[00:00:01] Speaker 00: The United States Court of Appeals for the Federal Circuit is now open and in session. [00:00:05] Speaker 00: God save the United States and this honorable court. [00:00:10] Speaker 03: Good morning. [00:00:11] Speaker 03: We'll hear argument first in number 19-2280, Liquid Inc. [00:00:16] Speaker 03: versus L'Oreal USA Inc., Mr. Kinnaird. [00:00:20] Speaker 03: And before you begin, just be aware there are a lot of issues in this case and my guess is we're going [00:00:27] Speaker 03: end up taking more than 15 minutes aside. [00:00:29] Speaker 03: But why don't you begin, Mr. Kinnaird, and perhaps it would be good at the outset to address the standing issue. [00:00:40] Speaker 01: Yes, Your Honor. [00:00:42] Speaker 01: May it please the court. [00:00:44] Speaker 01: So the rule of decision of this court in Shriver Foods is that transfer of all patents and causes of action moots an action unless cured prior to final judgment. [00:00:57] Speaker 01: The court followed the Supreme Court's Caterpillar decision, which holds at 519 U.S. [00:01:04] Speaker 01: 7677 that, and quote, if at the end of the day in case a jurisdictional defect remains uncured, the judgment must be vacated. [00:01:16] Speaker 01: So the only substantial question is whether Olaplex Inc. [00:01:20] Speaker 01: can be substituted after remand and vacator and have the judgment reinstated. [00:01:26] Speaker 03: An Olaplex relies on the Supreme Court's precedence under Federal Rule of Civil Procedure 21, which allows... Why is it that since the transfer took place after the injunction was entered that they can't be substituted under Rule 25? [00:01:47] Speaker 01: Well, because the injunction has merged into the final judgment, the action is moot and I think there's a number of [00:01:54] Speaker 01: precedents that if there's a pending injunction appeal and the action becomes moot, that the appeal must be dismissed. [00:02:02] Speaker 01: So, Olapex relies on the Supreme Court's precedents under Federal Rule of Civil Procedure 21, which allows adding or dropping parties in the interest of justice. [00:02:17] Speaker 01: But as the Ninth Circuit explains, Rule 21 can only be invoked to perfect jurisdiction [00:02:24] Speaker 01: over the original party's claims and to afford relief to the original party. [00:02:30] Speaker 01: It does not apply to an action that's moot and Rule 21 does not authorize substitution, which is what would have to occur here. [00:02:39] Speaker 01: In that case, there's Bain versus California Teachers Association, 891 F3rd, 1206, 1216 to 17. [00:02:48] Speaker 03: And so if you had a situation here in which the final judgment had been entered on the date of the injunction and then the motion for substitution were made thereafter as it was here, there would be no problem under Schreiber. [00:03:08] Speaker 03: Do you agree with that? [00:03:11] Speaker 01: If the asset transfer would have had to have occurred prior to final judgment. [00:03:18] Speaker 01: But if the asset transfer had occurred. [00:03:23] Speaker 03: I'm not understanding that. [00:03:24] Speaker 03: If there's a final judgment and then the case is on appeal and there's a transfer of asset, substitution is appropriate, right? [00:03:37] Speaker 01: Substitution under Shriver Foods, if the transfer occurred after final judgment, Shriver Foods does not hold that that's moot. [00:03:45] Speaker 01: We have an argument in the subsequent appeal that discusses whether or not that you need to have standing in order to file a brief. [00:03:54] Speaker 01: But as far as Shriver Foods, yes, you're correct that if the transfer occurs after final judgment, there could be substitution. [00:04:03] Speaker 00: And here the transfer occurred January of 2020, is that right? [00:04:07] Speaker 01: Right, and the final judgment was March. [00:04:10] Speaker 00: March of 2020. [00:04:12] Speaker 00: 2020 that's when what the post trial motions were ruled on? [00:04:16] Speaker 01: The post trial motions were ruled on in December and the district court asked the parties to reconcile the verdict and its other orders and said that it would then later enter a final judgment and since final judgment is determined based on the district court's intent that it be the last act of the case and there are a number of matters to reconcile about there were [00:04:39] Speaker 01: conflicting prejudgment interest awards because of the odd posture in which damages were awarded by the jury on different claims without any reconciliation. [00:04:51] Speaker 01: The district court reconciled them, but he awarded prejudgment interest on each of the claims, so the parties had to address that issue as well as conflicting parts of the opinion that at one point said... And in your view, [00:05:05] Speaker 00: All of, even though the only thing in front of us is an injunction which did predate the transfer of interest, our focus should not be on that, which would come within Schreiber, but rather on later developments in the district court leading to whatever the final judgment may have was. [00:05:28] Speaker 01: Yes, just with the qualification that Schreiber says that the transfer itself [00:05:33] Speaker 01: creates mootness, but the mootness can be cured before final judgment. [00:05:39] Speaker 01: But here, the transfer did not occur before the injunction, but the relevant time period is transfer before final judgment. [00:05:48] Speaker 00: And did you do any of the cases that you cited note the distinction between an appealable injunction and a final judgment in the district court case in the context of deciding [00:06:04] Speaker 00: whether substitution is appropriate by a post-injunction pre-final judgment, you know, post-injunction pre-final judgment transfer of interest? [00:06:16] Speaker 01: No, they don't, Your Honor, but we would submit that the relevant consideration is mootness of the action as a whole. [00:06:23] Speaker 01: And so I think for those reasons, we think that the appeal should be vacated and the judgment dismissed. [00:06:33] Speaker 01: without prejudice to Olaplex Inc. [00:06:35] Speaker 01: filing a new action so far as it can. [00:06:38] Speaker 01: And then, Your Honors, if there's no further questions, I'd like to turn to the concentration claim term, which does not permit the... Before you switch, I do have one or two more questions on the standing issue. [00:06:56] Speaker 03: You argued that in a situation, let's forget about an injunction situation. [00:07:02] Speaker 03: Let's assume that there were a transfer of assets followed by a final judgment and the effort was to have a substitution while the case is on appeal. [00:07:16] Speaker 03: And your argument is that you can't substitute while the case is on appeal because it's already become moot in the district court. [00:07:27] Speaker 03: Is there a remedy under those circumstances? [00:07:30] Speaker 03: Wait a second. [00:07:34] Speaker 03: Laquid argues that the remedy should be to vacate the judgment and allow the district court to consider substitution at the district court level and then enter a new final judgment. [00:07:48] Speaker 03: Why is that impermissible? [00:07:51] Speaker 01: Well, Your Honor, that's what I was mentioning with the Bain case. [00:07:54] Speaker 01: All of the precedents on which Olaplex relies, Mulaney and Newman-Green and so forth, all involve federal rule of Civil Procedure 21, which allows adding or dropping parties in the interest of justice, and appellate courts can do that as well. [00:08:14] Speaker 01: But as the Ninth Circuit explains, and also the Second Circuit itself, you cannot have substitution under Rule 21. [00:08:22] Speaker 01: It's adding [00:08:23] Speaker 01: or dropping parties, for example, to restore complete diversity, or in the Malaney case, to have the principle as well as the union with associational standing. [00:08:38] Speaker 01: Those are the kind of things that Rule 21 can do because it's adding or dropping a party. [00:08:43] Speaker 01: But the only reason that the courts do that and they say it's sparing is that Rule 21 allows you to perfect jurisdiction over the original party's claims [00:08:53] Speaker 01: to afford relief to the original party, which means the original party still has to have Article 3 standing. [00:09:00] Speaker 01: And that's why the Ninth Circuit in Bain said those precedents don't apply when there's mootness. [00:09:06] Speaker 01: And Shriver Foods clearly said there's mootness unless it's cured before final judgment. [00:09:13] Speaker 01: So turning to the concentration claim term, that does not permit the district court's construction. [00:09:20] Speaker 01: A concentration is not any ratio of weight, [00:09:23] Speaker 01: but the ratio of a part to a whole. [00:09:26] Speaker 01: Thus, the concentration of active agent, quote, in the mixture necessarily refers to the active agent that is part of the mixture. [00:09:35] Speaker 01: All the intrinsic evidence, particularly specification column 16 in the prosecution history, confirms the text. [00:09:42] Speaker 01: So interpreting weight of the agent in the mixture as weight added into the active agent formulation is a rewriting of claims, not a construction. [00:09:51] Speaker 00: Mr. Knaart, this is Judge Taranto. [00:09:55] Speaker 00: Suppose I thought that the language of the claim in the mixture language was actually not entirely clear and also thought that the specification uses had the same lack of complete clarity that the language on its face does. [00:10:19] Speaker 00: Then why isn't this a case for reliance under a clear error deference TEVA standard to the magistrate's reliance on the express testimony of the plaintiff's expert that a person of skill in the art would understand the usage in the art in the field of this in the mixture language as referring to the weight [00:10:49] Speaker 00: of what you put into it, not the weight of the thing that remains after the chemicals do their work once it's in the mixture. [00:10:59] Speaker 01: Well, if you reject our plain language argument, and I do think it's strong, I think the other point is that the construction has to be reconcilable with the 419's claim of maleic acid salts as the active agent. [00:11:13] Speaker 01: So, maleic acid will completely ionize into salt in an aqueous alkaline bleaching mixture. [00:11:20] Speaker 01: So, if a 100 gram mix. [00:11:21] Speaker 00: Can I ask you a factual aspect of that and maybe the other side is the better one to ask. [00:11:26] Speaker 00: But I know that you have a sentence in your, I think it's your brief, that said if you have a small amount of maleic acid in the alkaline, the heavily alkaline mixture, [00:11:41] Speaker 00: then that amount would be completely neutralized. [00:11:47] Speaker 00: What if the percent of the maleic acid was, you know, at the north end of 50%? [00:11:52] Speaker 00: Do we know that all of it would be neutralized? [00:11:56] Speaker 01: I believe it is a function of the pH, and you can see the fractional composition chart at appendix 24099. [00:12:04] Speaker 01: So I think it's understood that all of it, within the range, it would all ionize. [00:12:08] Speaker 01: And that supports our construction. [00:12:10] Speaker 01: Because if a hundred gram mixture has zero grams of free malic acid and 20 grams of malate salts, any skilled artisan would say the concentration of salts in the mixture is 20%. [00:12:24] Speaker 01: But under the quartz construction, the answer is zero or indeterminate. [00:12:28] Speaker 01: And that's absurd. [00:12:29] Speaker 01: So Olaplex must be held to what it claimed. [00:12:34] Speaker 01: It may have really intended at some level to [00:12:37] Speaker 01: to say the ratio of the pre-mixture weight to the final mixture weight or something like that. [00:12:43] Speaker 01: But that's not what it says. [00:12:45] Speaker 01: And, Your Honor, I just wanted to touch quickly on the summary judgment. [00:12:50] Speaker 03: We'll give you some more time. [00:12:52] Speaker 03: OK. [00:12:54] Speaker 01: So are there any more questions? [00:12:57] Speaker 03: Hold on a second. [00:12:57] Speaker 03: Are there any more questions about the construction issue? [00:13:01] Speaker 03: No. [00:13:02] Speaker 03: Hearing none. [00:13:03] Speaker 03: Why don't you help us [00:13:05] Speaker 03: Assume that you're wrong for the moment on the construction as to why there are still infringement issues that weren't appropriate for summary judgment. [00:13:18] Speaker 01: Yes, Your Honor, and do you want me, I was going to begin with the claims that are currently standing unless Your Honor wants me to start with the maleic acid. [00:13:29] Speaker 01: Because the only claims that the PTAB upheld subject to this Court's review [00:13:33] Speaker 00: Our claims- I'm sorry, they're all currently standing right now. [00:13:37] Speaker 01: Well, that's right. [00:13:38] Speaker 01: I mean, the PTAB has declared them unpatentable, but that's not final and effective until this Court's review is complete. [00:13:47] Speaker 01: But in claims 14 to 16 of the 954 patent, the claims breakage reductions must come from a single performance of only the claim method steps. [00:14:01] Speaker 01: And for this reason, our expert opined that the prototype testing in which Olaplex relies failed to prove infringement. [00:14:09] Speaker 01: The testing calculates breakage after three applications, as well as additional unclaimed conditioning steps. [00:14:18] Speaker 01: Multiple bond building treatments will reduce breakage more than one treatment. [00:14:23] Speaker 01: And the report itself also said that any treatment that reduces snags, entanglements, and abrasion [00:14:29] Speaker 01: can help in substantially lowering the number of broken fibers. [00:14:32] Speaker 01: So an additional unclaimed conditioning step would destroy the results. [00:14:39] Speaker 01: Olaplex could have but did not commission industry standard testing to replicate only the steps of the claim method and assess breakage after one application. [00:14:50] Speaker 01: The expert testimony on the inadequacy of the prototype testing creates a jury question as to infringement. [00:14:58] Speaker 01: Further, for all claims that require use of step three products, that's 12 to 16 and 19 to 20, Olaplex did not prove attribution of all method steps to a single actor as a matter of law. [00:15:12] Speaker 01: So stylists use step one and two, consumers step three. [00:15:18] Speaker 01: L'Oreal provides instructions on the step three label, but it does not control how a consumer applies a product. [00:15:24] Speaker 01: And there's no evidence that L'Oreal induces [00:15:28] Speaker 01: any stylist to use step three in the salon so there can't be indirect infringement. [00:15:34] Speaker 01: Those are refills. [00:15:35] Speaker 00: Can I ask you, this is Des Torrento, can I ask you this? [00:15:37] Speaker 00: So I think, you'll just have to correct me if I'm wrong, but in Travel Century we elaborated a little bit on what's already in the Akamai formulation. [00:15:53] Speaker 00: And I'm not sure, [00:15:57] Speaker 00: At least the way that I think I'm reading it is control is an alternative to the first actor benefiting from the second actor's performance in some way. [00:16:17] Speaker 00: If that is an alternative way to satisfy the attribution standard [00:16:26] Speaker 00: Why is that not present here? [00:16:32] Speaker 01: Your Honor, what Travel Sentry says is that it's actually the control and benefit test is the alternative to the first actor performing all steps of the infringement. [00:16:44] Speaker 01: So what you would have to show is that the second actor was under the direction or control of the first actor and that the court's decisions in Eli Lilly [00:16:57] Speaker 01: and Akamai and Travel Sentry all say that if you have, it's not enough to have just product instructions, but you have to actually deny the benefit, any benefit to the second actor, the consumer here, of using the product if it doesn't perform your instructions. [00:17:21] Speaker 01: So an example, Eli Lilly, [00:17:23] Speaker 01: You wouldn't be able to, you know, you wouldn't get the treatment if you didn't follow the doctor's instructions. [00:17:30] Speaker 01: Limelight, you wouldn't have access to the computer service unless you follow the instructions. [00:17:36] Speaker 01: And then travel center, you wouldn't have the benefit of the security screening unless you followed the exact instructions. [00:17:43] Speaker 01: And that would, again, with a summary, a denied summary judgment. [00:17:46] Speaker 01: So here it's a question of what is it, you know, is it conclusive proof? [00:17:51] Speaker 01: And the answer is no. [00:17:51] Speaker 01: So all the instructions say for step three, for example, is leave it on for 10 minutes, towel dry your hair first, you know, apply it at home. [00:18:01] Speaker 01: So, you know, the consumers still have benefit if it, if it, you know, if they did it for 11 minutes or if they air dried their hair. [00:18:09] Speaker 01: So all we're doing is providing instructions. [00:18:11] Speaker 01: There's really no question. [00:18:13] Speaker 01: There shouldn't even be a genuine issue of factors to control, but at a minimum, there can't be summary judgment. [00:18:21] Speaker 01: The next thing I'd like to point out is that summary judgment has to be vacated as to indirect infringement. [00:18:28] Speaker 01: And the reason is that L'Oreal is entitled to reasonable inferences in its favor on each individual claim. [00:18:35] Speaker 01: Olaplex, as the movement, can get necessary inferences, but there's never a necessary inference [00:18:42] Speaker 01: that any stylist used a given product for the claim bleaching as opposed to the non-infringing uses such as hair coloring, which were also instructed. [00:18:51] Speaker 01: So to illustrate, if Olaplex had sued a stylist for direct infringement and L'Oreal for inducement, it could not get summary judgment against the stylist just by proving product instructions because there's no necessary infringement of [00:19:07] Speaker 01: infringing use, or inference of infringing use. [00:19:11] Speaker 01: And thus, L'Oreal's indirect infringement is also unproven, and that applies across the board on all claims. [00:19:19] Speaker 01: So, Olaplex did not prove a single instance of indirect infringement, but if it had, most of that would justify partial summary judgment. [00:19:28] Speaker 01: The district court's plenary grant of summary judgment on all indirect infringement claims [00:19:33] Speaker 01: completely skewed the jury trial. [00:19:37] Speaker 01: And this is important because unlike reasonable royalty, this court's precedent in Golden Blunt and other cases say it's not enough to prove a single instance of direct infringement to get lost profits. [00:19:50] Speaker 01: You have to prove each infringing act that you claim resulted in a lost sale. [00:19:55] Speaker 01: And what this means is that Olaplex was deprived, relieved rather, of its liability burden at trial. [00:20:03] Speaker 01: to prove that an induced infringing act caused every lost sale. [00:20:07] Speaker 03: So the summary judgment order... That sounds like a damages issue for the next case rather than an issue that relates to the injunction. [00:20:16] Speaker 01: It's not, Your Honor, and the reason is... That might be true if it were a reasonable royalty case like Lucent, because in reasonable royalty, you just have to prove a single act. [00:20:28] Speaker 01: The royalty is determined as the date of first infringement and Lucent says, well, if you don't prove any other infringement, you might not get much of a royalty. [00:20:36] Speaker 01: But this court has been clear, you know, if you're trying to get lost profits and they claim lost profits from every single sale. [00:20:43] Speaker 01: So what the court has said, you have to prove that there's an infringing act that resulted in each particular lost sale, which means you have to prove and it has to be induced because this is indirect infringement of a method claim. [00:20:58] Speaker 01: So you have to prove that. [00:20:59] Speaker 01: And it's possible they could have done that by having a, depending on what the evidence they put in, but it would have to be a survey of L'Oreal customers during the period based on, you know, what percentage [00:21:13] Speaker 01: of the stylist used it for lightening versus coloring, and what was the breakdown of that stylist's usage, and then you can ask the jury for information. [00:21:24] Speaker 00: Am I right in understanding that the indirect infringement claims are all about what non-L'Oreal stylists do, that there's a set of L'Oreal stylists who are themselves part of L'Oreal? [00:21:39] Speaker 01: There may be, there was no proof put on specific to them, Your Honor. [00:21:44] Speaker 01: So the induced infringement, the vast majority would be for stylists that are not L'Oreal. [00:21:51] Speaker 01: So you would have to induce that infringement. [00:21:56] Speaker 01: And certainly that's the, my point is whatever the breakdown would be, they can't get plenary summary judgment on the entirety of their claims because inferences can't, inferences, [00:22:06] Speaker 01: are drawn on each cause of action, which is each separate use. [00:22:10] Speaker 01: So at least a summary judgment, there's no necessary inference that everybody used it for bleaching and bleaching in compliance with the method. [00:22:19] Speaker 01: So they really had a failure of proof. [00:22:21] Speaker 01: All they did is really prove the possibility that one could use L'Oreal's products to infringe. [00:22:27] Speaker 01: But when a product is not necessarily infringing, their burden [00:22:31] Speaker 01: is to prove a specific instance of infringement with a single actor performing each method step. [00:22:37] Speaker 01: And they just didn't bother to do that. [00:22:39] Speaker 01: I would note they did try, after their summary judgment motion, they put in with their opposition brief for the first time a declaration of one stylist. [00:22:49] Speaker 01: But we point out that's defective because there's no, that she didn't testify as to when she used it. [00:22:57] Speaker 01: And that's important here because the products were launched [00:23:01] Speaker 01: prior to the issue dates of the patent. [00:23:04] Speaker 01: So you have to establish that, and that inference goes in our favor. [00:23:07] Speaker 01: Her testimony is also completely incredible because she said she used step three products in the salon, so we're entitled. [00:23:15] Speaker 01: You can't just, you know, accept that. [00:23:17] Speaker 01: That is evidence of credibility. [00:23:19] Speaker 00: That doesn't make it completely incredible. [00:23:21] Speaker 00: It just might make it a triable issue. [00:23:23] Speaker 01: Exactly. [00:23:25] Speaker 01: A triable issue on that point. [00:23:26] Speaker 01: And that would be for step one, two, and three. [00:23:28] Speaker 01: But even, but there's, as I mentioned, an additional argument as to step three, because we don't induce sales, and this is undisputed, and you can see this at 449, 450, these step three products are retail products sold to the consumer specifically and expressly for at-home use. [00:23:48] Speaker 01: There's no evidence at all that we would induce a stylist to engage in use. [00:23:56] Speaker 00: Can I ask you about one of the specific non-infringement summary judgment issues that you have not either discussed or adverted to today but is I think actually the first such issue in your brief and that has to do with whether if the district court's claim construction about the molecular weight in the range in the mixture is right [00:24:24] Speaker 00: then nevertheless, there was at least a triable issue of whether that claim element was met in the accused products. [00:24:35] Speaker 00: And you focus on how the expert for the plaintiff relied on certain results from nuclear magnetic resonance. [00:24:49] Speaker 00: And this is how I understand what you have said, and you can correct me. [00:24:54] Speaker 00: that everybody agrees that that NMR test picks up not just maleic acid, but the two forms of malleates. [00:25:02] Speaker 00: You know, one negative and two negatives. [00:25:05] Speaker 00: And therefore, you can't just take that as a measurement. [00:25:10] Speaker 00: And I guess my question is this. [00:25:13] Speaker 00: Did you say that would change the numbers, but it would change the numbers in, did you ever say it would change the numbers in a way that would affect [00:25:23] Speaker 00: coming into or going out of the range. [00:25:27] Speaker 00: Because as I understand it, there's a truly trivial difference in the molecular weight between the malleates and the acid, like the difference between 116 and 114. [00:25:38] Speaker 00: And that just couldn't possibly change the numbers that the plaintiff expert came up with. [00:25:47] Speaker 00: I mean, they would change them slightly, but not either go below the south end or go above the north end of the range. [00:25:54] Speaker 01: Your Honor, I think it's not a question of the molecular weights as much as it is in terms of the concentration. [00:26:01] Speaker 01: This is a little bit complicated, so let me just take a moment. [00:26:05] Speaker 01: Our point is that on concentration, Olaplex's proof did not match the district court's construction, which calculates concentration based on the weight of free maleic acid [00:26:16] Speaker 01: added into the active agent formulations. [00:26:19] Speaker 00: Right, but their experts said, and I don't think this is disputed, that any of the malleates that would show up in the NMR would come on a one-for-one basis from a maleic acid put in. [00:26:30] Speaker 00: So the only thing you would do to the numbers from the NMR is change the 114 grams into a 116 grams, and that, I don't, I mean, is that right? [00:26:42] Speaker 00: And if that's right, then how could that possibly [00:26:45] Speaker 00: change the only conclusion that matters, which is that the figures that the plaintiff's expert came up with stay within the range. [00:26:56] Speaker 01: Your Honor, I don't believe that the expert said that, and Mr. Weisburs can point to the record if he says otherwise. [00:27:05] Speaker 01: Olaplex argued that in its brief when it realized the mistake that Dr. Freeman pointed out. [00:27:13] Speaker 01: So here's the key. [00:27:14] Speaker 01: The active agent formulations here are the step one products. [00:27:19] Speaker 01: So for purposes of claim construction, what is germane is the raw material added into those formulations, and that is an aqueous solution of maleic acid. [00:27:32] Speaker 01: So what Olaplex had to determine is the amount of free non-ionic maleic acid in that aqueous solution, and it did not. [00:27:42] Speaker 01: And in fact, both Olaplex [00:27:44] Speaker 01: at page 31, note 12. [00:27:46] Speaker 01: And Dr. Borish, in the chart at appendix 24099, admit that even highly acidic solutions may only be partially non-ionic maleic acid. [00:27:59] Speaker 01: And the fractional share drops precipitously as pH increases above 1. [00:28:05] Speaker 01: But rather than determine the free maleic acid in the aqueous solution, [00:28:10] Speaker 01: that was added into the active agent formulation, the step one bottle. [00:28:15] Speaker 01: Curiously, Dr. Borish attempted to calculate, with NMR results, the free maleic acid in the step one bottles themselves. [00:28:23] Speaker 01: And he treated that as a proxy for what was added, and that's wrong, because Dr. Freeman demonstrated that the NMR results, as you mentioned, do not distinguish free acids from maliates, and that if you actually calculate the free acid amounts in the step one bottles, [00:28:39] Speaker 01: The concentrations are well below the lower limit. [00:28:43] Speaker 00: I don't mean to beat a dead horse, but let me beat it one more time. [00:28:49] Speaker 00: If it's right that the only thing that would come up in the NMR test of the stuff in the bottle that isn't maleic acid are the malleates, and if it's also right that all the malleates come from [00:29:05] Speaker 00: that was in the aqueous solution before you put it into the bottle, then the question of how much difference that makes in terms of the concentration turns on the molecular weight difference, doesn't it? [00:29:20] Speaker 00: And that's trivial. [00:29:23] Speaker 01: No, Your Honor, because it's not true and there's no testimony. [00:29:27] Speaker 01: It's not that it just has to come from some form of maleic acid. [00:29:31] Speaker 01: It has to come from the free acid [00:29:35] Speaker 01: in the aqueous raw material solution. [00:29:38] Speaker 01: And that's what's never calculated. [00:29:39] Speaker 01: And that's what the chart at 24.099 would show, that a highly acidic solution like that is only going to have a fractional part of free acid. [00:29:49] Speaker 01: That's just their construction. [00:29:50] Speaker 01: Now, they run from their construction. [00:29:52] Speaker 01: Page 32 of the brief say, oh, we should just treat it as, you know, at some point, maybe at the vendor, at his vendor's plant, it came from pure maleic acid. [00:30:04] Speaker 01: There's no testimony to that effect. [00:30:06] Speaker 01: But that's what you look to. [00:30:08] Speaker 01: It's somewhere down the line. [00:30:10] Speaker 01: What was the pure maleic acid that's put in there? [00:30:13] Speaker 01: And that's not the question. [00:30:15] Speaker 01: The question is how much free acid is in the aqueous solution. [00:30:19] Speaker 01: And that's just unproven. [00:30:21] Speaker 01: And Dr. Freeman showed that there are Dr. Boris' proxy approach where he relied on the step one bottle acid that doesn't work. [00:30:34] Speaker 01: And I would also, they try now to also say, well, what about the safety sheet? [00:30:40] Speaker 03: But I think unless there are further questions from my colleagues, I think we're about out of time. [00:30:48] Speaker 03: OK, Your Honor. [00:30:51] Speaker 03: Hearing no further questions, we'll give you your three minutes for rebuttal. [00:30:54] Speaker 03: And we'll hear from Mr. Weisberg. [00:30:57] Speaker 02: Thank you, Your Honor. [00:30:58] Speaker 02: May it please the court, Sanford Weisberg for liquid and Olaplex. [00:31:02] Speaker 02: I'd like to begin with the standing issue. [00:31:05] Speaker 02: And I think that the only issue that this court needs to reach in the context of this permanent injunction appeal was the one that was noted, I believe, by Judge Taranto, which is that, undisputably, the transfer of interest here occurred after the permanent injunction and after the notice of appeal was filed. [00:31:21] Speaker 02: L'Oreal has cited no case law for the proposition that somehow subsequent events regarding a final money judgment could affect standing to appeal the permanent injunction or to make the case entirely [00:31:33] Speaker 02: But given the lack of case law, I think it's worth just putting this in some practical terms, because really this court is deciding that issue, which was not decided by Schreiber in any sense. [00:31:43] Speaker 02: on a clean slate, and this is a hyper-technical argument that L'Oreal is making that would lead to needless waste in terms of a remand to the district court to sort out whether to join or substitute Polaplex Inc. [00:31:57] Speaker 03: Okay, but your assumption there is that that's the remedy, and they say it's not. [00:32:03] Speaker 03: What case says that if there's an error in entering a final judgment when the remaining party in the case lacks standing, [00:32:12] Speaker 03: that that can be cured by a remand to the district court to add the party and renew final judgment. [00:32:22] Speaker 03: What case stands for that proposition? [00:32:25] Speaker 02: So the first case I would point to, which is also cited in the briefs, is the Mulaney case in the US Supreme Court. [00:32:32] Speaker 02: And I respectfully disagree with my friend on the other side on that question, because in Mulaney, when this case got to the US Supreme Court, [00:32:40] Speaker 02: There was a question of whether the party had standing at all. [00:32:44] Speaker 02: And what the Supreme Court said is, in order to avoid having to deal with that issue, we're just going to add, for the first time in the US Supreme Court, we're going to add a party that indisputably has standing. [00:32:55] Speaker 02: And so the remedy, the first remedy I would point to is court. [00:32:58] Speaker 03: I don't read the Mulaney case as saying that that's a routine practice. [00:33:03] Speaker 03: It seems to be a bit of an outlier. [00:33:07] Speaker 03: Any other authority for that problem? [00:33:09] Speaker 02: Yes, the other, the second authority I would point the court to is the Finn decision. [00:33:15] Speaker 02: And that's a case that went back and forth between the US Supreme Court and the Fifth Circuit. [00:33:19] Speaker 02: And in fact, it was remanded to deal with, in that case, a diversity problem. [00:33:25] Speaker 02: And diversity, we do believe is relevant here because among other reasons, the Shriver case relied on Caterpillar, which is a diversity case. [00:33:33] Speaker 02: So in fin, you had a remand and what was ultimately held by the fifth circuit is all you had to do was solve the diversity problem and then reinstate the original judgment. [00:33:44] Speaker 02: You didn't need to go through entirely new trial. [00:33:47] Speaker 02: Now we think even that step would be needlessly wasteful because we've already had a trial and remind me and then what happened? [00:33:55] Speaker 03: They, they dismissed the non diverse party. [00:33:58] Speaker 02: That's right. [00:33:59] Speaker 02: So in the original trial, there had been a trial of verdict. [00:34:03] Speaker 02: There was a diversity problem. [00:34:05] Speaker 02: It went up on to the US Supreme Court, went back down. [00:34:08] Speaker 02: And what happened was the what actually went back down to the district court. [00:34:13] Speaker 02: And the question was, once we solve the diversity problem, do we just reinstate the old original judgment without further ado? [00:34:21] Speaker 02: Or do we have to conduct an entirely new trial? [00:34:24] Speaker 02: And the Fifth Circuit said, you reinstate the original judgment. [00:34:27] Speaker 02: You don't go through an entirely new trial. [00:34:29] Speaker 02: But I don't want to lose sight of the fact that that issue, if it's relevant at all here, relevant to the money judgment, not to the permanent injunction. [00:34:37] Speaker 02: Now, there is another issue on this score that I'd like to address, which is even if there is some sort of merger problem created by the final judgment, I didn't hear my adversary on the other side talk about when finality occurred with regard to the money judgment. [00:34:52] Speaker 02: And we've explained in our brief that there was finality as of December 2019, and keep in mind that the transfer occurred in January 2020. [00:35:00] Speaker 02: Let me explain a little bit why there was finality as of December 2019. [00:35:04] Speaker 02: That is when the district court decided the post-verdict motions. [00:35:08] Speaker 02: And as of that time, we had rulings, whether by summary judgment or by the jury verdict, on all of the causes of action, all of the counterclaims, all of the affirmative defenses. [00:35:18] Speaker 02: We furthermore had a ruling by the district court. [00:35:21] Speaker 00: I'm sorry. [00:35:21] Speaker 00: And the time for appeal, for filing a notice then, [00:35:25] Speaker 00: would have run from then if a new notice would be required, right? [00:35:30] Speaker 02: Yes, so this order occurred on December 16, 2019, and the order also addressed prejudgment interests. [00:35:36] Speaker 02: In fact, L'Oreal filed a notice of appeal because it was concerned that that might be construed as final [00:35:43] Speaker 02: And yes, it labeled its notice a protective notice, but there's nothing in the federal rules that talks about protective notices. [00:35:51] Speaker 02: It's something that parties occasionally do. [00:35:53] Speaker 02: But at a minimum, it suggests that L'Oreal itself recognized that there might be finality as of December, and it wanted to get its notice on file and not take that risk. [00:36:02] Speaker 02: Our position here is, yes, there was finality. [00:36:05] Speaker 02: as of December 2019. [00:36:07] Speaker 02: The only issue was whether there was a separate judgment paper required by federal rule of civil procedure 58, but under federal rule of appellate, sorry, federal rule of civil procedure 58, [00:36:19] Speaker 02: Under federal rule of appellate procedure for a seven B, when a party files a notice of appeal, it waives the separate judgment paper requirements. [00:36:27] Speaker 02: And therefore the separate judgment paper that was entered ultimately in March, 2020 was unnecessary and did not remove finality that was present as of December, 2019. [00:36:37] Speaker 02: So that's another reason why this court need not even address the shrugger issue. [00:36:42] Speaker 03: The final point I would like to make, and I say that... That point is new, isn't it? [00:36:46] Speaker 03: I don't recall that being in your brief. [00:36:48] Speaker 02: No, that is argued in our brief. [00:36:51] Speaker 02: It is? [00:36:51] Speaker 02: Excuse me. [00:36:52] Speaker 02: Excuse me, Your Honor. [00:36:53] Speaker 02: I should correct what I said. [00:36:55] Speaker 02: This issue in the context of this appeal was framed up in the motion papers on substitution and Joinder. [00:37:03] Speaker 02: We did make that argument in our motion papers in that case. [00:37:07] Speaker 02: We also have made that argument in the... The other case? [00:37:11] Speaker 02: No, in this case, in the reply in support of our motion to join our substitute, which was filed after L'Oreal made its jurisdiction standing argument for the first time, we did make this finality point about December 2019. [00:37:25] Speaker 02: We have also, we and L'Oreal have both briefed this issue in the money judgment appeal, which we attached to a recent opposition to L'Oreal's motion for leave to file a supplemental brief for the court's convenience. [00:37:36] Speaker 02: So the issue has been timely raised by us. [00:37:40] Speaker 02: The final point I'd like to make on the standing question, and I say this with... Okay. [00:37:45] Speaker 04: Counsel, this is Judge Rene. [00:37:47] Speaker 04: Your argument is that the December 16, 2019 decision, post-trial decision by the court, that they colored all the issues that are before us today and applied to all the issues other than the injunction. [00:38:04] Speaker 04: Is that correct? [00:38:05] Speaker 02: Yes, it covered. [00:38:06] Speaker 02: Well, it covered the injunction had already been entered. [00:38:09] Speaker 02: The permanent injunction had already been entered. [00:38:10] Speaker 02: But what the December 16, 2019 order did was it resolved all pending issues in the case that related to not just the injunction, but the money damages issues. [00:38:21] Speaker 02: by that as well as prejudgment interest. [00:38:24] Speaker 02: And in fact, when the parties ended up submitting their proposed separate judgment papers, there was no disagreement in terms, except for some linguistic issues about how the counterclaim should be described. [00:38:34] Speaker 02: There really was no difference in terms of prejudgment interest, post-judgment interest between the parties, which again underscores that there was finality as of that time. [00:38:43] Speaker 02: The final point I just briefly make is that [00:38:46] Speaker 02: The Shriver decision is in fact dicta on the question of whether in the case where the transfer occurs after the district court enters judgment, there is an irretrievable mootness. [00:38:59] Speaker 02: Footnote six of Shriver. [00:39:01] Speaker 02: explains that because, and I'll just read it, although we have grave doubts as to whether Schreiber is correct, in light of our disposition, it is unnecessary to address this argument about whether Rule 25C of the Federal Rules of Civil Procedure allows for substitution for the first time on appeal. [00:39:17] Speaker 02: We respectfully submit that that is dicta, this court and its unpublished decision in total containment, which granted it's unpublished, but held that there could be substitution for the first time in appeal in that circumstance. [00:39:30] Speaker 02: The fifth and tenth circuits in the Slade and SLE cases have similarly so held and therefore that's the better view also because whatever one thinks of Mulaney [00:39:41] Speaker 02: there is an issue about whether we want to go through a meaningless exercise of a remand for further proceedings in the district court when it's really unnecessary and not supported by precedent. [00:39:52] Speaker 03: Does the district court have discretion under Rule 25 if there's a very late subset long after the transfer takes place to say, no, I'm not going to allow that. [00:40:07] Speaker 03: You're too late. [00:40:09] Speaker 03: Are there cases about that? [00:40:11] Speaker 02: Um, I'm, I'm not sure, your honor, whether there are cases about the discretion. [00:40:16] Speaker 02: Uh, it may be that in a case of extreme delay, there might be some discretion. [00:40:20] Speaker 02: However, I think it's worth pointing out that will 25 C does not impose a time limit. [00:40:25] Speaker 02: Similarly in cases among others of the, you know, low case in this court and the fifth circuit's decision in TOC say that substitution is entirely permissive, which again suggests that there's no strict timeline. [00:40:38] Speaker 02: And in any event, there was no long delay here. [00:40:40] Speaker 02: The transfer occurred in January 2020, and Olaplex explained that it would seek substitution in about March of 2020. [00:40:48] Speaker 02: So there was no lengthy delay here, such that would justify a denial of such a motion. [00:40:56] Speaker 02: So that's our position on that question. [00:40:58] Speaker 02: Unless there are any further questions I'm standing, I'd like to turn to the claim construction issue. [00:41:03] Speaker 02: And, um, I'd like to start with, uh, you know, when we look at the claim and we, we think that when you look at the words in the mixture, those don't say when they don't say when you weigh the Malay gasses, they just, they just don't, it could be construed either way. [00:41:19] Speaker 02: And so what this court has done in prior cases as judge Toronto pointed out is to look at it from the standpoint of the skilled artisan and. [00:41:28] Speaker 02: In that context, we have not just the magistrate judge in the district court, but also the PTAB in a related proceeding, and that's 16081 of the record, explaining that a skilled artisan would look at this and say, you weigh the maleic acid before you add it to the bleaching formulation. [00:41:47] Speaker 02: And we don't even need to take it from the skilled artisan standpoint alone. [00:41:52] Speaker 00: Can I just interrupt for a second? [00:41:57] Speaker 00: agree at some point, either here or in the district court, that the question of timing of measurement had the same answer for the 419 and the 954? [00:42:12] Speaker 02: I'm not sure if there was an agreement on that question between the parties. [00:42:17] Speaker 02: There is. [00:42:18] Speaker 02: Let me try to answer the question a different way, though. [00:42:21] Speaker 02: It is true that the 419 patent, I think it's important to clarify, talks about maleic acid [00:42:25] Speaker 02: or salt of maleic acid. [00:42:30] Speaker 02: What the parties agree on, I believe, is that once you combine the active agent formulation with the bleaching formulation, there will be no non-ionic maleic acid left. [00:42:41] Speaker 02: It will all have been neutralized. [00:42:43] Speaker 02: So at most, you will have some salts. [00:42:45] Speaker 02: And in the 419 patent context, the problem with that [00:42:48] Speaker 02: is that it eliminates non-ionic maleic acid, which is claimed by the patent as an option because it says it's maleic acid or salts. [00:42:56] Speaker 02: It eliminates one of those options. [00:42:59] Speaker 02: And in the 954 patent, it's even an easier question because that doesn't talk about salt at all. [00:43:04] Speaker 00: It only talks about maleic acid. [00:43:05] Speaker 00: Can I just, I mean, just, do you have any better recollection than you had 60 seconds ago about whether there was an agreement or, to put it the other way, [00:43:16] Speaker 00: Did L'Oreal ever argue that the timing of measurement question might be resolved differently for the 954 and 419? [00:43:30] Speaker 02: Well, I honestly don't. [00:43:34] Speaker 00: You have a stronger argument, I think, on the 954 than you do on the 419 because in the 954 it would [00:43:43] Speaker 00: that review would seem to wipe out, I mean, make meaningless some aspect of maybe even the whole claim. [00:43:55] Speaker 00: But with the salts in there on the 419, not so much. [00:44:00] Speaker 02: Right. [00:44:01] Speaker 02: And because we had prevailed, because Oliflex had prevailed on claim construction, we did not attempt for infringement purposes to point to salts because we thought all we needed to do was point to maleic acid as it existed before being added. [00:44:14] Speaker 02: But let me just briefly move past that question because I think it's also very important when we talk about how a skilled artisan would look at this, to look at how L'Oreal's own skilled artisans look at this. [00:44:25] Speaker 02: And I'd refer the court to 47631 of the appendix, which is an opinion by L'Oreal's expert, Nanda Geary, in a PTAB proceeding, where he uses the words in the mixture the same exact way that Oliflex uses, which is that it points to a pre-mixture weight. [00:44:41] Speaker 03: And even in the companion appeal that this court was here later today... That evidence arose after the summary judgment, correct? [00:44:50] Speaker 02: Well, I think we're still on claim construction. [00:44:53] Speaker 02: And I'm not entirely sure when that TTAB expert report was filed, but I still would submit that it's relevant evidence of what a skilled artisan would look to. [00:45:02] Speaker 02: And in L'Oreal's own brief and the companion appeal at 16 to 17, L'Oreal also... That sounds like a fact question is how an artisan would interpret this. [00:45:14] Speaker 03: And I don't know how to bring in factual evidence that post-dated the claim construction and the summary judgment. [00:45:23] Speaker 03: I mean, it's not intrinsic evidence we're talking about here. [00:45:27] Speaker 02: Well, I believe that this court, where there's an ambiguity on a claim, can consider extrinsic evidence. [00:45:33] Speaker 02: And I want to just correct briefly what I said. [00:45:36] Speaker 02: No, I'm not saying that at all, Your Honor. [00:45:39] Speaker 02: In the district court's claim construction decision, it refers back to the PTAB. [00:45:44] Speaker 02: It relies on the PTAB for persuasive authority. [00:45:47] Speaker 02: So that was decided by the PTAB before the district court's claim construction. [00:45:51] Speaker 02: This is 16081 to 082 of the record in this case. [00:45:56] Speaker 02: And the PTAB, in turn, explained that skilled artisans, including L'Oreal's own experts, had used in the mixture the same way that Olaplex had used it. [00:46:06] Speaker 00: And just to nail this down, [00:46:07] Speaker 00: Is the L'Oreal expert statement that you started talking about the statement that the board relied on in the board decision that you were just referring to? [00:46:20] Speaker 02: I believe it is, but in all candor, I'm not 100% sure of that. [00:46:25] Speaker 02: But if not, there are other similar statements that the PTAB did rely on. [00:46:30] Speaker 02: This is not an outlier. [00:46:32] Speaker 02: The Nandagiri opinion is not an outlier. [00:46:35] Speaker 02: It's similar to numerous other opinions. [00:46:37] Speaker 00: Your own expert did say this, right? [00:46:39] Speaker 00: And that the magistrate and the district judge adopted. [00:46:43] Speaker 02: Absolutely. [00:46:44] Speaker 02: Our expert's position was clearly that you weigh it before even adding it into the aqueous solution that's the active agent formulation. [00:46:50] Speaker 02: If I could move on to the summary judgment issues, let me start with the question of the NMR. [00:46:57] Speaker 02: And I think it's very important that before one even gets to NMR to recognize that there's an alternative way to finding that there's infringement of the maleic acid concentrations, which is from L'Oreal's own documents. [00:47:08] Speaker 02: And that, in fact, is a theme. [00:47:10] Speaker 03: L'Oreal's own documents in that respect say that it's less than a certain amount, right? [00:47:18] Speaker 02: What they say, yes, Your Honor, what they say is less than or equal, and yes, and let me, let me. [00:47:25] Speaker 03: Wait, how is a statement that it's less than X proves that it's X? [00:47:32] Speaker 02: Sure, in two ways. [00:47:33] Speaker 02: Number one is that L'Oreal never argued the less than or equal issue below. [00:47:38] Speaker 02: It was argued for the first time in their reply brief on appeal. [00:47:41] Speaker 02: That explains why it's not addressed at length below, but let me answer it on the merits. [00:47:47] Speaker 02: Dr. Borish, which is Oliflex's expert at 27714, relied not just on the less than or equal 10.7% document, but also on L'Oreal chemist Dreyer's estimate that the maleic acid concentration was 33% of 35.67%, which is 11.7%, which puts the number, in fact, over 10.7 as opposed to under. [00:48:13] Speaker 02: With that, no reasonable juror could find that it was something like zero. [00:48:17] Speaker 02: In fact, it was somewhere between 10.7 to 11.7, which is within the range. [00:48:22] Speaker 02: Once you use the instructions that are provided in the documents about how to combine it with bleaching formulation. [00:48:28] Speaker 02: And so Boris relied not just on NMR testing, [00:48:31] Speaker 02: but also on those documents. [00:48:32] Speaker 02: Now, Judge Toronto, we agree with your point about the relative molecular weights. [00:48:38] Speaker 02: What we're talking about, first of all, the claim construction starts with the pure maleic acid before it even enters aqueous solution. [00:48:46] Speaker 02: And yes, Dr. Borish had the test done on the aqueous solution product, but it's able to pick up [00:48:54] Speaker 02: non-ionic malic acid as well as malate and hydrogen malate. [00:48:58] Speaker 02: And the only molecular weight difference between hydrogen malate, malate and malic acid is the loss of one or two hydrogen protons which have a negligible weight and therefore would not affect in any meaningful way. [00:49:11] Speaker 00: So I'm not, I'm not certain I understand this fully. [00:49:17] Speaker 00: I thought I heard Mr. Kinnaird say [00:49:20] Speaker 00: but not quite in a way I could follow, something to the effect that some of the maleate found in the bottle, in the ultimate mixture, might not have come from the maleic acid that was in the aqueous solution. [00:49:40] Speaker 00: There might be other predecessors of the maleate. [00:49:46] Speaker 00: Did I understand that right, and can you illuminate that? [00:49:50] Speaker 02: I'm not sure if he was making that assertion or not, but I don't know where else it would have come from. [00:49:57] Speaker 02: And I am not the chemist or the expert here, but Dr. Borish explained using the district court's claim construction, which again looks at the maleic acid in its cure form before it's even added into that aqueous solution, that that would be the sole origin of any maleic acid originated molecules in that solution. [00:50:16] Speaker 02: Would they be relying on the molecular weight point or not? [00:50:20] Speaker 02: He was relying on, yes, because nuclear magnetic resonance imaging is, by nature, a weighing of all of those molecules. [00:50:33] Speaker 03: I don't know if it's all just discussing the point that Judge Toronto raised. [00:50:38] Speaker 03: Can you show me where he addressed that? [00:50:41] Speaker 02: He did not say what the weight of a hydrogen proton was, but he did say that nuclear magnetic resonance weight testing would measure all three of those molecules. [00:50:53] Speaker 02: And it's a matter of scientific fact that a hydrogen proton has a negligible weight compared to malate or hydrogen malate. [00:51:00] Speaker 03: But again... I worry about finding scientific facts on appeal. [00:51:08] Speaker 02: I understand that concern, but I think, again, I would go back to the documents that is an entirely separate approach than NMR here, which also point to infringement of the weight concentrations. [00:51:21] Speaker 00: Can I ask you, just to pursue this one further minute, when in the district court, L'Oreal registered some criticism of the NMR analysis, is that right? [00:51:37] Speaker 00: Yes, that's correct. [00:51:40] Speaker 00: And when it said that the NMR analysis picks up the maleates and not just the maleic acid, did it say, I assume it did say that would make a difference in the numbers. [00:51:53] Speaker 00: Did it ever say that would make a big enough difference in the numbers that it would alter the only conclusion that mattered? [00:52:02] Speaker 00: which was that the accused products were within the claimed range. [00:52:08] Speaker 02: I don't believe they took that further step, nor could they have given the negligible weight of a hydrogen proton. [00:52:15] Speaker 02: Okay. [00:52:16] Speaker 02: Let me turn to the step three attribution point briefly, and I have just two quick points on that. [00:52:24] Speaker 00: I'm sorry. [00:52:27] Speaker 00: Before you get to that, Kate, can you address this business about, there are two points about the, that are made by L'Oreal about the bleaching formulation which applies to both of the patents and the bleaching powder or the bleach powder that applies only to the 954. [00:52:50] Speaker 00: Can you address L'Oreal's arguments about why the evidence doesn't show that, at least doesn't show it enough [00:52:56] Speaker 00: to entitle you to summary judgment on the point? [00:52:59] Speaker 02: Sure. [00:53:00] Speaker 02: I would point the court again, as with the issue I was just discussing, to L'Oreal's own documents. [00:53:05] Speaker 02: And specifically, for example, appendix 31261 and 615, which is L'Oreal's marketing of its active agent products for use with L'Oreal's own bleach products. [00:53:19] Speaker 02: And we know from the record, and I just gave the sites, [00:53:23] Speaker 02: that L'Oreal's own bleach products include as their very first ingredient potassium persulfate. [00:53:29] Speaker 02: Bleach powder was construed as an alkalinic composition that includes a persulfate. [00:53:33] Speaker 03: So we have from L'Oreal's own... Wait, wait. [00:53:36] Speaker 03: These kits don't require the use of that product, right? [00:53:40] Speaker 03: The alleged infringing kits. [00:53:43] Speaker 02: The no, they don't require it. [00:53:46] Speaker 02: But again, if we, if we look at what L'Oreal actually did with the products in its own live demonstrations, it said, when we do these demonstrations, we ourselves are using our active agents with our bleaches. [00:54:00] Speaker 02: And so for example, 30396 is the Redken active agent with the Redken bleaches, 30413 [00:54:08] Speaker 02: And 31264 is the smart bond, and 31261 is the matrix ultimate. [00:54:15] Speaker 02: All three lines of products, L'Oreal itself, and this goes again, I haven't gotten to it yet, but direct versus induced infringement. [00:54:22] Speaker 02: We don't even need to get to induced infringement to support a permanent injunction here, because we have indisputable evidence from L'Oreal's own witnesses, Moreno, Morris, and Chiralby. [00:54:31] Speaker 02: that their demonstrators are out in the field doing these steps every day using their own active agents and their own bleachers. [00:54:39] Speaker 02: And we know from the labels that their own bleachers include persulfate as the very first ingredient. [00:54:43] Speaker 02: L'Oreal's argument to the contrary ignores these documents from their own files. [00:54:47] Speaker 03: So you're saying that it should be an injunction that is limited to enjoining them from these demonstrations? [00:54:55] Speaker 02: Among other things, it should enjoin them, as it's currently phrased, from promoting or using. [00:55:01] Speaker 03: How does that, even if it's true, support the breadth of this injunction? [00:55:08] Speaker 02: Because the injunction, as it's currently phrased, as this court has phrased it in the interim orders, bars promotion or use of the step one, step two, three, and three ingredients in an infringing manner. [00:55:21] Speaker 02: So when they're doing these demonstrations, they are both using [00:55:24] Speaker 02: as well as promoting [00:55:40] Speaker 02: who testified that she used all three steps of all L'Oreal's product lines with Redkin bleach, which is one of the L'Oreal bleaches that includes potassium persulfate as its first ingredient. [00:55:51] Speaker 02: So we have testimony, not just that L'Oreal itself did all this, but that it was promoting it to at least one person. [00:55:57] Speaker 02: And I disagree with my opponent on the other side. [00:56:00] Speaker 02: One instance is enough. [00:56:01] Speaker 02: We have many more than one instance, but one instance is enough for a permanent injunction. [00:56:06] Speaker 02: The extent under lucent is a question for damages. [00:56:09] Speaker 02: Not a question for the permanent injunction. [00:56:12] Speaker 02: And we have done enough. [00:56:14] Speaker 02: And L'Oreal's arguments in the main ignore its own document. [00:56:18] Speaker 00: Can I just ask this? [00:56:19] Speaker 00: I mean, why wouldn't the extent be relevant to at least the weighing of harms that would be required for the injunction standard? [00:56:34] Speaker 00: That is, if the injunction prohibited L'Oreal from doing [00:56:37] Speaker 00: a very wide range of things, only one, one of which, not a wide range of things, but yeah, a wide range of things covering many, many, many people's activities, their various customers' philist activities, and we only know that in some very narrow subclass, those activities would actually infringe [00:57:06] Speaker 00: And doesn't the balance of equity shift rather a lot? [00:57:12] Speaker 02: I don't believe so. [00:57:13] Speaker 02: And I think we have to keep in mind also the factor that L'Oreal, based on the summary judgment, is an infringer, based on the jury verdict, is a willful infringer. [00:57:22] Speaker 02: We also have to keep in mind that this is the entirety of Olaplex's business, whereas it's a very minor part of L'Oreal's business. [00:57:29] Speaker 02: L'Oreal is one of the biggest TV cosmetics companies in the world. [00:57:33] Speaker 02: And in terms of irreparable harm, we have shown enough, not just from L'Oreal's own actions, but from Laris, who's a non L'Oreal stylist, plus the instructions, which yes, they mentioned coloring, but they start, before they mentioned coloring, they talk about lightning. [00:57:50] Speaker 02: And when you put all of that together, [00:57:52] Speaker 02: Maybe the extent of how many Larises are out there is an open question. [00:57:57] Speaker 02: We think that that was decided by the jury and we'll get to that in the next case, but we have enough for an injunction. [00:58:03] Speaker 02: It shouldn't be allowed for an adjudicated infringer to be promoting the infringing use of these products, even to a single person. [00:58:10] Speaker 02: And so I'm not sure why. [00:58:12] Speaker 03: So what you're saying is even if, even if L'Oreal is right about induced infringement, you're saying the injunction can be sustained [00:58:21] Speaker 03: because of these small number of alleged direct infringement by L'Oreal? [00:58:31] Speaker 02: Well, respectfully, it's not just alleged. [00:58:33] Speaker 02: It's testimony from their own witnesses that they did actually use these products with their own bleaches. [00:58:39] Speaker 02: But yes, I would say that that evidence alone would support the injunction, because that is a use and a promotion of the use, which is what the injunction proscribes. [00:58:49] Speaker 02: of an infringing process. [00:58:53] Speaker 03: Let's suppose hypothetically that we don't accept that. [00:58:57] Speaker 03: Why isn't there a jury question on induced infringement? [00:59:02] Speaker 02: I think that there may be a jury question on the extent of induced infringement that was decided by the jury. [00:59:08] Speaker 02: What I'm suggesting to the court is that that is not necessary to sustain the permanent injunction here, given the indiscriminate evidence we have of infringement, whether direct or indirect. [00:59:18] Speaker 03: And I do think the... I thought the jury instructed that liability had been established, including liability for induced infringement. [00:59:27] Speaker 03: No? [00:59:28] Speaker 02: The jury still had to evaluate the extent of that. [00:59:33] Speaker 03: Am I correct? [00:59:34] Speaker 03: I'm correct that they were instructed that way, right? [00:59:38] Speaker 02: I believe they were. [00:59:39] Speaker 02: I don't have the instructions open right now, but I believe that they were. [00:59:43] Speaker 02: But what the jury was instructed or found, again, I respectfully submit is not necessary to sustain the permanent injunction here. [00:59:52] Speaker 02: because of, among other things, the direct evidence, as well as the Laris Declaration. [00:59:56] Speaker 02: There was an argument by counsel that the Laris Declaration is completely incredible, but that is not a basis to deny summary judgment simply because a party asserts that something is incredible. [01:00:07] Speaker 02: In terms of the date of the declaration, it was signed on April 3rd, 2019. [01:00:11] Speaker 02: It speaks in the present and recent past tense, so there's no reason to think or infer, and no reasonable juror could infer, that she used the products only before the patents issued in 2016. [01:00:22] Speaker 02: Uh, in terms of the late disclosure, allegedly disclosure of the, of the, uh, Laris declaration, it was within the district court's discretion under third circuit case law. [01:00:32] Speaker 02: I'd cite the Viverka case, 649 S appendix 165 to 166. [01:00:37] Speaker 02: It says the district court has discretion in terms of accepting a late disclosed witness in those circumstances. [01:00:44] Speaker 02: Um, [01:00:45] Speaker 02: The final point I want to make is, even if this court has concerns about the step three products, and we don't think that the court should have concerns, the step three products by their nature are called step three. [01:00:56] Speaker 02: They necessarily refer back, and their instructions refer back to steps one and two. [01:01:01] Speaker 02: So the step three, whether or not it itself infringes, is again promoting an infringing use of steps one and two. [01:01:07] Speaker 02: And for that reason, among others, the injunction can be sustained and should be sustained as to step three. [01:01:14] Speaker 00: Can I ask you, yeah, I do have one further question. [01:01:20] Speaker 00: Can you say something about this Akamai aspect where at least the allegations that involve the customer's use seem to require that a stylist and a customer [01:01:39] Speaker 00: be equated for direct infringement purposes, and why was the evidence sufficient for summary judgment in your favor on that question? [01:01:54] Speaker 02: Sure. [01:01:54] Speaker 02: Thanks, Judge Taranto. [01:01:55] Speaker 02: The first preliminary point I would make is that Laris, in her declaration, [01:02:00] Speaker 02: testified that she herself did all three steps, including step three. [01:02:05] Speaker 02: So we do have an example where we don't need to attribute a customer to a stylist. [01:02:09] Speaker 02: We have the stylist performing all three steps. [01:02:11] Speaker 02: Beyond that, on the travel sentry point, vis-a-vis the Akamai en banc decision, we do think travel sentry interprets those conditions of attribution in a way that applies here. [01:02:24] Speaker 02: And the reason is because travel sentry doesn't [01:02:27] Speaker 02: impose some strict requirement that will cut off access to the process by the first actor if the second actor doesn't do exactly what he or she was instructed to do. [01:02:38] Speaker 02: It's more lenient and what it does is it focuses on the benefits. [01:02:41] Speaker 02: So if there are instructions from the first actor to the second actor and if there are benefits that are reasonably obtained by performing those instructions, that is enough under travel sentry. [01:02:51] Speaker 00: Under travel sentry, who is it that is [01:02:57] Speaker 00: required to benefit. [01:02:59] Speaker 00: Is it here the home user or is it the stylist? [01:03:04] Speaker 02: It would be the home user. [01:03:06] Speaker 02: And in Travel Century, similarly by analogy, it was the TSA, Transportation Safety Agency, that was the actual performer of the steps. [01:03:16] Speaker 00: And in your summary judgment papers, did you address all of this? [01:03:26] Speaker 00: This whole Akamai [01:03:27] Speaker 00: attribution question for the direct infringement that's relevant here? [01:03:35] Speaker 02: I think it's actually to the induced infringement point. [01:03:38] Speaker 00: Well, but it's relevant indirectly because without direct infringement, there's no induced infringement. [01:03:45] Speaker 02: That's right. [01:03:45] Speaker 02: You need direct infringement by some end user and you need some end user or attributed end user to have performed all the steps. [01:03:53] Speaker 02: And I believe this was briefed. [01:03:54] Speaker 02: I'd be happy to provide the court with a specific page reference by letter, but I don't have that at my fingertips. [01:04:03] Speaker 03: All right, unless there are further questions from my colleagues, I think we're out of time. [01:04:09] Speaker 03: Hearing no questions, we'll hear from Mr. Kinnear in just a few minutes. [01:04:14] Speaker 01: Yes, Your Honor, I'll be very fast. [01:04:15] Speaker 01: So on the standing, I would note that Mulaney is a Rule 21 case. [01:04:20] Speaker 01: They still identify no authority. [01:04:22] Speaker 01: You use Rule 21 to cure mutinous or to substitute a party, which is what they would have to prove. [01:04:31] Speaker 01: In Mulaney, it was perfecting [01:04:33] Speaker 01: the jurisdiction over for the injured party, which were the union members. [01:04:38] Speaker 00: Um, on the, on the point about what can I just ask this and I don't, I don't have Mulaney in my head here. [01:04:45] Speaker 00: Um, I thought that your friend on the other side said that, and I think this was Mulaney, he was discussing maybe another case that, um, the Supreme court added the party specifically saying it was doing so, so it didn't have to decide. [01:05:01] Speaker 00: whether the pre-added party had standing, which means that what it did must be authorized even on the assumption that the original party lacked standing. [01:05:16] Speaker 01: No, Your Honor. [01:05:17] Speaker 01: I think this falls in the line, as the Ninth Circuit said in Bain, where you're perfecting the jurisdiction by adding a party, but there's an Article III controversy. [01:05:26] Speaker 01: So the court did not decide that the union lacked associational standing. [01:05:31] Speaker 00: On behalf of its non-resident members. [01:05:34] Speaker 00: But did it say, we don't have to decide that so that what we are doing is a valid thing to do even if that union association did not have standing? [01:05:48] Speaker 00: It must have been saying that, right, if it wasn't decided. [01:05:51] Speaker 01: Well, what it said is that it would perfect the appeal, but it's different when it's clear that the current parties have no standing. [01:06:01] Speaker 01: Cases moot, so you have to substitute. [01:06:03] Speaker 01: This is not an addition. [01:06:05] Speaker 01: I would also point out, I would urge the court to look at the December 16th order in a paragraph 11 because the district court clearly says he's ordering them to submit a proposed final judgment and it will then, and he asked the proposed final judgment to reconcile that memorandum, the court's memorandum on the duplicative damages and the jury verdict. [01:06:30] Speaker 01: And so that, and then he says, I will then enter a judgment. [01:06:33] Speaker 01: This is not a matter of just this separate paper requirement. [01:06:37] Speaker 01: And it's true the parties agreed on the prejudgment interest, starting with the latest of the jury verdicts. [01:06:44] Speaker 01: But the point is the court hadn't held that. [01:06:47] Speaker 01: The court was reserving to itself to review what the parties came up with. [01:06:52] Speaker 01: And the parties did dispute the disposition of other orders. [01:06:55] Speaker 01: And so on the dicta point, the only dicta is Rule 25. [01:07:00] Speaker 01: Rule 25 cannot be invoked when there's no Article 3 standing. [01:07:07] Speaker 03: I would then move on. [01:07:08] Speaker 03: Mr. Cairn, before you run out of time here, could you address the question of whether the injunction can be supported on the direct infringement theory that we heard from Mr. Weisberg? [01:07:20] Speaker 03: In other words, the way I hear him, [01:07:22] Speaker 03: He seems close to admitting that there might be genuine issues of material fact with respect to inducement. [01:07:31] Speaker 03: But he says, nonetheless, there are instances here of direct infringement by L'Oreal itself, which could support the injunction. [01:07:44] Speaker 01: Your Honor, I would say the answer to that is no, but I would just point out [01:07:49] Speaker 01: On their training videos, they never established that the performance took place before the patent's issued. [01:07:56] Speaker 01: And on the educators that go out, they never showed that all it says is that you're going to demonstrate the use. [01:08:05] Speaker 01: And one deponent thought that could mean just show how to mix it. [01:08:10] Speaker 01: They didn't show an actual single act. [01:08:15] Speaker 01: But the judgment cannot stand. [01:08:18] Speaker 01: without the indirect infringement because of step three. [01:08:22] Speaker 01: And there's no allegation or proof of any direct infringement of step three. [01:08:28] Speaker 01: And I would point out, they cannot say that the LARIS, first of all on LARIS, [01:08:34] Speaker 01: there is no evidence they point to that we induce her use of step three in the salon. [01:08:41] Speaker 01: They didn't put any evidence of inducement at all. [01:08:44] Speaker 01: If they're relying on instructions, those are only for at-home use. [01:08:47] Speaker 01: There's no evidence of inducement. [01:08:50] Speaker 01: But I would also push back on the idea that one instance of indirect infringement [01:08:58] Speaker 01: judgment across the board. [01:08:59] Speaker 01: If they had sued 10 different stylists, they couldn't prove summary judgment on all 10 just based on Ms. [01:09:06] Speaker 01: Laris. [01:09:06] Speaker 01: So that's part of their liability case. [01:09:09] Speaker 01: And liability for each inducing act is not important if you have reasonable royalties, but when you're seeking lost profits, it is critical. [01:09:19] Speaker 01: And then as far as the issue of control, [01:09:23] Speaker 01: We think they have summary judgment. [01:09:24] Speaker 01: They certainly don't get summary judgment on control. [01:09:28] Speaker 00: Mr. Kinnert, this is Judge Turnbull. [01:09:29] Speaker 00: Can I ask you this question? [01:09:31] Speaker 00: And I know it's sort of getting ahead of ourselves. [01:09:36] Speaker 00: Suppose that at the end of the day, in the case we're about to hear, the PGR case, and suppose also in the appeal of the December [01:09:47] Speaker 00: remand ruling in the 419P that the breakage claims and only the breakage claims survive. [01:09:55] Speaker 00: What should happen in this case? [01:09:59] Speaker 01: The breakage claims are critical to the summary judgment. [01:10:04] Speaker 01: If you uphold everything else, the breakage alone would not prevent an injunction. [01:10:09] Speaker 01: But you would have to uphold the step three issue on indirect for all those claims, which includes the breakage claims [01:10:16] Speaker 01: And you would have to uphold the independent claims as well. [01:10:21] Speaker 01: I would just point out one issue on the Malayic acid safety sheets. [01:10:25] Speaker 01: That's a red herring because the Malayic acid there is the same, measuring the same weight as the NMR. [01:10:33] Speaker 01: He did not rely on it, perhaps because it was a maximum. [01:10:36] Speaker 01: But the point is it suffers from the same flaws. [01:10:39] Speaker 01: The issue is, [01:10:40] Speaker 01: that what you use the molecular weights for is to determine the fractional composition of that weight that is free acid. [01:10:50] Speaker 01: That's what Dr. Freeman said and said, hey, you can't use this as a proxy for the amount added into the formulation, which is a different amount of free acid, because even this is for the concentration. [01:11:01] Speaker 01: So they had to go back to the original aqueous solution that [01:11:07] Speaker 01: up one product and show that the free acids there under their own construction would be within the concentration ranges. [01:11:17] Speaker 03: Thank you. [01:11:17] Speaker 03: I think unless my colleagues have further questions, we're out of time. [01:11:22] Speaker 03: Thank you, your honor. [01:11:23] Speaker 03: Thank you. [01:11:23] Speaker 03: I thank both counsel and cases submitted.