[00:00:00] Speaker 04: The next case is number 21, 1989, MyTechSystems Inc. [00:00:05] Speaker 04: versus United Services Automobile Association. [00:00:12] Speaker 04: OK, Mr. Mack. [00:00:16] Speaker 05: Good morning, Your Honors. [00:00:17] Speaker 05: Brian Mack of Quinn Emanuel on behalf of Declaratory Judgment Plaintiff and Appellant MyTech Systems, Inc. [00:00:24] Speaker 05: This is a classic patent infringement scenario where the patentee strategically decides to sue the deep pockets, in this case, the end customer banks, instead of suing the supplier of the technology, MyTech. [00:00:38] Speaker 05: Now there's nothing inherently wrong or improper with strategically deciding to sue the end users for patent infringement. [00:00:45] Speaker 02: What are you suggesting by the use of the term strategically that isn't, you know, there's some nefarious or something implication. [00:00:55] Speaker 02: What's the suggestion? [00:00:56] Speaker 05: Well there's a pattern of behavior here where they're going after [00:01:00] Speaker 05: There's the Wells Fargo lawsuit against Wells Fargo where they received $300 million in jury damages and that case was settled. [00:01:09] Speaker 05: Then they went after PNC Bank and then they filed a third lawsuit against BVBA Bank as well. [00:01:15] Speaker 05: So it's a serial litigation strategy. [00:01:17] Speaker 02: Right. [00:01:18] Speaker 02: And the strategy, which you want to cast a negative light on, would the appropriateness of casting the negative light be affected by whether there's a serious case for contributory or induced infringement? [00:01:33] Speaker 02: Because if there isn't, then why would you be disparaging the strategy? [00:01:37] Speaker 05: I'm not disparaging the strategy. [00:01:39] Speaker 05: I mean, my next point was going to be that there is nothing improper with that strategy. [00:01:44] Speaker 05: But if you do strategically decide to sue the end users, you open yourself up for a declaratory judgment suit from the supplier of that technology. [00:01:52] Speaker 05: And that's exactly what happened here. [00:01:54] Speaker 02: It's exactly what happened. [00:01:55] Speaker 02: And so on the case of controversy side of this, am I right in thinking that there are two potential interests here that are affected, one is the potential for [00:02:06] Speaker 02: my tax liability as a conceivably direct infringer, but I think maybe more likely as a possible indirect infringer. [00:02:16] Speaker 02: And then the other is cost you might incur by virtue of indemnity agreements, whether it's actual indemnity liability or obligation to defend. [00:02:25] Speaker 02: Correct. [00:02:26] Speaker 02: Correct, Your Honor. [00:02:27] Speaker 05: And we actually, the allegations in our original complaint said that we have an apprehension of both direct infringement and indirect inducement and contributory infringement, depending on the claims. [00:02:38] Speaker 04: I don't see that your allegations of the original complaint said some of the things that you say it said in your brief. [00:02:49] Speaker 04: a breach that is not entirely accurate in characterizing the complaint. [00:02:54] Speaker 04: And I read the complaint, and there is a mention of indemnity. [00:03:01] Speaker 04: But I don't see that it clearly says that the indemnity obligation arises from direct customer infringement that leads to the indemnity obligation. [00:03:15] Speaker 04: At the time that you drafted this original complaint, [00:03:19] Speaker 04: focused on the Wells Fargo situation, which is now over. [00:03:23] Speaker 04: Wells Fargo is settled, and there's no potential for Wells Fargo liability. [00:03:27] Speaker 04: So we have to look to the other [00:03:29] Speaker 04: parts of the complaint that don't relate to Wells Fargo. [00:03:32] Speaker 04: And it's a bit thin, it seems to me. [00:03:35] Speaker 05: Well, I can explain briefly the history. [00:03:37] Speaker 05: So my tech and its general counsel, and I was actually at the trial as well, the Wells Fargo trial, the apprehension of direct and indirect infringement claims did not arise until we saw the jury presentation of USAA's infringement expert, Professor Conte, [00:03:54] Speaker 05: And we cited our opening brief at pages eight and nine. [00:03:59] Speaker 05: We cited the appendix record, the entire slides that Dr. Conte used as demonstrators in front of the jury. [00:04:05] Speaker 05: That's at appendix 658 to 766. [00:04:08] Speaker 05: There's 15 slides just for claim one of the 571 patent that cite MyTech source code, MyTech documentation that is given to customers, [00:04:19] Speaker 05: and Mytek witnesses that Dr. Conti and the USA versus Wells Fargo trial used to show infringement. [00:04:27] Speaker 04: There may have been in the context of the Wells Fargo litigation [00:04:33] Speaker 04: a case of controversy between MyTech and the Patentee. [00:04:38] Speaker 04: But the Wells Fargo litigation is over with, so I have to look to the complaint to find out what the allegations are with respect to other customers. [00:04:48] Speaker 04: And what I suggested a moment ago is that it strikes me that they're a bit thin, because they do talk about indemnification, but they don't suggest that [00:04:58] Speaker 04: there is going to be direct infringement liability for the customers as a result of the use of the MyTech software. [00:05:04] Speaker 04: It just doesn't dot the I's and cost the T's the way it needed to. [00:05:09] Speaker 04: I mean, show me where [00:05:10] Speaker 04: Well, in the complaint, it says the customers are going to be held liable for direct infringement for using our software, and this leads to an indemnification obligation. [00:05:20] Speaker 05: At Appendix 31, we state that Mytek has various contractual relationships with its customers, including OEM agreements related to MySnap and Mytek's mobile deposit product offering. [00:05:31] Speaker 05: These agreements include indemnification provisions relating to actual or alleged patent infringement by Mytek's technology. [00:05:39] Speaker 05: In response to USAA's massive enforcement and letter writing campaign, MyTech has received demands for indemnification. [00:05:45] Speaker 04: OK, but that says we're getting indemnification demands. [00:05:49] Speaker 04: It doesn't say the customers are subject to infringement liability for using our software. [00:05:57] Speaker 05: We then go in the complaint. [00:05:58] Speaker 05: There's a patent-specific section for each patent. [00:06:01] Speaker 05: If you go to paragraph 30 of the complaint at appendix 36, we walk through claim one in the 779 patent. [00:06:08] Speaker 05: And we point out that Wells Fargo relies on MyTech source code, MyTech documentation, and MyTech testimony to show infringement of this claim at the Wells Fargo trial. [00:06:17] Speaker 05: That's Wells Fargo. [00:06:19] Speaker 05: Where does it say that about other people? [00:06:21] Speaker 05: There's no reason to believe. [00:06:23] Speaker 05: The infringement allegations here are central to MyTech's product offer. [00:06:29] Speaker 04: Where does the complaint say that the other customers are in the same position as Wells Fargo? [00:06:34] Speaker 05: Well, the problem there is that there's a lack of transparency because we're not privy to, we're not signed onto the protective order in any of these cases. [00:06:43] Speaker 05: So we're not privy to the expert reports. [00:06:45] Speaker 05: We're not privy to even the infringement contentions. [00:06:46] Speaker 05: What we have and what we know is that we sat through the Wells Fargo lawsuit. [00:06:50] Speaker 05: We saw how central MySnap was to the infringement allegations in that lawsuit. [00:06:56] Speaker 05: Immediately after the Wells Fargo lawsuit, you have USA's, I believe it was USA's CEO. [00:07:03] Speaker 03: Council, on page 36, lines 23 through 26, you made a statement about Mytek and all of its MySnap customers are presently faced with a substantial risk of litigation. [00:07:16] Speaker 03: What's the underlying support for that statement that you're making there? [00:07:20] Speaker 05: So after Wells Fargo lawsuit, there was a public notice by USAA that put the entire industry on notice. [00:07:29] Speaker 05: And they said, if you're using the same technology as Wells Fargo, MySnap, which is technology that's provided by my client, MyTech, then they should be on notice that they also may face these infringement allegations. [00:07:42] Speaker 04: That's true. [00:07:43] Speaker 04: The way I read that press release, there were statements by the author or some journalist that that might be the case. [00:07:53] Speaker 04: You attribute that statement to the patentee, but I don't... There were some direct quotations from my tech employee. [00:08:02] Speaker 04: Well, show me. [00:08:03] Speaker 04: Where does it... [00:08:04] Speaker 04: Say, where is it attribute that statement to USAA? [00:08:10] Speaker 05: And Your Honor, the reasonable apprehension of Sue. [00:08:12] Speaker 04: No, no, no, no. [00:08:13] Speaker 05: Where? [00:08:14] Speaker 04: Where is it say? [00:08:14] Speaker 04: Where? [00:08:15] Speaker 04: You attribute in your briefs that statement to USAA. [00:08:19] Speaker 04: I don't see that supported by the record. [00:08:22] Speaker 05: I believe it was an interview of USAA's employees, and it was an American banker. [00:08:28] Speaker 05: You're right. [00:08:28] Speaker 05: It was a journalist from American Banker. [00:08:30] Speaker 05: It's really widely read periodical in this industry. [00:08:34] Speaker 05: And it did quote USAA's employees, putting them on notice that they are going to be subject to suits as well. [00:08:42] Speaker 05: And we see that we see it from there. [00:08:44] Speaker 04: Where? [00:08:45] Speaker 04: Show me where USAA said that, or its employees said that. [00:08:50] Speaker 05: Let me see, the public warning to the industry, it's at appendix 768. [00:08:58] Speaker 05: And that's the article, I believe, that your honor is referring to. [00:09:01] Speaker 05: That's the American Banker article at appendix 768. [00:09:03] Speaker 05: There are quotations in that article from USA's employees. [00:09:12] Speaker 05: inviting them to take licensing opportunities with USAA. [00:09:17] Speaker 05: I mean, it's clear from the pattern of behavior. [00:09:20] Speaker 05: There's also a history of litigation between these companies. [00:09:22] Speaker 05: So I mean, the substantial controversy. [00:09:26] Speaker 04: But where does this say put statements like that at the mouth of USAA? [00:09:32] Speaker 04: I mean, there's a statement on 770, but that's a journalist's assessment. [00:09:37] Speaker 05: There's also quotations from USAA's employees. [00:09:40] Speaker 04: Well, there are, yes, but not to that effect. [00:09:44] Speaker 05: And Your Honor, it's not just this one statement. [00:09:47] Speaker 05: It's that under the Microsoft case, there just needs to be a reasonable probability that claims would be filed to have standing. [00:09:55] Speaker 05: And here, we have the Wells Fargo lawsuit. [00:09:59] Speaker 05: We have all of the demonstratives used by their infringement expert. [00:10:04] Speaker 05: We have in the record over 15 slides at Wells Fargo that cited MyTech source code and documentation to show infringement. [00:10:14] Speaker 05: We also have all the identification demands coming in. [00:10:17] Speaker 05: During this widely publicized lawsuit, MyTech received dozens of requests for identification. [00:10:24] Speaker 05: While it's true that MyTech hasn't voluntarily assumed liability, that's not the standard. [00:10:30] Speaker 05: I don't think there's a requirement that you have to [00:10:32] Speaker 05: that a small software company has to assume this huge liability from the bank in order to have standing. [00:10:38] Speaker 05: What we find is that we're being subpoenaed in every single one of these lawsuits for source code, for technical documentation, and for witness testimony. [00:10:46] Speaker 05: We've been subpoenaed. [00:10:47] Speaker 03: Who attached one letter, right? [00:10:48] Speaker 03: Was it one letter in particular, but there are thousands of letters? [00:10:52] Speaker 03: Is that right? [00:10:52] Speaker 05: The letter writing campaign was sent to over 1,000 banks, and we attached one representative letter. [00:10:57] Speaker 05: That's correct. [00:10:58] Speaker 05: And that was USA's letter writing campaign that was focused out of the Bay Area from the law firm that they selected to use, yes. [00:11:07] Speaker 03: And so the letter that you attached, though, didn't focus on the patents in suit, right? [00:11:11] Speaker 03: In terms of the claim chart, it was for a patent that wasn't one of the ones in suit? [00:11:15] Speaker 05: That's correct, Your Honor. [00:11:16] Speaker 05: That letter did attach a claim chart. [00:11:17] Speaker 05: And it also had a patent list that included the patents in suit in list form. [00:11:22] Speaker 05: And then it had a claim chart that detailed the infringement allegations with respect to a patent that's not in suit. [00:11:28] Speaker 03: Now, the list include three out of four of the patents in suit, right? [00:11:30] Speaker 03: Not all of four. [00:11:32] Speaker 05: Right. [00:11:32] Speaker 05: So there's two different patent families. [00:11:34] Speaker 05: And I think at the time that that letter was sent, one of the patents hadn't issued yet. [00:11:38] Speaker 05: But it included at least one patent in each of the two families. [00:11:40] Speaker 05: And there's continuation patents. [00:11:42] Speaker 05: So it either directly or indirectly included all of the patents. [00:11:47] Speaker 03: Is there anything in the record about the other letters? [00:11:49] Speaker 03: Did they have anything that, in terms of the claim charts, were they on any of the patents in suit? [00:11:54] Speaker 05: I do not believe so. [00:12:00] Speaker 02: My understanding is that in the Fifth Circuit, I think probably more widely, but in particular in the Fifth Circuit, a 12b1 motion can be treated and needs to be treated differently according to how the opponent of the motion responds. [00:12:22] Speaker 02: If the opponent of the motion responds with [00:12:26] Speaker 02: at least certain kinds of facts, affidavits, or maybe other kind of evidence, that turns the 12b1 motion into an opportunity for factual resolution. [00:12:43] Speaker 02: If not, then the 12b1 motion is resolved the way you would resolve a 12b6 motion, you know, on the basis of complaint and things that can be taken judicial notice of and things like that. [00:12:57] Speaker 02: Didn't the district court here effectively adopt the first path [00:13:04] Speaker 02: When USA responded said, look at the federal, look at the Wells Fargo litigation. [00:13:12] Speaker 02: There's no serious risk of any kind of infringement liability. [00:13:19] Speaker 02: And we also. [00:13:21] Speaker 02: dispute with at least some citations to evidence that you really do have a indemnification risk that is traceable to this. [00:13:36] Speaker 02: So that would then change our standard of review, right? [00:13:40] Speaker 05: I don't believe so, Your Honor. [00:13:42] Speaker 05: In the Fifth Circuit, it's clear that Judge Gilstrap cited the choice incorporated of Texas case in assessing jurisdiction. [00:13:49] Speaker 05: The district court is to accept as true the allegations, in fact, set forth in the complaint. [00:13:53] Speaker 05: There is something, there's a notion in the Fifth Circuit for jurisdictional questions, for verifiable facts, and these are usually historical facts. [00:14:01] Speaker 05: If you look at all the case law that was cited, it was whether a ship qualified as a vessel. [00:14:06] Speaker 05: It was an admiralty law, the N. Ray S. recycling case. [00:14:09] Speaker 05: or whether a Navy sailor was acting within the scope of his naval employment at the time of a car accident. [00:14:14] Speaker 05: There was a negligence case about a sailor and whether he was acting within the scope of his employment. [00:14:20] Speaker 05: Again, that's the Montes case. [00:14:21] Speaker 05: That's an Admiralty Law case. [00:14:23] Speaker 05: So if there is a predicate fact that concerns some historical or verified [00:14:27] Speaker 05: verifiable fact, there is some case law in the Fifth Circuit that says they can pierce the allegations in the complaint just with respect to those historical or verifiable facts. [00:14:38] Speaker 05: None of the facts here are disputed. [00:14:40] Speaker 05: I mean, the USAA sent thousands of letters to banks asking it to take place. [00:14:45] Speaker 04: When the facts are disputed, they're saying that your software is not as central to the infringement as you claim that it is. [00:14:57] Speaker 04: There were here a hearing, instead of judging this on the face of the complaint, or there were an amendment under Rule 15 to make the complaint more detailed. [00:15:10] Speaker 04: Is there more that could be presented here? [00:15:14] Speaker 05: What we could present what we're privy to is what we saw at the Wells Fargo case when we have the infringement allegations in the entire presentation from Professor Conti, and we know how central my snap was to those allegations, all of the main limitations of the claim. [00:15:30] Speaker 05: There's only three steps to these claims. [00:15:32] Speaker 05: If you look at these claims, they're incredibly broad. [00:15:34] Speaker 05: There's three steps to the claims. [00:15:36] Speaker 05: There's a monitoring step, there's a capturing step, and then there's a transmission step. [00:15:40] Speaker 05: Some of the claims don't even have the last step. [00:15:42] Speaker 05: It's only a few of them happens to have that. [00:15:43] Speaker 04: But it seems to me the problem is that there seems to be some variability among customers as to how they use the software, how they customize it. [00:15:52] Speaker 04: I don't know whether that means that they turn on and off various features of your software or exactly what that means. [00:15:59] Speaker 04: But apparently there is some variability in what the customers do. [00:16:06] Speaker 04: So how do we know that what you keep referring to in Wells Fargo litigation is typical? [00:16:14] Speaker 04: of what the situation is with respect to other customers. [00:16:18] Speaker 05: MyTech is a software company. [00:16:20] Speaker 05: They provide the software. [00:16:21] Speaker 05: It operates in several different ways, but they have to support all of the different options. [00:16:25] Speaker 05: So there is an automatic capture mode. [00:16:27] Speaker 05: There's a manual capture mode. [00:16:28] Speaker 05: MyTech supports both. [00:16:29] Speaker 05: The product, the software supports both. [00:16:31] Speaker 05: They have to test both. [00:16:33] Speaker 05: So you don't even have to look at the customer. [00:16:35] Speaker 05: There's an allegation of direct infringement by MyTech when it tests the products and tests the software. [00:16:43] Speaker 05: They have to test all the bells and whistles. [00:16:44] Speaker 05: They have to load the software onto a mobile phone. [00:16:46] Speaker 05: The mobile phone has a communication pathway back to the server. [00:16:49] Speaker 05: All the elements are there. [00:16:51] Speaker 05: There's nothing else needed to show infringement. [00:16:53] Speaker 05: There's really allegations of direct infringement and testing by MITEC. [00:16:56] Speaker 04: Well, you haven't said in the complaint that there's an allegation of direct infringement, have you? [00:17:02] Speaker 05: We do in the complaint have indirect and direct infringement, Your Honor. [00:17:06] Speaker 05: So paragraph 11 and 12 of the complaint, the final sentence, MITEC therefore has- What page are we on? [00:17:12] Speaker 05: Appendix 31, paragraph 12 of the complaint. [00:17:16] Speaker 05: Paragraphs 11 and 12 kind of summarize the allegations. [00:17:19] Speaker 05: With the final sentence, MyTech therefore has a real and substantial apprehension of imminent litigation between MyTech and USAA for direct infringement, inducement, and contributory infringement. [00:17:28] Speaker 05: And the paragraphs before that explain why. [00:17:31] Speaker 02: And the direct infringement is a realistic possibility, notwithstanding what you tout as USAA's strategy not to sue you, but to sue your customers. [00:17:41] Speaker 05: We don't have a covenant not to sue. [00:17:42] Speaker 05: They could provide Bytec a covenant not to sue, and we wouldn't be here today. [00:17:45] Speaker 05: But they haven't done that. [00:17:46] Speaker 05: So there's nothing preventing USAA from turning around tomorrow and filing a lawsuit against Mytek for direct infringement from testing the products. [00:17:54] Speaker 05: from building the products in their test labs on real phones. [00:17:58] Speaker 05: They put it on real Android devices, real Apple devices. [00:18:01] Speaker 04: OK, but it doesn't say that. [00:18:03] Speaker 04: I mean, it doesn't talk about testing as being direct infringement. [00:18:07] Speaker 05: Does it? [00:18:08] Speaker 05: I don't believe it gives the example of testing, but it does say direct and indirect infringement. [00:18:12] Speaker 04: And I think under the heiress and like. [00:18:13] Speaker 04: It's somewhat ambiguous as to whether it's referring to direct infringement by MyTech or by the customers and induced and contributory infringement by MyTech. [00:18:23] Speaker 05: Well, under this court's precedence of Harris and Microsoft, the data turned, there's an implied assumption of indirect infringement when there's an allegation of direct infringement by the customer. [00:18:34] Speaker 05: So that's implicit, that's implied. [00:18:36] Speaker 05: But more than it being implied, we sat through the Wells Fargo trial and we actually saw [00:18:41] Speaker 05: of what the allegations were by their infringement expert. [00:18:46] Speaker 05: He stepped through all the limitations, 15 different slides of source code of MyTech put up in front of the jury. [00:18:51] Speaker 05: MyTech documentation that's provided to customers. [00:18:54] Speaker 05: That's all you really need to show inducement. [00:18:56] Speaker 05: You need to show that there's a method claim. [00:18:59] Speaker 05: And that MyTech, as aware of the patent, which they obviously are now that there's a lawsuit, MyTech provides customer-facing documentation to its customers, like all software companies do, to configure the products, to use the products. [00:19:11] Speaker 05: All the elements of inducement are there at a minimum. [00:19:14] Speaker 02: And even in addition to... So you think that there is in this documentation the kind of, I guess, what in the pharmaceutical inducement cases we call instructions to use? [00:19:29] Speaker 05: So if you, yes or no, if you look at what, if you look at the, in the appendix at the slide that Dr. Conti, Professor Conti, excuse me, cited, there's MyTech source code cited. [00:19:43] Speaker 02: Can I look at something? [00:19:44] Speaker 05: Sure, it's Appendix 711 through 719. [00:19:49] Speaker 05: This is for the capture limitation where MyTech source code is being cited. [00:19:59] Speaker 05: And if you want to see a MyTech documentation, it's appendix 720, and 721, and 722. [00:20:03] Speaker 05: There's a MyTech SDK programmer's guide, and there's a MyTech developer's guide. [00:20:09] Speaker 05: These were all used by Professor Conti to show infringement at the Wells Fargo case. [00:20:13] Speaker 02: They were more so than that. [00:20:16] Speaker 02: Just to make sure that I try to make sure that I'm communicating what I'm focused on. [00:20:23] Speaker 02: So the piece of inducement. [00:20:25] Speaker 02: Put aside contributory infringement, just on the theory that by turning off the automatic feature, your product has material uses that are non-infringing. [00:20:39] Speaker 02: Put aside the possibility of testing, just focusing on inducement. [00:20:43] Speaker 02: There's not only the knowledge of the patent. [00:20:47] Speaker 02: There's this element of encouragement, intentional encouragement, for which we have a tolerably high standard that requires something like instructions. [00:20:58] Speaker 02: Now that wouldn't have been a material thing to prove in the Wells Fargo case, because there wasn't an inducement case. [00:21:05] Speaker 02: So I guess I'm very focused on the question, is there actually a real possibility of your being sued for inducement based on whatever you communicate in, what is it? [00:21:21] Speaker 02: Software guides or something? [00:21:23] Speaker 05: Yes, your honor. [00:21:24] Speaker 05: All software companies provide guides on how to configure and use the software. [00:21:27] Speaker 05: These examples on Appendix 720, the MyTech SDK Programmer's Guide, that's the Software Development Kit Programmer's Guide. [00:21:36] Speaker 05: That's a document intended to be given to the end users, the customers, the banks, the financial services companies that are integrating the software into the bank's software. [00:21:46] Speaker 05: So appendix 720 is the programmers guide and appendix 721 is the developers guide. [00:21:51] Speaker 05: That's another example of a document. [00:21:52] Speaker 05: The developers guide shows how to configure all the features. [00:21:55] Speaker 05: That's all that's really needed. [00:21:56] Speaker 05: It shows you how to turn it on. [00:21:57] Speaker 05: It shows you how to turn off each feature. [00:21:59] Speaker 05: And what you mentioned about the automatically capturing, there's only two of the patents used the phrase automatically capturing. [00:22:05] Speaker 05: The other two patents just say capture without the word automatically. [00:22:08] Speaker 05: So Judge Gilstrap actually construed that very broadly. [00:22:11] Speaker 05: So it may actually include other things than automatically capturing. [00:22:14] Speaker 05: So if you look at the claims of the 571, [00:22:19] Speaker 05: and the 090 patent, those don't even say automatically capture. [00:22:22] Speaker 05: They say capture. [00:22:23] Speaker 05: So those could arguably be infringed by both modes, the manual mode and the automatic mode. [00:22:27] Speaker 05: But regardless, we're a software company. [00:22:29] Speaker 05: We support both modes. [00:22:30] Speaker 05: We support both modes to our customers. [00:22:32] Speaker 05: We explain to them how to use both modes. [00:22:34] Speaker 05: We provide documentation. [00:22:36] Speaker 05: Some of the documentation was shown to the jury in the Wells Fargo case. [00:22:39] Speaker 05: There's really nothing preventing USAA from suing Mitac other than the fact that we don't have as deep pockets as the banks. [00:22:46] Speaker 05: And it would change the entire Georgia-Pacific analysis, the damages analysis. [00:22:50] Speaker 05: This is what the Declaratory Judgment Act is designed to do. [00:22:53] Speaker 05: It's like to avoid unreasonable licensing demands. [00:22:56] Speaker 05: The strategy of suing these large banks, extracting exorbitant licensing fees, and then suing another bank, extracting exorbitant licensing fees, this could go on until the patents expire, six years after the patents expire. [00:23:08] Speaker 05: Bytech's going to get dragged into each case, subpoenaed for its source code, for its technical documentation, and the subpoenas are on the record, your honor. [00:23:18] Speaker 05: The subpoenas are Appendix 633 in the Wells Fargo case and Appendix 1021 for the PNC case. [00:23:24] Speaker 05: You can look at how broad those subpoenas are. [00:23:27] Speaker 05: MiTech has a reasonable apprehension of being sued just by virtue of being subpoenaed for its technical documentation for USAA to show infringement. [00:23:37] Speaker 04: That seems to ask us to assume that the Wells Fargo situation is representative of the situation with respect to other clients, right? [00:23:48] Speaker 05: Your Honor's probably know as well as I do. [00:23:50] Speaker 05: These are kind of copycat cases. [00:23:52] Speaker 05: They're being filed at one bank after another to extract licenses. [00:23:55] Speaker 05: OK, but the problem is he didn't say that. [00:23:58] Speaker 04: Their complaint doesn't say that the Wells Fargo situation is typical of what they're filing. [00:24:03] Speaker 05: We're not privy to any confidential information in the PNC case. [00:24:06] Speaker 05: We haven't signed on to the protective order. [00:24:09] Speaker 05: We don't know exactly what their allegations are against PNC until the PNC trial is scheduled. [00:24:14] Speaker 05: I think, in three weeks to go forward. [00:24:16] Speaker 05: And we're going to be sitting at that trial again. [00:24:17] Speaker 05: We're going to watch another one of our customers pay exorbitant licensing fees for these patents. [00:24:22] Speaker 04: OK, but Judge Cunningham asked you about these other letters. [00:24:27] Speaker 04: You must have the other letters, right? [00:24:31] Speaker 05: There are hundreds of letters. [00:24:32] Speaker 05: We attached one, and then we alleged that there were others. [00:24:35] Speaker 05: You have the other letters, right? [00:24:37] Speaker 05: I believe so. [00:24:38] Speaker 05: I don't know if we have the one specifically for PNC. [00:24:41] Speaker 04: OK, but do the other letters [00:24:44] Speaker 04: tie the infringement allegation to your software? [00:24:47] Speaker 05: The letters, from what I understand, were copy and paste letters. [00:24:51] Speaker 05: They were exactly the same. [00:24:52] Speaker 05: And some of them attached infringement charts. [00:24:55] Speaker 05: Some of them did not attach infringement charts, but they were boilerplate copy and paste. [00:25:02] Speaker 02: You know what your customers' products look like, right? [00:25:07] Speaker 05: And that's why I think MyTech is in the best position to... And they're using your software? [00:25:11] Speaker 05: Yes. [00:25:13] Speaker 05: Well, they are using, we know to a degree, we help them. [00:25:17] Speaker 02: Are there other suppliers of similar software? [00:25:20] Speaker 02: Well, the market. [00:25:21] Speaker 05: The issue here is that there's third party integrators. [00:25:23] Speaker 05: So there's companies like Pfizer and NCR and, and, and Senta, which is a Jack Henry corporation now. [00:25:29] Speaker 05: They help the end user banks. [00:25:32] Speaker 05: They take our software and they help the end user banks like Wells Fargo develop their product. [00:25:36] Speaker 05: Or the end user banks develop the product on their own with some assistance from MyTech. [00:25:40] Speaker 05: If they need support or there's a bug that needs fixing, they may contact MyTech directly and ask them, put in a support ticket with MyTech. [00:25:50] Speaker 05: But this is very confidential. [00:25:51] Speaker 05: I mean, each bank's implementation, while it is specific to that bank, the core functionality, the core technology that performs [00:25:59] Speaker 05: The bulk of the claim limitations is performed by my client's software. [00:26:04] Speaker 05: That's the MySnap software. [00:26:06] Speaker 05: The monitoring and the capture limitations, if you look at the infringement allegations, it's relying on the source code and the technical documents from MyTech. [00:26:15] Speaker 05: as well as potentially some source code and technical documents from the banks as well. [00:26:20] Speaker 05: But we feel that we're in the best situation to defend our product from these allegations of infringement. [00:26:27] Speaker 05: We want to assist our end users and customers. [00:26:30] Speaker 05: We feel like they shouldn't be dragged through all this litigation. [00:26:33] Speaker 05: We're in the best position to handle the discovery, to handle the invalidity of the patents, to handle the non-infringement of the patents. [00:26:39] Speaker 05: And that's why we're here asking for jurisdiction. [00:26:44] Speaker 02: Your DJ action requested a declaratory judgment of non-infringement, not of invalidity. [00:26:52] Speaker 02: Am I remembering that right? [00:26:53] Speaker 05: That's correct. [00:26:54] Speaker 05: If it requested invalidity, then we wouldn't have been able to file the patent office proceedings which we filed. [00:26:59] Speaker 05: So that was another point in the brief. [00:27:02] Speaker 05: So our DJ action is only for non-infringement. [00:27:05] Speaker 05: And then what typically happens is there'll be a compulsory counterclaim of infringement. [00:27:08] Speaker 05: And then we'll file affirmative defenses of invalidity. [00:27:12] Speaker 05: So it'll all get rolled up into the case eventually. [00:27:15] Speaker 04: Are there patent office proceedings ongoing now? [00:27:20] Speaker 05: That was another point made in the brief. [00:27:23] Speaker 05: Most of the petitions were discretionarily denied because USAA argued that we have too close of a relationship with our banks. [00:27:32] Speaker 05: Yeah, but are there any pending? [00:27:33] Speaker 05: Not anymore. [00:27:34] Speaker 05: So that's another, we have no avenue to defend ourselves. [00:27:37] Speaker 05: The patent office discretionarily denied the petitions because they, because USAA argued that we were too closely tied to our end users. [00:27:46] Speaker 05: Now they're arguing [00:27:48] Speaker 05: that we don't have any substantial controversy. [00:27:51] Speaker 05: So we can't even file a declaratory judgment action. [00:27:53] Speaker 05: So it really leaves us with no avenue to defend ourselves. [00:27:57] Speaker 03: Is intervention still available in other suits? [00:28:00] Speaker 03: You just said there's no ad. [00:28:01] Speaker 05: It could be. [00:28:02] Speaker 05: But in order to intervene, there's a lot. [00:28:05] Speaker 05: The briefing makes a lot about intervening in the Wells Fargo case and why we didn't intervene in the Wells Fargo case. [00:28:11] Speaker 05: Wells Fargo was one of the only banks that actually didn't ask for identification. [00:28:15] Speaker 05: We couldn't have intervened. [00:28:16] Speaker 05: I don't think you have a legal right to intervene if you're not. [00:28:18] Speaker 05: We didn't stand in their shoes by virtue of any indemnification in the Wells Fargo case. [00:28:26] Speaker 05: PNC did request indemnity. [00:28:29] Speaker 05: NCR, the third party integrator that works with PNC, also sent us a separate letter for indemnification, and that's in the record. [00:28:36] Speaker 05: BBVA, the third target, they also requested indemnification. [00:28:42] Speaker 05: So we could intervene theoretically in those cases. [00:28:46] Speaker 05: But again, I mean, [00:28:47] Speaker 05: It's their strategic decision to sue the banks. [00:28:50] Speaker 05: So instead of intervening, we decided to file a declaratory judgment action on behalf of all the customers yet to be sued. [00:28:57] Speaker 05: We filed it immediately during the jury trial, the Wells Fargo case. [00:29:01] Speaker 05: And we filed before the PNC case was filed. [00:29:05] Speaker 05: We filed our declaratory judgment action. [00:29:07] Speaker 05: And if you look at this case, the precedent of this court, that's the exact purpose of the Declaratory Judgment Act. [00:29:14] Speaker 02: Can I just ask you, I'm sorry, just one more question. [00:29:18] Speaker 02: So putting aside the question of case or controversy, Judge Gilstrap at the end of his opinion said, [00:29:24] Speaker 02: Declaratory judgment remedy under 22.1 is discretionary, and in a very abbreviated way, but thinking about what that abbreviation was an abbreviation of, I guess I perhaps would attribute him to be saying that he just thinks that intervention [00:29:52] Speaker 02: in the next suit in which you actually do have some indemnity risk is a more efficient way of you vindicating your rights. [00:30:05] Speaker 02: And why is that not a sufficient basis for his ruling? [00:30:11] Speaker 05: Well, Your Honor, it's very clear under this court's Micron case and the electronics for imaging case that the quote is, dismissal is rarely proper. [00:30:20] Speaker 05: when the objectives of the Declaratory Judgment Act are served. [00:30:23] Speaker 05: And here we filed our Declaratory Judgment Act during the first jury trial [00:30:30] Speaker 05: before we knew all of our other customers were going to be sued in a serial fashion to kind of preempt all future actions. [00:30:37] Speaker 05: And you won't find a fact pattern. [00:30:39] Speaker 05: The cases that they cite for discretionary denial. [00:30:42] Speaker 02: Why would it not be sufficient? [00:30:45] Speaker 02: Let's assume Judge Gilstrop had said, never mind Wells Fargo, although I actually now know a lot about the matter. [00:30:52] Speaker 02: But if you're truly worried, MyTech, about other customers being sued, [00:30:58] Speaker 02: The next one that happens, intervene there. [00:31:02] Speaker 02: That's a preferable way for you to vindicate your rights than a declaratory judgment action, in part because the software may be changed, in part because the instructions or other communications that might constitute encouragement for inducement [00:31:20] Speaker 02: might be case specific. [00:31:21] Speaker 02: And that's just a better way to proceed. [00:31:23] Speaker 02: And I don't really see it's a better way to proceed. [00:31:25] Speaker 05: A couple observations there. [00:31:27] Speaker 05: A declaratory judgment act, we can have one action to kind of vindicate our software that's used by all the banks in one action rather than indemnifying and intervening in all the serial cases. [00:31:39] Speaker 05: Also, it's a different posture. [00:31:41] Speaker 02: I'm sorry. [00:31:42] Speaker 02: Unless your communications with your various customers varies. [00:31:46] Speaker 02: from customer to customer, changing the inducement analysis? [00:31:52] Speaker 02: Or is your DJ action going to be about all of your 1,000 customers and all of your communications with them to establish that you've never done anything called encouragement? [00:32:02] Speaker 05: That's true, but the documentation that's given to the end customers is identical. [00:32:06] Speaker 05: It's these programmers' guides that we looked at earlier or the SDK guides. [00:32:11] Speaker 05: So there are common commonalities across all the cases. [00:32:14] Speaker 05: I think a DJ action is the most efficient way to resolve these issues. [00:32:18] Speaker 05: But the larger picture here, Mytek is a small software company based in San Diego, a few hundred employees. [00:32:24] Speaker 05: To require Mytek to assume this massive liability of banks, $300 million, [00:32:31] Speaker 05: I'm not sure what Mytek's revenue is each year, but I don't think it's $300 million. [00:32:36] Speaker 05: To have Mytek assume liability of a bank in order to intervene into each one of these cases, I just don't know if that's something that should be encouraged by this court as a matter of policy. [00:32:47] Speaker 04: Why would they have to assume liability to intervene? [00:32:52] Speaker 05: Well, I believe we would have to accept the indemnification request. [00:32:55] Speaker 05: In the indemnification language, there's standard indemnification language in all of our OEM agreements that says that if we are- Can we intervene because of the possibility of indemnification obligations? [00:33:09] Speaker 05: I'm not sure, Your Honor. [00:33:10] Speaker 05: I would assume that we would have to agree to accept indemnity to intervene to have an interest sufficient enough to intervene. [00:33:18] Speaker 05: I don't know if there's cases on that. [00:33:21] Speaker 05: That would be my assumption. [00:33:23] Speaker 03: You mentioned the indemnification language. [00:33:25] Speaker 03: Can you describe more of that or point me to a page where I could see it? [00:33:30] Speaker 05: The indemnification language wasn't made part of the public record because it's confidential. [00:33:34] Speaker 05: It's in the OEM agreements with each specific. [00:33:36] Speaker 05: It's either directly in an agreement with the end user bank. [00:33:40] Speaker 05: BVVA, there's a direct relationship between MyTech and BVVA. [00:33:44] Speaker 05: So there is direct indemnification language between those two parties. [00:33:47] Speaker 05: The other indemnification language is between MyTech and those third-party integrators, like NCR, Fiserv, FIS. [00:33:54] Speaker 05: There's several companies that help the banks integrate the software. [00:33:59] Speaker 05: So you would have to look to the language of those. [00:34:01] Speaker 05: But it's very specific. [00:34:02] Speaker 05: It's fact-specific, obviously. [00:34:04] Speaker 05: The language is different in each of the agreements. [00:34:06] Speaker 05: There hasn't been any judicial determination that MyTech [00:34:09] Speaker 05: has any indemnity obligations, what we allege is that they're facially colorable requests for indemnification, which should be sufficient under this court's precedence and the Harris and Microsoft v. Datater case for a substantial controversy to exist here. [00:34:29] Speaker 04: OK. [00:34:29] Speaker 04: Well, we're way over time. [00:34:32] Speaker 04: Sorry. [00:34:32] Speaker 04: Thank you. [00:34:33] Speaker 04: It's our questions, not yours. [00:34:34] Speaker 04: We'll give you two minutes for a bottle. [00:34:36] Speaker 04: Ms. [00:34:36] Speaker 04: Glasser? [00:34:39] Speaker 01: Good morning, Your Honors, and may it please the court. [00:34:41] Speaker 01: I'd like to start just by briefly making two corrections to the record regarding statements that were made by the appellant. [00:34:49] Speaker 01: The first relates to Appendix 769, which is what was described by appellants as a threat made by USAA regarding these patents in suit. [00:35:01] Speaker 01: Now, if we look at Appendix 769, what we see is not only, as your honors pointed out, that this is something that was actually written by a third party and not by USAA, but I think actually even more importantly, this was about a completely different set of patents. [00:35:19] Speaker 01: This article here has to do with the second lawsuit between USAA and Wells Fargo, which related not to any of the four patents in the suit here, but to two completely different patents. [00:35:32] Speaker 01: The second correction to the record is that appellant had suggested that the reason the 090 patent is not included in its example letter was it had issued later. [00:35:43] Speaker 01: That is also not correct. [00:35:45] Speaker 01: As we can see from the face of the 090 patent issued in November 2017, the letter is dated from late January 2018. [00:35:53] Speaker 01: So I wanted to just make those points clear. [00:35:57] Speaker 04: I know all four patents were mentioned in the letter, but the claim chart related to [00:36:02] Speaker 04: a different patent. [00:36:03] Speaker 04: Am I wrong about that? [00:36:04] Speaker 01: So three of the patents were mentioned in a list of patents that was at the end that was described as, quote, a list of USAA's issued patents. [00:36:13] Speaker 01: One of them, though, the 090, was not even included in that generalized list. [00:36:19] Speaker 01: And then your honor is correct that the one that was charted was not one of these four. [00:36:23] Speaker 01: And just to be completely explicit about the relationship, it's not that it was a family member or somehow indicative of the other four. [00:36:30] Speaker 01: The 227 patent that was charted is actually a patent from a completely different patent family. [00:36:37] Speaker 01: We can see that on the face of the four patents that are in the record. [00:36:40] Speaker 01: It is not part of the file history for any of those patents. [00:36:43] Speaker 01: It's not part of the continuation chain. [00:36:45] Speaker 01: It's just a completely different patent, different invention, different priority date. [00:36:50] Speaker 01: And so. [00:36:50] Speaker 03: The one I know, though, is related to one of the patents in that list, correct? [00:36:54] Speaker 03: Like one of them's apparent? [00:36:55] Speaker 01: That is correct. [00:36:56] Speaker 01: The one I know is related to the 571 patent, yes. [00:37:00] Speaker 01: And so what's interesting about the letter and Appellants' Council acknowledged that all of the letters were at least based on MyTech's apprehension copy-paste, I think he said, and that the one that was committed to the district court was in Appellants' words, representative. [00:37:17] Speaker 01: And so what we see from the record is that the only letter that has ever been forwarded to MyTech, this representative letter, [00:37:25] Speaker 01: None of these letters even chart any of the four patents in this case. [00:37:30] Speaker 04: And what about in the Wells Fargo litigation? [00:37:32] Speaker 04: Were all four patents involved in the Wells Fargo litigation? [00:37:34] Speaker 01: The first Wells Fargo litigation, again, not the one that's referenced in the article that counsel is discussing, but the first Wells Fargo litigation initially asserted all four of those patents. [00:37:45] Speaker 01: And by the time it got to trial, it had been narrowed down. [00:37:48] Speaker 01: The 571 patent was asserted and went to verdict, as was that 090 patent. [00:37:54] Speaker 04: OK, so in the Wells Fargo litigation, your client accused Wells Fargo of infringing by using the MyTech software, right? [00:38:02] Speaker 01: I don't agree with that, Your Honor. [00:38:04] Speaker 01: I think Wells Fargo and MyTech and USAA were all very, very clear during that trial that while the MyTech software was a component that Wells Fargo had purchased either directly or indirectly and had customized, that there were numerous aspects, including aspects required to satisfy the claim elements. [00:38:24] Speaker 01: that either had nothing to do with my tech at all or were highly customized by Wells Fargo. [00:38:30] Speaker 01: I can provide a few record examples of that. [00:38:33] Speaker 01: I think there is at least. [00:38:34] Speaker 04: Well, I mean, the patents require more than photographing. [00:38:41] Speaker 04: But for the purpose, in terms of the photographing of the check, which I guess is the claimed inventive aspect of these patents, that the photographing of the check [00:38:53] Speaker 04: is done using the MyTech software, right? [00:38:56] Speaker 01: So the inventive aspect of the invention went well beyond just the photographing. [00:39:01] Speaker 01: But the photographing itself was actually performed by a combination of, maybe missing one, at least three different things. [00:39:08] Speaker 01: The photographing was by the customized MyTech software, independent Wells Fargo code, and then also actually there was a piece of it by the example of an Apple phone. [00:39:19] Speaker 01: The Apple code actually is involved in that as well. [00:39:21] Speaker 01: And so there's at least three different things going on just for that one element in particular. [00:39:26] Speaker 04: And in general, for the patents themselves, there was... Put it this way, that the proof of the use of the MyTech software by Wells Fargo was an indispensable element of the proof of direct infringement. [00:39:40] Speaker 01: So I don't think you would have had to reference the MyTech software in particular, but MyTech was the vendor that Wells Fargo had chosen. [00:39:47] Speaker 04: I'm sorry, what's your answer to my question? [00:39:49] Speaker 01: It wouldn't have had to be MyTech necessarily. [00:39:52] Speaker 01: I don't care whether it has to be MyTech. [00:39:55] Speaker 04: But the allegation was that the MyTech software here was an indispensable ingredient of the proof of direct infringement. [00:40:04] Speaker 01: In the sense that Wells Fargo had chosen to use MyTech and use that as a basis to customize, and that ultimately satisfied one of the claim elements, that is correct, Your Honor. [00:40:15] Speaker 01: But Wells Fargo didn't need the MyTech software in particular to accomplish this. [00:40:20] Speaker 04: And then there were- So what? [00:40:21] Speaker 04: I understand what that has to do with anything. [00:40:24] Speaker 04: I just want to be clear, Your Honor. [00:40:26] Speaker 04: But the fact is that it was accused based on the use of the MyTech software. [00:40:30] Speaker 01: Well, that aspect I definitely don't agree with. [00:40:32] Speaker 01: And there were certain other elements of the claims that are just totally unrelated to the MyTech software, for example. [00:40:38] Speaker 01: I don't know if I'm engaging with your question properly. [00:40:40] Speaker 01: I want to just be sure and be very explicit about which pieces of it related to the MyTech and which parts did not. [00:40:47] Speaker 02: Which pieces did not? [00:40:50] Speaker 02: Put aside the mobile device. [00:40:52] Speaker 01: Yes, but the mobile device, of course, Your Honor. [00:40:54] Speaker 01: Probably the clearest example, because the record was very explicit that it was done entirely by Wells Fargo, is the, let me get the exact code of the language so that we can hear, the transmission via communication pathway element. [00:41:10] Speaker 01: So when we look at appendix. [00:41:12] Speaker 04: Sending the photograph to the back. [00:41:14] Speaker 01: That's correct. [00:41:15] Speaker 01: Yeah, that one had nothing to do with the MyTech. [00:41:17] Speaker 04: OK, but in terms of taking the actual photograph, [00:41:20] Speaker 04: That's the MyTech software, right? [00:41:22] Speaker 04: That's a combination of the MyTech software, the Wells Fargo configuration, and then that was the piece actually that- Wells Fargo configuration, in other words, the choice they made within the MyTech software to activate a particular feature. [00:41:37] Speaker 01: It goes beyond that. [00:41:37] Speaker 01: There is configuration files that are adopted by Wells Fargo. [00:41:42] Speaker 01: And it's not just whether to do it automatically or manually. [00:41:44] Speaker 01: That's one piece that was discussed in the briefing. [00:41:47] Speaker 01: But the other piece of it that is much more highly customized [00:41:50] Speaker 01: is the monitoring criterion. [00:41:52] Speaker 01: So monitoring criterion are an element of all these claims as well. [00:41:56] Speaker 01: And those ones are an instance where I think that the testimony from the expert was they have full control here. [00:42:03] Speaker 02: Could you explain what monitoring criteria are, please? [00:42:08] Speaker 01: I want to be careful that that's a claim element to get some examples that I think of what was actually at issue here. [00:42:13] Speaker 01: There were things like how much the software is focused on lightness or brightness in the background would be one example. [00:42:22] Speaker 01: I don't recall actually at the top of my head if I did this about the corners. [00:42:27] Speaker 02: when reading the brief and in this discussion too, every time I heard here the word customize, I asked myself, well, if they're choosing red or blue, red or blue have nothing to do with the claim element, they can have lots of customization and I don't think that would matter in the slightest. [00:42:47] Speaker 02: So the only kind of custom, and I didn't see in your brief, you're narrowing [00:42:51] Speaker 02: the evidence about customization to choices about fulfilling or not fulfilling a claim element, except choosing options already provided within the MyTech software, which then takes you to this sort of scenario of options provided with [00:43:15] Speaker 02: either sufficient or insufficient instructions. [00:43:18] Speaker 02: But I didn't understand all this customization language ever to have been narrowed to choices between satisfying a claim element and not satisfying a claim element. [00:43:30] Speaker 01: So let me see if I can engage with that directly. [00:43:33] Speaker 01: So the MyTech software, as I understand it, provides different options that somebody could select. [00:43:40] Speaker 01: And then Wells Fargo has its own configuration files, is my understanding. [00:43:45] Speaker 01: So Wells Fargo could choose to either override what is already in the system. [00:43:50] Speaker 01: They could choose to adopt some, but not all. [00:43:52] Speaker 01: They could choose to use some, but adjust them so that they're less exact, right? [00:43:57] Speaker 01: So you could choose to have it trigger not necessarily on a particular threshold, but on something that is, you know, [00:44:03] Speaker 01: percentage off of the threshold, et cetera. [00:44:06] Speaker 01: And so the monitoring criterion is something that I think every bank is going to be doing differently. [00:44:11] Speaker 01: And in fact, a bank could decide to completely override it entirely if they chose to do that. [00:44:17] Speaker 01: They certainly don't need to be doing that. [00:44:19] Speaker 02: And those choices would or would not change whether the resulting software met some claim element? [00:44:27] Speaker 01: Those could easily change whether it satisfied the element, because each of these patents includes [00:44:32] Speaker 01: an element that either expressly requires the monitoring criterion or is talking about a specific type of monitoring criterion, such as an alignment guide. [00:44:40] Speaker 04: OK, but that sounds as though the customer could render the process non-infringing by customizing it so that it's not infringing. [00:44:49] Speaker 04: If they use the MyTech software, isn't there an allegation that that causes an infringement? [00:44:58] Speaker 01: So the MyTech software, standing alone, [00:45:01] Speaker 01: isn't going to be performing all the elements of the plane. [00:45:04] Speaker 04: I understand the mobile phone, the transmission, but in terms of the photographic aspect [00:45:10] Speaker 01: So the customer could implement that piece in a way that satisfies those claim elements, or they could choose to implement in a way where it does not satisfy those claim elements. [00:45:19] Speaker 01: That's absolutely true. [00:45:20] Speaker 04: OK, so didn't MyTech suggest to the customers, or in their evidence in the Wells Fargo case, it suggested to the customers that they do the photographing in a way that would satisfy the claim limitations? [00:45:33] Speaker 01: That was not part of the trial, one way or the other. [00:45:36] Speaker 01: I mean, as was discussed earlier, the intent of MyTech was not at issue. [00:45:40] Speaker 04: The only reason that my... But in terms of the apparently was some evidence of the instructions they gave to the customers. [00:45:48] Speaker 04: My question is, doesn't that evidence tend to show that they instructed their customers to use it in a way that would meet the claim limitations concerning photographing? [00:45:57] Speaker 01: I have to say that was just not at all part of the trial or the record. [00:46:00] Speaker 01: The way that this came up, Your Honor, at the trial was that MyTech chose to appear as a witness to try to explain that part of the capture limitation wasn't met. [00:46:11] Speaker 01: In particular, they were directed at a sub-piece of it, which was the timing. [00:46:15] Speaker 01: They wanted to show, this is another one of those customization things, right? [00:46:18] Speaker 01: They wanted to show that the timing of the capture [00:46:21] Speaker 01: was occurring at a different time than USAA was saying it was occurring. [00:46:25] Speaker 01: And the reason that those manuals came into the record was purely because as to that sort of sub-piece of a sub-part of an element, the manuals contradicted what the MyTech witness had said. [00:46:37] Speaker 01: And so other than that, there was no inquiry into the manuals or what sort of instructions were given. [00:46:41] Speaker 01: It was just to show there was statements in their own manuals that were at the opposite of what they were telling the jury. [00:46:47] Speaker 04: The two of you seem to have different views [00:46:49] Speaker 04: of the record and the facts. [00:46:51] Speaker 04: Perhaps the right thing to do here would be to send this case back to Judge Geldstraf with instruction to have a jurisdictional hearing to determine whether, in fact, there are allegations here that would satisfy induced infringement standards sufficient to support declaratory judgment instead of trying to do this based on the vague allegations [00:47:17] Speaker 01: So I think that actually would make a lot of sense if we had a concrete customer and the parties were fighting about what is going on with this particular customer because the district court obviously would need to satisfy himself of whether or not there's a live controversy and an indemnity obligation with respect to that customer. [00:47:40] Speaker 01: Fortunately, I think for all of us to simplify what's a fairly complicated set of facts a little bit, Wells Fargo is definitely over. [00:47:47] Speaker 01: The Wells Fargo piece of it is not in play. [00:47:50] Speaker 02: Does it matter that when the complaint was filed, which is usually the time that jurisdiction has to be decided, Wells Fargo was not over? [00:47:59] Speaker 01: I think at that time, it did appear that MyTech was actually seeking to collaterally attack that judgment. [00:48:05] Speaker 01: And so the MyTech or the Wells Fargo case did actually appear to be part of the complaint. [00:48:10] Speaker 01: MyTech, since then, has taken that off the table. [00:48:13] Speaker 01: MyTech actually stated in its first briefing to the California District Court that the Wells Fargo case is over. [00:48:23] Speaker 01: And this is the exact quote, because I think that would otherwise be a complicated issue off the table. [00:48:29] Speaker 01: MyTech said, quote, the Wells Fargo trial is over, and this lawsuit [00:48:35] Speaker 01: involves an entirely different accused product. [00:48:39] Speaker 02: And so you said that in what? [00:48:41] Speaker 01: In the briefing to the California District Court, which is that Appendix 485. [00:48:46] Speaker 01: My text counsel said that at Appendix 485. [00:48:49] Speaker 01: I think that that statement alone, it simplifies the issues quite a bit. [00:48:55] Speaker 01: And it also goes to this issue we've been talking about, which is, are we talking about a situation where we're really just talking about my text? [00:49:04] Speaker 01: Are we talking about a situation where we need to look at who is the actual infringer, and what is it that they're doing? [00:49:11] Speaker 01: I think the record is clear on its own, but it's quite helpful to have that statement by Mytek as well, which tells us the same thing. [00:49:19] Speaker 02: A question arose in the briefing and also earlier in this argument about exactly what Mytek would have to establish [00:49:33] Speaker 02: in order to be entitled to intervene in one of your suits against one of its customers. [00:49:41] Speaker 02: What do you think that is? [00:49:44] Speaker 01: So MyTech could intervene. [00:49:47] Speaker 01: I think that they could certainly come in as a cross-claimant if they believe they had a live dispute regarding indemnity. [00:49:54] Speaker 01: The statute. [00:49:54] Speaker 02: Just a live dispute about indemnity. [00:49:57] Speaker 02: They wouldn't have to essentially concede an indemnity obligation. [00:50:02] Speaker 01: In order to actually get involved in the dispute regarding infringement, they need to be standing. [00:50:07] Speaker 01: Let me take just a step back from that for a minute, because I think the intervention question is actually a different legal standard. [00:50:12] Speaker 01: then the question of what sort of indemnity obligation allows you to independently on your own pursue a declaratory judgment suit. [00:50:22] Speaker 01: Intervention is a more lenient standard that allows interested third parties to get involved in an ongoing lawsuit when they may have an interest. [00:50:30] Speaker 01: On the indemnity question, the reason that MyTech has to show that it has an actual obligation is because [00:50:37] Speaker 01: standing in a situation where you don't have an accusation directly against you. [00:50:42] Speaker 01: It's purely derivative. [00:50:45] Speaker 01: So the BP case, the data turn case, actually indirectly in Harris as well, this court has recognized that you don't independently get standing because you think you might need to indemnify someone. [00:50:57] Speaker 01: You can have standing when you literally are standing, well, figuratively standing in the shoes, [00:51:03] Speaker 01: of a customer by way of an indemnity application. [00:51:06] Speaker 03: So they don't need to concede an indemnity obligation. [00:51:09] Speaker 03: Do you agree with that? [00:51:11] Speaker 01: I believe they actually do need to concede an indemnity obligation. [00:51:15] Speaker 01: Although I will say in this particular, and let me get to that in a minute, but I will say in this case that I really don't think it's dispositive. [00:51:22] Speaker 01: Because my tech says, well, we just need to show that we have a colorable indemnity obligation. [00:51:29] Speaker 01: But they haven't pled or introduced any facts [00:51:32] Speaker 01: anything that would suggest they have a colorable obligation, even if that were the standard. [00:51:37] Speaker 01: They've only alleged that they've received demands. [00:51:39] Speaker 01: They don't say from who or quite about what. [00:51:43] Speaker 01: But they never say that any of it is even colorable. [00:51:46] Speaker 01: And so even if their standard were correct, we'd reach the same result here. [00:51:51] Speaker 01: But in any event, the reason why I say they do need to show an actual indemnity obligation in order to have standing where it otherwise would not be present [00:52:01] Speaker 01: is because of what I mentioned. [00:52:03] Speaker 01: In the data turn case, and again in the earlier BP case, it was explained that, let me turn to the quote from BP I think is very helpful, the agreement to defend or indemnify a third person does not provide the actual controversy whereby the defender or indemnitor may bring a declaratory judgment on its own behalf. [00:52:28] Speaker 01: The indemnitor's standing in such a case is derivative, not original and independent. [00:52:34] Speaker 01: And so in order to have standing under that approach, you really need two things. [00:52:39] Speaker 01: You need an actual obligation. [00:52:41] Speaker 01: And I think particularly important for this case, because we see the sort of confusion that happens without it, we need to know who it is. [00:52:50] Speaker 01: We can't bring an action sort of theoretically on behalf of folks that we think we might have to indemnify. [00:52:55] Speaker 03: So you think what's in paragraph 13 on appendix 31 is insufficient in terms of what was said there? [00:53:02] Speaker 03: I'm sorry, paragraph? [00:53:04] Speaker 03: 13, appendix page 31, that talks about the indemnification from its customers or the demands for indemnification. [00:53:13] Speaker 03: You thought that was insufficient? [00:53:16] Speaker 01: Yes, Your Honor. [00:53:17] Speaker 01: Let me walk through that exactly. [00:53:20] Speaker 01: Let's see. [00:53:27] Speaker 01: I really apologize. [00:53:28] Speaker 01: Which paragraph? [00:53:29] Speaker 03: It's paragraph 13, appendix page 31. [00:53:31] Speaker 01: Yes. [00:53:32] Speaker 01: So they allege that they have various contractual relationships with its customers. [00:53:37] Speaker 01: Problem from the get-go is we don't even know if these are banks. [00:53:40] Speaker 01: I think they've acknowledged elsewhere that most of their customers are actually some sort of intermediaries and not banks. [00:53:46] Speaker 01: They then go on to say they include indemnification provisions [00:53:50] Speaker 01: relating to actual or alleged patent infringement by MyTech's technology. [00:53:56] Speaker 01: That doesn't tell us anything about whether or not these provisions encompass USA's claims. [00:54:04] Speaker 01: But we do know one thing about whether or not MyTech is alleging that they do cover USA's claims, which is in the appendix as well. [00:54:13] Speaker 01: We have MyTech's actual 10Q filing. [00:54:17] Speaker 01: where they specifically state to their investors that they do not believe, at least in the case of the PNC lawsuits, that they have any indemnity obligation to anyone. [00:54:30] Speaker 03: But could that no indemnity obligation be because they say there's no infringement? [00:54:34] Speaker 03: Do you get what I'm getting at? [00:54:35] Speaker 03: There could be a distinction as to why they're making that statement. [00:54:39] Speaker 01: They do make their argument in the brief, but they don't say they have no indemnity liability. [00:54:44] Speaker 01: They say they have no indemnity obligation [00:54:47] Speaker 01: The obligation is the threshold question of whether you have an obligation to provide the indemnity. [00:54:54] Speaker 01: That's the threshold question of whether, if somebody is liable, you have any responsibility, whatever their responsibility may be. [00:55:01] Speaker 01: And the reason why that's so ultimately important, again, goes back to they're trying to argue this as their hook to raise declaratory judgment suits on behalf of some group of unidentified, I guess, banks or some other sort of customer that haven't been mentioned. [00:55:17] Speaker 01: They could only have the ability to bring suits on behalf of these customers if there's an actual live controversy between the customer and USAA, one. [00:55:27] Speaker 01: And two. [00:55:28] Speaker 04: No, that's not true. [00:55:30] Speaker 04: It doesn't have to be an actual live controversy in the sense of a pending suit. [00:55:36] Speaker 01: Not a pending suit. [00:55:37] Speaker 01: That's correct. [00:55:38] Speaker 01: A controversy in the sense of an actual legal dispute, something between the parties that's concrete. [00:55:43] Speaker 01: and immediate, whether or not it's actually resulted in litigation or whether it's- They say that that came from these letters. [00:55:52] Speaker 01: Correct, Your Honor. [00:55:52] Speaker 01: That's their primary assertion. [00:55:54] Speaker 01: And I think that's, in fact, one of the main ways we know that there's no there there, because we have the letter, which they say is representative, which they say is copy paste. [00:56:05] Speaker 01: And there's two things about that letter that are really, really important. [00:56:09] Speaker 01: One. [00:56:10] Speaker 02: Is that letter in here? [00:56:12] Speaker 01: It is, your honor. [00:56:13] Speaker 01: The letter is at, I'm mixing up my papers a little bit, I apologize. [00:56:19] Speaker 01: Appendix 44. [00:56:20] Speaker 02: What's that? [00:56:21] Speaker 03: Appendix 44. [00:56:22] Speaker 01: Thanks. [00:56:23] Speaker 01: Yes, thank you so much, your honor. [00:56:25] Speaker 01: And so this letter, a couple of really, really interesting things about it. [00:56:29] Speaker 01: One is that MyTech [00:56:32] Speaker 01: here today in the complaint in the district court, the two district courts, they've never alleged that anything in this letter is actually about MyTech. [00:56:42] Speaker 01: In fact, I think counsel said something essentially just to the contrary today. [00:56:47] Speaker 01: This letter, we can look through it as long as we like, and we're not going to see the word MyTech. [00:56:53] Speaker 01: But it's not a situation where someone's just using a code word to avoid it. [00:56:56] Speaker 01: There's just nothing in this letter about MyTech at all. [00:57:00] Speaker 01: much less any accusations. [00:57:03] Speaker 04: Well, they're alleging that the customer infringes their technology, and the customers allegedly are using the MiTech technology to photograph the checks. [00:57:18] Speaker 01: So let me point you to something in this 10Q statement that I think makes this easier than it otherwise. [00:57:26] Speaker 04: I think coming back, I mean, we have, you know, [00:57:29] Speaker 04: are arguing about the significance of the 10Q statements. [00:57:32] Speaker 04: We don't have any of the infringement on any of the indemnification provisions in front of us. [00:57:37] Speaker 04: Why shouldn't this go back to have a hearing before the district judge to explore some of the things that the two of you are arguing about here today? [00:57:46] Speaker 01: So let me answer that first. [00:57:47] Speaker 01: And then I want to come back briefly to the 10Q, because I do think in this case it's important. [00:57:53] Speaker 01: And it wasn't fleshed out in the briefing that much. [00:57:56] Speaker 01: So in this case, the district court [00:57:58] Speaker 01: had the same question, I think, as your honor, which is, do we need more facts here? [00:58:03] Speaker 01: Is there more about the indemnity obligation that we can learn? [00:58:06] Speaker 01: And so the district court judge actually asked my text counsel at the oral argument, [00:58:12] Speaker 01: to give more detail, to specify whether or not there were some customers as to which there is an indemnity obligation, pressed the council repeatedly about it. [00:58:22] Speaker 01: Council for MyTech made explicit not only that they didn't want to put more information forward, but that they were actually affirmatively making a decision to take, quote, no position. [00:58:32] Speaker 04: Would you show me where they said that in the hearing? [00:58:37] Speaker 01: Yes, absolutely, Your Honor. [00:58:41] Speaker 03: Can you also give us the TINQ page? [00:58:43] Speaker 01: Yes. [00:58:44] Speaker 01: Let me do that just really quickly. [00:58:45] Speaker 01: I have that one in front of me. [00:58:46] Speaker 01: It's Appendix 1049. [00:58:48] Speaker 01: And this is really, really important. [00:58:50] Speaker 01: So remember, that letter is about a different family of patents. [00:58:54] Speaker 01: It's about a different family of patents that was at issue in the second Wells Fargo lawsuit. [00:58:59] Speaker 01: And here is what MyTech says in its 10-q about that family of patents, which again is the only one charted in the letter. [00:59:07] Speaker 01: It says, the two patents in question in the second Wells Fargo lawsuit as the litigation involved broad banking processes and not MyTech's specific mobile deposit features. [00:59:22] Speaker 04: But these are different patents. [00:59:24] Speaker 01: this exact same patent family at issue in the letter. [00:59:28] Speaker 01: That's my point, Your Honor. [00:59:29] Speaker 04: But it's different. [00:59:30] Speaker 04: It's not the same patents, right? [00:59:31] Speaker 01: It actually is. [00:59:32] Speaker 01: That same patent was at issue in the second Wells Fargo lawsuit. [00:59:37] Speaker 01: So that's why I say the 10Q actually is worth it in this instance. [00:59:40] Speaker 01: I apologize for going in the leads. [00:59:42] Speaker 01: But what MyTech is saying in its 10Q is it's saying there's a group of patents that aren't about us at all. [00:59:49] Speaker 01: They're about broad banking processes. [00:59:51] Speaker 01: That's the second Wells Fargo lawsuit. [00:59:54] Speaker 01: Second Wells Fargo lawsuit is the one that's mentioned in that group of patents is the one that's at issue in their letter, their representative letter, and the same one in that banking article. [01:00:07] Speaker 01: None of these things have anything to do with the four patents at issue in this case. [01:00:12] Speaker 01: The letter, the article, all of that is only about the patent family at issue in the Second Wells Fargo lawsuit, where MyTech is on record here [01:00:22] Speaker 01: at Appendix 1049 as saying it involved broad banking processes and not my tech. [01:00:29] Speaker 02: Where on that 1049 is that? [01:00:32] Speaker 01: This is about six lines down from the top of page 21 at Appendix 1049. [01:00:37] Speaker 00: I got it. [01:00:38] Speaker 01: Let me try to find this quote from the district court while you are looking at that. [01:00:46] Speaker 01: I apologize for the delay. [01:00:57] Speaker 01: Here we go. [01:00:58] Speaker 01: So this is appendix 981 to answer your question judge Jake 981 981 So my text council after quite a bit of back and forth for the district court judge is trying to ascertain whether there's some there there And my text council says I think the record is clear that we do not take the position that we admit an indemnity Obligation exists. [01:01:22] Speaker 01: Okay, but that makes sense based on what they're saying and then he goes on and [01:01:25] Speaker 01: I think the record, as I read it respectfully, Your Honor, is that it is, you know, we take no position on that issue. [01:01:34] Speaker 04: I thought you were saying that they said they didn't want to present any further factual evidence. [01:01:43] Speaker 04: Where does it say that? [01:01:44] Speaker 01: So here, they say we take no position on that issue. [01:01:47] Speaker 01: This was following or perhaps immediately preceding a lengthy discussion back and forth. [01:01:52] Speaker 01: They're saying, well, why don't you submit letters? [01:01:55] Speaker 01: There's no letters. [01:01:55] Speaker 04: The issue is whether there's an indemnity obligation. [01:01:58] Speaker 01: Yes, correct. [01:01:59] Speaker 04: Maybe I misunderstood. [01:02:01] Speaker 04: They're not saying we don't want to make a better record, right? [01:02:07] Speaker 01: So you could read it, I guess, multiple ways. [01:02:10] Speaker 01: But the discussion back and forth at the court was, well, why didn't you submit letters? [01:02:15] Speaker 01: And they say, I'm sorry, we didn't submit letters. [01:02:17] Speaker 01: And they kind of go back and forth about why they didn't submit letters. [01:02:20] Speaker 01: And then here, it is just very, very clear that they don't want to take any position at all about whether there is an indemnity. [01:02:26] Speaker 04: OK, but that's not the same thing as saying they don't want to make a better record. [01:02:32] Speaker 01: It's a fair point, Your Honor. [01:02:35] Speaker 01: So we have a situation here where MyTech came forward and they identified only two different customers. [01:02:41] Speaker 01: They identified Wells Fargo. [01:02:43] Speaker 01: And the record is clear. [01:02:45] Speaker 01: Wells Fargo didn't ask for indemnity, was never indemnified. [01:02:50] Speaker 01: And then the second customer is this mission, this mission being, which received a letter that doesn't say anything about infringement of any of these four patents. [01:03:01] Speaker 01: And MyTech is not taking the position that they had any obligation to indemnify this bank either. [01:03:08] Speaker 04: OK, so I think we're way over our time. [01:03:09] Speaker 04: Unless my colleagues have any further questions, I think we're done for the moment. [01:03:15] Speaker 04: And Mr. Mack has two minutes. [01:03:17] Speaker 01: Thank you for your patience, Your Honor. [01:03:20] Speaker 05: Thank you, Your Honors. [01:03:22] Speaker 05: Just briefly, I mean, all software is configurable. [01:03:27] Speaker 05: It's a dangerous precedent that this Court would set that any software supplier would not have DJ standing just because the software is configurable. [01:03:35] Speaker 05: That's what software is. [01:03:36] Speaker 05: There's lots of those. [01:03:37] Speaker 03: What is your position on Judge Dyke's suggestion on a jurisdictional hearing and remanding for that? [01:03:42] Speaker 05: I think a jurisdictional hearing makes a lot of sense, but I think it actually should [01:03:46] Speaker 05: in the Northern District of California, not in Texas. [01:03:48] Speaker 05: If you looked at the, I don't know if you guys, I could briefly address the transfer issue. [01:03:52] Speaker 02: This is a rebuttal thing. [01:03:55] Speaker 05: Well, it's in the briefing. [01:03:56] Speaker 05: It's pretty well articulated in the briefing why all of Judge Chen's analysis of the first three factors were clear error. [01:04:02] Speaker 05: But all software is configurable. [01:04:05] Speaker 05: just because you can configure the software doesn't mean it's not infringing or we don't have standing to assert a declaratory judgment action plus with the monitoring criteria that you talked about yes there's a list of monitor criteria my tech supports ten different monitor criteria there still has to be some monitor criteria [01:04:22] Speaker 05: It could be brightness. [01:04:24] Speaker 05: It could be the skew. [01:04:25] Speaker 05: It could be the slam. [01:04:26] Speaker 05: There's maybe 10 different options. [01:04:29] Speaker 05: Just because the bank can choose which monitoring criteria it wants to use, that doesn't avoid infringement. [01:04:34] Speaker 05: There still has to be some monitoring criteria. [01:04:36] Speaker 05: I would just take a look at claim number one of the 090 patent. [01:04:41] Speaker 05: Look how incredibly broad that claim is. [01:04:45] Speaker 05: All it requires is monitoring for some monitoring criteria, basically just scanning over an image and then capturing the image when the monitoring criteria is met. [01:04:55] Speaker 05: It's incredibly broad. [01:04:56] Speaker 05: That core functionality is provided by MySnap, MyTech software. [01:05:02] Speaker 05: And MyTech would like to defend its software against these spurious allegations of infringement. [01:05:06] Speaker 05: We think we're in the best position to do that. [01:05:08] Speaker 05: We think we have standing to do that. [01:05:10] Speaker 05: And I think that if this court were to say that no software provider would ever have DJ standing just because the software is configurable, I just don't think that's the correct precedent we want to be setting. [01:05:22] Speaker 04: Thank you.