[00:00:02] Speaker 00:
The United States Court of Appeals for the Federal Circuit is now open and in session.

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God save the United States and its honorable court.

[00:00:12] Speaker 01:
Good morning, ladies and gentlemen.

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We have three cases on the calendar this morning, one from a district court, one from the patent office, and a veteran's case.

[00:00:22] Speaker 01:
Only the district court case is being argued, and that is SRI International versus Cisco Systems 2020.

[00:00:31] Speaker 01:
Good morning, Your Honor.

[00:00:37] Speaker 04:
Thank you.

[00:00:37] Speaker 04:
I'm prepared to proceed.

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In my time this morning, I would like to touch on three points.

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The first is that the district court improperly reweighed the evidence on willfulness

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Substantial evidence supports the willfulness verdict and this is true even without assessing engineer testimony or the absence of opinions of counsel.

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This court in the AcuMed case made that point explicitly that reweighing is not something the court can do, it's for the jury.

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The second point

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is the legal standard.

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Apparently, it seems Judge Andrews felt that this court had changed the legal standard for willfulness and enhanced damages in the first appeal.

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That isn't the case, and the legal standard remains the same recklessness under HALO as it has been throughout the course of this case without challenge or argument by Cisco.

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And the third point I'd like to address toward the end, if there's time, is enhancement.

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The only basis on which this court vacated enhancement was because it had vacated willfulness.

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And if you restore willfulness, we believe enhancement is right for review.

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This is now the second appeal where enhancement has been fully briefed and before, Your Honors.

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So on the reweighing point,

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We put this chart in our brief at page 30 listing the five factors that were in the jury instruction in this case on subjective willfulness and including recklessness and identifying the evidence on each of those factors as assessed by the district court itself.

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Again, I want to emphasize that I understand there's a dispute about whether

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engineer testimony remains relevant or not, but that isn't essential to this appeal.

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Judge Andrews found the evidence on two of the factors at least arguably supported SRI even without any engineer testimony, even without any debate about opinions of counsel, and that really should have been the end of the issue.

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do with the fact that arguably the jury instructions that Judge Andrews was looking at imposed a higher willfulness burden than perhaps HALO does?

[00:03:15] Speaker 04:
Well, so that question I think Judge O'Malley has been answered by the court in several cases, including Western GCO and WBIP in particular.

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The conclusion is if willfulness was proved and in particular if recklessness, subjective willfulness was proved under the clear and convincing evidence standard that applied under Seagate, it certainly satisfies the post-HALO standard of merely preponderance of the evidence.

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Both those cases say that.

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In fact, there's a host of Federal Circuit cases say that.

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And of course, Halo itself, I think one of the things that maybe got lost in the shuffle here, Halo itself, one of its fundamental points is that subjective willfulness alone is enough.

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Halo discusses subjective willfulness, it discusses recklessness, and says that is enough.

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And that's A, and B, you only have to prove it by a preponderance of the evidence.

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And so this, you have here,

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one of really a fair number of cases where willfulness was proved under a much more difficult standard by a higher burden of proof.

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And that's all the more reason for this court to affirm on this record.

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I do want to just emphasize.

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This is just so, in this case, the jury found induced infringement, right?

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And that is not challenged on appeal.

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That combined with some other things might support your willful infringement argument or saying there's substantial evidence to support the jury verdict because inducement requires knowledge of the patent intent to induce.

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Do you agree with that?

[00:05:06] Speaker 04:
I do, yes, though, you know, we've never taken the position, and this was the subject of a

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a little back and forth with Judge Andrews at the argument below, we're not taking the position that if you prove inducement, you therefore have proved subjective willfulness or recklessness under Halo.

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There may be a difference between the two.

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We're not saying that, you know, ergo, if you have inducement ergo, you have subjective willfulness.

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Is it relevant?

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Absolutely.

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And in fact, that's why, you know, in these cases, when arguing willfulness, for example, to the jury below,

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I referred back to inducement because that is highly relevant.

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It goes to the mental state of, in this case, Cisco at the time that it acted.

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And much of the same evidence overlaps.

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And also, from my perspective, right, from our perspective as a reviewing court, when we look at the induced infringement verdict

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we have to know, we presume that the jury made certain fact findings, including the underlying fact findings that support induced infringement, right?

[00:06:20] Speaker 04:
That is correct.

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Judge Stoll, that's correct.

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Inducement's never been challenged by Cisco on appeal to this court, and nor has the jury instruction actually ever been challenged on appeal by Cisco to this court, or actually, for that matter, even on remand to Judge Andrews.

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Let me pivot, if I can, to that point.

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Do you read echo brands, though, to say that inducement's always enough or simply what we just heard you say, which is it's a factor?

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I think it's a factor.

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To be honest, I'm not aware of a case from this court where the court has been required to analyze

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whether there's any daylight between an inducement finding on the one hand and a subjective willfulness finding on the other.

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And I'm not prepared to say it could never be the case that you could say somebody induced infringement yet wasn't reckless.

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So, you know, again, we're not making that legal argument.

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I don't think you have to make that legal argument or, excuse me, reach that conclusion.

[00:07:29] Speaker 02:
uh... to affirm here and i think that this is just like i appreciate your answer i wanted to just ask one question in that regard to have you don't look at it related which is you know uh... we've got the common decision from the supreme court that says that uh...

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you know, whether the defendant's belief regarding patent validity is a defense to a claim of induced infringement and the Supreme Court said it's not.

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But a defendant's belief regarding patent validity could be something that would support a jury verdict of no will for infringement.

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Isn't that right?

[00:08:04] Speaker 04:
Yeah, that's certainly true.

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Yes.

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And on this record, of course, you do have, so you have both here.

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You have a situation where the jury found inducement, which means it necessarily found Cisco's infringement defenses to be meritless and in fact, something Cisco never believed.

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And then on the validity side, that's an area where the record's particularly strong about how frivolous the defenses were.

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And again,

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You have no evidence that anyone at Cisco ever believed any of the validity defenses that were proffered to the jury.

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Um, if I could, uh, True that judge Andrews found that the jury was entitled to find in favor of SRI on whether or not there was a reasonable basis to believe that there was a non-infringement that, um, Cisco didn't get infringed or that it had a reasonable belief, um, that the patent was invalid.

[00:09:01] Speaker 04:
Yes, I think it's very clear, exactly.

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I think it's very clear that Judge Andrews said, look, I'm gonna throw out, I think I have to completely disregard the engineer testimony.

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I think I have to disregard whether Cisco got an opinion of counsel or not, what's left.

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He looked at what's left in his view and he said, well, on two of the factors, it's arguable that they favored SRI.

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And that's the end of the story.

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Again, I recommend this Acumet case, it's in our papers.

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The court, this court said there may be, that was a case where the evidence went both ways.

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Some factors favored willfulness, some factors did not favor willfulness.

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The jury found willfulness and this court said that's for the jury.

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If it goes both ways, that's the end of the story.

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I think Judge Andrews, to be fair, felt that this court had changed legal standard in some way in the last appeal.

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And maybe I'll, in the interest of time here, maybe end there.

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And of course, that didn't happen, right?

[00:10:08] Speaker 04:
The legal standard in this case has never been at issue.

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It's never been appealed.

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The jury instruction's never been appealed.

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And if you look at, as I'm sure you have, what this court said in its prior opinion about the legal standard, it said HALO.

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HALO's the standard.

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And in fact, the court proceeded from the proposition

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that quotes HALO to say that the type of conduct required has been variously described.

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And that's the point.

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It's been variously described.

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It could be willful.

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It could be wanton.

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It could be deliberate.

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But it could also be reckless.

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And so that is the standard that has applied.

[00:10:52] Speaker 02:
Sure.

[00:10:52] Speaker 02:
Kimba, can I ask you one last question?

[00:10:54] Speaker 02:
Sure.

[00:10:54] Speaker 02:
What do you think willful means?

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I mean, it's a legal concept.

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What does it mean?

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Does it mean that you know you're doing something wrong?

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What does it mean in your view?

[00:11:05] Speaker 04:
It certainly means that, Judge Stoll, but it also means that I guess I think conceptually it means at least

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two buckets of things.

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One is you've got the deliberate, intentional actor who knows what they're doing is wrong, infringes a patent without any defense, and they go ahead anyway.

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But the second bucket, which is, and we think that applies here, but even if there's a disagreement on that, the second bucket is you should have known

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that what you were doing was plainly wrong because you put on frivolous defenses, because you never believed those defenses, because you over-litigated a weak case.

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That is this case, and this court's decisions interpreting HALO very clearly say that second flavor of willfulness is alive and well and is sufficient.

[00:12:01] Speaker 03:
Before you sit down, can I just ask you one question about the enhancement issue?

[00:12:04] Speaker 03:
You argue that if we were reverse on willfulness that we should just reinstate the enhancement award.

[00:12:15] Speaker 03:
My hesitation about that argument is even if we were to reverse on willfulness, we already took out a big chunk of the willfulness verdict the first time around.

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In other words, it only covers a more limited period of time.

[00:12:36] Speaker 03:
Couldn't that go to the question of enhancement or even the dollar figure of the enhancement?

[00:12:43] Speaker 04:
Ah, the answer is, and this one I believe is my fault and I apologize for it, the answer is no, because the only damages included in the damages base in this case and included in the enhancement in this case are post-notice damages.

[00:13:01] Speaker 04:
We made that point in our brief, our opening brief at 67.

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Our damages expert started his calculation with that May 2012 notice date.

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And so, no.

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So, there is nothing in the base here.

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There's nothing in the numbers that relies in any way on pre-notice damages.

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And this is an issue.

[00:13:24] Speaker 04:
There's no dispute from BISISCO.

[00:13:29] Speaker 03:
Okay.

[00:13:29] Speaker 03:
Why do you say that's your fault?

[00:13:31] Speaker 04:
Well, I feel like, let me put it this way.

[00:13:35] Speaker 04:
I intended to raise that in the prior appeal.

[00:13:39] Speaker 04:
It never got there.

[00:13:42] Speaker 04:
And you know, I think it's... OK, that's what I thought you were going to say.

[00:13:47] Speaker 03:
You didn't say that in the prior appeal.

[00:13:49] Speaker 03:
No.

[00:13:50] Speaker 03:
OK.

[00:13:52] Speaker 01:
Thank you, Mr. Scherkendorf.

[00:13:53] Speaker 01:
We've consumed some of your rebuttal time with questions.

[00:13:57] Speaker 01:
So we'll give you three minutes for rebuttal.

[00:14:00] Speaker 01:
We'll hear from Mr. Danford now.

[00:14:04] Speaker 05:
May it please the court.

[00:14:05] Speaker 05:
My name is Andrew Danford.

[00:14:06] Speaker 05:
I represent the Cross Appellant Cisco.

[00:14:09] Speaker 05:
I would like to start with willfulness since that's where Mr. Schurkenbach spent most of his time.

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But I do want to be sure that we also spend some time to talk about enhancement separately because even if SRI were correct about willfulness, it wouldn't make a difference because the district court properly exercised its discretion to find that this case doesn't meet the HALO threshold for enhancement.

[00:14:29] Speaker 05:
But as for willfulness, this court remanded following the prior appeals so that the district court could decide whether there was substantial evidence of willfulness during the period after Cisco was on notice of SRI's patents.

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In doing so, the district court on remand was not writing on a clean slate.

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This court provided substantial guidance on what post-notice evidence counted as evidence of willfulness and what could not.

[00:14:53] Speaker 05:
And that actually I think resolves most of the issues that SRI has raised in this appeal.

[00:14:59] Speaker 05:
The only new issue that SRI is raising in this appeal is its argument that the jury could have found willfulness based upon the supposed weakness of Cisco's trial defenses.

[00:15:11] Speaker 05:
And that's not an argument that SRI made at trial or in its post-trial briefing.

[00:15:16] Speaker 02:
And it doesn't amount to... Mr. Danford, this is Judge Stoll.

[00:15:21] Speaker 02:
The jury was instructed on that.

[00:15:24] Speaker 02:
Isn't that correct?

[00:15:24] Speaker 02:
The jury was instructed

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and the instructions were not objected to, to specifically consider whether or not there was a reasonable basis to believe that Cisco didn't infringe or had a reasonable defense to infringement, that is, validity.

[00:15:45] Speaker 02:
Why couldn't they consider that?

[00:15:48] Speaker 05:
They could, Your Honor, and that was part of the boilerplate instruction that was given, and we didn't object.

[00:15:54] Speaker 02:
So, since we're looking at a jury verdict of willfulness, thinking about this after May 8, 2012, don't we have to consider, don't we have to presume that the jury found in SRI's favor on that finding?

[00:16:13] Speaker 05:
Yes, and that's what the district court did here.

[00:16:15] Speaker 05:
It did presume, and this is at APPX6, it says, I have to presume that the jury could have found an SRI's favor on that third factor in the jury.

[00:16:25] Speaker 02:
So this waiver argument of jurors doesn't make much sense to me.

[00:16:29] Speaker 05:
And this court doesn't need to reach the waiver argument to rule in our favor.

[00:16:33] Speaker 05:
And I think there are two reasons for that.

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Willfulness depends on the totality of the circumstances.

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And so whatever SRI is saying about the strength of CISCO's defenses now, it doesn't amount to substantial evidence of willfulness in the totality of the circumstances.

[00:16:52] Speaker 02:
Go ahead, Judge O'Malley.

[00:16:55] Speaker 03:
I was just going to say, the totality of the circumstances, isn't that up to the jury to decide?

[00:17:03] Speaker 03:
I mean, I think that

[00:17:07] Speaker 03:
My problem is that there are a lot of factors and the jury can weigh them and ultimately come to a conclusion.

[00:17:15] Speaker 03:
What's your response to your friend's argument on the other side that really what Judge Andrews did here was reweigh the factors and not give the jury the opportunity to reach its own conclusion.

[00:17:32] Speaker 05:
Sure.

[00:17:33] Speaker 05:
Two responses to that.

[00:17:34] Speaker 05:
So this court in the Comark decision, this is cited by SRI and we respond to it in our red brief, the Comark decision says in evaluating substantial evidence of willfulness because of the totality of the circumstances test, the reviewing court has to look at the evidence on both sides of the issue.

[00:17:53] Speaker 05:
It's not a one-dimensional test.

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And the second thing here is that the district court did actually give SRI full credit

[00:18:02] Speaker 05:
for that argument with respect to the third factor in the jury instruction.

[00:18:06] Speaker 05:
He said, I have to presume that the jury could have found some evidence of that, but it's a multi-factor test and that alone doesn't add up to substantial evidence of willfulness and you have to consider all of the evidence in the record, which includes the evidence that Cisco did not copy.

[00:18:23] Speaker 05:
It includes evidence that

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Cisco engaged with SRI after learning about the patents, denied infringement, and presented defenses.

[00:18:30] Speaker 05:
And that's at APPX 20694.

[00:18:33] Speaker 03:
But he never actually says no reasonable jury could conclude that there was willfulness here.

[00:18:40] Speaker 03:
He just says that I look at all these factors and I weigh them myself.

[00:18:45] Speaker 03:
And that's not the right standard, is it?

[00:18:48] Speaker 05:
It would not be the right standard if he were actually re-weighing.

[00:18:52] Speaker 05:
What I take to be the sentence that you're referring to is the summation sentence that is included on APPX 7, where he says, so summing it up, here's what the record includes.

[00:19:02] Speaker 05:
There is some arguable basis with respect to two of the five factors, but there's evidence on the other side of this.

[00:19:10] Speaker 05:
And that arguable basis does not amount to substantial evidence of willfulness.

[00:19:14] Speaker 05:
And I think that that was an appropriate determination.

[00:19:18] Speaker 05:
But even so, it wouldn't matter because if you look at what the district court did here, what the district court did here was it concluded that there was not substantial evidence that Cisco's infringement was willful, wanton, malicious, and bad faith.

[00:19:32] Speaker 02:
Mr. Danford?

[00:19:34] Speaker 02:
Yeah.

[00:19:34] Speaker 02:
This is Judge Stowell.

[00:19:35] Speaker 02:
So I was actually just about to ask you about that language.

[00:19:39] Speaker 02:
And combining that with an earlier footnote in the court's opinion, I think it's footnote one.

[00:19:45] Speaker 02:
I'm wondering whether you think that maybe Judge Andrews thought that we had changed the standard for willfulness in our last opinion.

[00:19:57] Speaker 05:
I think that Judge Andrews was struggling a little bit because this court's cases and Halo use different adjectives at different times.

[00:20:07] Speaker 05:
I think that the fundamental point that this court's cases make and that Halo makes is that

[00:20:13] Speaker 05:
What is required for willfulness is something that sets the case apart from an ordinary case of infringement.

[00:20:20] Speaker 05:
Knowledge of the patent, the fact of infringement alone is not enough to establish willfulness.

[00:20:25] Speaker 05:
And I don't take what this court said in its prior decision to be a change

[00:20:31] Speaker 05:
In the law, in that regard, you know, Echo Brands even cites the SRI decision.

[00:20:39] Speaker 05:
And this court, even as recently as last month, has decisions like the Bayer v. Vaxalta case, where SRI and Echo Brands are cited together.

[00:20:49] Speaker 05:
And those two standards, I think, are getting at the same, or that the language in those two cases are actually making the same point.

[00:20:56] Speaker 05:
But I think that all of that is beside the point when you get to enhanced damages, because SRI is not saying that the standard, the Bursetta is the wrong standard for enhancement.

[00:21:08] Speaker 05:
And when the district court was explicit about the basis for its ruling, the basis for its ruling was that Cisco's infringement was not wanton, malicious, and bad faith.

[00:21:18] Speaker 05:
That's saying that the halo threshold for enhancement is not met, and that is an issue within the district court's discretion.

[00:21:26] Speaker 05:
The district court is entitled on evaluating enhancement to reweigh the evidence.

[00:21:30] Speaker 05:
The district court's entitled to use its discretion.

[00:21:33] Speaker 02:
Wait, can I ask you, I have a question.

[00:21:35] Speaker 02:
You're saying the sentence that says there is no substantial evidence that Cisco's infringement was wanton, malicious, and bad faith, that that is going to enhancement and not the question of whether the jury was entitled to find willful infringement?

[00:21:49] Speaker 05:
So there are two sentences, and they're right next to each other.

[00:21:51] Speaker 05:
The sentence right before that says, there is not substantial evidence of willful infringement.

[00:21:55] Speaker 05:
That's how he ends that sentence.

[00:21:58] Speaker 05:
And then he says it again to make his rationale clear.

[00:22:00] Speaker 05:
I think that willfulness and enhancement in this regard collapse in this case, at least given the way that Judge Andrews viewed it.

[00:22:11] Speaker 05:
And because

[00:22:14] Speaker 05:
Because he's actually applying a standard that nobody disputes as the appropriate standard for enhancement, and that is a discretionary determination that he is entitled to make.

[00:22:27] Speaker 05:
He's entitled to reweigh the evidence in making that discretionary determination, and there's no dispute about the standard.

[00:22:33] Speaker 05:
That really resolves that he denied the motion for enhancement.

[00:22:37] Speaker 05:
He was clear about his reasons.

[00:22:39] Speaker 02:
We have some older precedent in this court that says,

[00:22:43] Speaker 02:
When a district court judge denies enhancement, um, the judge has to explain the basis for the, and that when they deny enhancement following a jury verdict of willful infringement, that the district court judge has to provide some reasoning, uh, for why that decision is being made.

[00:23:06] Speaker 02:
Because otherwise it's very hard for us to review it because we review

[00:23:10] Speaker 02:
a decision on whether or not to enhance and the amount of enhancement for an abuse of discretion.

[00:23:16] Speaker 02:
I'm currently sitting here, I can't remember the name of the case, but I know we have a case that holds that.

[00:23:21] Speaker 02:
So what's your response to that?

[00:23:22] Speaker 02:
Because looking at this and tying these two sentences together, first of all, I'm not sure I agree with you to be addressed enhanced damages other than to say, because I'm not supporting the jury verdict of wilfulness, I'm not awarding enhanced damages.

[00:23:37] Speaker 02:
But, you know, what is your response to that?

[00:23:40] Speaker 02:
Because I really can't tell what his reasoning was here.

[00:23:44] Speaker 05:
So I think that the reasoning is everything that he had explained on the prior pages where he went through, reviewed the evidence and the trial record.

[00:23:51] Speaker 05:
And it's actually, I think, a more favorable analysis for SRI than he would need to make if he were just addressing

[00:23:59] Speaker 05:
enhancement on its own.

[00:24:00] Speaker 05:
He addressed it through the substantial evidence standard.

[00:24:04] Speaker 05:
If he were actually addressing enhancement on its own, that wouldn't have been necessary and he could have just used his discretion to say, I don't think that's supported here.

[00:24:14] Speaker 01:
So I think... Mr. Dancer, why don't you see a cross appeal?

[00:24:19] Speaker 05:
Yeah.

[00:24:20] Speaker 05:
So turning to that cross appeal, I think that this issue hinges on whether all of SRI's fees for the entire case

[00:24:26] Speaker 05:
were caused by Cisco's litigation conduct and defenses.

[00:24:30] Speaker 05:
And they were not.

[00:24:31] Speaker 05:
And it was an abuse of discretion for the district court on remand to award fees that SRI as the plaintiff would have incurred anyway.

[00:24:37] Speaker 03:
Isn't it kind of hard for us to say there was abuse of discretion when two different judges looked at the same conduct and both of them decided that a full award of fees was appropriate?

[00:24:50] Speaker 05:
I think that there are two things going on here.

[00:24:53] Speaker 05:
First, the original judge's decision was based in part on willfulness, then that's why that was vacated.

[00:24:58] Speaker 05:
And the second judge's decision was based on a determination that Cisco's entire case was weak.

[00:25:05] Speaker 05:
And that is not correct for at least three reasons.

[00:25:08] Speaker 05:
The first reason is that Cisco's position with respect to damages was not weak.

[00:25:13] Speaker 05:
Cisco forced SRI to abandon four and a half years of pre-suit damages through its marking defense.

[00:25:17] Speaker 01:
But the exceptional case that you're raising on your cross appeal was based on litigation misconduct.

[00:25:25] Speaker 05:
That's correct.

[00:25:25] Speaker 05:
And litigation misconduct was cataloged by the district court.

[00:25:29] Speaker 05:
It was limited to specific acts and certain events.

[00:25:32] Speaker 05:
And it doesn't relate at all to the damages issues.

[00:25:37] Speaker 05:
It doesn't relate at all to the section 101 issue.

[00:25:41] Speaker 05:
And the third thing is it didn't relate at all.

[00:25:43] Speaker 05:
They got damages.

[00:25:44] Speaker 05:
They got a fee award from a period before the litigation even began.

[00:25:51] Speaker 05:
And those fees, by definition, could not have been caused by Cisco's litigation conduct and defenses.

[00:25:56] Speaker 05:
There wasn't even a case at that time.

[00:25:59] Speaker 05:
SRI's position ultimately comes down to the notion that Cisco should have settled the case before it even began, but no.

[00:26:09] Speaker 05:
judge has ever made that determination and it couldn't be made here given the overreaching and excessive positions that SRI was taking with respect to damages and infringement in this case where it ultimately took a claim of damages to trial that was more than twice what it could prove and it substantially narrowed the categories of products it accused of infringement 20 months into litigation.

[00:26:32] Speaker 05:
It's punitive and not compensatory to make Cisco responsible for those fees.

[00:26:38] Speaker 05:
Unless there are any further questions on that, I'll reserve the remainder of my time for rebuttal.

[00:26:43] Speaker 01:
We will save three minutes for your rebuttal time on the cross appeal.

[00:26:48] Speaker 01:
Mr. Sharpenbach.

[00:26:51] Speaker 04:
Thank you, Your Honor.

[00:26:52] Speaker 04:
First point I'd like to make is to respond to the suggestion that Judge Andrews in fact addressed enhancements somehow on the merits

[00:27:02] Speaker 04:
I don't think that's at all a reasonable characterization of his opinion or what he in fact did.

[00:27:08] Speaker 04:
The sentence Cisco fastens on is in the context of whether the willfulness verdict was supported or not.

[00:27:16] Speaker 04:
The judge concluded in his view after reweighing the evidence he didn't think it was.

[00:27:20] Speaker 04:
And then he says, thus, I will deny the motion to amend the willfulness judgment and award enhanced damages.

[00:27:28] Speaker 04:
He simply didn't reach enhancement because he thought he didn't have to because of the willfulness determination.

[00:27:35] Speaker 04:
Enhancement was briefed at length below to Judge Andrews.

[00:27:38] Speaker 04:
The read factors were discussed at length to Judge Andrews.

[00:27:42] Speaker 04:
Judge Robinson, in finding that enhancement was warranted, went through the read factors in detail.

[00:27:49] Speaker 04:
The notion that an implication from one sentence in Judge Andrew's opinion somehow addressed all of that is, I think, not a reasonable one.

[00:28:01] Speaker 04:
On this issue of whether there was reweighing, counsel said, well, there is,

[00:28:10] Speaker 04:
There is precedent suggesting that looking at all the evidence is fine, and that's not reweighing.

[00:28:15] Speaker 04:
And we agree with that.

[00:28:16] Speaker 04:
But that, of course, isn't what happened here.

[00:28:19] Speaker 04:
The court reweighed.

[00:28:20] Speaker 04:
It didn't simply look at all the evidence and consider all of the evidence.

[00:28:25] Speaker 04:
Last on fees, I do want to make the point that this whole apportionment argument that's now been raised on appeal is, to us, pretty clearly waived.

[00:28:39] Speaker 04:
just to recount history for a second, in the first time around in front of Judge Robinson, Cisco made an apportionment argument in its briefs below to Judge Robinson.

[00:28:52] Speaker 04:
Then they appeal to this court.

[00:28:54] Speaker 04:
They do not make that argument.

[00:28:56] Speaker 04:
They do not say anything at all about only some fees should be appropriate.

[00:29:02] Speaker 04:
That first appeared in a petition for rehearing, which they filed the first time around.

[00:29:07] Speaker 04:
That's waiver.

[00:29:08] Speaker 04:
That's a clear case of waiver.

[00:29:10] Speaker 04:
We shouldn't actually even be talking about it.

[00:29:13] Speaker 04:
The last point I would make is even if you do wanna talk about it, to pick up on Judge O'Malley's point, this is a case of pervasive misconduct.

[00:29:21] Speaker 04:
Judge Robinson clearly said all sorts of things implying that.

[00:29:26] Speaker 04:
Judge Andrews himself independently reviewed it and in fact, as we cite in the papers, Judge Andrews in another case characterized

[00:29:37] Speaker 04:
Cisco's behavior in this case as pervasive misconduct.

[00:29:42] Speaker 04:
That's sort of an overwhelming, I think, validation of exercise of discretion at awarding fees.

[00:29:50] Speaker 04:
Unless the court has other questions, I'll stop there.

[00:29:55] Speaker 01:
Thank you, Mr. Scherpenbach.

[00:29:56] Speaker 01:
Mr. Janford has three minutes if you need it on the cross-appeal.

[00:30:01] Speaker 05:
Thank you.

[00:30:02] Speaker 05:
Let me just start with the issue of pervasiveness because I think there's some confusion about what pervasiveness means.

[00:30:09] Speaker 05:
Pervasiveness is just another way of saying that the misconduct caused all of the fees incurred by the other party.

[00:30:16] Speaker 05:
There's no pervasiveness exception to causation.

[00:30:19] Speaker 05:
There's no pervasiveness exception that permits punitive fee awards.

[00:30:24] Speaker 05:
And that comes straight from Goodyear.

[00:30:26] Speaker 05:
And this court has adopted and applied the Goodyear standard in the context of 285 fees in the Rembrandt decision.

[00:30:34] Speaker 01:
Well, pervasiveness means misconduct throughout the case.

[00:30:42] Speaker 05:
Pervasiveness means misconduct throughout the case that caused all of the fees.

[00:30:46] Speaker 05:
And this is out of

[00:30:48] Speaker 05:
the Rembrandt, or this is out of the Goodyear decision, when you look at page 1188 in the Supreme Court's decision, it says the court only escapes the grind of segregating out the factors when the standard is met, that all of the fees were caused by the other party's misconduct.

[00:31:07] Speaker 05:
And so that has to be the guiding principle, and pervasive just means all of those fees were caused

[00:31:14] Speaker 05:
by the other parties' misconduct.

[00:31:16] Speaker 05:
And that can't be true here for those reasons I already addressed, the damages issue, the Section 101 issue, and the fees that were sought and rewarded from before there is even a case filed.

[00:31:30] Speaker 05:
I do want to turn to the waiver point, too, before I sit down.

[00:31:33] Speaker 05:
We didn't waive this argument.

[00:31:35] Speaker 05:
This is the first time that SRI ever sought fees in the absence of willfulness.

[00:31:41] Speaker 05:
and based solely on Cisco's litigation conduct and defenses was on remand here.

[00:31:46] Speaker 05:
We raised this issue.

[00:31:47] Speaker 05:
This is a new issue that's presented for the first time by this new basis for fees that SRI raised on remand, and it is totally appropriate for us to raise a response to an issue that's first presented in the context of this current motion that's on appeal.

[00:32:05] Speaker 05:
SRI has actually made the waiver argument.

[00:32:07] Speaker 05:
They made the waiver argument in opposition to

[00:32:10] Speaker 05:
Cisco's petition for panel rehearing and again before the district court, no one has ever found waiver and there's no basis to find waiver now.

[00:32:19] Speaker 05:
I do also want to briefly address the appropriate remedy on attorney's fees.

[00:32:24] Speaker 05:
SRI made the strategic choice on remand not to seek anything less than its full fees for the entire case.

[00:32:30] Speaker 05:
That amount of fees is not permissible because Cisco's litigation conduct and defenses did not cause SRI to incur all of those fees.

[00:32:38] Speaker 05:
And because SRI is not demonstrated as entitlement to any lesser amount, Cisco respectfully requested the court reverse the award of fees without a remand.

[00:32:47] Speaker 05:
SRI should not be allowed to try and try again until it proposes the amount of fees that's actually legally permissible and supported on this record.

[00:32:55] Speaker 05:
But we do think at the very least that vacatur and remand is warranted here with respect to the attorney's fees issue since the

[00:33:04] Speaker 05:
The full award of fees for the entire case clearly includes amounts that SRIs the plaintiff would have incurred anyway, regardless of the litigation conduct and defenses that are the basis for the fee award.

[00:33:14] Speaker 05:
Thank you.

[00:33:14] Speaker 01:
Thank you.

[00:33:15] Speaker 01:
Mr. Danford, we appreciate the arguments of both counsel and will take the case under submission.

[00:33:22] Speaker 01:
Thank you, Your Honor.

[00:33:24] Speaker 00:
The Honorable Court is adjourned until this morning at 11 a.m.