[00:00:00] Speaker 02: The first argued case this morning is number 21, 2253, Fingen LLC against Juniper Networks, Incorporated. [00:00:09] Speaker 02: Mr. Denning. [00:00:12] Speaker 05: Thank you, Your Honor. [00:00:13] Speaker 05: Roger Denning of Fish and Richardson, Appellate Counsel for Fingen. [00:00:19] Speaker 05: I plan to focus my argument on the third of the issues presented, which is whether the district court erred in awarding fees that were unrelated to the conduct by Fingen's prior counsel that was the basis for its finding of exceptionality. [00:00:36] Speaker 05: I plan to submit on the papers our argument that the underlying conduct was not exceptional unless this court has any questions. [00:00:44] Speaker 05: In Octane Fitness, the Supreme Court broadened the scope of litigation conduct that may subject a party to fee shifting under Section 285. [00:00:54] Speaker 00: I'm not quite clear on, because time is limited. [00:00:58] Speaker 00: When you said the issue you want to focus on is, so tell us specifically, because is that involving both patents or just one patent? [00:01:06] Speaker 05: Both patents, Your Honor. [00:01:07] Speaker 05: So we argued that the conduct that the district court found exceptional was not, and should not have subjected Fingen to any fee shifting. [00:01:17] Speaker 00: We also argued in the third. [00:01:18] Speaker 00: So you are arguing it's not exceptional. [00:01:20] Speaker 05: We are, Your Honor. [00:01:21] Speaker 05: I don't plan to address that today. [00:01:22] Speaker 00: OK, what are you addressing here? [00:01:24] Speaker 00: OK, tell me what you're addressing here. [00:01:25] Speaker 00: Sure. [00:01:26] Speaker 05: So there were specific conduct that the district court identified as being exceptional with regard to the 494 patent and with regard to the 780 patent. [00:01:36] Speaker 05: But despite that, the district court awarded fees for the entirety of the litigation relating to the 494 patent and the 780 patent, including fees that predated the conduct that the district court found to be exceptional. [00:01:51] Speaker 05: And that's what I was planning to address today. [00:01:53] Speaker 04: So you're essentially arguing we have to, the district court has to kind of more precisely apportion the fees to the specific misconduct. [00:02:03] Speaker 05: That's correct, Your Honor. [00:02:04] Speaker 05: As the Supreme Court said in the Goodyear case, the district court doesn't have to be a green eye shade accountant in drawing these lines. [00:02:14] Speaker 05: But there does need to be a connection between the conduct that the court finds exceptional [00:02:19] Speaker 05: and the fees awarded. [00:02:21] Speaker 05: This court has said the same in the Munchkin case, where we said the district court must provide a concise but clear explanation of the reasons for its award. [00:02:31] Speaker 05: And in the Rembrandt case, where he said- OK, so you're talking about the 494. [00:02:35] Speaker 00: And is your argument that he should have parsed the damages versus the infringement? [00:02:41] Speaker 05: That's right. [00:02:41] Speaker 05: So the only conduct that the district court found to be exceptional was the damages case. [00:02:49] Speaker 05: The damages expert report, which the court [00:02:52] Speaker 00: When you say that, and I guess I hear the words, but in his analysis, it seems to me, my read of it, is he really tied, firstly damages is obviously tied to infringement. [00:03:06] Speaker 00: And it was all part of one thing. [00:03:10] Speaker 00: It's kind of hard to tease it out. [00:03:12] Speaker 00: I take your point that some of the detailed stuff was in the damages context. [00:03:18] Speaker 00: But what he said, what awry in the damages context, was very much related to the infringement case, which I think he said kept shifting and was unclear. [00:03:29] Speaker 00: And at the end of the day, he says it was just completely [00:03:33] Speaker 00: Not frivolous, but you know. [00:03:34] Speaker 00: So I take your point that damages and infringements are different words and different things, but they're very related. [00:03:41] Speaker 00: And in this case, I think he put the package together. [00:03:44] Speaker 00: So tell me why he didn't. [00:03:45] Speaker 05: Sure. [00:03:46] Speaker 05: So on the infringement case, for instance, both sides moved for summary judgment, non-infringement and infringement. [00:03:53] Speaker 05: The judge granted summary judgment of infringement for all but one claim limitation. [00:03:58] Speaker 05: of claim 10 of the 494 patent. [00:04:02] Speaker 05: And he said that one should go to trial. [00:04:05] Speaker 05: He never said that Finjen's infringement case. [00:04:09] Speaker 00: Yeah, but when he tells the story of what went down, and if you look at the record, you see what went down, a lot of the confusion and the problems he had with the damages, which I think you're suggesting maybe was OK, was related to the confusion as to what the infringing products were. [00:04:28] Speaker 00: So I think there might be instances where you can tease out two different theories and say they were completely separate. [00:04:36] Speaker 00: But do you understand what I was saying? [00:04:37] Speaker 00: If you look at the whole record and what went down, the damages stuff, and you're right. [00:04:42] Speaker 00: I mean, they went to trial on it, and it was based on. [00:04:45] Speaker 00: But it was very much related. [00:04:47] Speaker 00: The shifting sand stuff had to do not just exclusively with the damages theory, but the damages theory and how it related to the infringing [00:04:58] Speaker 00: products. [00:05:00] Speaker 05: So you're honest correct. [00:05:02] Speaker 05: The primary problem that the district court had with the damages expert report was that it included as a check on the number the revenue for the SRX gateway products, which was much greater than the revenue for the Sky ATP licenses that people had taken. [00:05:19] Speaker 05: That's a very different issue than the non-infringement case [00:05:23] Speaker 05: that Juniper put on at trial, and a very different issue than any of the infringement case presented to the court. [00:05:31] Speaker 05: There was never an argument that the SRX Gateway products don't infringe. [00:05:37] Speaker 05: And even from the beginning of the case, Finjen had always said SRX Gateway, together with Sky ATP, infringes. [00:05:47] Speaker 05: SRX gateway by themselves, no. [00:05:51] Speaker 05: Finjen did not argue that. [00:05:51] Speaker 00: But didn't he also say, Justin, this is a little different, moving on to another point. [00:05:55] Speaker 00: I also think, just in another respect, didn't he also say that even though he admitted error, it's hard for judges to do that, let me tell you. [00:06:03] Speaker 00: But he kind of said, you know, at first, I thought this infringement, there might be something to this infringement thing. [00:06:10] Speaker 00: We tried it. [00:06:12] Speaker 00: Not only did he think the jury was right in finding no infringement, but he finally understood what the infringement theory was. [00:06:24] Speaker 00: used to describe it, but how really thin or misleading it was. [00:06:30] Speaker 00: So why isn't that enough to say that he could stick the infringement stuff into the attorneys? [00:06:35] Speaker 05: So you see, Your Honor is right. [00:06:37] Speaker 05: After the trial, he discouraged Finjen from filing a J-Mall motion saying that when he heard counsel for Juniper's closing argument, the scales fell from his eyes, and he understood why Juniper did not infringe. [00:06:51] Speaker 05: Fincher nevertheless filed a Jamal motion. [00:06:54] Speaker 05: And in his order denying the Jamal motion, the court never said that the infringement case was without merit. [00:07:01] Speaker 05: Instead, he said it turned to a battle of the experts. [00:07:05] Speaker 05: And that was the basis for saying, well, the jury had sufficient evidence to find for Juniper on the infringement issue. [00:07:13] Speaker 05: Never in his fee award, in his order awarding fees, did the district court ever talk about infringement. [00:07:21] Speaker 05: The only issue he talked about specifically in that fee award is damages. [00:07:27] Speaker 05: So this court has to determine [00:07:30] Speaker 05: whether the district court abused his discretion in awarding fees. [00:07:34] Speaker 00: So where is that language? [00:07:35] Speaker 00: Where was I reading? [00:07:36] Speaker 00: What document was I reading where the district court did discuss infringement, saying that he had kind of been bamboozled, and he thought it might have some merit at the beginning. [00:07:46] Speaker 00: What you just cited, where he said at closing argument, suddenly he realized this was just a completely bogus thing. [00:07:53] Speaker 00: What piece of paper was that analysis? [00:07:56] Speaker 05: That was in an argument after the trial. [00:07:59] Speaker 05: It was before Finch had filed its J-Maw motion. [00:08:05] Speaker 05: I don't have the site because I wasn't planning on covering that, but I can get that for you. [00:08:11] Speaker 05: Maybe I have it. [00:08:15] Speaker 05: Give me one second. [00:08:19] Speaker 05: No. [00:08:21] Speaker 05: I will note, though, that in arguing for fees in the trial, and this is at appendix 8551, Finjen encouraged the district court to award fees based on the infringement case. [00:08:34] Speaker 05: And the district court didn't do so. [00:08:36] Speaker 05: It had the opportunity. [00:08:37] Speaker 05: Juniper argued for it. [00:08:39] Speaker 05: And the court didn't include it in either of the two orders, not only the one before the accounting, but the one after the accounting. [00:08:46] Speaker 05: never included the infringement case. [00:08:49] Speaker 05: As to the 780 patent, the district court gave three reasons for exceptionality. [00:09:01] Speaker 05: The first of them chronologically [00:09:04] Speaker 05: was that he felt that Fingen should have dropped the 780 patent altogether after the first summary judgment showdown round. [00:09:12] Speaker 05: Not only claim one, but also claim nine. [00:09:15] Speaker 05: The other two incidents that he cited, incidents by Fingen's prior counsel, why regrettable, they occurred after that date. [00:09:24] Speaker 02: So is it correct, just to make sure I have the facts right, that after the summary judgment showdown that the district court [00:09:33] Speaker 02: refused to certify for immediate appeal? [00:09:36] Speaker 05: That is correct, Your Honor. [00:09:38] Speaker 02: OK. [00:09:39] Speaker 05: That is correct. [00:09:41] Speaker 05: And the additional conduct came long after that. [00:09:46] Speaker 05: So even in the district court's order awarding fees on the 780 patent, the order states specifically, Finjen should have dropped the 780 patent after that first round patent showdown. [00:10:01] Speaker 05: So my position, my argument I'm making to you here, is that the fees for the 780 patent should go back no further. [00:10:08] Speaker 05: than that first patent showdown. [00:10:10] Speaker 05: That was August 9, 2018. [00:10:13] Speaker 05: No fee should be awarded before then, because in his order, finding exceptionality. [00:10:21] Speaker 00: Do you have a rough number of what percentage of the fees? [00:10:25] Speaker 00: Because it seems like even if you look at the calendar and what went down, I thought a large portion of the fees were [00:10:32] Speaker 00: during part of the showdown stuff and after. [00:10:36] Speaker 00: So what general guess do you have as a percentage of what we're fighting about here? [00:10:42] Speaker 05: I don't. [00:10:42] Speaker 05: I haven't looked at that. [00:10:43] Speaker 05: I know that the case was filed in September of 2017. [00:10:45] Speaker 05: The showdown was in August of 2018. [00:10:49] Speaker 05: And then the first trial was in December of 2018. [00:10:54] Speaker 05: So it was almost a year between the filing of the case and that first showdown. [00:10:59] Speaker 00: But the stuff that we have in the record that you say occurred after the showdown thing, that seems to me, I mean, fees were being incurred during that. [00:11:10] Speaker 00: It wasn't clear to me what fees [00:11:13] Speaker 00: What portion of the fees charge would have come before that? [00:11:17] Speaker 05: So if the only action that supports a fee award occurred on August 9th of 2018, everything that came before that, including all of the workup for that first summary judgment round, [00:11:32] Speaker 05: should not be taxed on the 7-8-0 patent, which wasn't even a subject of that first round. [00:11:38] Speaker 05: So we would say that's the first date on which any fees, if there's going to be any fee award on the 7-8-0, it should go back no further than August 9. [00:11:48] Speaker 05: I see I'm into my rebuttal time, but I'm happy to continue to answer any questions that the court has. [00:11:54] Speaker 02: Well, I think we're all right for the moment. [00:11:57] Speaker 02: We want to be sure we explore it thoroughly. [00:11:59] Speaker 02: Let's hear from the other side. [00:12:01] Speaker 03: Thank you, Your Honor. [00:12:03] Speaker 02: And Mr. Kagan. [00:12:04] Speaker 03: Thank you, Your Honor. [00:12:05] Speaker 03: May it please the court, Jonathan Kagan of IRL and Monella, representing Juniper Networks. [00:12:11] Speaker 03: So Judge Prost, to address your question, the quote that you were referring to, it was a part of the hearing, a statement the judge made at the hearing on the JA malls. [00:12:23] Speaker 03: And it is in the record at page 7855. [00:12:27] Speaker 03: And this relates to the 494 patent. [00:12:30] Speaker 00: So do you want to address your friend's arguments about the emphasis on the so-called damages portion [00:12:37] Speaker 00: and why infringement should not have been included in that? [00:12:42] Speaker 03: Sure. [00:12:42] Speaker 03: So that relates to the 494 patent. [00:12:44] Speaker 03: The problem with the damages theory is inherently related to the infringement theory. [00:12:48] Speaker 03: Because what FinGen tried to do was come up with a new infringement theory on the eve of trial, as the court said. [00:12:56] Speaker 03: So they're inextricably linked. [00:12:58] Speaker 03: It wasn't that the damages expert had just miscalculated the numbers. [00:13:04] Speaker 03: It's that they were trying to shift their infringement theories. [00:13:06] Speaker 00: But even if that's so, if they came up with this new infringement thing on the eve of trial, then maybe the attorney's piece related to pursuing that new infringement theory on the eve of trial should be included. [00:13:19] Speaker 00: But why should the prior infringement theory, whatever it may have been, not be included? [00:13:25] Speaker 03: So there's a number of reasons for that. [00:13:27] Speaker 03: Number one, one of the factors that the court can consider under octane fitness is the strength of the plaintiff's case and their litigation positions. [00:13:36] Speaker 03: And as you noted, the court said, I realized at the end, this whole thing was based on smoke and mirrors, is what he said. [00:13:43] Speaker 03: He said, I was taken in by you. [00:13:46] Speaker 03: And that's really one of the factors that this court can and should consider. [00:13:50] Speaker 03: That's on the record. [00:13:51] Speaker 03: This court said, on liability, it was a very weak theory. [00:13:57] Speaker 03: On damages, it's also a weak theory. [00:14:00] Speaker 03: But the real problem here is that had they come to grips with [00:14:07] Speaker 03: Had they come to grips with their real damages number, what would this case have looked like? [00:14:11] Speaker 03: And that's one of the things that the court's looking at. [00:14:13] Speaker 03: And the same thing is true with the 780 patent, by the way. [00:14:16] Speaker 03: This is a case where millions upon millions of dollars were spent by both sides. [00:14:20] Speaker 02: We're not deciding the merits. [00:14:23] Speaker 02: We're deciding where the exceptionality of it is so. [00:14:30] Speaker 02: And I must say, the damages theory, even though the damages expert was excluded, [00:14:35] Speaker 02: We certainly have seen that same theory presented in other cases. [00:14:41] Speaker 02: So it's hard to understand where the exceptional case lies. [00:14:46] Speaker 02: For instance, apparently there was no Rule 11 complaint or procedure against counsel that the court criticized. [00:14:59] Speaker 02: And to know where the line is when we have a hard fought [00:15:04] Speaker 02: case on both sides doesn't look that different from a lot of the cases that we see, where there are, let's agree, extreme positions taken on each side, and they need to get sorted out. [00:15:19] Speaker 03: So if we're going to focus on the sort of aggressiveness with which the case was handled, [00:15:25] Speaker 02: Let's start with that, because that certainly perturbed this very savvy judge with a lot of experience. [00:15:33] Speaker 03: Right. [00:15:33] Speaker 03: So the problem with the damages theory wasn't [00:15:36] Speaker 03: the merits of the theory. [00:15:38] Speaker 03: In other words, the judge didn't say, I don't like your theory, so I'm not going to allow it. [00:15:43] Speaker 01: He excluded it on Daubert. [00:15:44] Speaker 01: So it had to have been that he didn't like the theory. [00:15:47] Speaker 03: No, he excluded it because it was based on a brand new infringement theory that had never previously been asserted. [00:15:54] Speaker 03: He did not address the merits of the theory itself. [00:15:58] Speaker 03: because what they were trying to do was invent a new infringement theory to support a new damages case. [00:16:05] Speaker 03: That was his problem. [00:16:06] Speaker 03: And if you read his Daubert order, you'll see. [00:16:08] Speaker 03: And if you read his order on fees, you'll see that's exactly what he said. [00:16:11] Speaker 00: But also, if I could just add, and this is a friendly comment to your side, which is that he didn't just say, Daubert, this damages expert was bogus. [00:16:21] Speaker 00: You're out there getting fees. [00:16:23] Speaker 00: He also relied on what they did afterwards, which he let them put on a fact-based damages case at trial. [00:16:29] Speaker 00: And that, too, proved to be, in his view, I think, quite bogus and quite insubstantiated. [00:16:36] Speaker 00: And I don't know what adjective to use. [00:16:39] Speaker 03: He used woefully inadequate, were the words he used. [00:16:42] Speaker 03: And that's correct. [00:16:42] Speaker 03: That's another example of the conduct that occurred during this litigation. [00:16:48] Speaker 03: But the litigation conduct went far beyond that. [00:16:51] Speaker 03: So what the judge said, and we're reviewing this for abuse of discretion. [00:16:56] Speaker 03: What the judge said expressly is, these things that I'm putting in this order are not the exclusive examples of bad conduct, for example, that I'm basing this order on. [00:17:07] Speaker 03: He said, this case, it went all the way through this case. [00:17:10] Speaker 03: He's a very experienced judge. [00:17:12] Speaker 03: He said, this permeated the entire case. [00:17:16] Speaker 03: So he's just providing examples in his order of things that he thinks will, I guess. [00:17:23] Speaker 00: But isn't that a problem for you? [00:17:25] Speaker 00: Isn't that the Achilles heel in your case, which is that he used the word example, and the other side is coming in and saying, [00:17:34] Speaker 00: Well, he gave two examples, and that's not enough. [00:17:37] Speaker 00: We have to be able to review what he did. [00:17:39] Speaker 00: So you can't say, this whole case was terrible, and here's one example of what went wrong. [00:17:44] Speaker 00: And you talk about one little thing. [00:17:45] Speaker 00: How are we supposed to review that, even under abusive discretion? [00:17:48] Speaker 03: Well, so then the answer to this goes to what Judge Hughes was asking. [00:17:51] Speaker 03: At one point, does he have to list every single instance of poor conduct? [00:17:56] Speaker 03: in order for this court to have effective appellate review. [00:18:00] Speaker 03: I would say no, because it's a highly deferential standard of review. [00:18:03] Speaker 03: And really, all you need to look at when you're looking at it. [00:18:06] Speaker 04: I mean, there's a line there somewhere, right? [00:18:08] Speaker 04: Like, if what he found, the only thing he found problematic was the damages portion of the case, and that he didn't find the [00:18:16] Speaker 04: the infringement portion problematic, but nevertheless awarded fees for the entire case, I think he would have a problem. [00:18:25] Speaker 04: And it's hard to tell when the examples he's showing are mostly about damages, although I see how you're trying to connect them up to review that. [00:18:35] Speaker 04: I think we don't have a strict apportionment policy for fees, [00:18:43] Speaker 04: there has to be some relation, right? [00:18:45] Speaker 03: Right, and I think that's why we pointed to other examples in the record. [00:18:49] Speaker 04: The problem is, it seems like he did not, even though those were examples, [00:18:57] Speaker 04: and of conduct that could have supported an exceptionality finding. [00:19:01] Speaker 04: I didn't necessarily find the connection where he used those as examples, but rather you posed them as support. [00:19:09] Speaker 03: So for example, in the section of the Jamal argument that Judge Pro cited, the judge is clearly saying, this whole case is based on smoke and mirrors. [00:19:19] Speaker 03: You've been wrong from the get-go. [00:19:21] Speaker 03: And he said they had the shifting sands approach. [00:19:23] Speaker 03: And that's what they did. [00:19:23] Speaker 03: They always tried to get to the next day of litigation. [00:19:25] Speaker 04: So the fact that he didn't repoint to that statement in his attorney's fees award, in your view, doesn't matter, because he's already set on the record that the litigation of this case throughout has been exceptional. [00:19:37] Speaker 03: Right. [00:19:38] Speaker 03: So the scope of his award is clear. [00:19:39] Speaker 03: He says, I think I find, by the way, it wasn't the entire case. [00:19:42] Speaker 03: It was a nine patent case. [00:19:44] Speaker 03: We sought fees for all nine patents. [00:19:47] Speaker 03: He only awarded fees on two of those patents, including the fact that he denied fees on a patent that we won summary judgment on. [00:19:55] Speaker 03: So this judge has demonstrated, if you just look at the record, he's careful to separate out the behavior and the patents from where he believes they're exceptional and patents where there's not. [00:20:07] Speaker 03: He's not throwing the baby out with the bathwater, so to speak. [00:20:10] Speaker 00: Well, I'd also point out in his order, he does refer to, he makes several references to the infringement case. [00:20:16] Speaker 00: Yes. [00:20:16] Speaker 00: The products and infringing products and the revenue base. [00:20:19] Speaker 00: Because as I said earlier, I mean, there's an intertwinedness between damages and infringement. [00:20:26] Speaker 00: In terms of if there's any infringing products, you've got to know what the accused products are. [00:20:30] Speaker 03: In a way, it's even stronger with aspects of the 780 patent. [00:20:34] Speaker 03: Because the 780 patent, the notice issues, [00:20:38] Speaker 03: with regard to infringement actually eliminated any potential for liability with regard to certain products, because they had not provided either actual or constructive notice. [00:20:48] Speaker 03: Patent expired before they brought suit. [00:20:51] Speaker 03: And they brought it against a product called the ATP appliance. [00:20:58] Speaker 03: There was no possibility of any damages because of the absence of notice. [00:21:02] Speaker 03: But what they did, [00:21:04] Speaker 03: was they made misrepresentations to the court about that notice to keep the case alive. [00:21:09] Speaker 03: They put on a witness who said, oh, I provided notice of these patents. [00:21:13] Speaker 03: He hadn't. [00:21:13] Speaker 03: We had a tape recording of the conversation that proved he hadn't done that. [00:21:18] Speaker 03: We had them misrepresent perhaps inadvertently case law from this court. [00:21:27] Speaker 03: We also had Finjen try to walk back concessions they had made. [00:21:33] Speaker 03: And this is in his order on relating to Arctic Cat and notice. [00:21:37] Speaker 03: So with the 780 patent in particular, but also with the 494, there is this interrelationship between the damages and the liability issues. [00:21:47] Speaker 00: Can I ask you about the 780 patent? [00:21:51] Speaker 00: Your friend was trying to sort of at least parse a piece of it out. [00:21:54] Speaker 00: And I think what he was, I think he said, the pre-summary judgment work and attorney's fees. [00:22:01] Speaker 00: But the summary judgment showdown was over a different claim, right? [00:22:04] Speaker 00: It was over claim one, not claim nine. [00:22:07] Speaker 00: So do you have a guess about what portion of the fees we would be talking about if it was prior to the showdown dealing with claim nine? [00:22:18] Speaker 03: I do not have an estimate for it. [00:22:21] Speaker 00: Do you suspect it was quite de minimis, or no? [00:22:23] Speaker 00: Am I just making this up? [00:22:26] Speaker 03: It was not a big part of the overall award, certainly. [00:22:30] Speaker 03: The 494 patent, as Your Honors know, that was the one that went to trial. [00:22:34] Speaker 03: And most of the fees are associated with that. [00:22:37] Speaker 03: So the fees associated with the 780 are much smaller. [00:22:41] Speaker 03: I think that initial period of time are going to be a small portion of it. [00:22:45] Speaker 00: But you're also saying that the failure of notice infected it from the get-go. [00:22:50] Speaker 03: Yes, of course. [00:22:52] Speaker 03: Well, I mean, look, we didn't get into this issue in great detail. [00:22:59] Speaker 03: in the briefing. [00:23:00] Speaker 03: But the ATP appliance, there was no damages claim. [00:23:05] Speaker 03: There was no claim against it whatsoever because of the failure of notice. [00:23:08] Speaker 03: And the failure of notice started well before. [00:23:11] Speaker 03: They were aware of the failure of notice before they filed their case. [00:23:15] Speaker 02: Would you focus, again, on what there is about this case that is exceptional to the point of crossing this barrier, which is very rarely crossed, as you know, [00:23:30] Speaker 02: or fee shifting. [00:23:33] Speaker 03: OK, so let me start with the case in general. [00:23:36] Speaker 03: This is a nine patent case that was brought. [00:23:39] Speaker 02: All right, that's not so unusual. [00:23:41] Speaker 02: Now what else? [00:23:42] Speaker 03: OK, of those nine patents, six of them ended up being voluntarily dismissed with prejudice after being asserted. [00:23:49] Speaker 02: That's not so unusual. [00:23:51] Speaker 02: We see that from time to time. [00:23:52] Speaker 03: Two of them were lost on summary judgment. [00:23:55] Speaker 02: We see that very often. [00:23:57] Speaker 03: And the one remaining patent, which is the one that went to trial, their damages case was found improper as a matter of law because they're trying to introduce a new theory. [00:24:09] Speaker 01: So they lost on damages. [00:24:11] Speaker 03: And in addition, they lost on liability. [00:24:15] Speaker 03: But they didn't just lose on liability. [00:24:17] Speaker 03: They lost on liability in the way where the court found that their entire case had been based on smoke and mirrors. [00:24:23] Speaker 02: Well, so some infringement was found. [00:24:25] Speaker 02: Was it not? [00:24:26] Speaker 02: No. [00:24:27] Speaker 03: No infringement was found. [00:24:28] Speaker 03: There was no infringement found at all. [00:24:30] Speaker 02: OK. [00:24:31] Speaker 02: It just was close enough to go to trial then? [00:24:33] Speaker 03: Well, you say it was close enough to go to trial. [00:24:36] Speaker 03: We never moved for summary judgment on that patent. [00:24:38] Speaker 03: Because under the court's rules, we were allowed to move on one. [00:24:42] Speaker 03: We moved on another patent. [00:24:44] Speaker 03: So when Fingen says, our claim survived summary judgment, their claim didn't survive the summary judgment motion that we filed. [00:24:52] Speaker 03: Their claim just managed to survive their own summary judgment. [00:24:57] Speaker 02: Well, you see what's troubling me. [00:25:00] Speaker 02: This is, from the viewpoint of what we see on appeal, an extraordinary action. [00:25:08] Speaker 02: Fee shifting, we have a hard fought action. [00:25:11] Speaker 02: Each side overstated. [00:25:13] Speaker 02: Each side pressed everything that they could and then withdrew all of these activities. [00:25:21] Speaker 02: that for better or for worse seems to prevail once you get at least into patent litigation. [00:25:28] Speaker 02: Why does this one occasion attorney's fees? [00:25:33] Speaker 02: And does it, in fact, mean that every time counsel misstates, like you pressed, that their lawyer didn't quite misstate but simplified precedent [00:25:52] Speaker 02: what had happened and that it wasn't totally accurate. [00:25:55] Speaker 02: We see this sort of inaccuracy. [00:25:58] Speaker 02: If it's significant, it's generally corrected at the trial. [00:26:04] Speaker 02: I'm trying to get from there to fish shifting, or are we opening the door that every case? [00:26:11] Speaker 02: That's why I wondered about rule 11. [00:26:13] Speaker 02: If this behavior was so representative, how come there was no objection? [00:26:19] Speaker 02: formal objection of that sort? [00:26:21] Speaker 03: So a brief answer to that. [00:26:23] Speaker 03: Rule 11 has some specific requirements. [00:26:25] Speaker 03: It has to be things that are in writing, put in briefs, et cetera, by the parties. [00:26:31] Speaker 03: But also, and just to be clear, I want to be forthright with the court. [00:26:35] Speaker 03: We had filed a motion for sanctions for bad faith. [00:26:39] Speaker 03: The court denied that motion. [00:26:41] Speaker 03: So what the court said is, I do not think their conduct rises to that level of bad faith. [00:26:47] Speaker 02: Well, that doesn't help, does it? [00:26:49] Speaker 02: I mean, it doesn't help the way it finally came out? [00:26:53] Speaker 03: Well, I would say this. [00:26:54] Speaker 03: If the court had found bad faith, it would be easier to sustain exceptionality. [00:26:59] Speaker 03: But the important point is that the Octane Fitness case said you don't need bad faith. [00:27:03] Speaker 03: So bad faith is not an element of an exceptionality determination. [00:27:08] Speaker 03: So this case, essentially, is somewhere between exceptional and bad faith, according to the judge. [00:27:15] Speaker 03: And he looked at it carefully. [00:27:16] Speaker 03: And he didn't say the whole case. [00:27:18] Speaker 03: He said only portions of the case. [00:27:21] Speaker 03: And so what I would say is this is not opening the door. [00:27:24] Speaker 03: Really, this is a review based on abusive discretion. [00:27:29] Speaker 03: This is an experienced judge who looked at this case, only found exceptionality with regard to two out of nine patents. [00:27:37] Speaker 03: And when he did that, he supported it, both with findings that there were problems with the liability case, but also problems with the conduct of counsel [00:27:45] Speaker 03: that the Pellet Council here is not disputing. [00:27:48] Speaker 03: What they're doing is they're acknowledging those errors, and they're just saying, well, we think that those errors don't rise to the level of exceptionality, but we acknowledge they're wrong. [00:27:58] Speaker 03: That's a classic discretionary call for the trial court to make. [00:28:02] Speaker 02: Now, the real question is, what is the level of exceptionality when you have a hard-fought case with just the same, I'll call them abuses here? [00:28:13] Speaker 02: that we see, unfortunately, are not that unusual. [00:28:19] Speaker 03: Well, again, what I would say is this district court found that the case did not have merit on the infringement side from the beginning. [00:28:30] Speaker 03: That's what he said. [00:28:31] Speaker 03: It was smoke and mirrors. [00:28:33] Speaker 03: He said he found numerous examples of misconduct of counsel that were attempting to mislead. [00:28:39] Speaker 03: He also threw the damages case out as a matter of law. [00:28:43] Speaker 03: So this is a case where their strongest patent out of all these nine [00:28:47] Speaker 03: The way they litigated it, they couldn't bring a damages case. [00:28:52] Speaker 03: The judge found the infringement case to be all smoke and mirrors, and he found numerous examples of misconduct along the way. [00:28:57] Speaker 03: That's for their strongest patent out of the nine. [00:29:01] Speaker 03: So again, I don't know how many when your honors are reviewing cases. [00:29:05] Speaker 03: I'm sure you see a lot of things. [00:29:07] Speaker 03: My suspicion is that's actually not typical. [00:29:11] Speaker 03: But again, I could be wrong on that. [00:29:13] Speaker 00: I don't think you're opening the door. [00:29:14] Speaker 00: Can I ask you about a question? [00:29:15] Speaker 00: I don't know which cases, if this is obtained, doesn't one of the Supreme Court cases also include in there a standard of, [00:29:23] Speaker 00: It stands out, presumably, in the experience of it. [00:29:26] Speaker 00: Yes, that's exactly what the standard is. [00:29:28] Speaker 00: It stands out. [00:29:29] Speaker 00: And so we're reviewing abuse of discretion, including on the fact that this judge has concluded that based on his experience, which in this instance is pretty extensive on this judge, and it stands out in his experience in terms of the cases, is that the right standard? [00:29:46] Speaker 03: Yes, the exact language mocked in fitness is [00:29:50] Speaker 03: Quote, we hold then that an exceptional case is simply one that stands out from others with respect to the substantive strength of a party's litigating position, considering both the governing law and the fact that it is. [00:30:04] Speaker 00: That would be in the district court's view. [00:30:06] Speaker 00: I mean, the district court would be saying this case stands up. [00:30:09] Speaker 00: Yes. [00:30:12] Speaker 03: Yes, this is clearly a decision that's left to the discretion of the district court. [00:30:20] Speaker 03: in the first instance. [00:30:22] Speaker 02: Any more questions for counsel? [00:30:24] Speaker 02: Any more questions? [00:30:25] Speaker 02: Thank you. [00:30:26] Speaker 02: Thank you. [00:30:29] Speaker 02: Let's make it five minutes. [00:30:31] Speaker 05: Thank you, Your Honors. [00:30:32] Speaker 05: I want to make sure the record is clear on one point. [00:30:35] Speaker 05: In the first showdown, the district court granted Finge and Summary Judgment Motion of Infringement with respect to all but one limitation. [00:30:45] Speaker 05: It said that limitation needs to go to the jury. [00:30:48] Speaker 05: But all the rest, I find are met. [00:30:50] Speaker 05: So Finjen's infringement case was very strong going to trial. [00:30:54] Speaker 05: There was only one limitation that the jury had to find met. [00:30:57] Speaker 05: Ultimately, it didn't. [00:30:59] Speaker 05: But that's clearly not a case that was an unreasonable infringement case, one that would support fee shifting. [00:31:06] Speaker 05: Counsel continues to pick and choose comments from the court throughout the litigation. [00:31:13] Speaker 05: The smoke and mirrors is the one that they love to talk about most. [00:31:17] Speaker 05: That is from the hearing on the J-Mall. [00:31:20] Speaker 05: But in the judge's order on that J-Mall, the judge never said that the case was without merit. [00:31:26] Speaker 05: Instead, the judge said this case came down to a battle of the experts. [00:31:32] Speaker 05: And Juniper prevailed. [00:31:34] Speaker 05: That's not an exceptional case. [00:31:35] Speaker 05: That happens all the time in patent litigation. [00:31:39] Speaker 05: So that cannot be the basis for an exceptionality determination. [00:31:43] Speaker 05: Juniper tried to make it one, and they argued in their fees briefing [00:31:48] Speaker 05: that the weakness of Finjen's infringement case should be a basis for exceptionality, the judge did not include that in his order. [00:31:57] Speaker 05: The only thing he included was damages. [00:32:00] Speaker 05: That's the only thing that this court can then review. [00:32:04] Speaker 05: for abuse of discretion is his statement about the damages on the 494 patent. [00:32:10] Speaker 05: And we submit, in that case, then damages, the fees, should not be awarded prior to the granting of that Daubert order, which was in December 3, 2018. [00:32:25] Speaker 05: December 3, 2018 is when the fees should be awarded, if at all. [00:32:31] Speaker 05: On the damages, [00:32:33] Speaker 05: case, I want to make sure that we're clear on one point as well, which is that the damages in the infringement cases were not linked in that regard. [00:32:41] Speaker 05: All along, Finjen had argued that the combination of SRX Gateway and Sky ATP infringed. [00:32:49] Speaker 05: That combination, and I would reference the court to Appendix 5876, which was the Daubert order, and in which the court says, in its motion for summary judgment, Finjen accused, number one, SRX Gateways used in combination with Sky ATP. [00:33:07] Speaker 05: That had always been Finjen's infringement argument. [00:33:10] Speaker 05: It wasn't a new argument on the eve of trial. [00:33:14] Speaker 05: Even in summary judgment, they had argued that combination. [00:33:16] Speaker 00: I'm sorry to take your time again, because I just want to make clear if anybody writes an opinion on this. [00:33:22] Speaker 00: Yes. [00:33:23] Speaker 00: I was careful in what I asked about, because I thought that stuff was marked confidential in the appendix, the portion of the Daubert order. [00:33:32] Speaker 00: Is that no longer, it wasn't in the, is that portion is no longer confidential of those, parties waived all the markings of confidentiality in the Daubert order? [00:33:48] Speaker 00: I'm sorry to take your time, but I, [00:33:51] Speaker 05: I don't know the answer to that. [00:33:53] Speaker 05: I'll be honest. [00:33:53] Speaker 05: I don't know the answer to that, Your Honor. [00:33:56] Speaker 05: In that section, the court was just describing what the party's positions were. [00:34:00] Speaker 05: I don't think there's anything on 5876 that is confidential. [00:34:05] Speaker 05: I apologize if it wasn't. [00:34:06] Speaker 05: I overlooked that. [00:34:07] Speaker 05: I don't know the answer to that. [00:34:09] Speaker 05: But that was always the case. [00:34:11] Speaker 05: And so in Mr. Ars, the damages expert's analysis, he used the cost saving methodology, which has been used by many experts with approval of this court. [00:34:22] Speaker 05: And then he compared that cost savings to the revenue on SRX Gateway as well as Sky ATP. [00:34:30] Speaker 05: The judge found fault with including the SRX Gateway revenue and said you should only compare it to the Sky ATP. [00:34:37] Speaker 05: But we submit that that was an error because SRX Gateway was an accused product as well. [00:34:44] Speaker 05: But at the very least, that damages [00:34:47] Speaker 05: order from the court did not affect infringement in any way. [00:34:52] Speaker 05: So two entirely separate issues. [00:34:54] Speaker 05: The only thing on the 494 that the district court found to be exceptional was the damages case. [00:35:00] Speaker 05: So at most, the fees should be awarded for the damages case starting on December 3rd of 2018. [00:35:07] Speaker 02: When you say the damages case, were those fees in the various documentation [00:35:16] Speaker 02: going back and forth on the result. [00:35:21] Speaker 02: Where were those fees identified? [00:35:24] Speaker 02: Were they sorted out? [00:35:25] Speaker 02: Do we know what the total is? [00:35:27] Speaker 05: I don't know the total, Your Honor. [00:35:30] Speaker 05: I don't know how clearly, for example, Juniper's counsel made their time entries to identify whether it was damages only or whether it related to other issues. [00:35:40] Speaker 05: I would submit that my point was you shouldn't award any fees [00:35:45] Speaker 05: before December 3 of 2018, because that's the first conduct that the district court found to be exceptional. [00:35:54] Speaker 05: Maybe the fees after December 3, 2018 should also be apportioned to include only the fees related to the damages case, which is what the court found to be exceptional. [00:36:06] Speaker 05: I think that would be appropriate as well, based on the authority from the Supreme Court. [00:36:13] Speaker 02: OK, do you want a final sentence to wrap it up, or we have your position? [00:36:17] Speaker 05: I think you have my position, Your Honor. [00:36:19] Speaker 02: Any more questions for counsel? [00:36:22] Speaker 02: OK, thank you. [00:36:24] Speaker 02: Thank you. [00:36:25] Speaker 02: The case is taken under submission. [00:36:27] Speaker 02: Thank you.