[00:00:03] Speaker 03: The United States Court of Appeals for the Federal Circuit is now open and in session. [00:00:08] Speaker 03: God save the United States and this honorable court. [00:00:13] Speaker 06: We have one case for this afternoon. [00:00:15] Speaker 06: It's number 20-1382, Liquide, Inc. [00:00:19] Speaker 06: versus L'Oreal USA, Inc., Mr. Kinnaird. [00:00:25] Speaker 06: Obviously, many of the issues that were briefed here [00:00:29] Speaker 06: were resolved in our opinion about the injunction, but there are some remaining issues. [00:00:36] Speaker 06: Mr. Kinnaird, why don't you go ahead. [00:00:39] Speaker 02: Thank you, Your Honor. [00:00:40] Speaker 02: I plan to address JMAAL on the trade secret and contract claims, the witness exclusion error, the written description issue that would end the patent claims and damages. [00:00:52] Speaker 06: Olaplex asserted... The substitution issue, which you didn't mention, the standing issue. [00:00:59] Speaker 02: Your Honor, I think our understanding of the 954 decision of this Court, which held that the substitution of a transferee was available, notwithstanding mootness, would seem to us to resolve this case as well. [00:01:22] Speaker 02: Oleplex asserted four categories. [00:01:26] Speaker 06: That's nice that you're taking that position, but I'm not sure that the previous opinion does resolve that issue because in that case, we said that the transfer took place after the judgment that occurred. [00:01:43] Speaker 06: Are you agreeing that that same thing happened here with respect to the money damages? [00:01:55] Speaker 02: No, the transfer here occurred after final judgment. [00:01:59] Speaker 02: So the case was moot at the time of final judgment. [00:02:03] Speaker 02: So we think that it was moot, but the court distinguished the Bain case, which had held that there's no remedy. [00:02:14] Speaker 02: While a jointer or dismissal of party, if there's Article III standing, is permissible, but not [00:02:22] Speaker 02: Substitution, if there's mootness in the court, as least as I understood the opinion, said that you could substitute if it's a transferee as opposed to a brand new party. [00:02:35] Speaker 02: So that remedy is available and the court could order it, I think, in line with the others. [00:02:41] Speaker 02: But I mean, if the court believes that's distinguishable, then I think then there is a potential distinction in terms of when the [00:02:52] Speaker 02: when judgment was rendered, and that there was lack of standing here at the time of judgment. [00:02:58] Speaker 06: Okay, well, unless my colleagues have further questions about that, why don't you just go ahead. [00:03:02] Speaker 02: Yes, Your Honor. [00:03:05] Speaker 02: Olaplex asserted four categories of trade secrets at trial. [00:03:09] Speaker 02: Three cannot even arguably sustain the verdict, as the district court ruled, and critically, there's zero evidence of improper use or causation of damages. [00:03:19] Speaker 00: Can I just double check something and perhaps more important question to Olaplex. [00:03:27] Speaker 00: Is there a dispute about whether there's any difference relevant to this case in the legal requirements for the trade secret and contract breach claims? [00:03:40] Speaker 02: We don't think there's, the distinction they point out is that they don't have to show value, but they do have to show that the contract, that the information could be protected by the contract was not generally available, which is the same as ready ascertainability, and was not previously possessed by or independently developed by. [00:04:04] Speaker 02: L'Oreal USA. [00:04:05] Speaker 02: And if that's true, there is no protection at all. [00:04:09] Speaker 02: And because their theory is use and breach of a duty under the NDA, there's no misappropriation. [00:04:15] Speaker 02: So I think in practical terms, there is no difference. [00:04:18] Speaker 02: You can't sustain the verdict on the contract because they have the same flaws in proof. [00:04:24] Speaker 02: And the patent application that they asserted can't be a trade... Counsel, when you... This is Judge Rainer. [00:04:31] Speaker 05: When you say the same flaws in proof, [00:04:34] Speaker 05: Do you mean economic value or showing of economic value in both of those instances? [00:04:39] Speaker 02: No, Your Honor. [00:04:40] Speaker 02: I think that it's not the value that it's, but the value has to be derived by not being readily ascertainable or generally known. [00:04:52] Speaker 02: And that's in common with the contract requirement that the information can't be generally available. [00:04:59] Speaker 02: And so here is the thing, and I think Olaplex now concedes, at trial they disclaimed any trade secret that was a combination of public and private information. [00:05:09] Speaker 02: At pages 13 to 15 to 16 of the trial transcript, which rules out the unpublished patent application as a whole. [00:05:17] Speaker 02: So they now concede at page 21 of the Red Brief, and as the Third Circuit held in Heisley, a plaintiff must identify discrete non-public information contained in the application. [00:05:29] Speaker 02: and prove that it qualifies as a trade secret. [00:05:32] Speaker 02: But Olaplex never asserted any narrow maleic acid trade secret at trial. [00:05:38] Speaker 02: Neither the district court's conception of a maleic acid active ingredient nor Olaplex's appellate redefinition [00:05:46] Speaker 02: of its secret as maleic acid used during bleaching. [00:05:50] Speaker 02: And indeed, it couldn't have. [00:05:51] Speaker 02: The Mintel reference addressed during prosecution disclosed a bleaching cream with maleic acid. [00:05:57] Speaker 02: Olaplex distinguished it only by adding a concentration limitation, Appendix 1428586. [00:06:04] Speaker 02: And the PTAT, as the court knows, found that Ogawa KR564 in Kitibata disclosed maleic acid during bleaching. [00:06:12] Speaker 02: This court upheld those findings. [00:06:14] Speaker 06: But if Olaplex wished... Is the standard determining whether something is obvious the same as the trade secret standard about public availability or ability to reconstruct the trade secret from public security? [00:06:33] Speaker 02: Your Honor, they're not exactly the same, but they share certain commonality. [00:06:36] Speaker 02: If anything, obviousness is harder to show reasonable expectation of success and the like. [00:06:42] Speaker 02: But ready ascertainability is, I think, a lower standard and doesn't apply to the entire invention. [00:06:49] Speaker 02: It's whatever the trade secret is, which they defined as malleic acid during leaching, at least on appeal. [00:06:57] Speaker 00: But here's the fundamental- Do you need that? [00:06:59] Speaker 00: This is just Toronto. [00:07:00] Speaker 00: Do you need that proposition here? [00:07:02] Speaker 00: I had understood that once one focuses on the asserted trade secret of [00:07:10] Speaker 00: maleic acid either as an active ingredient or during bleaching that at least one, maybe two, maybe three or four individual pieces of prior art teach that, even if obviousness was needed for the entirety of the particular claims in the two PGRs. [00:07:34] Speaker 02: That's exactly right, Your Honor. [00:07:36] Speaker 02: I'd like to point out that this was part of their affirmative burden of proof, and they put on no expert. [00:07:42] Speaker 02: who surveyed the political literature and testified that use of maleic acid during bleaching was not readily ascertainable or generally known. [00:07:50] Speaker 02: And that failure of proof alone requires JMAW. [00:07:54] Speaker 02: But as you point out, we also put forth multiple references disclosing maleic acid during bleaching. [00:08:00] Speaker 02: Olaplex studiously ignored them in its red brief, looked to other ones that we just had in there for the functional effects of maleic acid. [00:08:10] Speaker 02: And as we show at pages 33 to 34, this is, I think, very clearly determined, even apart from their failure on the burden of proof. [00:08:22] Speaker 02: But JMAW should be granted for an independent and simple reason. [00:08:25] Speaker 02: There can be no misappropriation or breach of contract unless the NDA protected the information transmitted. [00:08:33] Speaker 02: But there's no protection if O'Loreal previously possessed or independently developed it. [00:08:40] Speaker 02: as shown in the blue brief at 27 to 28. [00:08:42] Speaker 02: The record incontrovertibly shows that L'Oreal possessed the alleged trade secret of maleic acid used during bleaching by at least April 16, 2015, a month before. [00:08:54] Speaker 02: The PTAP found that, this court in the 954 appeal affirmed. [00:08:58] Speaker 02: And because that's so, none of the so-called circumstantial evidence advanced by Olaplex [00:09:05] Speaker 02: which is conspiracy theory, masquerading as proof, matters because we are not restricted in using the punitive trade secret information if we already possessed it. [00:09:15] Speaker 02: And there can be no misappropriation or breach of contract. [00:09:19] Speaker 02: But I would point out, Your Honor, that even absent Jamal, the exclusion of critical witnesses warrants a new trial. [00:09:27] Speaker 02: Alar was the central fact witness to our defense. [00:09:30] Speaker 00: Can I just ask you this question? [00:09:34] Speaker 00: do you think Oleplec should have served on whom in order to seek a deposition of Ms. [00:09:43] Speaker 00: Allard? [00:09:44] Speaker 02: Well, Your Honor, they really didn't have any way to get a compulsory, there's no compulsory deposition. [00:09:52] Speaker 02: What they had noticed that had to be filed, they could have come to us and requested it, right? [00:09:59] Speaker 02: And then, but the other important point I would say, [00:10:02] Speaker 06: So your view is that under the district court's order, it was the burden was on them to seek and take the deposition rather than to your offering up the witnesses. [00:10:15] Speaker 06: Is that right? [00:10:15] Speaker 02: Well, our view is that the scheduling order doesn't have anything to do with duty. [00:10:20] Speaker 06: I'm trying to answer my question. [00:10:22] Speaker 02: I'm sorry, your honor. [00:10:24] Speaker 06: Is your view that under the scheduling, you listed [00:10:28] Speaker 06: the witnesses. [00:10:31] Speaker 06: So in that respect, you comply. [00:10:32] Speaker 06: Is it your view that having listed the witnesses, it was up to them to depose them rather than up to you to offer them up for deposition? [00:10:43] Speaker 02: Right. [00:10:44] Speaker 02: Your Honor, there's never a duty to offer for deposition. [00:10:48] Speaker 02: I mean, even if it's within the [00:10:50] Speaker 02: A witness within your control, you have to notice the deposition. [00:10:55] Speaker 02: They didn't do that with Alar. [00:10:57] Speaker 00: So I'm a little confused. [00:10:59] Speaker 00: I thought you just said there wasn't actually any compulsory process that Olaplex had available to it that it bypassed to get Alar's deposition and that what Olaplex should have done is simply say, please, would you do it for us? [00:11:16] Speaker 02: Yes, they could have asked, but because the important point is the established law is that a party has no duty to produce anyone for deposition other than an officer, director, or managing agent, and then only upon notice. [00:11:30] Speaker 02: And the scheduling order did and could not impose new discovery duties. [00:11:35] Speaker 02: It only declares that it is expected that witnesses will have been disclosed, vetted, and deposed if a party elects during the fact discovery process. [00:11:45] Speaker 02: So it's besits a scheduling order. [00:11:47] Speaker 02: This means only that if a party elects to depose a trial witness and is entitled to the deposition, it has to schedule it before fact discovery closes. [00:11:56] Speaker 02: And this is another fundamental point. [00:11:58] Speaker 02: If Olaplex believed that its September 2018 Hague request was, quote, an election that triggered a duty of L'Oreal USA to produce Allah, [00:12:10] Speaker 02: Then, as with any enforcement of a discovery obligation, it had to meet and confer and, if necessary, file a motion to compel production of a large deposition before the December 21st fact discovery deadline. [00:12:24] Speaker 02: Olaplex cannot wait nine months and then raise its novel theory of a scheduling order violation for the first time in a motion of limiting and then say our prior offer of a deposition came too late. [00:12:37] Speaker 02: And further, I think Olaplex is responsible for how it frames its discovery request. [00:12:42] Speaker 02: It sought Alar, or another witness, as a corporate deponent for L'Oreal SA. [00:12:48] Speaker 02: And it's not really our role or duty to suggest that their Hague request was an ill-conceived mechanism for deposing Alar, who is not present in France, and inquire whether they might [00:13:01] Speaker 02: affirmatively inquire whether they might prefer a more limited deposition on her personal knowledge. [00:13:09] Speaker 00: When Olaplex filed its hate convention request, did you already know that Arard was in South America and not in France? [00:13:17] Speaker 02: Yeah, they did too, Your Honor, because it was mentioned in their expert report. [00:13:24] Speaker 02: But yes, she's been there since 2016. [00:13:28] Speaker 02: And by the way, even if [00:13:30] Speaker 02: they feel like they should have gotten her then, we offered her right within a week. [00:13:36] Speaker 02: You know, they said, arrange it through us, and we sent a letter even a week after that. [00:13:41] Speaker 02: So there was no prejudice at all. [00:13:43] Speaker 02: But even so, in the absence of duty, the district court... Hold on a second. [00:13:47] Speaker 06: Unless my colleagues have further questions on the witness issue, I'd like to turn you to the effect of the [00:13:56] Speaker 06: PTAB decision on your invalidity contention as to the patent verdict. [00:14:03] Speaker 06: Yeah. [00:14:04] Speaker 06: So are we done with the witness questions? [00:14:09] Speaker 05: Yeah, that's fine. [00:14:11] Speaker 06: Yeah. [00:14:12] Speaker 06: OK. [00:14:12] Speaker 06: So you had these two invalidity issues that you raised, written description and obviousness. [00:14:22] Speaker 06: Why is it that the PTAP decision, which has now become final, isn't preclusive as to those two because they could have been raised in the post-grant review proceeding? [00:14:37] Speaker 02: Your Honor, the reason is twofold. [00:14:39] Speaker 02: One is that the statute says that Estopolo [00:14:45] Speaker 02: comes when there is a final written decision under Section 328A. [00:14:50] Speaker 02: That's the PTAB final written decision. [00:14:54] Speaker 02: So when the 954 final written decision was issued, [00:14:59] Speaker 02: before trial, this estoppel issue was ripe and they chose for their strategic reasons not to assert it in the district court. [00:15:08] Speaker 02: And so the purpose of the statutory estoppel was frustrated because there were, we had to go ahead and try that. [00:15:15] Speaker 02: And I think they may have done that because they knew in the very limited time we'd have to put on that case and it would detract from our other arguments. [00:15:23] Speaker 06: Let's assume for the moment that we were to hold [00:15:29] Speaker 06: that the estoppel doesn't arise until the final written decision becomes final, i.e. [00:15:36] Speaker 06: not subject to further court review. [00:15:40] Speaker 06: They weren't untimely if that's the case, right? [00:15:44] Speaker 02: They wouldn't be untimely, Your Honor. [00:15:46] Speaker 02: The problem with that interpretation also is it's a fact question about what we reasonably could have raised. [00:15:52] Speaker 02: And here in with regard to written description, [00:15:55] Speaker 02: our risk and description defense was based on the district court's claim construction, which post-stated the TGR petition. [00:16:01] Speaker 02: And they certainly haven't established that. [00:16:03] Speaker 02: And there's no mechanism on appeal to really determine that or to determine whether the references we relied on in obviousness were the same. [00:16:11] Speaker 06: So I think it has to be... I'm sorry. [00:16:13] Speaker 06: I just didn't understand what you're saying. [00:16:16] Speaker 06: So what they have to show... A pink-written description. [00:16:20] Speaker 06: You could have raised that before the PTAB, right? [00:16:26] Speaker 02: We could have, yes. [00:16:27] Speaker 06: So why isn't there foreclosure as to that? [00:16:31] Speaker 02: Well, the reason is that the foreclosure, it wasn't the precise written description defense because our written description defense necessarily had to address the district court's claim construction and one of the primary disputes was whether [00:16:47] Speaker 02: Among other things, the breakage descriptions actually reflected what this record had deemed to be industry standard testing, which was only part of their construction. [00:16:59] Speaker 02: So we couldn't have raised the precise defense. [00:17:02] Speaker 02: We could have raised a written description defense. [00:17:04] Speaker 02: But I think that's the issue, that it would have been their burden to prove. [00:17:09] Speaker 02: And I think because that's a factual question, that simply underscores why [00:17:14] Speaker 00: Would I understand correctly that the implication of your position, what you just said, is that not just as to written description, but as to enablement indeed in IPRs as to 102, 103, if a district court adopts a particular claim construction, you know, after, you know, along the way that [00:17:42] Speaker 00: a whole bunch of 102, 103, 112 defenses now are not subject to estoppel because it's not exactly the same claim construction as the board used. [00:17:58] Speaker 00: That seems like an extraordinary narrowing of the estoppel provision. [00:18:05] Speaker 02: And that's why I say I think it would have to be one in which the written description defense was affected [00:18:11] Speaker 02: by the position. [00:18:15] Speaker 02: But I think that's the plain language. [00:18:17] Speaker 02: Under 315, the PTAB has taken the position that a stopper arises with its final written decision, even prior to rehearing or prior to appeal. [00:18:30] Speaker 02: And I think this is not written like some of the other provisions which have to do with cancellation, which talk about a final ruling, and they didn't use the term of art, final written decision under 328A. [00:18:41] Speaker 02: So I think if the court reaches it, would Your Honor, I'm well into my rebuttal, I think, of past, would you like to hear argument on either the substance of written description or damages? [00:18:56] Speaker 06: Well, have you said all you have to say about the PTAB estoppel issue? [00:19:03] Speaker 01: Yes. [00:19:05] Speaker 06: OK, we'll give you a minute to talk about the merits of written description and obviousness. [00:19:12] Speaker 02: Okay, not damages. [00:19:15] Speaker 02: That's fine. [00:19:16] Speaker 02: The written description, what they had to describe was the precise invention of claims 14 to 16, which is a specific bleaching method of claim 13 with maleic acid in a specified concentration range, second application of maleic acid as a conditioning agent, and then resulting in the enumerated breakage reduction. [00:19:40] Speaker 02: And the specification doesn't describe that for three reasons. [00:19:43] Speaker 02: First, the breakage reductions are only described for some embodiments, not identified malic acid as opposed to the potentially thousands of other active agents that are covered by the patent's generic formulas. [00:19:57] Speaker 02: None of the breakage reductions is identified for bleaching, much less the specific bleaching method of claim 13. [00:20:03] Speaker 02: In fact, the sections in which those disclosures are made deal with permanent waving and hair coloration. [00:20:10] Speaker 02: And third, the specification must describe the full range of the claim up to 100% breakage reduction. [00:20:17] Speaker 02: There's no description of a perfect method of hair protection that eliminates 100% of breakage, but Olaplex claims that. [00:20:25] Speaker 02: So it's unfounded and we clearly did preserve the issue in Rule 50A. [00:20:30] Speaker 02: Council, we identified the law written description. [00:20:33] Speaker 02: We've identified the facts, the testimony of Dr. Freeman. [00:20:38] Speaker 02: The district court has said don't give me argument and then ruled summarily. [00:20:41] Speaker 02: We think that issue is presented. [00:20:45] Speaker 06: Okay. [00:20:45] Speaker 06: I think unless my colleagues have further questions about this issue, we're out of time. [00:20:54] Speaker 06: I'm not hearing any questions. [00:20:55] Speaker 06: We'll give you two minutes for rebuttal. [00:20:58] Speaker 06: Thank you. [00:21:01] Speaker 06: Okay. [00:21:02] Speaker 06: Was Mr. Weiss first? [00:21:04] Speaker 04: Thank you, Your Honor. [00:21:05] Speaker 04: May it please the Court. [00:21:07] Speaker 04: I'd like to begin briefly with the question of jurisdiction. [00:21:12] Speaker 04: It is our position that this Court should decide that question based both on the decision and the injunction appeal that Mr. Kinnaird referenced, but also because the transfer here did occur after the judgment. [00:21:25] Speaker 04: Specifically, the judgment was rendered in mid-December [00:21:29] Speaker 04: and the transfer happened in January. [00:21:32] Speaker 04: And that, we've explained that in our brief, why that is so. [00:21:35] Speaker 04: Only the final judgment paper, not the final judgment, occurred after the judgment was entered. [00:21:41] Speaker 06: Okay. [00:21:42] Speaker 06: The problem with that, perhaps, is that the December document is not labeled judgment. [00:21:50] Speaker 06: And some of these cases have suggested that [00:21:53] Speaker 06: in determining whether something constitutes a judgment that it really depends on the district court's intent. [00:22:00] Speaker 06: I'll tell you what troubles me a bit about that argument is that if instead of a standing issue, we had here a question of the timeliness of the notice of appeal, to say that you had to appeal from something that labeled a memorandum, opinion, or whatever it was, [00:22:23] Speaker 06: seems to me potentially unfair. [00:22:26] Speaker 06: What's your answer to that? [00:22:28] Speaker 04: Yes. [00:22:28] Speaker 04: I think that the answer to that comes from the federal rules. [00:22:32] Speaker 04: And specifically, there is a normal requirement that a final judgment paper, which as Your Honor referenced, is something that states that it is a judgment on its face, is. [00:22:43] Speaker 04: However, if a party goes ahead and files a notice of appeal, [00:22:47] Speaker 04: earlier than that, then that requirement of a final judgment paper and waiting, I believe, it's 120 days until that happens is waived under the federal rules. [00:22:56] Speaker 04: OK. [00:22:57] Speaker 06: The problem that I'm having is if we call this original memorandum the final judgment, then you would have to appeal from that document within the time period. [00:23:14] Speaker 06: And that's potentially unfair, right? [00:23:17] Speaker 04: No, I don't. [00:23:18] Speaker 06: We were just talking about the question of whether that's in the context of the timeliness of a notice of appeal, whether it would be unfair to treat this memorandum as the final judgment. [00:23:34] Speaker 04: So Mr. Weisberg. [00:23:36] Speaker 04: Yes. [00:23:38] Speaker 04: And very briefly, I believe that absent the fact that Morial did go ahead and file a notice of appeal, this would not be an issue of fairness because you would have the normal requirement of a separate final judging paper that would be required. [00:23:50] Speaker 04: So I don't believe it presents unfairness. [00:23:53] Speaker 06: I'd like to also, however, as I said... Wait, that seems to suggest that you're arguing for a different standard for substitution and for the notice of appeal as to when the final judgment is. [00:24:11] Speaker 04: No, what I'm saying is the final judgment, in fact, did occur. [00:24:18] Speaker 04: I believe that to the extent that Schreiber holds on this issue, and I don't intend to criticize Schreiber during today's argument, but to the extent Schreiber is holding, I believe that that... Wait, are you saying that if the notice of appeal [00:24:36] Speaker 06: were only filed from what's labeled here as the final judgment, that that would be timely? [00:24:44] Speaker 04: If L'Oreal had not filed an earlier notice of appeal in January, instead had waited for a final judgment paper to file its notice of appeal, yes, our position is that would be timely. [00:24:54] Speaker 04: However, final judgment would still... I think the distinction is between final judgment on the one hand and the final judgment paper on the other. [00:25:01] Speaker 04: It is our position that the final judgment was as of December. [00:25:05] Speaker 04: and therefore the transfer of the place after. [00:25:07] Speaker 04: However, even if Your Honor and this Court rejects all of that, we do believe that under the approach of the injunctional appeal, which has now remanded and held its jurisdiction to have a new trial on liability for patent infringement, that that also should control here. [00:25:22] Speaker 04: It wouldn't make much sense to dismiss the damages piece of the case and make that start over when we know we're going to have a new liability trial for injunction purposes. [00:25:30] Speaker 04: If I could turn to the question of the trade secret Jamal issue. [00:25:34] Speaker 04: We absolutely do not concede that the trade secret was public information. [00:25:38] Speaker 06: Well, did this have any testimony at all on the question of whether it was readily ascertainable? [00:25:45] Speaker 06: I'm talking about the Malay asset. [00:25:48] Speaker 04: Yes, we did. [00:25:49] Speaker 04: Our expert and there is some overlap. [00:25:54] Speaker 06: Where did your expert testify that it wasn't readily ascertainable? [00:26:00] Speaker 04: Dr. Borish was our principal expert on this issue, as well as Mr. Shoon. [00:26:05] Speaker 04: But Dr. Borish testified to all of the prior references that were raised by L'Oreal trial. [00:26:12] Speaker 06: I'm asking you where he testified to this point. [00:26:17] Speaker 04: Yes. [00:26:17] Speaker 04: If you bear with me, I can give you the appendix site. [00:26:30] Speaker 04: So, for example, it's at around 45566 and thereabouts. [00:26:36] Speaker 04: Which volume? [00:26:38] Speaker 04: This is the appendix. [00:26:40] Speaker 06: Which volume? [00:26:41] Speaker 04: Volume 4. [00:26:43] Speaker 04: Volume 4 actually begins with 4, 5, 5, 6, 4. [00:26:47] Speaker 04: So he goes on and talks about several different references at that point. [00:26:52] Speaker 04: And yes, he's doing it in the context of obviousness. [00:26:55] Speaker 04: We believe under page. [00:26:56] Speaker 06: Wait, you're not answering the question. [00:26:58] Speaker 06: Where did he think that it wasn't readily answered? [00:27:03] Speaker 06: I understand that he attempted to distinguish some of these references. [00:27:08] Speaker 06: Where does he testify that the alleged trade secret wasn't readily ascertainable? [00:27:14] Speaker 04: For example, if we look at 45566, he argues that there's kind of two schools of prior art, one of which teaches... Wait, wait, wait. [00:27:27] Speaker 06: What page? [00:27:28] Speaker 06: 45566. [00:27:36] Speaker 04: Okay, where? [00:27:37] Speaker 04: And this is just one example, but he's talking about teaching away and how some of the prior art references involved a high pH and others involved a low pH, and it was his position that they couldn't be combined, and it was not obvious to combine them, and it was not, therefore, as a matter of trade secret, readily ascertainable to combine them. [00:27:54] Speaker 06: When does he say that? [00:27:57] Speaker 04: Well, I'm not sure if he used the words readily ascertainable on that specific page. [00:28:03] Speaker 04: But he did certainly use the concept of teaching away. [00:28:06] Speaker 04: And I would argue that teaching away means it's not readily ascertainable. [00:28:11] Speaker 06: We also, however... This is testimony about obviousness, right? [00:28:15] Speaker 04: That's right. [00:28:16] Speaker 04: We also, if I could just provide the court with another citation. [00:28:21] Speaker 04: This is from Mr. Shoon who was more the trade secret expert. [00:28:25] Speaker 04: Although the reason I talk about obviousness is because that's where a lot of the prior references were discussed at trial. [00:28:30] Speaker 04: But Mr. Shoon at 44624 to 44625 discussed the value of the trade secrets and they're not being readily ascertainable. [00:28:40] Speaker 06: And I'll give... What page? [00:28:43] Speaker 04: 44624 to 44625. [00:29:00] Speaker 06: Okay, which line? [00:29:20] Speaker 04: Well, I think we could start with line 16 on 44624. [00:29:27] Speaker 04: where he talks about the use of maleic acid in a bleaching treatment at the same time as a bleaching treatment as being a brand new category in the industry. [00:29:35] Speaker 06: And then further... He testified that it wasn't readily ascertainable from the prior art references. [00:29:44] Speaker 04: So if we look at the file on page 44625, he says that these are very unconventional methods that were being used by Olaplex and they had not been used before. [00:29:55] Speaker 04: But I would, if the court will permit me, I do want to point out a couple of things. [00:30:02] Speaker 04: Number one, even if the obviousness and the readily ascertainable standard were exactly the same, we do now have a PTAB decision affirmed by this court that says that claims 14 through 16 of the 954 patent are not obvious. [00:30:16] Speaker 04: We would argue it follows a fortiori that those consist in a trade secret. [00:30:20] Speaker 04: And the reason why those claims alone are not. [00:30:23] Speaker 06: Where did you claim that those [00:30:25] Speaker 06: or that that was the trade secret? [00:30:27] Speaker 06: I thought the trade secret is defined in your brief with the use of maleic acid in the bleaching process. [00:30:36] Speaker 04: Yes. [00:30:36] Speaker 04: That is what we said in the brief. [00:30:39] Speaker 04: At the time, we had not yet lost the independent claims of those patents. [00:30:43] Speaker 04: And we stand by that position, I want to stress, because the standard of obviousness under patent law is different from the standard for trade secret purposes under the Supreme Court's Kimani decision. [00:30:53] Speaker 04: But I do want, I think we've been focusing a lot on the unpublished patent application, but it's equally important to focus on what else was handed over the table on May 19th that L'Oreal misused. [00:31:05] Speaker 04: And that was a set of financial information and how to test and know how for producing this product and bringing it to market. [00:31:13] Speaker 00: There were four buckets of- Mr. Weisberg, this is Judge Charano. [00:31:16] Speaker 00: Can I just ask you the same question I asked Mr. Kinnaird? [00:31:20] Speaker 00: Is there any difference relevant to this case [00:31:23] Speaker 00: in the legal requirements for the trade secret and contract breach claims? [00:31:28] Speaker 04: Well, I would agree with Mr. Kinnaird. [00:31:30] Speaker 04: I think the main difference is the value of the trade secret that we don't need to prove the value for purpose of the breach of contract claim. [00:31:37] Speaker 04: We do need to prove that for the trade secret claim we believe we have. [00:31:40] Speaker 04: I would agree with Mr. Kinnaird though that [00:31:42] Speaker 04: in terms of whether something was publicly available or not. [00:31:45] Speaker 04: If it really were publicly available, it wouldn't be protected by the contract, but we absolutely showed that this was not publicly available here. [00:31:53] Speaker 00: And... Do you make an... I don't remember you're making an argument about a difference in the existence or strength of a particularity requirement, which has a fair bit of precedent in the trade secret area, and I didn't know whether you thought that carried over to the contract claim. [00:32:12] Speaker 00: But I don't remember you're making any distinction on that ground. [00:32:16] Speaker 04: No, we did not argue that. [00:32:17] Speaker 04: We pointed to the value. [00:32:20] Speaker 04: But I would like to say, so we had this testimony from the Oliflex CEO, Mr. Crystal. [00:32:26] Speaker 04: He explained that they had given not just the unpublished patent application, but also financial information and technical know-how and dead ends and how to bring this product to market. [00:32:36] Speaker 04: And that full package of material is what's at issue here. [00:32:39] Speaker 04: So it's really not just one unpublished patent application. [00:32:42] Speaker 04: And I heard Mr. Kinnaird criticize this as masquerading and CEO hyperbole, he called it in his brief. [00:32:49] Speaker 04: But really what this was was competing presentations to a jury which decided this issue. [00:32:55] Speaker 04: And it's a very high standard, as this court knows, to overturn a jury verdict. [00:32:58] Speaker 04: And we don't think that that standard is a mess. [00:33:01] Speaker 04: Now, I would like to briefly point the court to a few citations. [00:33:04] Speaker 00: I'm a little confused about something you just said. [00:33:06] Speaker 00: And I just may have misunderstood. [00:33:08] Speaker 00: You referred to a package. [00:33:10] Speaker 00: Is there a document? [00:33:12] Speaker 00: that you're referring to as identifying the trade secrets other than the, you know, the maleic acid one, the know-how testing that you said that your expert or your witness was referring to and thereby incorporating some details that he might not have articulated in answers to questions as a witness. [00:33:41] Speaker 04: Well, again, the key witness here is Mr. Shoes, who sort of ties everything together. [00:33:46] Speaker 04: But he does refer to all of the material that was handed over at that May 19th meeting, which included both the unpublished application as well as financial information. [00:33:55] Speaker 06: Well, the problem with that is that the cases suggest that you have to identify a trade secret with some particularity. [00:34:03] Speaker 06: And that sounds just like saying, well, it's this document and maybe some of the material. [00:34:09] Speaker 06: And it is a trade secret. [00:34:11] Speaker 06: there isn't any specificity as to what the trade secret is other than the maleic acid trade secret that you assert. [00:34:21] Speaker 04: Yes. [00:34:21] Speaker 04: And to clarify my point, the trade secret is maleic acid used at the same time and after a bleaching treatment. [00:34:30] Speaker 04: this other material, such as the financial information, the technical know-how, surrounds that trade secret and is what helps make it a valuable trade secret. [00:34:39] Speaker 06: What's the other trade secret? [00:34:41] Speaker 06: I mean, it hasn't been defined as the problem. [00:34:45] Speaker 04: Well, I point the court to the 44624 of the appendix. [00:34:51] Speaker 04: The trade secret there is defined as [00:34:53] Speaker 04: a maleic-based treatment in bleaching. [00:34:56] Speaker 04: Mr. Shunsa, that is the trade secret. [00:34:58] Speaker 06: I'm not talking about the maleic acid trade secret. [00:35:01] Speaker 06: I'm talking about the other alleged trade secrets. [00:35:04] Speaker 06: It's never been specified exactly what they are. [00:35:09] Speaker 04: Well, I would respectfully disagree. [00:35:11] Speaker 04: I think what they are is what surrounds the use of maleic acid in a bleaching treatment in order to bring that to market. [00:35:18] Speaker 04: So it's kind of the trappings of that trade secret and making it into an actual product. [00:35:23] Speaker 00: Are the trappings written down somewhere that we can look at in the Joint Appendix? [00:35:30] Speaker 04: Well, the trappings, some of this information was communicated orally and some in documents. [00:35:37] Speaker 04: The key document besides the unpublished patent application is the financials that were provided on May 19th. [00:35:43] Speaker 04: And while those financials are not [00:35:46] Speaker 04: in the record, L'Oreal's use of them is, and I can give the court a citation reference for that, 46788 to 46789. [00:35:57] Speaker 04: L'Oreal, what it does is it has taken those Olaplex financials and uses it in its own analysis of what to do in terms of whether to make its own product or to purchase Olaplex. [00:36:08] Speaker 05: How do those financial documents reveal a trade secret? [00:36:13] Speaker 05: What is it about the financial documents? [00:36:16] Speaker 04: that demonstrates the trade secrets. [00:36:20] Speaker 04: Because the financial documents are, number one, not publicly available, and their concrete cost information will have... That's different, isn't it? [00:36:28] Speaker 05: Not publicly available as opposed to it constituting a trade secret. [00:36:35] Speaker 04: Yes, it's not publicly available, but it's also a road map, as the CEO testified, to how to bring this product to market. [00:36:42] Speaker 04: So it is a trade secret. [00:36:44] Speaker 05: So what's the road map? [00:36:45] Speaker 05: So what's the roadmap? [00:36:47] Speaker 04: The roadmap is here's both the invention, maleic acid and bleaching, and here also is how you're going to commercially develop it into a product and get it out on the market, which of course is everyone's goal. [00:36:59] Speaker 04: It was L'Oreal's goal. [00:37:00] Speaker 04: It was Olaplex's goal. [00:37:02] Speaker 04: And they all go together. [00:37:04] Speaker 04: That's why the trade secret experts valued them as a package, but they are slightly different. [00:37:09] Speaker 04: Financial information is a separate document from the unpublished patent application. [00:37:15] Speaker 04: If the court will permit me, I'll briefly, I know I'm over my time as Mr. Kinnaird was as well. [00:37:20] Speaker 04: And if the court will indulge me, I'd just like to say a few words about some of the other issues. [00:37:25] Speaker 04: First of all, I think it's important. [00:37:27] Speaker 06: I have a question for you about the estoppel, OK? [00:37:31] Speaker 06: Suppose just hypothetically that in proving infringement here, you present evidence that the breakage limitation was inherent [00:37:45] Speaker 06: in the prior art, would an argument that that created obviousness before close by the PTAB decision since that evidence wasn't something that could have been presented to the PTAB? [00:38:05] Speaker 04: I'm not sure I follow your honest question. [00:38:08] Speaker 04: I apologize because my understanding was that the inherency argument was in fact made to the PTAB, was rejected by the PTAB and was affirmed by this court. [00:38:18] Speaker 04: So I do think that it was able to be raised and actually was raised and decided. [00:38:22] Speaker 06: What I'm saying is there's new evidence presented by you in connection with infringement that also shows inherency. [00:38:31] Speaker 06: But this is a hypothetical I'm talking about in the new trial. [00:38:36] Speaker 06: And the question I'm asking you is once you've presented this new evidence and they fasten on that and say, well, this new evidence shows inherency, is that argument foreclosed by the PTAB decision since the evidence that they would then be relying on wasn't evidence that could have been presented to the PTAB in the first place? [00:39:03] Speaker 04: Well, the standard, I admit, under the statutory estoppel under 325 could have been raised. [00:39:09] Speaker 04: And if they have a legitimate argument to make that they could not have raised something, then that's fine. [00:39:13] Speaker 04: However, on the written description issue that's at issue here, that's really just a matter of statute. [00:39:19] Speaker 04: That's something that could have been raised. [00:39:20] Speaker 04: And really, what written description requires is you're comparing the claims to the specification. [00:39:25] Speaker 04: I don't understand the L'Oreal point that it depends on some claim construction of the district court. [00:39:30] Speaker 04: I don't think that that fits here. [00:39:32] Speaker 04: And but even on the merits of written description, if I could just address those, we heartily disagree. [00:39:38] Speaker 04: And the relevant pages that the court could find at 307 and et cetera of the appendix talk about one thing Mr. Kinnaird mentioned is it doesn't go up to 100%. [00:39:48] Speaker 04: It absolutely does. [00:39:49] Speaker 04: At column 18, lines 28, it talks about 20% or higher after treatment. [00:39:57] Speaker 04: Or higher gets you up to 100%. [00:39:59] Speaker 04: And we also have pointed to other passages, which I don't have time to review now, but all of the passages in the specification support those claims 14 through 16. [00:40:09] Speaker 04: On the exclusion of witnesses issue, very briefly, here's the point. [00:40:13] Speaker 04: It's not about an obligation to produce someone. [00:40:16] Speaker 04: What it is is a precondition that if L'Oreal wants to call a witness at trial for its own case, which is what they ended up wanting to do, [00:40:24] Speaker 04: They cannot do that unless they satisfied the precondition of producing that person for deposition. [00:40:29] Speaker 04: Cause they, they obviously had control over missile art where they're willing to fly. [00:40:33] Speaker 06: Where does the order say that they have to produce them? [00:40:36] Speaker 06: I mean, there's no such requirement in the federal rule. [00:40:39] Speaker 06: You can't get it out of the order. [00:40:40] Speaker 06: Where is it in the order? [00:40:42] Speaker 04: Yes. [00:40:43] Speaker 04: It's a six, three, seven, four of the appendix. [00:40:46] Speaker 04: Um, the order says that trial witnesses, that is a witness that a party wants to call it trial. [00:40:52] Speaker 04: has to have been deposed if the other party elected deposition during the period. [00:40:57] Speaker 06: And I must correct Mr. Kinnear... Let's just say that they have to produce the witness as opposed to you're going through the normal processes to get the deposition. [00:41:09] Speaker 04: It's the way we interpreted it, as well as the district court, was that it's a precondition to L'Oreal being able to offer a witness. [00:41:16] Speaker 04: Now, if L'Oreal had not tried to offer Mr. Lard, then it's up to us to take whatever compulsory process is available to us. [00:41:24] Speaker 04: But this is a precondition and it's born out of fairness. [00:41:28] Speaker 04: It's not fair for L'Oreal to come forward and put a witness up who they clearly have control over because L'Oreal SA, maybe a different entity from L'Oreal USA, but they obviously had control because they could fly her up at a moment's notice. [00:41:42] Speaker 04: It's not fair for them not to put us through the burden of going to the Hague. [00:41:46] Speaker 04: We did ask in August [00:41:48] Speaker 04: of the year before the trial, August 2018, Mr. Kinnaird said we didn't ask for a deposition. [00:41:52] Speaker 04: We absolutely did ask. [00:41:54] Speaker 04: They denied it. [00:41:55] Speaker 04: We went to the Hague request. [00:41:56] Speaker 04: We filed this election during the fact discovery period. [00:41:58] Speaker 04: They fought us. [00:41:59] Speaker 04: They opposed the Hague request. [00:42:01] Speaker 04: We showed up in Nanterre, France to take her deposition. [00:42:04] Speaker 04: She no showed. [00:42:05] Speaker 04: They didn't give any... We had no idea she was in Brazil. [00:42:07] Speaker 04: That's a misstatement by Mr. Kinnaird. [00:42:09] Speaker 04: And so they put us through all of this trouble, all of this expense, and they also delayed off having the benefit of her deposition until very late in the case. [00:42:17] Speaker 04: And the district court's rule under the pretrial order is you can't do that. [00:42:21] Speaker 04: The sanction for that is that you cannot have that person testify for you because you did not make that person available timely during the period. [00:42:30] Speaker 04: That's the basis of the order. [00:42:31] Speaker 04: It's not some freestanding obligation to put a witness up. [00:42:34] Speaker 00: Right at the beginning of that recitation, before you got to the Hague, you said, [00:42:39] Speaker 00: We asked them, let's assume you meant L'Oreal USA, for a deposition of Ms. [00:42:48] Speaker 00: Allard. [00:42:49] Speaker 00: Where did you do that? [00:42:51] Speaker 04: We did it in a oral communication in August 2018. [00:42:55] Speaker 04: It's not in the record. [00:42:57] Speaker 04: I don't want to overstate it, because it's not a document. [00:43:01] Speaker 04: But there was a communication where that was requested. [00:43:06] Speaker 04: So it wasn't like we jumped right to a Hague request [00:43:08] Speaker 06: You can't rely on something that's not in the record to support what the district court did? [00:43:15] Speaker 04: Well, that's fair. [00:43:17] Speaker 04: I take that point. [00:43:18] Speaker 04: But Mr. Kinnaird said that we had not even asked in any respect. [00:43:22] Speaker 04: And I don't feel that that's a true statement. [00:43:25] Speaker 04: But I do recognize that it's not in the appellate record. [00:43:27] Speaker 04: We certainly did make the Hague request well within the fact discovery period, however. [00:43:33] Speaker 04: I want to mention one more thing, which I think is important, and that's aside from statutory estoppel, there's the doctrine of collateral estoppel under Max Linear, which Judge Dyke is authored, and other cases like the Nestle v. Steuben case. [00:43:46] Speaker 04: And the collateral estoppel issue here applies to independent development versus copying. [00:43:50] Speaker 04: The PCAB and the 419 proceeding, and then this finding was affirmed by this court, found that L'Oreal copied the unpublished patent application, did not independently develop. [00:44:02] Speaker 04: This court in its most recent decision on the injunction, excuse me, on the 954 patent, assumed without deciding, which of course is assumed without deciding, but that issue was argued in that case as well. [00:44:14] Speaker 04: And it's our position under Max Linear and Nestle that there is a stopple on the question of copying from that decision. [00:44:21] Speaker 04: And I have taken up much of my time, if not more. [00:44:26] Speaker 04: So if the court has no more questions, I will stop. [00:44:31] Speaker 06: Okay, hearing none, thank you, Mr. Weisberg. [00:44:34] Speaker 06: Mr. Kinnaird, you have two minutes. [00:44:36] Speaker 02: Yes, I'll be very fast. [00:44:37] Speaker 02: First, Dr. Borish filed no expert report on trade secrecy. [00:44:41] Speaker 02: He was not qualified to do that and he did not testify to it. [00:44:45] Speaker 02: He didn't even testify to the full range of references that Dr. Freeman elucidated for this purpose, only to the references that were part of the obviousness combination. [00:44:55] Speaker 02: You saw the testimony of Mr. Schoon, 4462425. [00:45:01] Speaker 02: He doesn't address specifically maleic acid. [00:45:05] Speaker 02: As far as these [00:45:08] Speaker 02: other claims and the financial information that they said, well, we used it to evaluate whether to acquire or do our independent development. [00:45:18] Speaker 02: That was permitted under the NDA. [00:45:20] Speaker 02: And also their expert said at 44653 that he is not applying that we use the financials. [00:45:28] Speaker 02: And I think, I'm sorry to say, but I believe that Mr. Weisberg has not accurately stated the other [00:45:36] Speaker 02: the other trade secrets, and this is addressed at 30 to 31 of our reply briefs, but the testing trade secret, and there was very scant information about that at trial, but it was sensory testing of marketed products on hair tresses and salons. [00:45:54] Speaker 02: It was product stability testing. [00:45:57] Speaker 02: and the non-use of silicone. [00:45:59] Speaker 02: Those had nothing to do with maleic acid. [00:46:01] Speaker 02: Those were all in relation to the Olaplex product. [00:46:05] Speaker 02: And none of that could have, and there was no testimony that that was used in the maleic acid development. [00:46:10] Speaker 02: So I think that's all, you know, completely incorrect. [00:46:16] Speaker 02: And furthermore, on the exclusion [00:46:20] Speaker 02: part of it. [00:46:22] Speaker 02: We did not have control. [00:46:23] Speaker 02: We certainly had practical ability to arrange, but that's not the same as duty. [00:46:27] Speaker 02: They did not ask for a deposition and we have consistently maintained that and if they had thought that was untrue, they should have submitted a declaration in the record. [00:46:37] Speaker 02: This is the first time that we're hearing that and it doesn't matter whether they knew whether she was in Brazil or not. [00:46:44] Speaker 02: The fact is, you know, it was an ill-conceived notion that you would [00:46:47] Speaker 02: tried to get Allard in France when she's not present in France and can't be compelled. [00:46:54] Speaker 06: And even if they... Thank you, Mr. McNair. [00:46:56] Speaker 06: I think we're out of time. [00:46:57] Speaker 06: Okay, very good. [00:46:58] Speaker 06: Thank you. [00:46:59] Speaker 06: We thank both counsels. [00:47:00] Speaker 06: Before we conclude, the counsel should know that the court suggests that the parties might wish, now having come up to our court four times and potentially going [00:47:17] Speaker 06: back for a new trial. [00:47:19] Speaker 06: It is going back for a new trial. [00:47:20] Speaker 06: The parties might consider settling this case. [00:47:25] Speaker 06: We're not ordering that. [00:47:27] Speaker 06: We're just suggesting that it might be time to think about that. [00:47:31] Speaker 06: So, unless my colleagues have something to add to that, hearing nothing, the case is submitted. [00:47:40] Speaker 06: That concludes our session for this afternoon. [00:47:46] Speaker 03: The Honorable Court is adjourned from day to day.