[00:00:00] Speaker 01:
Mr. Broody, before I start the clock, let me just give you a heads up that you've reserved four, I'm correct?

[00:00:09] Speaker 03:
Yes, Your Honor.

[00:00:10] Speaker 01:
Okay.

[00:00:11] Speaker 01:
At 11 minutes, the tone will sound, and I'll just interrupt you a little bit to remind you into your rebuttal time.

[00:00:19] Speaker 01:
You can keep going or not, as you please, but you'll be eating up your rebuttal.

[00:00:23] Speaker 01:
If you're answering

[00:00:26] Speaker 01:
An aggressive question, and you have to keep going on it.

[00:00:28] Speaker 01:
I won't take that away from you.

[00:00:31] Speaker 03:
Thank you, Your Honor.

[00:00:32] Speaker 01:
Go ahead.

[00:00:33] Speaker 01:
Thanks.

[00:00:35] Speaker 03:
This is Ted Berruity for Appellants.

[00:00:37] Speaker 03:
May it please the court?

[00:00:39] Speaker 03:
Your Honor, I'll begin with the issue of first impression, which is the standard for single enterprise liability for Walker process fraud.

[00:00:49] Speaker 03:
There's not a lot of case law on this, but the 10th Circuit and Lennox

[00:00:54] Speaker 03:
gave us the standard when the parent controls, dictates, or encourages the subsidiary's anti-competitive conduct, the parent engages in sufficient independent conduct to be held directly liable as a single enterprise with the subsidiary under the Sherman Act.

[00:01:13] Speaker 03:
Where the district court erred was trying to impose on top of that an additional involvement or knowledge requirement that's just not there,

[00:01:23] Speaker 03:
and it conflicts with the reasoning of the 10th Circuit and the U.S.

[00:01:28] Speaker 03:
Supreme Court in the Copperwell's decision.

[00:01:33] Speaker 02:
Ms.

[00:01:33] Speaker 02:
Council, this is Judge Hughes.

[00:01:35] Speaker 02:
Before you get to your merits issues, can you tell me why under our precedent and diatronics that this shouldn't be transferred to the 5th Circuit?

[00:01:47] Speaker 03:
Yes, Your Honor.

[00:01:50] Speaker 03:
I have three reasons.

[00:01:51] Speaker 03:
First, under Zitronix, it was a standalone Walker process fraud case.

[00:01:57] Speaker 03:
The court, through Espani, transferred it to the Fifth Circuit, and the Fifth Circuit transferred it back.

[00:02:02] Speaker 03:
And then you kept it, and it was your honor that was on that panel.

[00:02:06] Speaker 02:
Yes, I know I was on that panel, but that's why I'm asking you the question.

[00:02:10] Speaker 02:
Our original Zitronix decision is presidential and binding.

[00:02:14] Speaker 02:
When we got it back, we did not agree with the Fifth Circuit.

[00:02:18] Speaker 02:
that jurisdiction was proper, we held under Christensen that it was plausible and didn't retransfer.

[00:02:23] Speaker 02:
But isn't that initial electronics decision precedential here?

[00:02:29] Speaker 03:
Well, the cases are all fours in terms of being plausible.

[00:02:36] Speaker 03:
But in addition to that, there's also a sham litigation, patent litigation claim.

[00:02:42] Speaker 03:
Surely sham patent litigation

[00:02:45] Speaker 03:
is a substantial issue of patent law.

[00:02:50] Speaker 03:
And further, there's four reasons.

[00:02:54] Speaker 03:
The infringement claim on the 993 patent, appellees have admitted in their briefing, it's still pending in the district court.

[00:03:04] Speaker 03:
There's still an infringement claim against appellants on the 993 patent pending in the district court.

[00:03:11] Speaker 03:
That's jurisdiction right there.

[00:03:15] Speaker 02:
And in addition to that... How can there be a pending infringement claim based upon an invalid patent?

[00:03:26] Speaker 02:
Because they never dismissed it despite multiple requests.

[00:03:29] Speaker 02:
It's there.

[00:03:31] Speaker 02:
Well, it's not... But it can't be pursued.

[00:03:34] Speaker 02:
There's no valid patent anymore, so it can't be pursued.

[00:03:37] Speaker 02:
The only live claims in this case are your welfare process claims.

[00:03:41] Speaker 02:
aren't they?

[00:03:42] Speaker 03:
I don't understand.

[00:03:43] Speaker 03:
And sham litigation.

[00:03:44] Speaker 03:
All right.

[00:03:45] Speaker 03:
Well, there are also other patents involved.

[00:03:47] Speaker 03:
The energy heating case recognized there was a continuation patent and the game being played if they're taking all the inequitable conduct pleadings, dumping them into an IDS, sending it into the patent office, switching up the claims a little bit on a continuation and

[00:04:08] Speaker 03:
getting the patent office to issue it because the patent office has no mechanism to deal with inequitable conduct, which is an issued equity before court.

[00:04:17] Speaker 03:
And now they've done it three more times.

[00:04:20] Speaker 03:
So now there's four continuation patents on this same 993 patent that was fraudulently obtained, and they paid the issue fees for all of these.

[00:04:29] Speaker 02:
So that is a very... Are those continuation... Are those continuation patents part of this case?

[00:04:37] Speaker 02:
They are not part of the case, but they have been... Well, I don't see how they're relevant here.

[00:04:46] Speaker 02:
I do want to ask you, because you suggested a couple of times that there's something different from the Walker process, which is a sham... What do you call it?

[00:04:55] Speaker 02:
Sham patent litigation?

[00:04:58] Speaker 02:
Sham patent litigation is a broader doctrine, yes.

[00:05:04] Speaker 02:
And what is that doctrine based upon?

[00:05:06] Speaker 02:
What statutory basis is that doctrine?

[00:05:13] Speaker 03:
Well, it would certainly be under the patent statute.

[00:05:16] Speaker 03:
If you improperly bring a patent claim, that is a substantial issue of patent law that the... No, no, no, no.

[00:05:24] Speaker 02:
Tell me what the source of that cause of action is.

[00:05:29] Speaker 02:
We know that Walker process is based upon antitrust law.

[00:05:32] Speaker 02:
Is sham patent litigation also a variant of anti-trust law, or is it a form of somehow patent infringement litigation?

[00:05:46] Speaker 03:
I would argue it can be both, Your Honor, including in the inherent authority of this court to police its own or to police the patent world.

[00:05:55] Speaker 02:
I don't understand that at all.

[00:05:58] Speaker 04:
Can you help me?

[00:05:59] Speaker 04:
This is Judge Chen.

[00:06:01] Speaker 04:
Does this sham patent litigation claim that you say that you have that you also say is separate from your Walker process claim somehow, does that sham patent litigation claim arise under the Patent Act or does it arise under the Sherman Act or does it arise under some other act?

[00:06:18] Speaker 04:
What's the answer to that question?

[00:06:22] Speaker 03:
The case law is that it arises under the Sherman Act, but I would also argue,

[00:06:29] Speaker 03:
in the Zytronic line of cases, it raises substantial issues of patent law that the federal circuit should address.

[00:06:37] Speaker 04:
Okay.

[00:06:38] Speaker 04:
It's a Sherman Act claim that you think there's some important substantial patent law issue inside of that Sherman Act claim.

[00:06:46] Speaker 04:
Exactly, Your Honor.

[00:06:47] Speaker 04:
Just as you would argue the same thing for what you say is a separate claim, your so-called Walker process claim.

[00:06:55] Speaker 04:
Is that right?

[00:06:57] Speaker 04:
Exactly, Your Honor.

[00:06:59] Speaker 04:
Okay.

[00:06:59] Speaker 04:
So why doesn't your so-called separate sham patent litigation claim suffer from the same problems as the Walker process claim, which under our precedent that we're bound by in Zetronix, we've already held we don't have jurisdiction to handle under these circumstances.

[00:07:20] Speaker 03:
But didn't the court also suspend the mandate in that?

[00:07:23] Speaker 03:
You did keep it.

[00:07:26] Speaker 02:
We kept it because the Fifth Circuit re-transferred, and under Christensen, in order to avoid a ping pong back and forth, a court can ultimately decide that even though it doesn't think it has jurisdiction, if there's a plausible case to be made, it won't re-transfer.

[00:07:44] Speaker 02:
That doesn't mean we agreed with the Fifth Circuit, and it doesn't mean we can ignore our binding precedent in Zytronix.

[00:07:51] Speaker 02:
So we very well may well end up with the same kind of situation here where we send it to the Fifth Circuit and then they send it back and we have to decide whether it's plausible or not.

[00:08:01] Speaker 02:
But this case seems even less plausible than Cytronics because the patent here has already been declared invalid.

[00:08:09] Speaker 02:
for inequitable conduct.

[00:08:11] Speaker 02:
So I don't see any possible patent issue in this case.

[00:08:14] Speaker 02:
In fact, all the issues you have on appeal have nothing to do with patent law.

[00:08:18] Speaker 02:
They're all to do with like antitrust and statute of limitations and standing, which have no unique patent law claim.

[00:08:25] Speaker 02:
So again, what patent law issues would we have to decide in this case?

[00:08:32] Speaker 03:
The patent law issues include how

[00:08:40] Speaker 03:
in a Walker process fraud context, the patent is enforced and what knowledge is required by the party pulling the strings for that party to be liable for enforcing that patent, which does raise important issues under the patent statute.

[00:09:04] Speaker 02:
What are those issues?

[00:09:06] Speaker 02:
It sounds to me like we already know that

[00:09:10] Speaker 02:
These people are enforcing or trying to engage in inequitable conduct and therefore got their patent declared invalid.

[00:09:17] Speaker 02:
So we know that the patent is invalid and that they engage in equitable conduct, which goes to intent.

[00:09:22] Speaker 02:
What other patent law issues?

[00:09:24] Speaker 02:
It sounds to me like you're reciting typical antitrust elements, not patent elements.

[00:09:31] Speaker 03:
Well, there are also elements that involve

[00:09:35] Speaker 03:
What is knowledge of, what are facts related to experimental use and the experimental use defense and rain?

[00:09:49] Speaker 02:
Have those not already been decided by our prior cases, case saying this patent's invalid due to inequitable conduct?

[00:10:00] Speaker 03:
Well, see, a big issue in this case, Your Honor,

[00:10:04] Speaker 03:
is when is it proper to hold the Chandlers, the appellants, to knowledge of, in this case, a bogus, if you will, or a bad faith experimental youth defense when the opinion of counsel was withheld, didn't even exist, wasn't disclosed until within the four-year period, the four-year statutory period.

[00:10:31] Speaker 03:
And then what those components of the experimental use defense are, and that's something appropriate for a national rule unless everybody in our situation, every time one person in one case files an equitable conduct defense, which we've all done many times, and usually it doesn't work, then the clock's running on a Walker process fraud antitrust case.

[00:10:58] Speaker 03:
That matters.

[00:11:04] Speaker 03:
And, and I would, I would add, if I may, that in a Zitronix case, this, uh, the courts, the panel specifically held that even if the patent is not live, that is not a, that is not a reason not to maintain jurisdiction.

[00:11:21] Speaker 02:
Well, it's not the single reason, but Zitronix clearly held in that case that we didn't have jurisdiction because under gun,

[00:11:30] Speaker 02:
there was no, it didn't arise under a patent law, it arose under the Sherman Act.

[00:11:36] Speaker 03:
Okay, in the record, there is a continuation patent that is... Is it being asserted in this case?

[00:11:46] Speaker 02:
Not yet, but if... Well, then it doesn't arise under, it doesn't arise under that patent case.

[00:11:53] Speaker 02:
I mean, let me ask you this very simple question.

[00:11:55] Speaker 02:
Do you think Gunn v. Mitten applies to Walker process claims at all?

[00:12:03] Speaker 03:
In the same sense that this court distinguished Gunn v. Minton, which is a, which was a... We didn't... Can we just clear?

[00:12:16] Speaker 02:
Let me just stop you.

[00:12:17] Speaker 02:
We did not distinguish Gunn v. Minton.

[00:12:19] Speaker 02:
We applied it.

[00:12:20] Speaker 02:
The Fifth Circuit distinguished it.

[00:12:22] Speaker 02:
And what I'm asking is, do you think Gunn v. Minton applies to Walker Process Claims?

[00:12:27] Speaker 02:
and will place some of them in regional circuits if they have no patent issue?

[00:12:32] Speaker 02:
Or do you think that Walker process claims always arise under the patent statutes and belong in the federal circuit?

[00:12:38] Speaker 02:
I'm not trying to trick you.

[00:12:39] Speaker 02:
I think this is an important question and is unanswered by the Supreme Court.

[00:12:43] Speaker 02:
Zytronex answered it one way in our case, and the Fifth Circuit, I think, answered it the other way.

[00:12:49] Speaker 02:
What's your answer?

[00:12:51] Speaker 03:
My answer is this is

[00:12:53] Speaker 03:
Walker process fraud always raises substantial issues of patent law.

[00:12:58] Speaker 03:
And those cases do belong in this court.

[00:13:03] Speaker 03:
And I agree.

[00:13:04] Speaker 03:
It's unclear.

[00:13:05] Speaker 03:
I agree.

[00:13:05] Speaker 03:
The case law is unclear, but that I think that's the better answer.

[00:13:12] Speaker 02:
But it's not the answer we gave him and Zitronix were bound by.

[00:13:18] Speaker 03:
It still raises a plausible, substantial issue.

[00:13:31] Speaker 03:
I also see that I'm 13 minutes into my time, so I'd like to reserve from here.

[00:13:37] Speaker 01:
Go ahead.

[00:13:45] Speaker 00:
Your Honor, do I just start?

[00:13:48] Speaker 01:
Next, counsel, please.

[00:13:50] Speaker 00:
Yes.

[00:13:50] Speaker 00:
Thank you, Your Honor.

[00:13:51] Speaker 00:
May it please the court.

[00:13:52] Speaker 00:
This is Devin Padmanabhan for Phoenix and Mark Fisher.

[00:13:56] Speaker 00:
Your Honor, this court should dismiss this appeal for lack of jurisdiction and transfer this appeal to the Fifth Circuit.

[00:14:05] Speaker 00:
And the primary reason is that this appeal does not present a case in which patent law is a necessary element of the claims.

[00:14:12] Speaker 00:
I think, as Mr. Baruti admitted, Chandler's claims do not arise under the Patent Act.

[00:14:17] Speaker 02:
Can I just interrupt you?

[00:14:21] Speaker 02:
I have a couple of questions here.

[00:14:22] Speaker 02:
First, isn't this just going to be a waste of time?

[00:14:25] Speaker 02:
Because it seems pretty clear from the Fifth Circuit's decision that they don't think Gun B. Minton applies to Walker process claims at all.

[00:14:34] Speaker 02:
Is that your reading of the Fifth Circuit decision in Zytronic?

[00:14:38] Speaker 00:
Your Honor, it isn't, and there's only one part of the Fifth Circuit decision that gives me a reason to say that, is they went out of their way, because in your initial decision in Zytronic, you cite that Eleventh Circuit case, the MDS case, Your Honor, and make the point that that's a case in which

[00:14:56] Speaker 00:
that 11th Circuit decided to keep the case, even though there was an underlying patent infringement issue.

[00:15:01] Speaker 00:
And when the 5th Circuit looked at it, they kind of stopped on that, and they went out of their way to make clear the reason they didn't think that mattered to their decision was because the patent in Zytonics was live.

[00:15:14] Speaker 00:
And so they've also kind of put themselves in a box where they've identified one where they've said, hey, if it wasn't live, I don't think we can distinguish.

[00:15:23] Speaker 00:
And probably under Christensen, they would have had to keep it.

[00:15:26] Speaker 00:
And so I think the Fifth Circuit's own opinion makes clear why this particular issue should be decided by the Fifth Circuit and not by the Federal Circuit.

[00:15:39] Speaker 00:
And that's my, that's my best answer for why.

[00:15:42] Speaker 00:
Otherwise, I think there, you know, I, I wasn't trying when we brought this issue up, we weren't trying to make it into another ping pong match, but I think the ways I tried to read between the three cases, it makes sense.

[00:15:54] Speaker 00:
And then when you, when you took it back, as much as this court agreed, disagreed with the fifth circuit at the very end where you say, Hey, we really want to make it clear that.

[00:16:04] Speaker 00:
This is not going to be based on whether the patent is live or dead.

[00:16:10] Speaker 00:
I think what you were saying, and I'm speaking for you, Your Honor, and I appreciate you were on the case.

[00:16:17] Speaker 00:
But what you were saying was, whether it's live or dead, what you're looking for is, is there a substantive patent law issue there?

[00:16:25] Speaker 00:
And in a dead one, especially in a case like ours, where all of the issues you've already decided in energy heating, you've already determined the inequitable conduct issues, and you've decided that there was inequitable conduct, there are no patent law issues left.

[00:16:42] Speaker 00:
And it goes clearly to kind of where I think you want the jurisprudence to go, which is to focus everybody in on what Gundy Minton said,

[00:16:51] Speaker 00:
And what you want people to do, which is have you exercised jurisdiction when there is a substantive patent law issue at stake?

[00:17:00] Speaker 00:
This is a case where it's absolutely clear, because you've already decided the patent law issues, that there are no patent law issues.

[00:17:07] Speaker 00:
And it's exactly the same position where the Fifth Circuit said, you know, the only reason we're distinguishing your analysis of MDS from the Eleventh Circuit is it's a live patent, not a dead patent.

[00:17:19] Speaker 02:
Counsel, let me ask you just one more question.

[00:17:21] Speaker 02:
I think we're bound by Cytonics on this, so we can't get around it.

[00:17:24] Speaker 02:
But putting that aside, do you think there's a way to read Gunby Minton as not applicable to 1331 at all and just regulating the state versus federal sphere and not the circuit to circuit sphere?

[00:17:44] Speaker 00:
Your Honor, I mean, based on the facts alone, you could, you know, there's a way to do it and argue that.

[00:17:51] Speaker 00:
But I think the more persuasive approach is looking at the language and it's something you struggled with in the opinion is how you take statutory language that's so close and try to read them differently.

[00:18:03] Speaker 00:
And I think that's the better view of this.

[00:18:05] Speaker 00:
And that's why really tying it to the statutory basis for this court's jurisdiction and reading Gunby Mitten in that context is the better approach.

[00:18:20] Speaker 04:
This is Judge Chen.

[00:18:22] Speaker 04:
Can you remind me again the basis of the findings of inequitable conduct for the underlying patent here?

[00:18:30] Speaker 00:
Yes, Your Honor.

[00:18:31] Speaker 00:
So in the underlying patent, in the district court, there was an argument over whether the experimental use evidence over that two-year period was the basis for not having to disclose.

[00:18:46] Speaker 00:
The district court did two things that this court considered.

[00:18:49] Speaker 00:
the district court excluded the testimony of the patent lawyer whom the inventor relied upon.

[00:18:56] Speaker 00:
And the second piece was the experimental use evidence.

[00:18:58] Speaker 00:
And this court said it was fine that the district court was within the district court's discretion to exclude the attorney's testimony.

[00:19:08] Speaker 04:
Let me cut to the chase since we're running out of time.

[00:19:10] Speaker 04:
The patent was ruled unenforceable for inequitable conduct because there was a finding that the inventor here knowingly

[00:19:19] Speaker 04:
procured the patent when the invention had been in public use for more than a year.

[00:19:25] Speaker 04:
And the experimental use defense theory was rejected.

[00:19:29] Speaker 00:
Is that fair to summarize?

[00:19:31] Speaker 00:
That is very fair.

[00:19:32] Speaker 04:
Okay.

[00:19:33] Speaker 04:
And so now that patent is gone and yet there have been continuation patents that have issued here?

[00:19:39] Speaker 04:
Is that right?

[00:19:40] Speaker 04:
Off of the same specification?

[00:19:42] Speaker 04:
Off the same specification, but in that... How in the world are those legitimate patents?

[00:19:49] Speaker 00:
Well, so Your Honor, there's a footnote in your opinion where you even looked at one of the continuation patents that were issued and pointed out that the claims in that particular patent actually implicated the experiments being used in the experimental use defense, but that the claims in the 993 did not have the limitations necessary to implicate the experimental use.

[00:20:14] Speaker 00:
So the reason for that is really based on a sentence from your opinion where you showed the difference in line where experiments can apply and where it wouldn't apply.

[00:20:25] Speaker 00:
And so all the continuations they're doing really is following this court's direction on that line when it analyzed experimental use.

[00:20:37] Speaker 00:
Your Honor, unless there's anything else, the only other case that I would point to, and I agree with you, Zeytronix is binding on this issue, is the Westlake case that we cite, also a very similar situation, both sham litigation claims and Walker process claims, the Ninth Circuit decided it would keep it because the underlying patent there was invalid and so there were no substantive patent law questions.

[00:21:01] Speaker 00:
And with that, Your Honor, I'm not gonna address the

[00:21:05] Speaker 00:
because I don't think you're interested in the merits right now.

[00:21:08] Speaker 00:
Unless you have any questions for me, I can yield the rest of my time.

[00:21:13] Speaker 01:
And further, thank you, Council.

[00:21:17] Speaker 01:
Mr. Broody, I'm going to give you your full four minutes since we've been after you.

[00:21:25] Speaker 03:
Thank you, Your Honor.

[00:21:27] Speaker 03:
I would just confirm that Enzytronic

[00:21:29] Speaker 03:
This court held, quote, while it is not implausible to reach this conclusion, we reject the theory that our jurisdiction turns on whether a patent can still be asserted.

[00:21:41] Speaker 03:
So that is in Zitronix.

[00:21:45] Speaker 03:
I would also make the point that it was this court that found in energy ceding that there was bad faith.

[00:21:52] Speaker 03:
as well as inequitable conduct.

[00:21:55] Speaker 03:
And these are substantial issues of patent law.

[00:21:58] Speaker 03:
And how they get applied in this case is going to inform Walker process jurisprudence going forward.

[00:22:08] Speaker 03:
And what happens to patent plainness in these multiple LLCs which are proliferating

[00:22:20] Speaker 03:
is a matter of substantive patent law because what you're creating is basically a weapon for the LLC that's judgment proof at the bottom and the guys making the money at the top can just wield it without, if they're not held liable, wield it without consequence and that's why you need the single enterprise theory and having many circuits

[00:22:48] Speaker 03:
differences on what is an appropriate single enterprise theory is not an appropriate, is not the best way to police patent law for those kind of situations.

[00:23:07] Speaker 03:
And I'm looking at the Westlake case cited by a post council, and it does reference that the plaintiffs under Christensen

[00:23:17] Speaker 03:
Plaintiff's rights relief necessarily depends on a resolution of a substantial question of federal patent law.

[00:23:24] Speaker 03:
And there are substantial questions of patent law, especially related to the fraudulent concealment and the running of the statute of limitations.

[00:23:38] Speaker 03:
And what is experimental use and what are the facts that support experimental use, among others.

[00:23:45] Speaker 01:
Anything further, counsel?

[00:23:47] Speaker 01:
uh... no your honor the matter will stand submitted thank you