[00:00:00] Speaker 04: The United States Court of Appeals for the Federal Circuit is now open and in session. [00:00:07] Speaker 04: God save the United States and its honorable court. [00:00:12] Speaker 01: Good morning. [00:00:12] Speaker 01: We have first for argument two cases, number 192306, Caterpillar Inc. [00:00:20] Speaker 01: versus International Trade Commission, to be followed by number 192320, Wartgen versus ITC. [00:00:29] Speaker 01: So we'll begin first with 192306 and hear from Mr. McCammond. [00:00:38] Speaker 06: Thank you, Your Honor, and may it please the court. [00:00:41] Speaker 06: The commission aired when it found that a machine manufactured in Italy by an Italian company was sold in this country, despite the fact that there was no evidence of any activity related to that sale in the US. [00:00:52] Speaker 06: The question of what constitutes a sale in this country for purposes of validity [00:00:56] Speaker 06: is directly analogous to what qualifies as sales in the United States for the purposes of infringement. [00:01:02] Speaker 06: In the infringement context, this court has consistently acquired a probing inquiry to identify actual domestic activity for sales to be considered in the United States. [00:01:12] Speaker 06: And in that inquiry, the nationality of the company has never been desposed of. [00:01:16] Speaker 06: In fact, in this court's decision in Texas Advanced Optoelectronics, which is discussed on page 21 of the blueprints, both companies involved in the sale were US companies. [00:01:26] Speaker 06: The nationality companies did not dictate the location of the sale. [00:01:30] Speaker 01: Mr. McCann, let me ask you a question. [00:01:34] Speaker 01: Suppose the sale for the title transfer took place in Italy, but that the machine was being sold for use in the United States. [00:01:48] Speaker 01: Do you agree that under those circumstances the on-sale bar would apply? [00:01:55] Speaker 06: Not with that more information in your arm, because with that hypothetical, all we know is that there was a sale in Italy and that title transfer took place in Italy and perhaps the Italian company knew that it might be used in the United States. [00:02:10] Speaker 01: Wait, you're not accepting my hypothetical. [00:02:12] Speaker 01: My hypothetical is that while title transfer happened in Italy, the machine was sold to a US company for use in the United States. [00:02:22] Speaker 01: Is that covered by the on-sale bar? [00:02:24] Speaker 06: No, I don't think so, Your Honor. [00:02:26] Speaker 06: And the reason for that is, I think, that with just that information, all we know about the activity related to the sale is that there was a sale, there was title transfer in the US, and we don't know more about any activity that Italian companies specifically directed to the United States. [00:02:43] Speaker 06: And so I think if we look at the parallels in the Frenchman context, where perhaps a company for a foreign sale knows that a [00:02:53] Speaker 06: company or a product will eventually be used in the United States and later imported, that isn't enough to show a sale in the United States. [00:03:00] Speaker 06: And certainly, there are other ways that that sale could come into play for validity. [00:03:04] Speaker 06: So if the machine was imported and actually used in the United States, that would be a potential public use that could bar patentability. [00:03:14] Speaker 06: If there was evidence of that use in the United States before the critical date, [00:03:20] Speaker 06: But just having the knowledge that the machine might be used in the United States, I don't think it's not. [00:03:27] Speaker 01: You keep adding might to my hypothetical. [00:03:32] Speaker 01: I didn't say might. [00:03:33] Speaker 01: It was sold for use in the United States. [00:03:40] Speaker 06: Yes, Your Honor. [00:03:41] Speaker 06: I think my hesitation there is I [00:03:46] Speaker 06: don't know more information about what the parties did during the contracting process, where they negotiated, or what the activities of the Italian company were. [00:03:56] Speaker 06: And I think that it's important to know where the companies actually did their activity. [00:04:01] Speaker 06: And so the issue I'm having with the hypothetical is that the Italian company may know that the U.S. [00:04:14] Speaker 06: company will [00:04:15] Speaker 06: eventually imported and used it in the United States. [00:04:17] Speaker 06: But I think the inquiry of where the location of the sale took place has to ask where the activity related to the sale took place. [00:04:24] Speaker 06: And so that is why I think that the hypothetical that you've proposed wouldn't fall under the on-sale bar, because without more information showing that there was actual activity related to the sale directed to the United States, then they wouldn't qualify as a sale in the United States. [00:04:41] Speaker 06: And that's why I think it wouldn't qualify. [00:04:44] Speaker 06: Does that answer your question? [00:04:48] Speaker 06: Go ahead. [00:04:50] Speaker 06: And I think if we look to the infringement context, again, the parallels there show that in the infringement context, that type of activity doesn't qualify. [00:05:01] Speaker 06: I mentioned the Texas Advanced Optoelectronics case. [00:05:03] Speaker 06: In that case, both companies were US companies. [00:05:06] Speaker 06: And they both had a US address and communicated about the sale. [00:05:11] Speaker 06: And the accused product was actually integrated into the iPhone, which was sold to the United States. [00:05:16] Speaker 06: So in that case, there was certainly an expectation that there would be use in the United States. [00:05:22] Speaker 06: But that wasn't enough, even under the lower proponents of the evidence standard, to show infringement. [00:05:28] Speaker 06: And so I think that since we're talking about sales, we're talking. [00:05:31] Speaker 06: Yeah. [00:05:32] Speaker 02: McCann, excuse me. [00:05:33] Speaker 02: This is Judge Shaw here. [00:05:37] Speaker 02: What I would like to ask you is this. [00:05:40] Speaker 02: Is it wrong or improper to infer from the facts that we have that there was a sale in the United States? [00:05:50] Speaker 02: Let me back up. [00:05:51] Speaker 02: I'm sorry. [00:05:52] Speaker 02: To infer from the following hypothetical that there was a sale in the United States, assuming we have the bill of sale that we have here, and then we had, say, a month after that, the paper appearing in the United States [00:06:09] Speaker 02: cannot one infer from that that there was a sale to the United States. [00:06:17] Speaker 06: I think with just that information, Your Honor, no, you can't because you have the bill sale and, you know, let's say that the facts are similar to this case where the company has the US address and the description of the item is in English and the paid in US dollars. [00:06:31] Speaker 06: The issue is that those facts that the commission relied on [00:06:35] Speaker 06: are just facts that indicate a U.S. [00:06:37] Speaker 06: company was involved. [00:06:38] Speaker 06: So any time that you deal with a U.S. [00:06:40] Speaker 06: company, they're going to have a U.S. [00:06:41] Speaker 06: address. [00:06:42] Speaker 06: Any time in most cases where you deal with a U.S. [00:06:45] Speaker 06: company, they're probably going to be English, and there's probably going to be U.S. [00:06:48] Speaker 06: dollars used. [00:06:49] Speaker 06: But that doesn't show where the activity took place related to the sale. [00:06:53] Speaker 06: And again, I turn back to the Texas Advanced Optical Electronics case because both companies were U.S. [00:06:58] Speaker 06: companies, would have that same sort of indicia of an American company being involved. [00:07:04] Speaker 06: Now, your hypothetical, you've mentioned that the paver was found a month later in the United States. [00:07:10] Speaker 06: And I think that that kind of gets back to Judge Zak's hypothetical a bit too, which is that the paver being in the US and later being found there is indicative that, of course, it was imported. [00:07:22] Speaker 06: And perhaps there was a public use, and there's a separate provision covering public use that would bar patentability. [00:07:28] Speaker 06: But without evidence of public use, that provision wouldn't qualify. [00:07:31] Speaker 06: And I think it's improper to wrap up a later importation into a sale without more information about what the activity of the parties was at the time and whether that activity was actually directed to the United States, whether that activity took place in the United States or was directed there. [00:07:48] Speaker 06: Because it's certainly possible that a sale between a US company and an Italian company like we have here took place entirely in Italy and that there was no activity in the United States or even directed to the United States. [00:08:00] Speaker 05: And just because... Mr. McKenna, this is Judge Hughes. [00:08:04] Speaker 05: Can I interrupt here again? [00:08:05] Speaker 05: This is, I think this is tricky and I have, I'm sorry, I'm going to burden you with some more hypotheticals, but I'm going to. [00:08:10] Speaker 05: Let's say first, you know, a U.S. [00:08:15] Speaker 05: citizen travels to Italy and buys some nice Italian shoes and takes them back. [00:08:20] Speaker 05: I assume you would say that obviously is not a U.S. [00:08:23] Speaker 05: sale, even though the goods are being [00:08:25] Speaker 05: take them back to the United States. [00:08:27] Speaker 05: It may be a use if they're used there, but it doesn't constitute a US sale. [00:08:32] Speaker 05: Is that correct? [00:08:35] Speaker 05: That's correct. [00:08:37] Speaker 05: So what about if the customer says, I really like these shoes when he's back in the United States and calls the Italian company and says, I'd like to buy another pair of those shoes. [00:08:47] Speaker 05: Can you send them to me? [00:08:49] Speaker 05: Is that a US sale or is it not? [00:08:52] Speaker 06: In that case, General, I think it would be a US sale. [00:08:55] Speaker 06: You know, there we have some of the factual underpinnings tying activity to the United States, which we see in some of the cases, like Henry Cavani and Hamilton Beach products. [00:09:06] Speaker 06: But, you know, there has to be some evidence actually showing where something took place in the United States. [00:09:12] Speaker 05: There was activity in the United States. [00:09:14] Speaker 05: And I think you're into your rebuttable time, but I just want to try to pinpoint on what do you think's the key dispositive factor there that turns that into a U.S. [00:09:21] Speaker 05: sale? [00:09:22] Speaker 05: Is it that [00:09:24] Speaker 05: the person making the offer for purchase is actually located in the United States? [00:09:31] Speaker 06: I think it's not that the person is located in the United States. [00:09:33] Speaker 06: I think that it is showing that there's some action by the seller that's directed to the customer's place of business, or the customer in this case, because they're actually directing activity into the United States by being on that call with them where the, you can think of it as telephone signals are being sent to the United States in that case, [00:09:53] Speaker 06: and they're actually conducting business with someone located there and directing activity there. [00:09:59] Speaker 06: And that's what you see. [00:10:00] Speaker 01: How is that different from this situation? [00:10:03] Speaker 01: Because there was no telephone call? [00:10:06] Speaker 06: The difference, Your Honor, is that we just don't have any information about where anything took place in this case. [00:10:11] Speaker 06: And it's just a void of information. [00:10:13] Speaker 01: All we really know is that... Well, no, but you... And Judge Hughes' hypothetical, you said, [00:10:18] Speaker 01: that was a sale in the United States. [00:10:21] Speaker 01: What's different from this case to the hypothetical? [00:10:25] Speaker 06: In this case, we don't know anything about the party's interactions related to the sale. [00:10:30] Speaker 06: We don't know what the business practices were. [00:10:33] Speaker 06: We don't know who talked to, when or where. [00:10:35] Speaker 06: We don't know anything related to the sale other than that there is an invoice with a US address that used English and that later, we don't know when, 20 years later is all we know. [00:10:45] Speaker 06: the company was found in the United States. [00:10:47] Speaker 06: And that's, that's the issue is that there's just no evidence where you can clarify. [00:10:51] Speaker 05: Can I just clarify one more time? [00:10:52] Speaker 05: Cause I think I hear what you're saying, but it's a difference that you're at least assuming my hypothetical assumes that since the buyer is the U S and he wants the shoe shipped to the U S that it's a sale back to him in the U S and what you don't have here is an invoice suggesting that the, um, [00:11:11] Speaker 05: the machine should be shipped to the United States after purchase. [00:11:16] Speaker 05: If that invoice that we have showed not just that it was sold to a U.S. [00:11:21] Speaker 05: customer or paid for in dollars and all of that, but also was to be shipped back to the Stockton, California address, would that be enough for the on-sale bar? [00:11:31] Speaker 06: I think, Your Honor, that probably would be, and we probably would be having a conversation right now. [00:11:35] Speaker 06: And the issue is the invoice shows the opposite. [00:11:38] Speaker 06: It shows it was delivered in Italy. [00:11:40] Speaker 06: And so all we know is that [00:11:41] Speaker 06: There was a company that manufactured and delivered a machine in Italy. [00:11:44] Speaker 06: We had no other information. [00:11:46] Speaker 06: And that's really the difference between your hypothetical and the case we have here. [00:11:51] Speaker 01: Thank you. [00:11:51] Speaker 01: Unless my colleagues have further questions, Mr. McCannon, I think we're done. [00:11:57] Speaker 01: We'll give you two minutes for a rebuttal. [00:12:00] Speaker 01: Thank you, Your Honor. [00:12:02] Speaker 01: We'll hear from Ms. [00:12:02] Speaker 01: Borad. [00:12:06] Speaker 00: Good morning, Your Honor. [00:12:07] Speaker 00: May it please the court? [00:12:08] Speaker 00: I would like to first address the hypotheticals, and I want to say that under the court's precedent, Life Tubes Hamilton Cavalier, whether it's under Section 271 or under Section 102B, a sale occurs also at the location of the buyer. [00:12:31] Speaker 00: And here, the commission has substantial evidence to support its determination. [00:12:37] Speaker 00: The commission relied on sales documents showing that two becoming machines were sold to a customer located in the United States. [00:12:46] Speaker 00: So the commission did not just rely on the citizenship of the buyer as Caterpillar suggests, it considered the location of the buyer in the United States, an invoice to that buyer, which- But how is that, how is that dispositive of whether a sale occurred in the US? [00:13:03] Speaker 05: I'm going to ask you, I'm sorry for all these hypotheticals, but this is kind of [00:13:07] Speaker 05: to me, a little bit difficult. [00:13:08] Speaker 05: I want to test the boundaries. [00:13:09] Speaker 05: Let's say you have a US company and a foreign company. [00:13:13] Speaker 05: And the US company is purchasing an item, but it's always intended to be delivered outside the US. [00:13:23] Speaker 05: So here, they buy it. [00:13:26] Speaker 05: And then they are purchasing it on behalf of somebody else. [00:13:32] Speaker 05: And they deliver it immediately from Italy to Germany, say. [00:13:37] Speaker 05: And so, it's not intended to be used in the United States. [00:13:43] Speaker 05: The only connection is that an American company purchased it. [00:13:49] Speaker 05: But it was never, and it was purchased from the foreign company. [00:13:54] Speaker 05: Is that on sale in the United States? [00:13:59] Speaker 00: Well, the case law makes clear, Your Honor, that delivery is not relevant at all. [00:14:04] Speaker 00: because a commercial offer for sale. [00:14:08] Speaker 05: So is your answer to my hypothetical, yes, that it's a sale in the United States? [00:14:15] Speaker 05: Well, how is that different from my hypothetical that a US traveler goes to Italy and buys a pair of shoes in Italy and brings them home? [00:14:25] Speaker 05: That's not an on sale in the United States, is it? [00:14:31] Speaker 00: If the customer is in Italy purchasing the item in Italy, I would agree with you that that would not be a sale in the United States, but that's not the fact here. [00:14:42] Speaker 00: The fact here is that the sale was direct. [00:14:45] Speaker 05: Sorry, can you, when I, I know this is hard over the phone, but I'm, and you're, you don't have much time. [00:14:50] Speaker 05: I want to put two hypotheticals. [00:14:51] Speaker 05: What if the customer, I don't understand why the customer's location is dispositive of where the sale occurred. [00:14:59] Speaker 05: Suppose the customer bought these foreign, like these foreign shoes enough and when he was back in the United States says, I really like these and calls up the Italy company and says, I want you to send a pair of these shoes to my friend in England. [00:15:13] Speaker 05: Is that on sale in the United States? [00:15:21] Speaker 00: These one or two cases are very fact. [00:15:25] Speaker 00: So those are not the facts here. [00:15:28] Speaker 05: The invoice shows that the same. [00:15:30] Speaker 05: Please answer the hypothetical. [00:15:35] Speaker 00: So it depends on the record, Your Honor, because if the invoice, for example, is if there is like an invoice. [00:15:43] Speaker 05: Stop, stop, stop, stop. [00:15:44] Speaker 05: Sorry. [00:15:45] Speaker 05: Listen to the hypothetical. [00:15:46] Speaker 05: I'm not asking about this case. [00:15:47] Speaker 05: I'm not asking about the record. [00:15:49] Speaker 05: I'm asking hypothetical. [00:15:51] Speaker 05: We already established a person goes to Italy and buys the shoes there and brings them back is not on sale in the United States. [00:15:57] Speaker 05: The hypothetical is that same person calls up the Italian company, buys a pair and says send them to my friend in London because he'll like them too. [00:16:08] Speaker 05: Is that on sale in the United States just because the purchaser is a United States resident? [00:16:17] Speaker 00: I would believe so, Your Honor, because that's the sale between, even though the delivery is in England, it's still a sale between the company, the foreign seller and a U.S. [00:16:28] Speaker 00: customer that is located in the United States and makes the purchase from the United States. [00:16:33] Speaker 00: So I would think the one it should be would still apply in that case. [00:16:37] Speaker 01: Well, I wonder whether it depends on whether the title [00:16:42] Speaker 01: And that hypothetical, whether the title passes in the United States or abroad, because we have this Agyaio case, I'm mispronouncing it, in the Southern District of Texas, which involved the sale of a product for use in Canada. [00:17:02] Speaker 01: But the district court found that the sale itself took place in the United States. [00:17:09] Speaker 01: And to what extent does the outcome of these cases depend on where the title passes? [00:17:17] Speaker 01: If title passes in the United States, even though it's for use abroad, under that case, that would be covered by the on-tail bar. [00:17:28] Speaker 01: So in Judge Hughes' hypothetical, as I understand it, the title passes not in the United States, but abroad. [00:17:38] Speaker 00: If I may answer, I think the Light Tubes case is directly relevant to this issue because in that case, the sale was made free on board from Canada. [00:17:51] Speaker 00: And the party tried to make the same argument that the sale was actually consummated in Canada because the products were shipped free on board. [00:18:02] Speaker 00: And the court rejected that and said that this expressly stated that [00:18:08] Speaker 00: the sale also occurs at the location of the buyer. [00:18:12] Speaker 00: And so based on that, and it was under 271, the court found that there was a sale in this country. [00:18:21] Speaker 01: OK. [00:18:24] Speaker 01: Unless one of my colleagues has further questions for Ms. [00:18:27] Speaker 01: Morad, we'll move on to Mr. Jopper. [00:18:31] Speaker 01: Are there any further questions for Ms. [00:18:33] Speaker 01: Morad? [00:18:35] Speaker 02: No. [00:18:35] Speaker 01: No. [00:18:36] Speaker 01: Hearing none. [00:18:36] Speaker 01: OK. [00:18:36] Speaker 01: Mr. Jopper. [00:18:38] Speaker 03: Good morning. [00:18:39] Speaker 03: May it please the court? [00:18:41] Speaker 03: I think it's important to recognize that the ALJ made a specific factual finding on this point, which can be found at Appendix 118, which is that there is evidence of a commercial activity directed to the United States. [00:18:54] Speaker 03: And so I would go back to the fact that this is a question of substantial evidence at the end of the day. [00:19:01] Speaker 03: And it's substantial evidence that is actually stronger than other instances in which this [00:19:07] Speaker 03: court has found that the on sale bar has been triggered. [00:19:10] Speaker 03: So if you look at the Hamilton Beach case, uh, that this court, uh, I'm sorry, can I, can I just jump in? [00:19:17] Speaker 05: Is there any evidence of where title passed in this case? [00:19:21] Speaker 05: Because it does seem just positive here. [00:19:24] Speaker 01: We seem to be having a lot of background noise. [00:19:28] Speaker 01: What is that coming from? [00:19:33] Speaker 01: Okay, go ahead. [00:19:33] Speaker 04: It sounds like it's coming from Mr. Joffrey's line. [00:19:37] Speaker 04: I apologize. [00:19:38] Speaker 04: I'll try to say as quiet as possible. [00:19:40] Speaker 04: Thank you. [00:19:42] Speaker 04: Go ahead. [00:19:49] Speaker 05: I apologize. [00:19:50] Speaker 05: That's OK. [00:19:52] Speaker 05: If you're moving around or something, that sometimes causes it. [00:19:55] Speaker 05: But let me just ask. [00:19:56] Speaker 05: If there's no evidence of where title passed, then the substantial evidence we have, I think, [00:20:02] Speaker 05: I mean, it's pretty undisputed that there were machines sold to a customer, the address listed with the U.S. [00:20:08] Speaker 05: company, the product was described in English, and the payment was in U.S. [00:20:13] Speaker 05: dollars, and then a long time after the fact, one of the machines was found in the United States. [00:20:20] Speaker 05: I have a hard time understanding how that substantial evidence sufficient to meet the clear and convincing burden here without showing that the sale was actually [00:20:31] Speaker 05: directed to the United States, particularly when it was delivered to someplace outside the United States. [00:20:40] Speaker 03: I would answer that there was similar facts present in Hamilton Beach. [00:20:45] Speaker 03: For example, in Hamilton Beach, there was a purchase order that listed a US address. [00:20:50] Speaker 03: The purchase order, for example, had number of units, part numbers, unit price, all the same things that are found on the purchase order in this case. [00:20:58] Speaker 03: And this court found that that was sufficient to trigger the on-sale bar because that was an offer for sale. [00:21:04] Speaker 05: Similarly, here we have evidence that the... You know, you're talking about all these cases and they all have different facts. [00:21:13] Speaker 05: Can we just talk about the law as applied to the fact of this case? [00:21:17] Speaker 05: We're not talking about an offer for sale here. [00:21:19] Speaker 05: We're talking about an actual sale, aren't we? [00:21:22] Speaker 03: Yes, we are. [00:21:22] Speaker 03: And that should be stronger, Your Honor, than just an offer for sale because here, [00:21:26] Speaker 03: it's undisputed that there was both an offer and an acceptance. [00:21:30] Speaker 03: And the acceptance was by a United States corporation in California. [00:21:34] Speaker 02: And so therefore... Wait a minute. [00:21:39] Speaker 01: Wait a moment. [00:21:41] Speaker 01: Mr. Joppery, what is that background noise? [00:21:44] Speaker 01: Can we stop that? [00:21:47] Speaker 03: I apologize. [00:21:48] Speaker 03: I'm not shuffling papers or anything, Your Honor, so I'm not sure what the background noise is caused by. [00:21:52] Speaker 05: Are you on headphones with a cord? [00:21:56] Speaker 03: I am, yes, Your Honor. [00:21:59] Speaker 05: You've got to be still because those cords make a lot of noise if you move around. [00:22:05] Speaker 04: Oh, all right. [00:22:06] Speaker 04: I will try to stay as still as possible, Your Honor. [00:22:09] Speaker 04: Mr. Joffrey, this is Patrick Chestnut, the court and deputy. [00:22:12] Speaker 04: When a judge is speaking, if you could mute your line locally, that would help. [00:22:17] Speaker 04: OK, I will do so. [00:22:18] Speaker 04: Thank you. [00:22:20] Speaker 05: OK, I'm sorry. [00:22:23] Speaker 05: Let me just try to dive right back in. [00:22:25] Speaker 05: Do you agree with your friend from the ITC that a U.S. [00:22:29] Speaker 05: citizen making the purchase seems to be dispositive? [00:22:33] Speaker 05: Because that seemed to be what she was saying. [00:22:38] Speaker 03: I would say, Your Honor, that the Court has addressed this. [00:22:41] Speaker 03: So I agree that it is quite strong evidence, but the Court has addressed this in Cavanaugh and Hamilton Beach and others in saying that... Can you address my hypothetical about the U.S. [00:22:52] Speaker 05: customer [00:22:54] Speaker 05: calling up the Italian company and saying, send a pair of shoes to my friend in Italy. [00:22:58] Speaker 05: Is that a US sale or not? [00:23:00] Speaker 03: No. [00:23:00] Speaker 03: And the reason it's not a US sale is because there's no expectation that anyone has that this sale was meant to be for Italy, that it was directed, I'm sorry, that was directed to the United States, meant for the United States or otherwise. [00:23:13] Speaker 03: It was clearly directed at Italy. [00:23:14] Speaker 03: And that is the difference between this case. [00:23:18] Speaker 03: There's no evidence, for example, that anything happened [00:23:22] Speaker 03: in Italy other than the purchase order was provided, that the machine was made, and then the sale was to this United States company. [00:23:33] Speaker 05: What's the evidence that it was intended for the United States, particularly when it was delivered abroad? [00:23:40] Speaker 03: It's the same evidence that's found in Hamilton Beach, that it is the listing of an address of a United States customer, listing in English, [00:23:49] Speaker 03: with dollars rather as the currency with a customs number. [00:23:54] Speaker 03: Those are all strong evidence that is meant directed to the United States. [00:23:59] Speaker 03: And Caterpillar as the actual seller of this, the party with the records in this case, could have come forward with other evidence, but they did not. [00:24:08] Speaker 03: And so all the evidence points one way. [00:24:11] Speaker 01: Okay. [00:24:14] Speaker 01: And let the further questions for Mr. Joffrey. [00:24:18] Speaker 01: Hearing none, we'll hear from Mr. McCammon. [00:24:21] Speaker 01: You have two minutes. [00:24:24] Speaker 06: Thank you, Your Honors. [00:24:26] Speaker 06: So because the work in Ray's Hamilton Beach quite a bit, I would like to point out that I think that it's quite distinct from the facts here. [00:24:33] Speaker 06: In Hamilton Beach, you had a party, and there was ample evidence of where they were negotiating things. [00:24:39] Speaker 06: The company was in the United States. [00:24:41] Speaker 06: It was negotiating with a foreign company from the United States. [00:24:46] Speaker 06: It had requested a purchase order to the United States. [00:24:48] Speaker 06: There was correspondence and emails that were sent from the United States. [00:24:52] Speaker 06: There were actual evidence of where activity took place. [00:24:55] Speaker 06: We simply don't have that here. [00:24:57] Speaker 06: And I think that Your Honor's hypotheticals are poignant because the only thing we know is that there is a machine that was delivered in Italy and we don't know anything else about it. [00:25:09] Speaker 06: And without anything more, it simply boils down to whether it's not that a US company was involved. [00:25:14] Speaker 06: And I would say, you know, if you look in Morgan's brief, they recognize that and say, [00:25:18] Speaker 06: that controlling law dictates that if a product is sold to a U.S. [00:25:21] Speaker 06: company, it's the one to be sell. [00:25:23] Speaker 06: And that's what they've had to fall back on because there is no evidence of any activity in the United States. [00:25:28] Speaker 01: And without that evidence. [00:25:29] Speaker 01: Why can't you infer from these facts that the sale was for use in the United States? [00:25:37] Speaker 01: There's no evidence that the purchaser has any Italian activity or business in Italy. [00:25:45] Speaker 01: Why aren't the facts sufficient to make that kind of inference? [00:25:52] Speaker 06: Your Honor, I think that because we don't have any facts of what actually took place in the United States or that there was a direction in the United States. [00:25:58] Speaker 06: And I think that this is really no different than Judge Hughes' hypothetical with the shoes being sold in Italy, because if they... No, it's quite different, because there there was evidence that the shoes were going to be transferred to somebody in England. [00:26:14] Speaker 01: There's no evidence here that this machine was going to be sent anywhere other than to the United States. [00:26:21] Speaker 01: The question is, can you infer from the fact that that is what was going to happen, that is, to be sent to the United States? [00:26:29] Speaker 06: Yes, Your Honor. [00:26:30] Speaker 06: In this shoe, I was actually thinking of the judge's first hypothetical, where the customer goes to Italy and purchases the shoes. [00:26:37] Speaker 06: And the issue is that even in that sale, where it takes place entirely abroad, there [00:26:42] Speaker 06: There could be a purchase order where they describe the item in English and they pay in US dollars, but even though it takes place entirely outside of the United States, that we would have the same fact that we have here. [00:26:54] Speaker 06: And there's simply no indication of where, when things were directed to the United States, when it came into the United States, and certainly nothing about the telepractices or the customer's practices and where they actually happened related to the sale. [00:27:10] Speaker 01: Okay, unless there are any other questions. [00:27:12] Speaker 01: Any further questions? [00:27:14] Speaker 01: All right. [00:27:16] Speaker 01: Thank you, Mr. McCann. [00:27:18] Speaker 01: Thank you, Your Honor. [00:27:19] Speaker 01: The case is submitted. [00:27:20] Speaker 01: And we'll turn to the second of these cases, number 192320, Wirtgen versus IPC. [00:27:28] Speaker 01: And I guess here first we hear from Mr. Joffrey. [00:27:33] Speaker 01: OK, we'll hear argument next in number 192320, Wirtgen versus International Trade Commission, Mr. Joffrey. [00:27:41] Speaker 03: May it please the court. [00:27:43] Speaker 03: When Congress amended Section 337 to allow complainants to meet the domestic industry requirement by proving that there was an industry in the process of being established, it specifically had in mind the scenario where, quote, a new product is developed in the United States which is protected by U.S. [00:28:00] Speaker 03: intellectual property right, end quote. [00:28:02] Speaker 03: Congress created that provision so that, quote, the owner of the intellectual property right, [00:28:07] Speaker 03: would not have to wait to bring an action under Section 337 until he can satisfy the definition of an industry. [00:28:14] Speaker 03: That is precisely the situation that Caterpillar was in when it filed its complaint. [00:28:19] Speaker 03: It had developed a prototype for the machine. [00:28:20] Speaker 03: It was preparing to sell that machine, but it had not done so yet. [00:28:24] Speaker 03: Therefore, Caterpillar did not yet have an existing industry in the machine. [00:28:28] Speaker 03: It was only in the process of establishing one. [00:28:31] Speaker 03: But due to Caterpillar's failures during discovery, it was barred from demonstrating that industry was in the process of being established. [00:28:39] Speaker 03: Rather, it had to demonstrate an existing industry in that machine. [00:28:44] Speaker 01: The commission erred in holding there was one because it's... Why can't you have an existing industry as a result of say constructing a plant even though [00:28:57] Speaker 01: the plant hasn't made any sales yet. [00:29:03] Speaker 03: Because that is the definition of you're in the process of trying to establish one, Your Honor, rather than there actually being one. [00:29:14] Speaker 03: The building of a plant that essentially generates no income [00:29:18] Speaker 03: simply cannot be established. [00:29:21] Speaker 03: Now to be fair, it could be, those dollars could all count in the prong of in the process of being established and Congress wanted to make sure that that was possible and that's why it created the statute the way it did and made that distinction. [00:29:35] Speaker 03: The problem of course for Caterpillar is it was barred from attempting to show that it was in the process of trying to establish an industry through its prototypes and the dollars that it spent. [00:29:46] Speaker 03: And so therefore, [00:29:48] Speaker 03: based upon that problem, they simply cannot show a domestic industry in this case. [00:29:57] Speaker 03: Now, the distinction that the commission wants to draw or claims that it's drawing actually just collapses the two, the difference between an industry and the process of being established versus being established. [00:30:09] Speaker 03: They don't draw any distinction. [00:30:11] Speaker 03: There's no analytical work being done by that distinction that must be done because the statute is written the way it is. [00:30:18] Speaker 03: Indeed, when the commission goes about trying to determine whether or not a industry is in the process of being established, it uses the same exact test as it does when it is trying to figure out whether or not the industry is established or not. [00:30:35] Speaker 03: Namely, what it does is it goes through all of the different prongs that are found in paragraph A3 and asks whether there's a significant investment in plant [00:30:45] Speaker 03: labor or in the exploitation of patents through research and development licensing. [00:30:51] Speaker 03: And so it's not simply a hypothetical collapse of these two prongs of the statute into one. [00:31:02] Speaker 03: It is an actual one. [00:31:03] Speaker 03: They truly do not distinguish them in actual practice. [00:31:08] Speaker 03: And that is error because as the [00:31:12] Speaker 03: dictionaries as the clear import of the language shows, there has to be a difference between an industry and a non-industry. [00:31:20] Speaker 03: Another way of saying that is that if we went back to paragraph A2, Congress could have said, for example, that there's domestic industry if there is some activity in the United States or that there is some [00:31:37] Speaker 03: some actions by people in the United States. [00:31:39] Speaker 03: It didn't use those words. [00:31:41] Speaker 03: It didn't use activity or otherwise. [00:31:43] Speaker 03: Rather it used the word industry and therefore that term ought to be given an actual concrete definition and that actually ought to apply here. [00:31:56] Speaker 03: Now turning to the, unless the court has further questions about 337, I will turn to the question of, [00:32:03] Speaker 03: the Boozley patent and how it was ignored by the expert evidence was ignored by the commission in determining that the claim 19 was not obvious. [00:32:20] Speaker 03: It's important to understand that in road milling machines, when you swing that back leg of the road milling machine, you actually have to steer that back wheel. [00:32:29] Speaker 03: You have to keep pointing it forward. [00:32:30] Speaker 03: Otherwise, what happens when you swing the leg out is you'll drag it. [00:32:33] Speaker 03: You'll drag the wheel if you don't point it. [00:32:36] Speaker 03: And the Prior Art patent Boosley demonstrates exactly how that steering should be done. [00:32:42] Speaker 03: The commission, however, said that and ignored the fact that there was a reason to use the Boosley patent because it said that the response expert did not explain why or how the Boosley embodiments would be an improvement relative to actuators to Ulrich. [00:32:58] Speaker 03: That is simply not true and it ignores the evidence that Furkin's expert put into the record. [00:33:05] Speaker 01: As to why... What evidence is there in the record that it would have been advantageous to use the Boozley steering method as opposed to the old steering method or why it was necessary to use the Boozley steering method instead of the old method? [00:33:22] Speaker 01: I looked at the evidence that you submitted and I just don't see where your evidence says [00:33:29] Speaker 03: So the evidence, an example of the evidence can be found at Appendix A1354 in the record and this is the questioning and answer of Mr. Arnold which is, which at question 236, the question is why would you have used it or why was there a reasonable expectation of success? [00:33:51] Speaker 03: He said there's a reasonable expectation of success [00:33:54] Speaker 03: because of the similarities between the Boozley lifting column and the Volpe machine's lifting column. [00:34:00] Speaker 03: Namely, the problem with Ulrich was that there were no lifting columns, and so therefore you couldn't just simply use the actuators in Ulrich to steer that back wheel. [00:34:10] Speaker 03: So then the question is, well, how would one do that? [00:34:13] Speaker 03: And the answer, as pointed out by Mr. Arnold, is you'd use these Boozley steering mechanism because Boozley is integrated into a machine that has these lifting columns. [00:34:25] Speaker 03: And he explained in detail how you'd actually do that. [00:34:28] Speaker 03: So as to the why, if we can go to page 1360 at questions 253, [00:34:39] Speaker 03: He explained in detail exactly how you would combine Ulrich with Boosley and Volpe in order to have a steering mechanism that uses these, that uses the lifting column. [00:34:55] Speaker 03: Specifically, he even describes exactly how and what actuator in Ulrich would rotate that lifting column. [00:35:03] Speaker 01: But how? [00:35:04] Speaker 01: And I don't understand there to be an issue about the how. [00:35:08] Speaker 01: What's missing apparently is the lie. [00:35:14] Speaker 03: I think, Your Honor, that the Commission specifically said that there was no discussion or explanation of how in Appendix 42. [00:35:22] Speaker 03: So I think there actually is a dispute over that question. [00:35:25] Speaker 03: But second off, as to the why, that can be found by Mr. Arnold explaining the reason you need to combine this Boozley is because the Ulrich does not have a lifting column, and so you don't know how to steer [00:35:40] Speaker 03: with a listing column if you don't have the Boozley patented method. [00:35:46] Speaker 03: And so that's why, that is the why for why the Boozley patent is necessary. [00:35:52] Speaker 03: I see that I've run into my rebuttal time, Your Honor. [00:35:54] Speaker 01: Okay, unless there are further questions, I'll give you two minutes for rebuttal. [00:36:00] Speaker 01: And why don't you put yourself on mute because you're still getting a lot of noise from me. [00:36:04] Speaker 01: Thank you. [00:36:06] Speaker 01: Okay, thank you. [00:36:06] Speaker 01: Ms. [00:36:06] Speaker 01: Morad? [00:36:08] Speaker 00: Thank you, Your Honor. [00:36:09] Speaker 00: May it please the Court. [00:36:12] Speaker 00: As to the domestic industry issue, there is just no support. [00:36:16] Speaker 00: In the language of Section 327, the legislative history, this Court's precedent or Commission's precedent for word against argument that commercial sale or availability for sale is required for an existing domestic industry. [00:36:30] Speaker 00: There's no dispute that at the time of the complaint, Catepillar had an article protected by the patent [00:36:36] Speaker 00: and that they established significant employment of labor or capital and substantial investment in the exploitation of the patent. [00:36:44] Speaker 00: That is what the statute requires and that is how the statute defines a domestic industry that exists. [00:36:52] Speaker 00: Caterpillar has a complete machine incorporating the features of the patent before the complaint was filed. [00:36:57] Speaker 00: The machine was being tested by customers and was displayed at a trade show in Las Vegas. [00:37:03] Speaker 00: In addition, at the time of the complaint, Caterpillar had made significant investments relating to the machine at Caterpillar's facility in Minnesota and Peoria, Illinois. [00:37:15] Speaker 00: There is a clear distinction between an industry that exists and an industry that is in the process of being established. [00:37:23] Speaker 00: A different test applies for an industry that is in the process of being established. [00:37:28] Speaker 00: Under that test, complainants need to show that they are likely to establish in the future, and not at the time of the complaint, both the article requirement and the relevant statutory investment. [00:37:43] Speaker 00: As to the invalidity of Claim 19, substantial evidence supports the Commission's determination that word can fail to show clearly and convincingly that Claim 19 is invalid over the combination of three prior arts references. [00:37:57] Speaker 00: vault, outreach, and bucket. [00:38:00] Speaker 00: None of these references discloses a road-milling machine with a wheel and a lifting column that are both steerable and pivotable, and wherein rotating the wheel includes rotating the lifting column. [00:38:13] Speaker 00: Working relies on hindsight and uses the claim language and the specification of the asserted patent as a roadmap to construct their obviousness argument. [00:38:22] Speaker 00: That is impermissible under this court's precedent. [00:38:28] Speaker 00: Wordkin does not even acknowledge the substantial evidence standard for review of the Commission's factual findings. [00:38:41] Speaker 00: The Commission did not find Wordkin's expert testimony to be non-existent. [00:38:45] Speaker 00: It found the testimony to be conclusory. [00:38:49] Speaker 00: Both the Commission and the ALJ addressed that testimony, for example, [00:38:53] Speaker 00: at Appendix 29-43 and Appendix 139-140 and found no credible motivation to combine Bossley's hearing mechanism with the vault machine and outreach. [00:39:07] Speaker 00: And both the Commission and the ALJ credited Caterpillar's expert testimony over word games and concluded that there was no motivation to combine the three references and that the three references teach away from the combination. [00:39:23] Speaker 00: because it would produce an inoperative device. [00:39:26] Speaker 00: Thank you, Your Honor. [00:39:27] Speaker 00: Any questions? [00:39:29] Speaker 05: Ms. [00:39:29] Speaker 05: Varad, this is Judge Hughes. [00:39:31] Speaker 05: I don't have a question for you about this case, but I just wanted to apologize for getting testy with you in the last case. [00:39:37] Speaker 05: These telephone arguments are hard, and particularly when time is really short, it's very hard to get counsel to stop talking when the judges start. [00:39:44] Speaker 05: It's why I wish we were doing the video instead of just telephone, like most of the other circuits are doing. [00:39:49] Speaker 05: But again, I'm sorry for being testy last time. [00:39:53] Speaker 05: I know you were just trying to do your best. [00:39:56] Speaker 00: Thank you very much. [00:39:58] Speaker 01: All right. [00:39:58] Speaker 01: We'll hear from Mr. McCammon. [00:40:02] Speaker 06: Thank you, Your Honors. [00:40:04] Speaker 06: I'd like to start with the obviousness arguments that Working raised. [00:40:08] Speaker 06: And specifically, I'd like to correct one thing, which I think is inconsistent with the record. [00:40:13] Speaker 06: Working argued in their argument that, [00:40:16] Speaker 06: One of skill in the art would not be able to rotate or steer the track of their combination machine without Busley, but that's not consistent with their expert testimony or the findings in this case. [00:40:28] Speaker 06: Their expert at appendix page 1320 actually argued that that plantation was met based on the Olrack reference and that Busley was not required and said that Olrack disclosed that. [00:40:42] Speaker 06: The machine that they proposed, the pirate machine, they said, already caught this, it already rotated the track and already could steer. [00:40:49] Speaker 06: And the commissioner relied on that and actually invalidated claim one, which includes the rotating track without the Busley reference. [00:40:55] Speaker 06: So, it's appendix page 31, the commission invalidated claim one. [00:41:00] Speaker 06: And so, what was lacking, and I think Your Honor pointed this out, is a description of why. [00:41:05] Speaker 06: Why would one of skill in the arts [00:41:07] Speaker 06: modified machine based on the Busley reference when the machine could already steer and the evidence they put forth was that it could already steer, especially given the machine in Allworth was so different and it was direct, or when the machine in Busley was so different, it was directed to machines and wheels that could not pivot. [00:41:25] Speaker 01: And the situation was one in which... The teaching away part of what the commission said is difficult to support, right? [00:41:33] Speaker 01: I mean, I'm not talking about the motivation. [00:41:35] Speaker 01: I'm talking about the suggestion that was just somehow a teaching way here. [00:41:38] Speaker 01: That sounds like an argument that you'd have to have bodily incorporation, which is not the law. [00:41:50] Speaker 06: Your Honor, no, I don't think in this context it is difficult to square because you have to look at how the Busley reference actually functions and the way it operated was [00:42:02] Speaker 06: via a machine where the front legs were linked, and they were specifically designed so they could steer together. [00:42:08] Speaker 06: And because they were steered together, they had to maintain a fixed distance apart and not move apart. [00:42:13] Speaker 06: And so the distance between them was fixed, and the machine could not swing those legs. [00:42:20] Speaker 06: And in contrast, the claims of the 693 patent are directed specifically to a leg that can swing in and out. [00:42:27] Speaker 06: And so when you are faced with a [00:42:29] Speaker 06: a machine that is operative for the purpose that the defendant is applying it to, the case law says that that can be seen as a teaching away. [00:42:39] Speaker 06: And here there was evidence from Caterpillar's experts discussing this inconsistency, which workings experts never addressed, and the fact that if you tried to operate the Busley reference in a machine where the lick could swing it out, which is required by the claim, it wouldn't work. [00:42:56] Speaker 06: And so, in that context, where you have a machine that would be inoperative, if proposed like the, like work and argued, then that is the teaching way based on the case law. [00:43:07] Speaker 06: And I, you know, I don't disagree. [00:43:08] Speaker 06: This is not one of the cases where they specifically say that this is a textual difference that advocates explicitly. [00:43:19] Speaker 06: But when you look at the ways the work can propose the combination, [00:43:23] Speaker 06: the way they say that they wanted to use the machine. [00:43:25] Speaker 06: In that context, it renders the machine an obstacle and wouldn't function. [00:43:30] Speaker 06: And I also would like to point out that a big part of Workin's argument is the commission somehow ignored their evidence. [00:43:37] Speaker 06: And I also don't think that's supported. [00:43:39] Speaker 06: There are multiple portions of their expert testimonies that they rely on in the brief, but the commission cited those in its own opinion. [00:43:47] Speaker 06: They rely on their expert's testimony [00:43:50] Speaker 06: Question and answer 253, 233, and 235 of their expert witness statements. [00:43:55] Speaker 06: The commission's opinion cited all of those passages. [00:44:00] Speaker 06: Question 253 was cited as appendix page 40, 233 was cited as appendix page 40, and 235 was cited as appendix page 42. [00:44:07] Speaker 06: So the commission specifically looked at the testimony of working with this board in a brief. [00:44:12] Speaker 06: They analyzed it and they found a conclusory. [00:44:15] Speaker 06: And this is a pure question of fact and motivation combined. [00:44:18] Speaker 06: And the commissioner relied properly on Caterpillar's expert over Working's expert. [00:44:24] Speaker 06: And based on the substantial evidence review, that's certainly within the province of the fact-finder and appropriate here. [00:44:31] Speaker 06: Now, just to touch briefly on the domestic industry analysis, I would like to point out that this is a situation where this is not a nascent industry where there was no activity by the panthea here. [00:44:47] Speaker 06: There were tens of thousands of man hours put in by Caterpillar. [00:44:50] Speaker 06: There were millions in labor and capital. [00:44:52] Speaker 06: It was all domestic activity that we're relying on, which is actually taking place in Minnesota and Illinois. [00:44:58] Speaker 06: And there's no dispute by working that that ever was significant, that there was significant employment and labor capital, and that there was substantial investment in R&D. [00:45:09] Speaker 06: And it was all domestic. [00:45:10] Speaker 06: And the investment was related to the patent and the articles. [00:45:14] Speaker 06: That's all that's required for domestic industry. [00:45:17] Speaker 06: And with that, the statute specifically says when a domestic entry exists. [00:45:22] Speaker 06: It exists when the significant employment labor capital, which Working does not dispute. [00:45:27] Speaker 06: A domestic entry exists when there is substantial investment in R&D. [00:45:30] Speaker 06: Working does not dispute that. [00:45:31] Speaker 06: By the plain language of the statute, Caterpillar satisfies that test, and there is no argument or evidence to the contrary. [00:45:39] Speaker 06: Your Honor, unless there is any further questions, I would yield the rest of my time. [00:45:44] Speaker 01: OK. [00:45:44] Speaker 01: Thank you, Mr. McCown. [00:45:46] Speaker 01: Mr. Jaffray, you have a couple of minutes. [00:45:49] Speaker 01: Thank you, Your Honor. [00:45:51] Speaker 03: I would like just to go back to the Commission's point that they think that their test has a distinction between in the process of being established and existing. [00:46:00] Speaker 03: They pointed to the fact that they say, well, there has to be a likelihood that the industry requirement will be satisfied in the future. [00:46:06] Speaker 03: But they also require that you must demonstrate that they are taking the necessary tangible steps to establish an industry in the United States. [00:46:14] Speaker 03: Whenever there's a test, however, and the commission actually applies that, it looks to the same exact evidence for both existing and for in the process of being established. [00:46:25] Speaker 03: So therefore, again, they're just collapsing the two and the statute language requires a distinction. [00:46:31] Speaker 03: Turning to the obviousness point, Your Honor, the commission and Caterpillar both say that there was some sort of credibility determination of their expert, Caterpillar's expert being credited more than [00:46:44] Speaker 03: Verkin's expert, there is no such place in the actual commission opinion stating any of that. [00:46:50] Speaker 03: And as to why there was a reason to combine it, Verkin's expert provided exactly that at appendix 1353, question 235. [00:47:00] Speaker 03: He says, a POSA would have been motivated to modify the Volpe machine with Ulrich and Boosley because it simply and conveniently counts for the height adjustability provided by the lifting columns [00:47:13] Speaker 03: and allows the actuator to turn the cleavus relative to the arm while still maintaining the relative position. [00:47:20] Speaker 03: So there is both a how and there is a why. [00:47:23] Speaker 03: And the commission's plain language in their opinion states that Verkan did not state either how or why. [00:47:31] Speaker 03: As such, that is both a factual error, but it is also a legal error because it ignored the evidence that was available. [00:47:39] Speaker 03: It simply said there was no explanation of that when in fact there was. [00:47:44] Speaker 03: Therefore, for that reason, that determination needs to be reversed. [00:47:50] Speaker 01: Okay. [00:47:51] Speaker 01: Thank you, Mr. Jaffrey. [00:47:52] Speaker 01: Thank all counsel. [00:47:54] Speaker 01: The case is submitted.