[00:00:00] Speaker 01:
The United States Court of Appeals for the Federal Circuit is now open and in session.

[00:00:05] Speaker 01:
God save the United States and this honorable court.

[00:00:10] Speaker 05:
Our first case on the docket today is 20-2038, energy heating versus heat on the fly.

[00:00:18] Speaker 05:
Council, please proceed.

[00:00:20] Speaker 07:
Thank you, Your Honor.

[00:00:21] Speaker 07:
May it please the court.

[00:00:24] Speaker 07:
The undisputed finding of the district court is that Heat on the Fly reasonably disputed facts with its own evidence, and Heat on the Fly provided meritorious argument in defending against a claim of inequitable conduct.

[00:00:38] Speaker 07:
This finding is inconsistent with fee shifting, especially in light of the fact that the trial judge determined that Heat on the Fly did not engage in litigation misconduct, which has also been left undisturbed on remand.

[00:00:52] Speaker 07:
In this situation,

[00:00:53] Speaker 07:
fee-shifting is an abuse of discretion.

[00:00:56] Speaker 07:
Under the Octane Fitness case, this is the precise type of case that is not exceptional, because it neither stands out on the strength of the party's litigation position, nor was the manner in which it was litigated unreasonable.

[00:01:09] Speaker 07:
Now, what did change?

[00:01:11] Speaker 07:
The district court on remand put significant weight on the jury's bad faith finding on a claim that was unrelated to inequitable conduct.

[00:01:20] Speaker 07:
This finding was related to tortious interference, and in particular to the conduct of a salesperson and its statements, and it applied to the North Dakota Sales Act.

[00:01:31] Speaker 07:
More importantly, the original trial judge knew about this finding and still made clear that heat on the fly's case was meritorious.

[00:01:42] Speaker 05:
Is it your view that in order for there to be attorney's fees or for a case to be declared exceptional, there must be litigation misconduct?

[00:01:53] Speaker 07:
Your Honor, I think the best I can do on that is to say, I think the cases say yes because Octane Fitness looked at both and your order, your opinion in electronics commission

[00:02:06] Speaker 07:
made it suggested that it was an abuse of discretion for the district court not to address litigation misconduct.

[00:02:14] Speaker 07:
I think in that situation and given this record, there would need to be at least a significant discussion of litigation misconduct and it would have to, you know,

[00:02:25] Speaker 07:
be tied to the strength of the case to make that decision.

[00:02:29] Speaker 07:
But the other thing, Your Honor, is it also is consistent with... Oh, sorry.

[00:02:34] Speaker 07:
I apologize.

[00:02:35] Speaker 07:
Go ahead.

[00:02:35] Speaker 04:
Ms.

[00:02:35] Speaker 04:
Judge Proce, on that point, electronic communications said that it's a use of discretion for failure to consider the manner in which a party litigated a case.

[00:02:47] Speaker 04:
And didn't the district court here address the manner in which the case was litigated?

[00:02:53] Speaker 04:
In other words, he said that it was unreasonable for you to litigate this case because you should have known that the patent was invalid.

[00:03:01] Speaker 04:
So I'm having a hard time seeing.

[00:03:03] Speaker 04:
One, Chief Judge Moore is correct that I don't think there's any case that says that you have to find litigation misconduct in order to award fees.

[00:03:12] Speaker 04:
But I'm having a hard time understanding what you think the district court should have done that he didn't do.

[00:03:17] Speaker 07:
So Your Honor, in this case specifically, so let me address the first point.

[00:03:22] Speaker 07:
When the court looked at the bad faith ruling, that is a claim that is not under the Patent Act.

[00:03:29] Speaker 07:
And more importantly, when we talk about litigation misconduct, it's actually about the way it was litigated.

[00:03:35] Speaker 07:
That would go to the merits of the case if the court really believed that the bad faith meant we didn't have a strong case.

[00:03:42] Speaker 07:
But that's specifically what the trial judge had initially found that we had a meritorious defense, and it's why you sent it back, was to say, can you explain that?

[00:03:51] Speaker 07:
And the failure to explain that was the abuse of discretion, but... Counsel, this is Debra Prost again.

[00:03:56] Speaker 04:
I wasn't on the original panel, as my colleagues were, but I'm not sure that's accurate.

[00:04:01] Speaker 04:
The panel vacated the decision, right?

[00:04:05] Speaker 04:
Yes, Your Honor.

[00:04:06] Speaker 04:
There is no discussion on the books.

[00:04:07] Speaker 04:
If they didn't keep the decision in place,

[00:04:10] Speaker 04:
and tell the district court to do something in addition, right?

[00:04:13] Speaker 07:
Yes, Your Honor, the panel did vacate, but what the district court said and the magistrate said in her order, at appendix page 17 specifically, is that the court was going to reconsider those findings.

[00:04:27] Speaker 07:
And as you can see from the order, the order is completely silent on those very specific findings, the very reason this court sent it back, and the very reason this court even said, even if meritorious means plausible,

[00:04:42] Speaker 07:
then it still doesn't square with the tariff census requirement of the single most reasonable inference.

[00:04:47] Speaker 07:
And we need to understand that before we can address whether it was an abuse of discretion to deny fees.

[00:04:53] Speaker 07:
By specifically saying she's going to reconsider those findings, but yet making no statement, I think it's fair to say she left that record undisturbed.

[00:05:03] Speaker 05:
And that's why... Councilman Judge Moore again.

[00:05:05] Speaker 05:
Let me get this straight.

[00:05:07] Speaker 05:
We vacated a decision that said there were meritorious findings.

[00:05:10] Speaker 05:
And you think because of her failure to address the issue on remand, we should assume that she adopted the findings that we vacated?

[00:05:21] Speaker 07:
Your Honor, I think she has to specifically address it, because it's the very reason you sent it back was that statement.

[00:05:31] Speaker 07:
And you wanted it to be.

[00:05:33] Speaker 03:
Judge Stoll, what if the reason we sent it back was because there was inconsistent statements

[00:05:39] Speaker 03:
in the opinion and so that opinion was vacated and there were inconsistent statements and now there is an opinion where there are no such inconsistent statements and a determination of fees has been made.

[00:05:52] Speaker 03:
Shouldn't we just be looking at that determination anew and looking at that opinion anew given that it doesn't any longer have inconsistent statements in it?

[00:06:01] Speaker 07:
And Your Honor, you certainly could do that.

[00:06:06] Speaker 07:
The reason I was saying that she has not, that District Court did not address it on remand is even if you vacated it, you vacated it for a very specific sentence.

[00:06:15] Speaker 07:
And the fact that the District Court failed to even address that sentence by going to, the only way they addressed it was by going to the bad faith ruling, which is under the North Dakota Sales Act, not the specific tort that was actually addressed as iniquitable conduct.

[00:06:30] Speaker 07:
which is deceit, which the jury found there was no deceit.

[00:06:36] Speaker 07:
And again, that is a fundamental failure in the factual record for the district court.

[00:06:41] Speaker 07:
So even if you were to view the order on remand, it would fall woefully short because what the district court is relying on is simply not something for the Patent Act.

[00:06:53] Speaker 07:
In fact, the energy heating lost on it

[00:06:57] Speaker 07:
of fees claimed under the North Dakota Sales Act.

[00:07:00] Speaker 07:
What we're here on is a Patent Act violation, and the only tort that anybody should look at for the inequitable conduct is really the deceit claim, and the jury found for us on that thing there was no deceit.

[00:07:12] Speaker 07:
At minimum, that shows the meritoriousness of our defense, and it's why under your law that says just a finding of inequitable conduct doesn't mandate fees, that this case should not be one where fees should be shifted.

[00:07:28] Speaker 07:
Because all the district court is basically doing, if you take the view that it's just on remand, we look at that opinion on its own, the district court looks at a bad face finding, which again, not related to inequitable conduct when there's a direct tort that is related to inequitable conduct.

[00:07:45] Speaker 07:
They look at just the fact that we lost on inequitable conduct and then some case law analysis.

[00:07:50] Speaker 07:
There's no discussion of litigation misconduct at all

[00:07:54] Speaker 05:
And even though... Well, if we disagree with you that litigation misconduct is required when there is an affirmed determination that you intended to deceive the Patent Office, therefore obtain the patent through intentional deception.

[00:08:11] Speaker 05:
And that's... Your Honor, you're breaking up.

[00:08:16] Speaker 07:
I'm not able to hear you.

[00:08:17] Speaker 07:
I'm sorry.

[00:08:18] Speaker 07:
I missed the last part of your question.

[00:08:21] Speaker 05:
Why would we need to look at litigation misconduct

[00:08:25] Speaker 05:
when we previously affirmed the determination that you intended to deceive the patent office.

[00:08:33] Speaker 05:
That was a determination made below and affirmed on appeal.

[00:08:37] Speaker 05:
You intended to deceive the office and therefore your patent is unenforceable and you attempted to enforce it in this litigation.

[00:08:43] Speaker 05:
Why do we need to look beyond that?

[00:08:45] Speaker 07:
The reason you do, Your Honor, is Octane Fitness says you look at two things, both the strength of the case and the manner in which it was litigated.

[00:08:54] Speaker 07:
But separately, I believe that's true because of the basic rule that the court has said repeatedly, which is simply losing on inequitable conduct does not mandate fees.

[00:09:05] Speaker 07:
So just the fact that we found inequitable conduct, because there must be a set of cases where inequitable conduct is asserted, but it's a fair fight.

[00:09:13] Speaker 07:
There's non-trivialist arguments on that claim.

[00:09:16] Speaker 03:
Counsel, this is Judge Stolt.

[00:09:18] Speaker 03:
Just because we have cases that say inequitable conduct does not mandate an award of fees, that doesn't mean that there can't be an award of fees based on the inequitable conduct and other factors.

[00:09:32] Speaker 03:
Isn't that right?

[00:09:33] Speaker 07:
That is correct, Your Honor.

[00:09:36] Speaker 07:
But in this case... Oh, sorry.

[00:09:38] Speaker 07:
I apologize.

[00:09:38] Speaker 07:
I thought you were done.

[00:09:40] Speaker 07:
I was just saying review for abuse of discretion, right?

[00:09:44] Speaker 07:
Yes, you do review it for abuse of discretion, but in this case, there's several abuses of discretion, one being that the fact that the district court relies on a bad fate finding by the jury that is unrelated to the patent claim, whereas there's a direct tort that relates to the inequitable conduct is one abuse of discretion.

[00:10:04] Speaker 07:
separately the district court by not answering the federal circuit questions directly.

[00:10:09] Speaker 07:
In other words, the reason you sent it down, the reason you said the reason, the court said the reason it needed that information was to be able to assess the abuse of discretion and the denial of fees.

[00:10:18] Speaker 07:
The district court simply fails to address the prior judge's statement, the trial judge's statement on the fact that he found heat on the fly had produced evidence that was reasonable and meritorious argument relating to inequitable conduct.

[00:10:33] Speaker 07:
The district court's failure to simply address that is also an abuse of discretion, especially given that there was a deceit claim where we had won.

[00:10:41] Speaker 07:
And that goes to showing at least the plausibility of heat on the fly's defense.

[00:10:46] Speaker 05:
And it's exactly... Counsel, what do you mean the deceit claim where you won?

[00:10:49] Speaker 05:
You were found by clear and convincing evidence to have intended to deceive the PTO.

[00:10:57] Speaker 05:
We affirmed that termination.

[00:11:01] Speaker 05:
So how do you conclude there was some sort of deceit claim that you won?

[00:11:05] Speaker 07:
So, Your Honor, let me explain that in this way.

[00:11:08] Speaker 07:
So in the trial court, the judge explicitly tied the tort of deceit to inequitable conduct, and the jury found no deceit.

[00:11:19] Speaker 07:
We argued to the judge that that was evidence that showed that there could be, there's not a single most reasonable inference.

[00:11:26] Speaker 07:
We lost.

[00:11:27] Speaker 07:
We didn't persuade the judge of that.

[00:11:28] Speaker 07:
But for this question, the question becomes, is it a plausible meritorious argument?

[00:11:35] Speaker 07:
And the judge found it was.

[00:11:37] Speaker 07:
And in those situations, there should not be fee shifting.

[00:11:40] Speaker 05:
No, counsel.

[00:11:41] Speaker 05:
The judge did not find it was.

[00:11:43] Speaker 05:
The judge on the case on appeal to us did not find that was a meritorious argument.

[00:11:49] Speaker 07:
I'm sorry, it would explain why the judge felt it was meritorious.

[00:11:52] Speaker 07:
So the judge said there were meritorious arguments.

[00:11:55] Speaker 07:
That's one of the factors that we had argued, and maybe that is one of the basis for why it's important.

[00:12:01] Speaker 05:
Counsel again, the judge on appeal to us did not, on this case, did not find it meritorious.

[00:12:08] Speaker 07:
The judge on this case did not address whether it was meritorious.

[00:12:12] Speaker 07:
The judge on this case on remand only looked at the bad faith ruling, did not even address the deceit ruling.

[00:12:18] Speaker 07:
Because the bad faith ruling really has, it's not tied directly to inequitable conduct, it's tied to sales practices of a particular salesperson.

[00:12:28] Speaker 07:
Whereas the deceit claim is directly tied by the district court to inequitable conduct, the very issue that we're talking to you about today.

[00:12:41] Speaker 07:
Your Honor, the other thing that I would, the only other thing I would add for evidence that there was merit to this is we've talked about the continuation applications and you can see that the Patent Office has issued several continuations after reviewing the exact same pre-critical date uses that form the basis of the inequitable conduct claim.

[00:13:04] Speaker 07:
And the reason this goes to the meritoriousness...

[00:13:07] Speaker 04:
In granting the continuation, the Patent Office never actually said or found the pre-critical date used to be experimental, did it?

[00:13:19] Speaker 04:
Yeah, Your Honor, it had to have, otherwise it would form a 102-B.

[00:13:23] Speaker 07:
My question, they didn't say anything about it, right?

[00:13:28] Speaker 07:
They did not, but by allowing it, they're saying it's not prior art.

[00:13:32] Speaker 07:
Otherwise, they would not have allowed the claim.

[00:13:38] Speaker 07:
And so it shows a different decision maker viewing the same evidence differently, which again, I'm not arguing for anything other than it shows the meritoriousness of the argument.

[00:13:47] Speaker 07:
Yeah.

[00:13:47] Speaker 05:
But council, council, we're reviewing the district court's finding that this case was exceptional as a question of fact for clear error, correct?

[00:13:58] Speaker 07:
For abuse of discretion.

[00:13:59] Speaker 07:
Yes, your honor.

[00:14:00] Speaker 05:
Which for a fact issue is clear error, correct?

[00:14:04] Speaker 07:
Yes, your honor.

[00:14:05] Speaker 05:
So if we're reviewing his findings for clear error, you think that I should say he clearly erred because the Patent Office allowed a continuation without speaking to the question of credit?

[00:14:17] Speaker 07:
I think the lead for clear error is really that he relied on the bad faith ruling.

[00:14:22] Speaker 07:
But further support for it is that there are other clear facts that show that the arguments had merit, and it's the type of case that should not be one where fee shifting occurs.

[00:14:44] Speaker 07:
Your Honor, if you have nothing else, I have no other comments.

[00:14:48] Speaker 05:
Okay, great.

[00:14:48] Speaker 05:
Let's hear from opposing counsel.

[00:14:52] Speaker 05:
I guess Ms.

[00:14:53] Speaker 05:
Lee, are you first?

[00:14:55] Speaker 02:
Yes, Your Honor.

[00:14:56] Speaker 02:
May it please the Court, my name is Sean Lee and I represent the Appellee's Energy Heating in Rocky Mountain.

[00:15:02] Speaker 02:
The District Court's decision was clearly not an abuse of discretion and should be affirmed.

[00:15:07] Speaker 02:
Nothing in this court's remand of this case in the last appeal required the district court to either double down on its vacated decision or defend the indefensible.

[00:15:17] Speaker 02:
Instead, the district court made every effort to get it right on remand.

[00:15:21] Speaker 02:
It undertook a robust and rigorous process to reconsider the issue.

[00:15:25] Speaker 02:
The presiding judge.

[00:15:26] Speaker 04:
Council, excuse me.

[00:15:27] Speaker 04:
This is Judge Prout.

[00:15:29] Speaker 04:
Shouldn't the jury's finding of no tort deceit

[00:15:33] Speaker 04:
play any role when we're discussing attorneys whether a case is exceptional?

[00:15:38] Speaker 02:
I'm happy to address that, Your Honor.

[00:15:40] Speaker 02:
There are a couple of arguments to that.

[00:15:41] Speaker 02:
First, Heat on the Fly waived it because they didn't raise it in their argument before the magistrate judge's report and recommendation issued.

[00:15:50] Speaker 02:
And so as a procedural matter governed by the Eighth Circuit precedent, this argument wasn't raised before the magistrate means that it was waived and can't be considered by the district court or on appeal.

[00:16:00] Speaker 02:
But more importantly,

[00:16:02] Speaker 02:
Inequitable conduct was for the court to decide, not the jury.

[00:16:06] Speaker 02:
Inequitable conduct was found and has been affirmed on appeal.

[00:16:09] Speaker 02:
Heat on the fly can't use the jury's decision on a tort claim to second guess the uncontestable fact that Heat on the fly obtained the patent through fraud.

[00:16:18] Speaker 02:
The jury's decision on the tort of deceit is irrelevant and has no weight to counter the firm's finding as inequitable conduct.

[00:16:24] Speaker 02:
Furthermore, the jury's finding is inconclusive at best.

[00:16:28] Speaker 02:
What counsel for Heat on the Fly neglected to mention is that the tort of deceit was only one of the potential predicate acts that the jury could find to supply one of the elements to the tortious interference claim.

[00:16:42] Speaker 02:
If the court looks at the tortious interference instructions, it requires that Heat on the Fly has committed a tort or a statutory violation.

[00:16:51] Speaker 02:
The jury did find a statutory violation,

[00:16:53] Speaker 02:
The fact that they didn't reach the other torts in finding against Pete on the Slide doesn't necessarily mean that Pete on the Slide didn't commit the tort.

[00:17:04] Speaker 02:
It could be that the jury ultimately found it was satisfied with finding the One Predicate Act needed.

[00:17:12] Speaker 02:
And then I'd also say that the jury's finding is irrelevant because district court isn't bound by the jury's decision.

[00:17:18] Speaker 02:
As this court found in American CalCAR,

[00:17:21] Speaker 02:
And inequitable conduct is inequitable in nature, and thus the district court was in no way bound by the jury's finding of no inequitable conduct in that case.

[00:17:30] Speaker 02:
And in that case, the jury had issued an advisory opinion on inequitable conduct, saying that the penalty hadn't committed inequitable conduct.

[00:17:39] Speaker 02:
But this court still affirmed the district court's finding of inequitable conduct, despite the jury's advisory verdict.

[00:17:45] Speaker 02:
And here in our case, there's not even an advisory opinion on inequitable conduct.

[00:17:51] Speaker 02:
no tort, that he'd on the fly hadn't committed, the tort of deceit is just so far removed that it's entitled to no weight, especially to undercut an affirmed finding of inequitable conduct.

[00:18:03] Speaker 04:
Counsel, this is Judge Crouse again.

[00:18:05] Speaker 04:
Could I ask you, am I correct that you're making a request for attorney's fees for this appeal?

[00:18:11] Speaker 04:
Yes.

[00:18:13] Speaker 04:
Isn't that a little premature?

[00:18:15] Speaker 04:
I mean, don't our rules, I don't have the rules in front of me, but I thought the rules were, the clock starts running after we decide a case for submission of attorney's fees requests, not before the case has ever been decided.

[00:18:29] Speaker 02:
Am I missing something?

[00:18:30] Speaker 02:
Your Honor, I've reviewed that rule and my impression of it was that that particular rule, I think it's 47.7,

[00:18:39] Speaker 02:
It seemed to apply if we were asking for the Court of Appeals to award and also determine the amount of fees to award on appeal.

[00:18:47] Speaker 02:
The relief that we're seeking here is a little different.

[00:18:49] Speaker 02:
We're asking the court to award fees, but then remand for the district court to determine the reasonable amount of fees.

[00:18:56] Speaker 02:
Of course, if the panel decides that the better procedure to follow here is 47.7, then we're happy to follow that procedure after the court issues its opinion.

[00:19:07] Speaker 02:
To quote this court in Brassler, exceptional cases are normally those involving bad faith litigation or those involving inequitable conduct.

[00:19:16] Speaker 02:
Here, the district court provided a surplus of reasons for its decision.

[00:19:19] Speaker 02:
Given the affirmed findings of both inequitable conduct and bad faith assertion of an obviously invalid patent, the district court properly concluded that this case stands out in the words of Octane Fitness.

[00:19:32] Speaker 02:
I'll focus first on the inequitable conduct finding and then turn to the bad faith.

[00:19:36] Speaker 02:
finding and finally to the totality of circumstances.

[00:19:40] Speaker 02:
As the court already recognized, and that's a little context.

[00:19:44] Speaker 05:
We kind of have all this pretty well in hand if you were listening to the first half of the argument.

[00:19:48] Speaker 05:
Why don't we just focus again on your request for fees?

[00:19:52] Speaker 05:
Are you suggesting under Section 285 that we can award fees for the appeal as part of the district court's award of fees in the case?

[00:20:04] Speaker 05:
Or are you suggesting that the appeal was either frivolous as filed or frivolous as argued and therefore entitled to a separate sort of fee award under a separate provision, namely our appellate fee provision?

[00:20:18] Speaker 02:
What we're asking for the court to award fees on is based on the fact that the appeal itself can be considered exceptional under 285.

[00:20:26] Speaker 02:
And as we laid out in our brief,

[00:20:29] Speaker 02:
There's actually some ambiguity in the case law as to whether or not the appeal itself needs to be found exceptional, but even if that standard applied, we believe that the appeal itself is exceptional for the reasons explained, namely that a lot of the arguments that Heat on the Fly has reiterated have either been rejected by controlling precedent, like American CalCAR, or the Nielsen case on their sort of quote-unquote benign and equitable conduct argument.

[00:20:58] Speaker 04:
Let me ask you, I thought you said earlier that you want us to say the award of fees and then for the district court to make the determination of the appropriate amount.

[00:21:09] Speaker 04:
I mean, so the district court's supposed to evaluate the reasonableness of the fees that went into the appeal?

[00:21:16] Speaker 04:
Is that often done as far as you know, or wouldn't the appellate court be in a position to assess the reasonableness of fees with respect to a proceeding before it?

[00:21:27] Speaker 02:
In fact, the district court awarded appellate fees after finding this case exceptional.

[00:21:33] Speaker 02:
In determining the reasonable amount of fees, the district court's award included appellate fees for the last appeal.

[00:21:38] Speaker 02:
So it seems appropriate for the district court to continue with that task for the second appeal.

[00:21:44] Speaker 02:
And in the federal circuit's decision in Selenese Polymer, the court has recognized that the powered award attorney fees for appellate work is not the exclusive domain of an appellate court and can be

[00:21:55] Speaker 02:
can be remanded to the district court.

[00:22:00] Speaker 05:
I'd like to... Hold on.

[00:22:03] Speaker 05:
I'm just a little confused by this.

[00:22:05] Speaker 05:
Section 285 says the court in exceptional cases may award reasonable attorney fees to the prevailing party.

[00:22:12] Speaker 05:
That has always in my mind been something tied to district court litigation and the district court's determination.

[00:22:21] Speaker 05:
Number one, our case law says

[00:22:23] Speaker 05:
The determination of whether something is exceptional or not is a question of fact.

[00:22:27] Speaker 05:
Appellate courts seldom render fact findings.

[00:22:30] Speaker 05:
If I were to follow your logic, I think your logic would allow me to award fees under 285, even when the district court did not at the district court level, if I somehow found the appeal itself exceptional.

[00:22:44] Speaker 05:
Is that right?

[00:22:45] Speaker 02:
That's right, Your Honor.

[00:22:50] Speaker 02:
There have been other cases at the district court level that have awarded fees for an exceptional case, and I'll refer the court to the dip and dots case that we cited on page 30 of our brief.

[00:23:03] Speaker 02:
And that court said that the Supreme Court's decision in June demonstrates that the prevailing party does not need to make a separate showing that the appeal itself is exceptional, but even if it did, it would award fees for the appeal.

[00:23:18] Speaker 05:
I'm sorry, but it seems very strange to me because, again, you're citing three cases where the district court found a case exceptional and you want the follow-on appellate-related fees awarded.

[00:23:29] Speaker 05:
However, your argument with regard to the statute itself, Section 285, seems to be much broader than even that.

[00:23:37] Speaker 05:
Unless I'm misunderstanding your argument, your argument is that an appellate court could award fees under Section 285 in the first instance.

[00:23:44] Speaker 05:
Am I right about that being your argument?

[00:23:47] Speaker 02:
If the underlying case was found to be exceptional in the district court, the appellate court can continue to find that the appeal, especially here when the district court has said that heat on the fly has persisted with objectively and subjectively baseless positions in trying to litigate infringement and defend the invalidity

[00:24:06] Speaker 02:
of the claims or of the patent, for them to continue to do so on appeal, here announcing basically a collateral, an improper, a collateral attack on the inequitable conduct findings and the rejected claim that those prior sales were experimental in nature, is indeed exceptional.

[00:24:24] Speaker 02:
And so it basically, Heat on the Fly has continued to press those objectively and subjectively baseless litigation positions through this appeal.

[00:24:33] Speaker 05:
But we have a number of rules and statutes that expressly govern circumstances in which appellate courts can award attorney's fees in the first instance.

[00:24:43] Speaker 05:
You know, like our FRAP rule that says when a case is frivolous, frivolous as filed or frivolous as argued.

[00:24:50] Speaker 05:
If 285 does everything you're saying it does, then

[00:24:55] Speaker 05:
it would seem quite odd indeed that we would have this separate rule of civil procedure that required a showing of frivolity.

[00:25:03] Speaker 05:
Because if under 285 an appellate court could award fees anytime an appeal is exceptional, then what would be the point of FRAP rule on frivolous appeals?

[00:25:14] Speaker 05:
What would be the point of that?

[00:25:16] Speaker 02:
I think my position is a bit more narrow than that, Your Honor.

[00:25:18] Speaker 02:
My position is that

[00:25:20] Speaker 02:
When a case has been found to be exceptional at the district court level and the patentee continues on appeal to press those same positions that have been found to be objectively and subjectively baseless, that the appellate court has the authority under 285 to award fees for the patentee for continuing to make this case exceptional by appealing it.

[00:25:41] Speaker 02:
And I'm not so sure that there's that much of a difference between the frivolity standard and the subjectively and objectively baseless

[00:25:50] Speaker 02:
litigation position that has been found at the district court.

[00:25:54] Speaker 02:
And so, to the extent that the court agrees that those positions have been continued to be persisted unreasonably on appeal, Section 285, I would argue, supports an award of appellate fees.

[00:26:05] Speaker 02:
And I want to quickly address opposing counsel's arguments that the badge-based finding had nothing to do with the patent claim.

[00:26:12] Speaker 02:
I would refer the court to the jury instructions

[00:26:14] Speaker 02:
on pages 288 to 296 of the appendix that make it clear that the jury's bad faith instruction was specific to findings that... Just to be clear, your bell went off a while ago.

[00:26:25] Speaker 05:
You're using Mr. Coleman.

[00:26:28] Speaker 05:
But the time is the time.

[00:26:29] Speaker 02:
I understand, Your Honor.

[00:26:31] Speaker 02:
And I'll wrap up really briefly.

[00:26:34] Speaker 02:
So taking the affirmed findings and inequable conduct and bad faith together, this case was exceptional.

[00:26:39] Speaker 02:
The totality of circumstances more than supports the district court's conclusion that this case stands out

[00:26:44] Speaker 02:
And any other outcome would wrongly suggest that fraud and bad faith are common and expected in patent cases.

[00:26:51] Speaker 02:
Here, Mike has had to pay any attorney's fees, had heat on the fly, committed inequitable conduct, and threatened them.

[00:26:58] Speaker 02:
And it needs to be both objectively and subjectively invalid and unenforceably affirming the district court's decision serves the deterrent and compensatory purposes of section 285.

[00:27:09] Speaker 02:
And with that, I'll rest on the brief.

[00:27:10] Speaker 02:
Thank you.

[00:27:12] Speaker 05:
Mr. Coleman, Mike, will you please let us know how much time Mr. Coleman has remaining of the five minutes?

[00:27:18] Speaker 05:
Because Mr. Lee used a bit of it.

[00:27:19] Speaker 01:
Sure.

[00:27:20] Speaker 01:
Mr. Coleman has just under three minutes remaining.

[00:27:23] Speaker 01:
Please proceed, Mr. Coleman.

[00:27:25] Speaker 00:
Thank you, Your Honors.

[00:27:26] Speaker 00:
May it please the court?

[00:27:28] Speaker 00:
Shane Coleman on behalf of the Marathon entities.

[00:27:31] Speaker 00:
And I just want to reiterate, I guess, from a big picture perspective here.

[00:27:35] Speaker 00:
This is a simple question of, is this an ordinary sort of a patent case or is this one that stands out?

[00:27:41] Speaker 00:
Or more precisely, is this a case where the district court clearly erred by concluding that this is not an ordinary case?

[00:27:49] Speaker 00:
And I would submit that there's ample evidence in front of the district court.

[00:27:53] Speaker 00:
provided to the district court, that is, to show that this is not an ordinary case.

[00:27:57] Speaker 00:
It does stand out.

[00:27:58] Speaker 00:
An ordinary patent case does not involve dozens and dozens of pre-critical date sales generating revenue of millions of dollars.

[00:28:07] Speaker 05:
Coleman, does your client likewise make the argument that Ms.

[00:28:10] Speaker 05:
Lee was making about attorney's fees related to the appeal?

[00:28:15] Speaker 00:
Your Honor, we're indifferent either way.

[00:28:17] Speaker 00:
We don't have anything to add in that regard.

[00:28:21] Speaker 00:
Um, our position and our emphasis at this point is, is, uh, affirming what the district court has done, uh, already.

[00:28:30] Speaker 04:
Um, and, and I do your response to chief judge more.

[00:28:34] Speaker 04:
Did you, did you ask for attorney's fees out for this appeal in your brief or not?

[00:28:39] Speaker 00:
We have one sentence saying we should be awarded a fees on appeal.

[00:28:42] Speaker 00:
If the court adopts the arguments from, uh, energy heating, then we would like to tag along with that.

[00:28:48] Speaker 00:
And if not, uh, we've, we've added no discussion beyond that.

[00:28:55] Speaker 00:
Let me, I guess, as we're nearing the end of time, explain somewhat the difference of Marathon from energy heating and how it ties into the tort of deceit.

[00:29:05] Speaker 00:
To be clear, Marathon was a party to the trial, but did not have any jury claims.

[00:29:10] Speaker 00:
Marathon did not bring any sort of claims related to seeking tort damages from Heat on the Fly or the other entities.

[00:29:19] Speaker 00:
Marathon sits in the shoes, essentially, of what triangle oil was in the underlying tort case.

[00:29:25] Speaker 00:
The jury found in that tort case brought by energy heating that when heat on the flies representatives told Triangle Oil, another oil company in the field, one of Marathon's competitors, that it had a valid patent, that not only was it wrong, but it was so clearly wrong and so clearly knew it was wrong that it was acting objectively and subjectively in bad faith.

[00:29:48] Speaker 00:
That the mere mention that hey, we have a valid patent and we're going to shut down your your oil operation fracking operation if you don't go with us was a tort here.

[00:29:59] Speaker 00:
Marathon in this case.

[00:30:02] Speaker 00:
Heat on the Fly not only threatened to sue Marathon, it did sue Marathon.

[00:30:05] Speaker 00:
It dragged Marathon into this lawsuit.

[00:30:07] Speaker 00:
The only thing Marathon's ever done in this case is related to the patent claims were not involved in the torts, were not involved in the other claims.

[00:30:15] Speaker 00:
But the jury nonetheless concluded it was not only objectively baseless to suggest that Heat on the Fly had a valid patent, but it was subjectively baseless.

[00:30:24] Speaker 00:
Heat on the Fly's own principles knew

[00:30:28] Speaker 00:
that the patent was invalid, and yet it not only asserted the patent, but then it proceeded to bring this lawsuit against Marathon, dragging it as one of energy heating customers into the case.

[00:30:39] Speaker 00:
This case is not ordinary.

[00:30:41] Speaker 00:
And for that reason, the district court's findings are not clearly erroneous.

[00:30:53] Speaker 05:
Council, we're out of time for this.

[00:30:54] Speaker 05:
We have some rebuttal time.

[00:30:56] Speaker 05:
Please proceed.

[00:30:58] Speaker 06:
The only point I'm going to make on rebuttal is the waiver argument that Energy Heating made was not made in their paper, so it's not part of the appendix, but we did argue to seek down below.

[00:31:11] Speaker 06:
With that, Your Honor, I have nothing else to add to the remarks made by Energy Council or Marathons Council.

[00:31:18] Speaker 06:
If the panel has any questions for me, I'm happy to address them.

[00:31:21] Speaker 05:
The next question I'd like to ask you to address is this Section 285 question and whether you believe that the panel on appeal is capable of awarding damages under Section 285.

[00:31:34] Speaker 06:
I don't believe so, Your Honor.

[00:31:38] Speaker 06:
I don't believe so.

[00:31:40] Speaker 06:
I think it's a separate rule, but we didn't really address it in the brief because we were focused on the merits of the judge's order.

[00:31:49] Speaker 05:
Okay, I thank both counsel or all three counsel for their argument.

[00:31:53] Speaker 05:
This case is taken under submission.

[00:31:55] Speaker 05:
Thank you, Your Honor.

[00:31:57] Speaker 03:
Thank you.