[00:00:00] Speaker 04:
All right, our next case for argument is 22-1092, Odessa versus Avery Denison.

[00:00:08] Speaker 04:
How do I pronounce your name, counsel?

[00:00:12] Speaker 04:
Oh, Your Honor, you must be on mute.

[00:00:14] Speaker 04:
That doesn't help me.

[00:00:16] Speaker 01:
Sorry, Your Honor.

[00:00:16] Speaker 01:
I was trying to be helpful.

[00:00:17] Speaker 01:
Mr. Schaefer.

[00:00:18] Speaker 04:
We'll do it.

[00:00:18] Speaker 04:
Mr. Schaefer.

[00:00:19] Speaker 04:
OK, Mr. Schaefer, please proceed.

[00:00:22] Speaker 01:
Thank you, Chief Judge Moore.

[00:00:23] Speaker 01:
May it please the court?

[00:00:24] Speaker 01:
Your Honor, this case presents a claim that's on the wrong side of a bright line this court has repeatedly drawn in order to determine eligibility under Section 101.

[00:00:35] Speaker 04:
I think you may be the only person I've ever heard stand up in court, and maybe you're on a video, so that's different, and say that we have somehow created bright lines in 101.

[00:00:44] Speaker 04:
I can't think of anything that's further from the truth.

[00:00:46] Speaker 01:
Chief Judge Miller, I don't want to pretend that there's not controversy around the specific contours of the 101 line.

[00:00:52] Speaker 01:
My modest submission today is that this case is clearly on the wrong side of it, this client.

[00:00:58] Speaker 01:
Because what I think does unite this court's cases, both holding and invalidating patents, is they need to be improving the computer functionality.

[00:01:08] Speaker 01:
And they need to do that by changing the technological details of the invention.

[00:01:12] Speaker 01:
And I think it's common ground, Chief Judge Moritz, that Blackwater Law says this positive question for this court is what it actually focuses on as its claimed invention over the firearm.

[00:01:22] Speaker 01:
And to show how clearly I think this case falls on the wrong side of the line, I respectfully direct the court to the claim.

[00:01:29] Speaker 01:
Claim one, the beginning of both sides of British.

[00:01:32] Speaker 01:
And what you find there, Your Honor, is reference to a substrate, antenna structure, RFID integrated circuit chip, the unique object number, the unique serial number space, all of that, Your Honor, all of those technological details are conventional, unchanged from the prior part.

[00:01:50] Speaker 01:
And when you get to the invention,

[00:01:52] Speaker 01:
it comes in the next swearing clause, that there's gonna be a portion of this serial number that is allocated to be a limited number of most significant bits.

[00:02:01] Speaker 01:
What's most significant bits, your honor?

[00:02:03] Speaker 01:
That is a fancy label for some unspecified leading number of bits in this serial number.

[00:02:11] Speaker 01:
You don't know how many of those are.

[00:02:13] Speaker 01:
There's no mathematical or scientific formula to get there.

[00:02:16] Speaker 01:
It's just, however, have been deemed to correspond with the allocated block.

[00:02:20] Speaker 01:
and then you get to the next wearing clause and this is where the invention, the claimed invention comes in, this limited number of most significantly fits will uniquely correspond to the limited number, to the allocated block, to the allocated block.

[00:02:34] Speaker 01:
That correspondence, your honor, that's the essence of the claimed invention.

[00:02:40] Speaker 01:
So ADASA isn't even claiming

[00:02:42] Speaker 03:
Well, counsel, I understand your arguments.

[00:02:45] Speaker 03:
I think this is a very hard case.

[00:02:48] Speaker 03:
To me, it's right on the line.

[00:02:50] Speaker 03:
But why isn't it?

[00:02:51] Speaker 03:
Because we can't just look at element by element.

[00:02:54] Speaker 03:
We have to look at the claim at a whole, and we have to read it in light of the specification.

[00:02:58] Speaker 03:
And isn't there really a technological advancement here, which is

[00:03:03] Speaker 03:
This way of encoding allows these to be done without continuous communication with a computer.

[00:03:10] Speaker 03:
It improves the system.

[00:03:12] Speaker 03:
That's the kind of thing that we found eligible in things cases like FinGen.

[00:03:16] Speaker 03:
FinGen seems very close to this one to me.

[00:03:20] Speaker 01:
Judge Hughes, if we read Enfish and Unilock, there you had changes to computer systems to improve the functionality of the computer system itself.

[00:03:31] Speaker 01:
To take Enfish, you had a self-wrenching referential database that was fundamentally changing

[00:03:36] Speaker 03:
uh... you know i think that but why isn't this this on all fours with that which is prior to this invention you have to have some kind of door and i'm going to get the terminology wrong but if i i if you understand what i'm talking about it if not you can clarify for me but my understanding is before this technology at least that's alleged what it does you have to have continuous communication with some type of computer system to to get these are fighting chips encoded

[00:04:05] Speaker 03:
But now with this technology, you don't.

[00:04:08] Speaker 03:
And so isn't that an improvement in technology?

[00:04:12] Speaker 01:
Let me take that question and offer a little bit of augmentation if I may.

[00:04:17] Speaker 01:
To take that question and that improvement in computer functionality, which is the quasi-autonomous encoding capability.

[00:04:24] Speaker 01:
Number one, you won't find that in the claim.

[00:04:27] Speaker 01:
And most importantly, it was disavowed for purposes of the claim construction.

[00:04:31] Speaker 01:
We wouldn't infringe.

[00:04:32] Speaker 03:
if the claim was... Well, I think your friend may have a problem when it gets to infringement.

[00:04:38] Speaker 03:
If he saves his patent as eligible because of that specific improvement, then I think it's very hard to disavow that for infringement purposes.

[00:04:48] Speaker 03:
But we're not here on that.

[00:04:49] Speaker 03:
We're here on eligibility.

[00:04:51] Speaker 01:
Fair enough, Judge Hughes, but that wasn't the claim.

[00:04:53] Speaker 01:
And the specification shouldn't be trumping and contravening the claim under this court precedent.

[00:04:58] Speaker 01:
And I think that's

[00:05:00] Speaker 01:
clearly taught from this course precedent.

[00:05:01] Speaker 01:
But the second answer is RFID for dummies had specifically taught that exactly this.

[00:05:08] Speaker 01:
You could accomplish quasi-autonomous functionality by just further specifying this component of a serial number.

[00:05:15] Speaker 01:
But more fundamentally, Judge Hughes, what we're talking about now is what ADASA is depicting in Appendix 2, 28, 30, first page of our brief.

[00:05:24] Speaker 01:
This is all about a mental step.

[00:05:27] Speaker 01:
This is all about human beings

[00:05:30] Speaker 01:
a portion of the serial number so that it corresponds.

[00:05:33] Speaker 01:
And I want to clear judge you.

[00:05:34] Speaker 01:
There is no way that the RFID technology, the chip, the encoding, the transmission, the readout, none of that is changed by the election.

[00:05:46] Speaker 01:
It is imperceptible that the initial leading digits are meant to correspond with an assigned block to denote something unless human beings say, hey, Walmart,

[00:05:57] Speaker 01:
The Avery-Denison tag will begin with 011 to denote that they came from us teeth.

[00:06:03] Speaker 01:
And then no one else will use those so that we have unique kids there.

[00:06:07] Speaker 01:
That's the essence of the invention.

[00:06:09] Speaker 01:
That's how you get the quasi-autonomous functionality.

[00:06:12] Speaker 01:
And it's all because of the human intervention.

[00:06:15] Speaker 01:
It's all because of the mental stuff.

[00:06:17] Speaker 01:
And so I think RFID for dummies, as I said, denies them the ability to claim that this is truly invented.

[00:06:24] Speaker 01:
But even if you put that to the side,

[00:06:26] Speaker 01:
The way that this invention is supposedly improving computer functionality, it's not improving the system itself.

[00:06:33] Speaker 01:
It's not changing the data.

[00:06:35] Speaker 01:
It's not changing the readout.

[00:06:37] Speaker 01:
It's not changing anything within the RFID system.

[00:06:41] Speaker 01:
The only thing it's doing is allowing human beings to further sub-partition this already divided set of data that's in the RFID ones and zeros.

[00:06:51] Speaker 01:
There's no change to the technology.

[00:06:53] Speaker 01:
And that, to judge it more, is why this case

[00:06:56] Speaker 01:
I submit should be so easy.

[00:06:58] Speaker 01:
There's no case, there's no case that suggests this sort of abstract, this sort of a mental spell can be on the correct side of the 101 line.

[00:07:09] Speaker 01:
I'm having trouble with your whole mental step concept.

[00:07:16] Speaker 04:
I mean, this is a different data structure.

[00:07:19] Speaker 04:
So I don't know about the mental step and your whole RFID for dummies point.

[00:07:22] Speaker 04:
I don't see this as really applying to 101, but I do see it having a lot of applicability to your 102, 103 issue, which I think

[00:07:29] Speaker 04:
is, by the way, way stronger for you.

[00:07:32] Speaker 04:
Would you like to pivot to that issue, or do you want to continue to negotiate 101?

[00:07:37] Speaker 04:
If you want to, that's fine.

[00:07:38] Speaker 04:
It's your time, but I would love to hear you address the 102-103, so please don't run out of time for that.

[00:07:43] Speaker 01:
I appreciate the guidance you did more.

[00:07:44] Speaker 01:
I respectfully direct your honors to personal web, secured mail, and intellectual vendors.

[00:07:50] Speaker 01:
I think if you read those cases,

[00:07:51] Speaker 01:
That does explain why this is really a mental step.

[00:07:54] Speaker 01:
And Chief Judge Moore, I would just note one more time that 228 to 230 of the appendix, you can see the ones and zeros are unchanged from the prior art to this invention.

[00:08:05] Speaker 01:
The only way that you're getting to a better functionality, supposedly, is because human beings have agreed among themselves that there is going to be something specially denoted and fixed at the beginning of the serial number.

[00:08:21] Speaker 01:
The chips, the transmission, the readout, totally unchanged, different from what we find in the court's cases that uphold claims under 101.

[00:08:29] Speaker 01:
And that takes me to 102 and 103, Chief Judge Moore.

[00:08:32] Speaker 01:
Because RFID for dummies did teach this, and so had CUNO taught this.

[00:08:38] Speaker 01:
And the court's only reason, ultimately, for granting summary judgment to ADASA in extraordinary fashion, was to basically say there was no genuine issue as to whether those pieces

[00:08:51] Speaker 01:
fire art had said most significant fits, that was the talismanic difference.

[00:08:57] Speaker 01:
But of course, that phrase doesn't deserve some sort of talismanic credit.

[00:09:02] Speaker 01:
It doesn't change what a person of ordinary skill in the art would understand from the disclosures in fire art.

[00:09:08] Speaker 01:
And these were, at the very least, questions to the jury if they didn't dictate invalidation of the claim as a matter of law.

[00:09:18] Speaker 01:
And I also don't want to lose track of the damages issue here.

[00:09:21] Speaker 01:
your honors, and I would note that the damages specifically are unsustaining.

[00:09:28] Speaker 01:
And if that selects any coherent defense of the jury instruction in verdict form that were issued over my client's objections, which you can find in the appendix 17898, the judge wound up telling the jury it must award a running royalty for its damages, despite on-point evidence supporting a lump sum

[00:09:47] Speaker 02:
and and and and and and and and and and and and and and and and and and and

[00:10:16] Speaker 01:
based upon the party's agreement that the Goodyear license was lump sum, confining the Red Bridge to 41.

[00:10:22] Speaker 01:
Their own expert, Mr. Pellegrino, testified in Appendix 15231 that he had called the Agron license the second of the three.

[00:10:30] Speaker 02:
OK, but let me stop you, because I know you're probably getting into your rebuttal time.

[00:10:34] Speaker 02:
But just that there were lump sum licenses in evidence, I'm not sure that that's enough to sustain

[00:10:42] Speaker 02:
a lump sum damages award, whereas I understand that your expert did not ask for a lump sum, and your whole strategy was to attack the licenses that were in the record.

[00:10:51] Speaker 02:
Isn't that right?

[00:10:53] Speaker 01:
Two lines of this court precedent need to answer your honor's question.

[00:10:56] Speaker 01:
One line says that the best evidence of the hypothetical license is the actual licensing.

[00:11:01] Speaker 01:
And here, there were three on-point licenses that were comparable and admitted.

[00:11:05] Speaker 01:
Two of the three of them were indisputably lump sum, and the third judge start

[00:11:10] Speaker 01:
Whatever it excluded, it was only for a fixed payment.

[00:11:13] Speaker 01:
There was no increase in the amount pursuant to a running royalty.

[00:11:16] Speaker 01:
This court has also said, pursuant to the statute, that a party may offer evidence of damages, offer expert testimony of the damages.

[00:11:25] Speaker 01:
It's not essential.

[00:11:26] Speaker 01:
So I think for the court to uphold this damages award would be tantamount to saying that the judge on this record could direct a verdict of a running royalty, which is abandoning back

[00:11:37] Speaker 01:
to the extent that there was any evidence of damages in this record that came from the on-point licenses.

[00:11:42] Speaker 01:
They were all lump sum.

[00:11:43] Speaker 01:
And our expert, Mr. Yurkowitz, repeatedly testified that the other side's evidence, DASA's evidence, all took the form of lump sum, and it could not be basis for a running royalty.

[00:11:54] Speaker 01:
The only thing he conceded is that in his expert report, he did not opine that a lump sum should be used.

[00:12:01] Speaker 04:
Counsel, one of your problems is you keep claiming, I think you have

[00:12:05] Speaker 04:
said several things that aren't necessarily consistent from a factual standpoint.

[00:12:09] Speaker 04:
You said all of the licenses were lump sum at one point.

[00:12:12] Speaker 04:
I don't think that's right.

[00:12:13] Speaker 04:
I think everyone agrees there's one license that had a lump sum.

[00:12:18] Speaker 04:
And I think there's a dispute over a second license in terms of whether it was a lump sum or not.

[00:12:23] Speaker 04:
Am I right about the facts?

[00:12:25] Speaker 01:
So their expert, Mr. Pellegrino, Chief Judge Moore, 15231 of the appendix acknowledged he had called the second license, the agron license, a lump sum license.

[00:12:35] Speaker 01:
But for all three of them, Chief Pickmore, there were only three licenses that were in evidence.

[00:12:40] Speaker 01:
Ours were excluded, so adoption's free payment.

[00:12:43] Speaker 01:
All three of them were for fixed payments that did not go up based upon use.

[00:12:49] Speaker 01:
In that sense, I think it should be incontestable that those could barely be found by a jury to be basis for a lump sum.

[00:12:57] Speaker 01:
And so I think there was ample evidence to allow a jury to award damages in that form, if only the judge had let them.

[00:13:03] Speaker 01:
And essentially, he directed the verdict to necessarily a running royalty form.

[00:13:08] Speaker 01:
And the result was an amount that's more than 50 times the biggest lump sum payment that was in evidence, which is the 50K payment.

[00:13:16] Speaker 01:
There were no more profitable license that was in evidence than the $50,000 that ADASA had paid.

[00:13:22] Speaker 04:
Do you want to keep any of your time for rebuttal?

[00:13:25] Speaker 04:
Because you have two minutes left.

[00:13:26] Speaker 01:
If Your Honors have questions about the sanctions issue, we're glad to answer them.

[00:13:30] Speaker 01:
I don't want to sandbag on that, but obviously we think this was an excessive sanction.

[00:13:34] Speaker 01:
It didn't have the requisite findings that the Ninth Circuit has required for any such sanction of this magnitude of importance.

[00:13:40] Speaker 01:
With that, I respectfully reserve the remainder of my time for a while.

[00:13:43] Speaker 04:
Okay, thank you.

[00:13:44] Speaker 04:
Mr. Greenspoon, please proceed.

[00:13:49] Speaker 00:
Good morning, Your Honors.

[00:13:50] Speaker 00:
May it please the Court.

[00:13:52] Speaker 00:
I'd like to start with preservation of error, which we didn't hear anything about just now.

[00:13:56] Speaker 00:
But it's very important.

[00:13:57] Speaker 00:
It's the elephant in the room.

[00:13:58] Speaker 00:
Because the district court denied Avery the claim scope that it asked for and needed for its summary judgment, Section 101 defense.

[00:14:08] Speaker 00:
And Avery did not appeal losing that claim construction.

[00:14:13] Speaker 00:
Avery even admitted eligibility with its district court lawyers

[00:14:17] Speaker 00:
to the district court under the existing unappealed claim scope, and that's at page 5603.

[00:14:24] Speaker 00:
This is their words, the requirements that bits be assigned to a pre-authorized range of serial numbers of an allocated block would constitute, would constitute

[00:14:35] Speaker 00:
specific language limiting the claims to a certain arrangement for effecting a desired result found patent eligible.

[00:14:41] Speaker 02:
The district court didn't seem to think that they had waived their right to raise 101, did it?

[00:14:47] Speaker 02:
It went on and resulted at summary judgment, I think.

[00:14:50] Speaker 00:
To the contrary, the district court resolved it by following Avery's breadcrumbs, which were claim construction breadcrumbs.

[00:14:56] Speaker 00:
So you see this from the summary judgment argument.

[00:15:00] Speaker 00:
Avery's own words, 5902 to 03,

[00:15:03] Speaker 00:
where if the claims cover any segmented serial number field, then they're directed toward the abstract idea of segmenting a numbering field.

[00:15:12] Speaker 02:
I guess what I'm saying is it doesn't look like the district court thought that once claim construction was done, 101 was not before it.

[00:15:20] Speaker 02:
That seems to be your argument, isn't it?

[00:15:22] Speaker 02:
That it was entirely contingent on winning a claim construction argument, which they did not win.

[00:15:27] Speaker 02:
But yet the district court continued to engage with 101 at summary judgment, I think at Motion and Lemonade.

[00:15:32] Speaker 02:
in a post-trial motion.

[00:15:34] Speaker 02:
It never said that you're right about this, that 101 isn't before me, I don't think.

[00:15:39] Speaker 00:
Well, a couple of responses to that, Judge Stark.

[00:15:41] Speaker 00:
First off, in the post-trial proceedings, Judge Kostubai did clarify or confirm in the written ruling that the prior disposition of Alice, the prior disposition of Section 101, had disposed of the issue for the case because he took up the post-trial arguments from Avery under Rule 59E

[00:16:02] Speaker 00:
even though they tried to present those arguments to him under Rule 50.

[00:16:05] Speaker 00:
So what that means is that everybody acknowledged, certainly by post-trial, that the cake was already baked at summary judgment.

[00:16:12] Speaker 00:
So that wasn't... But not at claim construction.

[00:16:15] Speaker 00:
Well, so let me divide two things.

[00:16:17] Speaker 00:
There was a mark in order or a claim construction prior to summary judgment.

[00:16:21] Speaker 00:
I'm referring to the summary judgment order, which was a bit later.

[00:16:25] Speaker 00:
And the

[00:16:28] Speaker 00:
The key page in the record is 6132, and maybe a little bit of the page before.

[00:16:34] Speaker 00:
But at 6132, here's the answer to the question, really.

[00:16:40] Speaker 00:
The judge said, in contrast to defendants unsupported assertion that the claims broadly encompass virtually any use of segmented serial numbers in RFID transponders,

[00:16:51] Speaker 00:
Dr. Ingalls testified, and then there's some technical follow on after that.

[00:16:57] Speaker 00:
And then one or two sentences after that, there's the rejection on summary judgment of the defense.

[00:17:03] Speaker 00:
So what that meant was it was a summary judgment, Section 101 defense, hinged on, dependent on, and needing a certain broad as all outdoors claim construction that ADASA didn't want.

[00:17:17] Speaker 00:
The district court didn't give it to Avery.

[00:17:20] Speaker 00:
So here we are on appeal, and we're going back to the well of the pleadings, where maybe there is something broad as all outdoors in terms of a Section 101 theory.

[00:17:30] Speaker 00:
But by the time of summary judgment, when it's go time, when you have to actually be committed to a presentation of your case, they had abandoned that broad as all outdoors theory, constricted it just to claim construction,

[00:17:43] Speaker 00:
And now here we see on appeal, it's brought us all outdoors one more time.

[00:17:49] Speaker 00:
So on the merits, what I heard, if I may transition to the merits of 101.

[00:17:55] Speaker 04:
You don't have much time.

[00:17:56] Speaker 04:
Why don't you move to the 102-103 argument?

[00:17:58] Speaker 04:
Because I see I have some concerns about the decision below on 102 and 103.

[00:18:04] Speaker 04:
It looks to me like the combination of the references plus the testimony, Mr. Williams and Mr. Sweeney,

[00:18:11] Speaker 04:
created at least a genuine issue of fact about this 102-103 issue.

[00:18:15] Speaker 04:
So I don't know why we wouldn't vacate that and send it back.

[00:18:18] Speaker 04:
So why don't you address that?

[00:18:20] Speaker 00:
Absolutely, Your Honor.

[00:18:20] Speaker 00:
So this was a summary judgment issue, because the references are the references, and they don't change, no matter what kind of expert conclusory testimony is thrown at it.

[00:18:29] Speaker 00:
And in fact, Mr. Sweeney said something completely inconsistent with an anticipation theory on summary judgment.

[00:18:36] Speaker 00:
He said, we report page 37 of our red brief

[00:18:39] Speaker 00:
were reporting Appendix 3826.

[00:18:41] Speaker 00:
This is their expert, Mr. Sweeney.

[00:18:44] Speaker 00:
Quote, as I researched material from the 2002 to 2010 time frame, I looked for references to most significant bits and found none in the available literature or working papers from industry meetings.

[00:18:56] Speaker 00:
And of course, he's referring to RFID technology, the RFID meetings, et cetera.

[00:19:01] Speaker 00:
So this specific implementation in the patent claims, the very limitation that they tried to

[00:19:08] Speaker 00:
you drive by or overlook further Alice defense was the specific limitation that was missing from RFID for dummies.

[00:19:17] Speaker 00:
It's just not there.

[00:19:18] Speaker 02:
Well, he says, or a reasonable fact finder taking the evidence in the light most favorable to the defendant could find all he's saying is the words aren't in the prior art, but the concept is.

[00:19:28] Speaker 02:
Why isn't there a fact dispute?

[00:19:29] Speaker 00:
Well, what your honor is making out in our colloquy right now is maybe something like an inherency argument.

[00:19:36] Speaker 00:
We didn't see any sort of inherency argument in the district court paper.

[00:19:39] Speaker 03:
Why does it have to be an inherency argument?

[00:19:41] Speaker 03:
It's just a different way of describing the same thing.

[00:19:44] Speaker 03:
And I mean, particularly in these kind of computer implemented software type cases, everybody uses different words.

[00:19:52] Speaker 03:
There's no standard vocabulary.

[00:19:54] Speaker 03:
So maybe RFID for dummies describe the concept in different words than you describe it in your patent as significant bits.

[00:20:02] Speaker 03:
I read the expert looking at those references saying, here's how I map all these words in the references to your claim elements.

[00:20:11] Speaker 03:
Why isn't that enough to create a genuine issue?

[00:20:14] Speaker 00:
Because the specific words in the reference were ranges of serial numbers.

[00:20:19] Speaker 00:
That's it.

[00:20:19] Speaker 00:
Full stop.

[00:20:20] Speaker 00:
Ranges of serial numbers.

[00:20:22] Speaker 00:
That comes nowhere near the level of detail.

[00:20:24] Speaker 00:
And that could be implemented in any wide number of ways, if you want to expand out what Mr. Sweeney was talking about.

[00:20:29] Speaker 03:
Yes, but didn't the expert explain that he thought that was covered?

[00:20:34] Speaker 03:
You may have the better argument on the facts, but I don't see how no reasonable person could understand that to include this concept.

[00:20:44] Speaker 00:
Well, Your Honor, the record shows that Mr. Sweeney made absolutely no explanatory effort.

[00:20:50] Speaker 00:
Perhaps, Your Honor, if Mr. Sweeney had gone into that work, pulled that laboring oar, and explained how range of numbers could mean this, but it could mean that, and this is how I conclude, maybe this would be a different case.

[00:21:04] Speaker 00:
But remember, what we had at the district court was a conclusory claim chart.

[00:21:07] Speaker 00:
And by the way, if we need to get to 103, I can talk about it, but 103 was not presented.

[00:21:13] Speaker 00:
at summary judgment.

[00:21:14] Speaker 00:
So it's another abandonment issue that we have in this case.

[00:21:17] Speaker 00:
But 102 was not abandoned.

[00:21:20] Speaker 00:
I concede that.

[00:21:21] Speaker 00:
So we're looking at Mr. Sweeney's declaration.

[00:21:23] Speaker 00:
The district court called a conclusory because all he did is he put a chart with the snippets and then didn't really explain in any way where the reference said ranges of serial numbers conformed to

[00:21:36] Speaker 00:
anything like the meaning that Avery would have needed to prevail.

[00:21:40] Speaker 02:
Are we required to agree that it was a conclusory claim chart?

[00:21:44] Speaker 02:
And what standard of review would we have for that?

[00:21:47] Speaker 00:
I actually researched that in preparation for this hearing.

[00:21:51] Speaker 00:
I think it's a little unclear.

[00:21:53] Speaker 00:
I found one decision, which I have on the table.

[00:21:56] Speaker 00:
I could report it to you in a moment.

[00:21:57] Speaker 00:
I did find one decision calling it an abusive discretion standard when a district judge reports that an expert's

[00:22:04] Speaker 00:
report or declaration was conclusory.

[00:22:07] Speaker 00:
Beyond that, I don't have any, even district court cases, I found only one case.

[00:22:11] Speaker 04:
Be clear, this is at the summary judgment stage.

[00:22:13] Speaker 04:
How could you possibly be telling me that anything at the summary judgment stage requires me to apply an abuse of discretion standard?

[00:22:18] Speaker 00:
Well, because this was a quasi-evidentiary finding.

[00:22:22] Speaker 00:
It was something like what would happen in emotional elimination.

[00:22:25] Speaker 04:
quasi-evidentiary standard on summary judgment?

[00:22:28] Speaker 00:
Well, that's my terminology.

[00:22:29] Speaker 00:
What I'm really getting at is when the judge considered that the testimony was conclusory, he was doing the same thing that he would do when evaluating whether to admit the expert at trial to report on those opinions.

[00:22:41] Speaker 03:
I mean, he didn't say the expert's opinion here doesn't meet the sufficient reliability under Dauber, and I'm not going to consider that summary judgment.

[00:22:52] Speaker 03:
We might have that argument if he'd done that.

[00:22:54] Speaker 03:
But he didn't.

[00:22:55] Speaker 03:
And we have to weigh all inferences in favor of the defendant.

[00:23:01] Speaker 03:
And it doesn't seem like the judge did that here.

[00:23:03] Speaker 00:
Well, there was, in fact, at the time there was an objection.

[00:23:07] Speaker 00:
And then the judge sustained the objection to the completeness of the expert report.

[00:23:13] Speaker 03:
But didn't exclude it.

[00:23:15] Speaker 00:
I believe that the sustaining of an objection is tantamount to exclusion.

[00:23:19] Speaker 03:
Are you saying the record is clear that the expert's report that accompanies these reference was excluded and therefore couldn't be relied on at summary judgment?

[00:23:31] Speaker 00:
With regard to those two references, CUNO, RFID for Dummies, that was the substance of his ruling.

[00:23:38] Speaker 00:
Yes, Your Honor.

[00:23:39] Speaker 00:
The substance of his ruling was at one point he says these are conclusory

[00:23:45] Speaker 00:
And I don't think they generate an issue of material fact.

[00:23:49] Speaker 00:
So Your Honor, if I may close on damages just very briefly, unless there are final questions.

[00:23:54] Speaker 04:
Well, I don't see how obvious you can argue that obviousness was somehow waived when the district court went on and granted summary judgment of non-obviousness.

[00:24:03] Speaker 00:
Right, Your Honor.

[00:24:04] Speaker 00:
That's because at the time, there were more claims in the case.

[00:24:08] Speaker 00:
Today, we're only looking at claim one.

[00:24:11] Speaker 00:
After that summary judgment ruling,

[00:24:15] Speaker 00:
everything other than claim one that was in the case was severed.

[00:24:18] Speaker 00:
So if you walk through the record, we walked through this in our red brief, the assertion against claim one by that expert in that declaration was solely anticipation for both of those prior art references.

[00:24:32] Speaker 00:
Now for RFID for Tummies, he got the claim two, he started to weave in some combinations, and then he concludes with some sort of very

[00:24:42] Speaker 00:
quick motivation to combine analysis, but those aren't before your honor anymore.

[00:24:48] Speaker 00:
Claims two through whatever are no longer in the case.

[00:24:50] Speaker 00:
They've been officially severed out of the case.

[00:24:53] Speaker 00:
So when we look at claim one, which is the only claim that went to trial, the only claim on which we have this judgment, the only attack on those claims at summary judgment from Avery Dennison was anticipation.

[00:25:06] Speaker 04:
What about claim one?

[00:25:07] Speaker 04:
Was claim one held on summary judgment not obvious?

[00:25:12] Speaker 00:
I'm not sure if those exact words are in the decision.

[00:25:17] Speaker 00:
I don't think the granularity that Your Honor is asking in your question was in the wording of the final order.

[00:25:23] Speaker 00:
I do know that he granted summary judgment.

[00:25:25] Speaker 04:
And what about Mr. Williams?

[00:25:26] Speaker 04:
Mr. Williams' testimony, he's not the expert, Mr. Sweeney, who the district court said was conclusory.

[00:25:33] Speaker 04:
Why doesn't Mr. Williams' testimony, in conjunction with the dummies' reference, at least create a question of fact?

[00:25:39] Speaker 00:
Well, because, Your Honor,

[00:25:41] Speaker 00:
confirmed what he meant in his answers during his deposition, in the live fire of a deposition.

[00:25:47] Speaker 00:
That's page 94 of his deposition, and we cite that, we walk through that in our red brief as well.

[00:25:54] Speaker 00:
So turning to that page of Mr. Williams, the questions were,

[00:26:03] Speaker 00:
He's staring at RFID for dummies.

[00:26:05] Speaker 00:
He's staring at the exact same passage that Mr. Sweeney was.

[00:26:08] Speaker 00:
He's being asked, question, could you do that by using decimal numbers?

[00:26:14] Speaker 00:
Hold on, it's the next question.

[00:26:15] Speaker 00:
But there, there's not a necessary conclusion from reading this that you would accomplish that by using most significant bits of the serial number.

[00:26:22] Speaker 00:
Answer, no.

[00:26:24] Speaker 00:
Question, and in fact, this doesn't mention anything about bits of a serial number at all, correct?

[00:26:29] Speaker 00:
Answer, it does not.

[00:26:31] Speaker 00:
So Mr. Williams,

[00:26:33] Speaker 00:
Certainly was asked some confusing questions and gave some confusing answers, but in the live fire of his deposition, he confirmed that he was not admitting that there was a disclosure of the most significant bits and so forth.

[00:26:45] Speaker 00:
Very quickly, unless Your Honor wants to stay on that, on damages... I'd like you to get to sanctions if you don't mind.

[00:26:53] Speaker 00:
Absolutely, Your Honor.

[00:26:57] Speaker 00:
So Your Honor, the trial judge, Judge Kasubai, talked about continuous disregard for the seriousness of this litigation and its extent.

[00:27:04] Speaker 03:
Let's just assume we agree that there's definitely a basis for sanctions.

[00:27:08] Speaker 03:
Get to the calculation and why it was proper to base the calculation and tie it to damages rather than looking at what their discovery misconduct caused your client in terms of

[00:27:23] Speaker 03:
extra resources and time and dollars and some kind of penalty for deterrent.

[00:27:28] Speaker 03:
This seems odd to me to tie it to damages rather than to address the misconduct.

[00:27:34] Speaker 00:
Well, Your Honor, the judge made a finding that his sanction amount, his calculation, was quote unquote, proportionate.

[00:27:42] Speaker 00:
That's in the sanctions order.

[00:27:45] Speaker 03:
And by that... I don't think that answers the question of whether the methodology he's using is an appropriate methodology.

[00:27:54] Speaker 00:
We explained this at length in our red brief, which is the conduct, the misconduct itself caused the jury to become unaware of the high proportion of infringement occurring under Avery's roof.

[00:28:07] Speaker 00:
And yet, certainly at the beginning of trial and with the examination of some of the witnesses, it recapitalized on what it told the jury was a low proportion of infringement to minimize the importance of the invention, which factored into the ultimate damages conclusion.

[00:28:24] Speaker 00:
So when Judge Kosubi, far in the future, says, my sanction is proportionate, he was referring back to the taint of the jury

[00:28:34] Speaker 02:
But didn't he also say, but I'm not changing the royalty that the damage is rewarded?

[00:28:40] Speaker 00:
How do you destroy those?

[00:28:41] Speaker 00:
Exactly.

[00:28:42] Speaker 00:
If you saw me flipping through my papers, I was trying to find that exact quote.

[00:28:44] Speaker 00:
But that is on the same page of the sanctions order.

[00:28:47] Speaker 00:
He said, I am deliberately keeping this monetary award separate from what became the judgment for the running royalty.

[00:28:58] Speaker 02:
I think that hurts you.

[00:28:59] Speaker 02:
He says, I'm not changing the jury's damages amount or royalty amount, but yet he did.

[00:29:05] Speaker 02:
He added like a quarter to every infringing unit, didn't he?

[00:29:09] Speaker 00:
0.0025 cents per tag was the final calculation.

[00:29:14] Speaker 00:
I'll just end with this, Your Honors, if you'll allow me.

[00:29:17] Speaker 00:
If Judge Kossubai had just picked a number out of the air, let's say $20 million, we would be here arguing.

[00:29:23] Speaker 04:
Doesn't seem likely that $20 million would correspond, does it, to the discovery.

[00:29:29] Speaker 04:
It seems like that would be random and it wouldn't correspond to the harm that was done, right?

[00:29:36] Speaker 00:
Well, my point is if the judge had just pulled that out of the air without any methodology, we would be here arguing about that.

[00:29:42] Speaker 04:
I guess the problem is I feel like he kind of did.

[00:29:44] Speaker 04:
The problem is I feel like he just picked a number.

[00:29:46] Speaker 04:
I'm going to tie it to damages.

[00:29:47] Speaker 04:
Maybe tomorrow he'll tie it to the weather.

[00:29:49] Speaker 04:
I don't know.

[00:29:49] Speaker 04:
But how is that linked to the actual discovery abuse?

[00:29:53] Speaker 00:
Because the record shows they tried to capitalize on their litigation misconduct with their arguments before the jury to reduce the rate.

[00:30:00] Speaker 00:
The rate we asked for was 0.009.

[00:30:03] Speaker 00:
The rate awarded by the jury was half of that.

[00:30:06] Speaker 04:
You're making it sound like it's an editor.

[00:30:09] Speaker 00:
Oh, definitely not an editor.

[00:30:10] Speaker 04:
Well, yeah, I wouldn't think you'd want it to be.

[00:30:12] Speaker 00:
Well, it just is not because of that.

[00:30:14] Speaker 04:
You just made it sound like one.

[00:30:16] Speaker 00:
It's not an editor because it's a monetary award under section 37C1, which is separate from a jury judgment.

[00:30:24] Speaker 02:
If we were to remand for further proceedings on invalidity, should we also vacate the sanctions?

[00:30:31] Speaker 00:
I don't see a basis for that, Your Honor.

[00:30:34] Speaker 00:
I saw no theory for why that would be inappropriate.

[00:30:36] Speaker 02:
What if it turns out your patents are invalid?

[00:30:38] Speaker 02:
Would you still have a claim to sanctions?

[00:30:40] Speaker 00:
We would indeed, because we cited cases at the end of the red brief, which talk about how this is an important policy to preserve obedience to the discovery rules in federal court.

[00:30:50] Speaker 03:
But even if it's appropriate for sanctions without any kind of damages award, how would it be appropriate to tie it to damages still?

[00:31:00] Speaker 00:
Again, it's to dissuade people from trying to capitalize this much.

[00:31:05] Speaker 00:
I'm waving my arms very wide.

[00:31:07] Speaker 00:
Capitalized by a quantifiable amount from their litigation misconduct.

[00:31:13] Speaker 00:
We have to have obedience to the rules of discovery for the courts to work.

[00:31:16] Speaker 04:
Okay, I thank counsel.

[00:31:18] Speaker 04:
I think we have some little time by Mr. Schaefer.

[00:31:22] Speaker 04:
uh... mister shaper uh... i allowed mister green spoon to go over by two minutes so you have one minute fifty two seconds on the clock but we'll change that four minutes even out the time that doesn't four minutes not five it doesn't mean you have to use it all thank you very much let me start with a one-on-one question whether it's easy or hard no don't start with the one-on-one question start with the one-on-two one-on-three questions very respectfully just on preservation just on preservation director on the pennix two

[00:31:51] Speaker 01:
6138-9477-14615 where the issue was repeatedly resolved on its merits by the district court solicited up your honors.

[00:32:00] Speaker 01:
Now I'm on to 102 and 103 your honor.

[00:32:03] Speaker 01:
For that, obviousness was also resolved on the merits on summary judgment by the district court.

[00:32:10] Speaker 01:
I would cite your honors to the appendix pages 6133 and 34 to 6138

[00:32:17] Speaker 01:
You can see Chief Judge Moore, when you were asking my friend Mr. Greenstein about it, he was a little bit hedging.

[00:32:23] Speaker 01:
What the court did was say, I'm analyzing anticipation and obviousness.

[00:32:28] Speaker 03:
then it turns into an illustrative... Can you not talk about the preclusion issue either?

[00:32:33] Speaker 03:
Get to the actual genuine issue and tell us because your friend says your expert doesn't really say anything.

[00:32:39] Speaker 03:
It's all conclusory and he doesn't map anything in the references to the concepts of significant bits.

[00:32:46] Speaker 03:
Where is that in his testimony?

[00:32:49] Speaker 01:
You can find it for Mr. Sweeney in the chart that accompanied his expert report.

[00:32:53] Speaker 01:
He went through each element of the claim.

[00:32:55] Speaker 01:
And he specifically recited what was disclosed in the prior art that would alert the person of reasonable skill in the art to the fact that that was available as prior art.

[00:33:06] Speaker 01:
And he did that for each of the elements in reference to specific quotations from the prior art.

[00:33:11] Speaker 04:
This court, in the medical instrumentation case, at 344 F3... Just out of curiosity, if he was as specific as you're saying, why would the district court expressly say his testimony was conclusory?

[00:33:22] Speaker 01:
It's a fair question, Chief Judge Moore.

[00:33:24] Speaker 01:
I think because he had a chart, perhaps, that went through what were the elements and where were those disclosed in the prior art.

[00:33:31] Speaker 01:
But I don't think that that's purely this trial's conclusory.

[00:33:34] Speaker 01:
In the cases where this court has said you can say an expert testimony is conclusory, if he had said, for instance, there's no infringement, one sentence, I can understand why that is not substantive.

[00:33:44] Speaker 01:
Here, the expert report went through the specific portions of it.

[00:33:47] Speaker 01:
You can find it in appendix 3841.

[00:33:50] Speaker 01:
for each of the elements, 3842 as well, where he continues on for two pages to show why it was anticipated.

[00:33:58] Speaker 01:
And then counsel also argued that it was obvious in light of that.

[00:34:01] Speaker 01:
This court had also held that it's not essential to have extra testimony to make the case for obviousness.

[00:34:08] Speaker 01:
And of course, the district court judge was ranking summary judgment as to validity across the board, anticipation and obviousness, so that the expert could not then testify to the jury

[00:34:18] Speaker 01:
and allow the jury to decide the genuine issues of material fact themselves.

[00:34:22] Speaker 01:
I also respectfully submit, combined with 101, that there's really no question but that the invention is obvious relative to the prior art and anticipated because of what RFID for dummies taught about exactly what Judge Hughes and I were talking about, quasi-autonomous programming.

[00:34:39] Speaker 01:
And RFID for dummies, Your Honor, didn't say that you could only do it one particular way.

[00:34:43] Speaker 01:
It said, for example, you can do it with a range.

[00:34:46] Speaker 01:
And all the invention does is say the range is

[00:34:48] Speaker 01:
It's just one specified sequence of bit, which was exactly what RFID redundancy was teaching, as was CUNOPI.

[00:34:55] Speaker 01:
Ended with that.

[00:34:57] Speaker 01:
For the damages question, I just want to direct Your Honors to the testimony from Mr. Yerbovich that at least presented a jury question on the alum sum.

[00:35:06] Speaker 01:
He had 15655.

[00:35:08] Speaker 04:
He didn't address that, so you don't get to address it in rebuttal.

[00:35:12] Speaker 01:
Move on.

[00:35:12] Speaker 01:
OK.

[00:35:12] Speaker 01:
Then on sanctions, Your Honors, if I may turn to that.

[00:35:16] Speaker 01:
In the SYNCOR case, the sanction was $50,000 on a judgment that was more than $90 million.

[00:35:23] Speaker 01:
There was a finding that there was severe prejudice to the other side.

[00:35:26] Speaker 01:
And it was willful, willful noncompliance there.

[00:35:30] Speaker 01:
Here, you had a self-detected, self-reported discovery violation.

[00:35:36] Speaker 01:
We retained Ernst & Young.

[00:35:37] Speaker 01:
We preserved $2 million in errors in favor of that.

[00:35:40] Speaker 04:
OK, counsel, your time is up.

[00:35:41] Speaker 04:
We have your argument.

[00:35:42] Speaker 04:
I thank both counsels.

[00:35:43] Speaker 04:
This case is taken under submission.