[00:00:01] Speaker 02:
OK, our next case is number 22-1081, Ynet Labs LLC versus Motorola Mobility LLC.

[00:00:11] Speaker 02:
OK, Mr. Orson.

[00:00:16] Speaker 04:
Good morning, Your Honors.

[00:00:17] Speaker 04:
Matt Orson for Ynet Labs LLC.

[00:00:20] Speaker 04:
I'd like to just touch on the legal framework surrounding this appeal.

[00:00:27] Speaker 04:
What Ynet is arguing for.

[00:00:30] Speaker 04:
is a holding from this court that Judge Lyman Weber had subject matter jurisdiction to enter an order dismissing the complaint with prejudice.

[00:00:43] Speaker 01:
Can we just assume that what I think is undisputed is that the order says nothing about prejudice one way or the other.

[00:00:52] Speaker 01:
And I think both sides agree it has to be only without prejudice.

[00:00:57] Speaker 01:
So are we losing something if we just treat it as without prejudice?

[00:01:01] Speaker 04:
I think the parties agree to that, that they can be treated without prejudice.

[00:01:06] Speaker 04:
Ynet's position in this court, however, is that Judge Leinenweber had jurisdiction to enter an order with prejudice under Rule 12b6.

[00:01:18] Speaker 04:
I would add that, and Ynet has communicated this to Motorola, Ynet has no intention of appealing that ruling.

[00:01:27] Speaker 04:
I don't understand what you're saying.

[00:01:33] Speaker 02:
The order under review, everybody agrees, is without prejudice.

[00:01:36] Speaker 02:
What's the point you're making?

[00:01:39] Speaker 04:
This appeal centers on that Judge Linenweber actually had the subject matter jurisdiction to enter an order with prejudice under Rule 12b6.

[00:01:48] Speaker 02:
I simply don't understand what you're saying.

[00:01:51] Speaker 02:
He didn't.

[00:01:53] Speaker 04:
He didn't.

[00:01:54] Speaker 04:
And this appeal surrounds Wynett's contention that he, in fact, did.

[00:01:59] Speaker 04:
Judge Lineweber rejected two alternative theories supporting, we believe, his Article III subject matter jurisdiction to enter the order with prejudice.

[00:02:12] Speaker 02:
And so the- Why are you talking about with prejudice?

[00:02:15] Speaker 02:
It's not with prejudice.

[00:02:18] Speaker 04:
The relief we seek is an order saying that he had the authority to enter the order with prejudice.

[00:02:25] Speaker 01:
I mean, you want this order to be with prejudice?

[00:02:30] Speaker 04:
Yes.

[00:02:31] Speaker 04:
Yes.

[00:02:31] Speaker 00:
And so I'm trying to- Why would you want it to be with prejudice?

[00:02:36] Speaker 00:
Because- Is that the only issue you're raising on appeal now?

[00:02:39] Speaker 00:
Have you changed your issues that you're raising on appeal?

[00:02:43] Speaker 00:
No.

[00:02:44] Speaker 04:
We're not changing the issue on appeal.

[00:02:47] Speaker 04:
were arguing that the order that Judge Leinenweber did have, and this is what we argued to the district court, that he had Article III standing because Ynet Labs LLC owned the patent when it filed the complaint.

[00:03:06] Speaker 04:
And that's our position before Judge Leinenweber.

[00:03:09] Speaker 04:
It's our position here.

[00:03:10] Speaker 02:
He said you didn't have to.

[00:03:14] Speaker 04:
It has to do with

[00:03:16] Speaker 04:
the power of the court to dispose of the case on the merits.

[00:03:22] Speaker 00:
on America's granting a motion to dismiss.

[00:03:25] Speaker 00:
Correct.

[00:03:25] Speaker 00:
And you challenge that motion to dismiss.

[00:03:27] Speaker 04:
Correct.

[00:03:28] Speaker 00:
You contend that you are the patent, that your client is the patent owner.

[00:03:32] Speaker 04:
Yes.

[00:03:33] Speaker 00:
Do you want to focus on that issue?

[00:03:35] Speaker 04:
Yes.

[00:03:36] Speaker 04:
Please, Your Honor.

[00:03:37] Speaker 04:
And so two alternative bases.

[00:03:41] Speaker 04:
First of all, the cases that Ynet has marshaled, three cases.

[00:03:47] Speaker 04:
A case out of this court from the 1990s, the Cannes case.

[00:03:52] Speaker 04:
this court's predecessor court in the 1960s, the Carey case, and then lastly, the United States Supreme Court case from the 1890s, the Sessions case.

[00:04:05] Speaker 04:
All of these cases, we believe, all of this precedent holds that in a situation like this one, where the patent owner is dissolved, goes bankrupt,

[00:04:18] Speaker 04:
the patent assets when they go unclaimed and are not disposed of, revert to the original owner.

[00:04:26] Speaker 02:
Okay, but those cases are dealing with particular legal regimes and we're in the United States, that may be the case, but we're dealing with British Virgin Islands law and there's no argument is there that under British Virgin Islands law when the

[00:04:43] Speaker 02:
company is dissolved the way this one was, the assets go to the crown, right?

[00:04:50] Speaker 04:
Well, we believe that the statutory regime, the BVI dissolution scheme, is analogous in particular to the Sessions case.

[00:05:01] Speaker 04:
So what the scheme does is really two things.

[00:05:04] Speaker 04:
First, it freezes the assets.

[00:05:07] Speaker 04:
of the corporation or company that struck from the rolls.

[00:05:11] Speaker 02:
Are you saying that the district court's interpretation of British Virgin Islands law is wrong?

[00:05:15] Speaker 02:
Is that what you're arguing?

[00:05:16] Speaker 04:
Yes, that's correct.

[00:05:18] Speaker 02:
Based on some cases which don't address British Virgin Islands law?

[00:05:23] Speaker 04:
No, based on an interpretation of the BVI statute, which was before the district court.

[00:05:29] Speaker 04:
And the district court held that when the patent, quote unquote, vested with the crown,

[00:05:37] Speaker 04:
The Crown was, in fact, a creditor of the BVI entity that had dissolved.

[00:05:44] Speaker 04:
And it's our contention that that's just not the case.

[00:05:48] Speaker 04:
What the scheme does is freezes the assets of the company that's struck from the rolls and allows creditors to assert claims against the dissolved entity.

[00:06:01] Speaker 04:
In this case, all the evidence that Ynet put in establishes, first of all, that the patent was the only asset of the company.

[00:06:11] Speaker 04:
Secondly, that the company had no creditors.

[00:06:15] Speaker 04:
And so under the scheme, what happens, and this happened in this case in April 2016, is that after a certain period of time,

[00:06:26] Speaker 04:
any unclaimed or not disposed of property, quote unquote, vests in the crown.

[00:06:32] Speaker 00:
What do you?

[00:06:33] Speaker 00:
OK, go ahead.

[00:06:34] Speaker 00:
Continue.

[00:06:34] Speaker 00:
I know what happened after.

[00:06:36] Speaker 04:
And this is out of the statute.

[00:06:38] Speaker 04:
The crown holds the property, not legal title to the property, but is mandated to return the property to the company if it's restored to the rolls.

[00:06:51] Speaker 00:
Where is that?

[00:06:52] Speaker 00:
Do you have?

[00:06:53] Speaker 00:
Yes.

[00:06:59] Speaker 04:
so appendix 582 section 220 paragraph 2 when a company is restored to the register any property other than money that was vested in the crown under subsection 1 on the dissolution of the company and that has not been disposed of must be returned to the company okay well

[00:07:27] Speaker 04:
But our contention is this, Your Honor, is that the Crown stands in the same position as the bankruptcy trustee in the Sessions case, where the bankruptcy trustee in the Sessions case has this patent asset that it cannot dispose of for the benefit of creditors.

[00:07:49] Speaker 04:
And the US Supreme Court held that in that situation, title reverts to the patent owner.

[00:07:56] Speaker 04:
And so analogous here, the Crown has no legal interests in the patent that is vested in the Crown, but rather holds title as a sort of lost and found for the dissolved company.

[00:08:15] Speaker 01:
And so I'm- Has Wynat Labs been restored to the Rolls?

[00:08:20] Speaker 04:
After a briefing had commenced in this court on this appeal, yes, the BVI entity was restored, obtained the patent, and has since assigned it to the appellant.

[00:08:36] Speaker 04:
Why not?

[00:08:37] Speaker 04:
So you could bring it in soon.

[00:08:39] Speaker 04:
We could, yes.

[00:08:40] Speaker 00:
Because it's not with prejudice.

[00:08:43] Speaker 04:
Exactly.

[00:08:44] Speaker 04:
So this takes us back to the beginning.

[00:08:47] Speaker 04:
And the point I'm trying to make is that when this court first remanded this action on this question of subject matter jurisdiction, with all of these facts in mind that we could go and get it back, we could continue to litigate this Article III question, we, YNET, approached Motorola and

[00:09:17] Speaker 04:
would have walked away with prejudice dismissal.

[00:09:22] Speaker 04:
And so that's kind of the posture we're in now, where we're advocating for, on the one hand, just simply walking away from this litigation and these issues.

[00:09:36] Speaker 04:
On the other hand, if, and Motorola has really gone down

[00:09:40] Speaker 04:
the avenue where, yes, it has to be a without prejudice dismissal.

[00:09:46] Speaker 04:
And my client has the wherewithal to get the patent back and could bring the claim anew in the district court.

[00:09:56] Speaker 04:
So that's kind of the, I think, unique framework that we're working on.

[00:10:02] Speaker 00:
Do you really understand why having your case dismissed with prejudice benefits you?

[00:10:13] Speaker 04:
Well, I think it goes to the issue of whether or not Judge Leinenweber had Article III standing when the 12b6 motion was filed.

[00:10:33] Speaker 04:
And it's our position that he did for the reasons discussed.

[00:10:39] Speaker 00:
And the question is standing at the time the complaint is filed, right?

[00:10:43] Speaker 00:
Yes, that's correct.

[00:10:46] Speaker 00:
And at that time, YNET BVI was not restored to the register?

[00:10:54] Speaker 04:
That's correct.

[00:10:55] Speaker ?:
OK.

[00:10:58] Speaker 04:
And so our principal point would be that in particular sessions, when you read the BVI dissolution scheme,

[00:11:10] Speaker 04:
The crown looks very much like the bankruptcy trustee.

[00:11:13] Speaker 04:
And we believe, as well as with these other precedents, that there's enough support that title would revert to the five inventors who then in 2019 assigned the patent to.

[00:11:29] Speaker 01:
What's the connection between reversing to the inventor

[00:11:38] Speaker 01:
I think they're not the same thing.

[00:11:41] Speaker 04:
They are not, Your Honor.

[00:11:43] Speaker 04:
So reversion of the asset to the five inventors would be based on the circumstances of the BVI entity dissolving without any creditors.

[00:11:59] Speaker 04:
And the intent in the 2005 covenant, the first assignment,

[00:12:07] Speaker 04:
where the five inventors covenant to perform quote unquote all lawful acts.

[00:12:13] Speaker 04:
And so we read that covenant broad enough to capture the intent of accepting that unclaimed property before it vests in the crown.

[00:12:30] Speaker 02:
So in your view, who owns this patent now?

[00:12:33] Speaker 02:
The restored company or the shareholders of the company?

[00:12:36] Speaker 04:
As a matter of fact, Ynet Labs LLC, my client, the appellant here, owns the patent today through the restoration.

[00:12:50] Speaker 00:
So when Ynet BBC was restored to the register, property was returned to it.

[00:12:59] Speaker 00:
You're saying the patent was returned to it.

[00:13:01] Speaker 00:
Yes.

[00:13:01] Speaker 00:
And then what happened?

[00:13:04] Speaker 00:
Assignment agreements?

[00:13:05] Speaker 04:
Yes.

[00:13:07] Speaker 04:
Yes, there was an assignment.

[00:13:11] Speaker 01:
So YNAB Labs, Inc., you say, none of this is in the record, has been restored to the roles under 220.

[00:13:19] Speaker 01:
You think it now has the patent back.

[00:13:27] Speaker 01:
Has YNAB Labs, Inc., the restored company, done an assignment to YNAB Labs, LLC?

[00:13:35] Speaker 01:
Yes.

[00:13:36] Speaker 01:
It has?

[00:13:36] Speaker 01:
Yes.

[00:13:36] Speaker 01:
That, too, has occurred.

[00:13:37] Speaker 04:
Yes, yes, yes.

[00:13:40] Speaker 01:
Yes.

[00:13:41] Speaker 01:
And so this is, this is not a theory of standing that I remember hearing about before.

[00:13:49] Speaker 02:
No, this all, this all happened in fact, when briefing was just closing because this didn't happen before the suit was brought, right?

[00:14:02] Speaker 02:
Right.

[00:14:02] Speaker 04:
Exactly.

[00:14:03] Speaker 02:
Yeah.

[00:14:03] Speaker 02:
Yeah.

[00:14:07] Speaker 04:
And I guess this latest colloquy goes to the practical point, too, that the five inventors and all of the equity shareholders, both the BVI entity and YNET, the current plaintiff, they're all closely connected.

[00:14:26] Speaker 04:
And they all, on this record, display an intent that legal title be held in either the BVI entity

[00:14:36] Speaker 04:
or the five inventors or, ultimately, the plaintiff.

[00:14:43] Speaker 04:
Looks like I've run out of time.

[00:14:46] Speaker 04:
We'll give you one minute.

[00:14:47] Speaker 04:
OK, thank you.

[00:14:52] Speaker 02:
Mr. Hankins.

[00:14:54] Speaker 03:
Good morning.

[00:14:54] Speaker 03:
May it please the court?

[00:14:57] Speaker 03:
I'm here today with my colleague, Lewis Clapp, from Riley Safer Homes in Kinsilla.

[00:15:02] Speaker 03:
I believe we just heard concessions that there was no standing at the time this lawsuit was filed.

[00:15:10] Speaker 01:
Let me ask you this.

[00:15:12] Speaker 01:
This inversion is the question.

[00:15:14] Speaker 01:
It appears to be, let's assume it's a reality.

[00:15:18] Speaker 01:
now that the BVI law's provisions for restoration have occurred.

[00:15:28] Speaker 01:
So it was always a possibility that that would occur.

[00:15:35] Speaker 01:
Why doesn't that possibility, which existed at the time of this lawsuits filing, not yet ripened into a reality, but a possibility, why wasn't that enough for standing even then?

[00:15:52] Speaker 03:
To assert standing, one has to assert a present ownership and a patent.

[00:15:59] Speaker 01:
Why is a constitutional matter present ownership?

[00:16:01] Speaker 01:
All you need is an injury, in fact.

[00:16:03] Speaker 01:
And our opinion last time was careful to say that the owner that we were doing, we were asking a question about injury, in fact, and that Ynet's only asserted basis was on the basis of ownership.

[00:16:17] Speaker 03:
The assignment that was used to file this lawsuit, the 2019 assignment, was made by five inventors to a Wyoming company called LLC.

[00:16:27] Speaker 01:
I understand this is, I think, actually a completely different theory of sanding, which has not been urged before.

[00:16:34] Speaker 01:
Fairly recent Supreme Court precedent that says theories of standing can in fact be forfeited by not that's the Texas against the United States case the second the third Affordable Care Act case so this may well have been forfeited, but just on the merits.

[00:16:50] Speaker 01:
I want to understand Why couldn't why that?

[00:16:54] Speaker 01:
when that LLC have said

[00:16:58] Speaker 01:
At the time we filed this lawsuit, there was a path for us, the company, Moinet LLC, to get this back.

[00:17:09] Speaker 01:
And that's a plausible path.

[00:17:12] Speaker 01:
And therefore, we have injury, in fact, for Article III.

[00:17:14] Speaker 01:
Is there some other jurisdictional problem?

[00:17:17] Speaker 03:
First of all, that theory is the first time I've ever heard it.

[00:17:21] Speaker 03:
So forfeiture is probably the first answer I would have to it.

[00:17:27] Speaker 03:
My second answer is, why wouldn't everybody have a path to ownership of a patent if that was a path to ownership of a patent for standing purposes under Article III?

[00:17:35] Speaker 03:
at the time this lawsuit was filed.

[00:17:37] Speaker 01:
There's nothing particularly speculative about this, right?

[00:17:40] Speaker 01:
It's right in the BVI law.

[00:17:41] Speaker 03:
It's completely speculative.

[00:17:43] Speaker 03:
What you just heard was completely speculative.

[00:17:46] Speaker 03:
What had occurred at the time this lawsuit was filed was that the property that was at issue in this lawsuit, the 374 patent, was owned by the Crown.

[00:17:54] Speaker 03:
Period and stop.

[00:17:56] Speaker 03:
That's the way the BVI law works.

[00:17:58] Speaker 00:
But there's a pathway, one that is not too hard to understand, and one that seems that YNET BVI could have pursued, where they could restore their company to the register.

[00:18:11] Speaker 00:
And then they get the patent, and then all they have to do is then assign it.

[00:18:15] Speaker 00:
So it does seem like a plausible.

[00:18:19] Speaker 00:
I agree with you.

[00:18:23] Speaker 00:
basis for them to become patent owners.

[00:18:25] Speaker 00:
It's not like I sue somebody for patent infringement and I don't own the patent and I just have to go to somebody and beg them to sell the patent to me.

[00:18:33] Speaker 00:
That's not possible.

[00:18:35] Speaker 00:
So your suggestion that anybody could bring a patent suit doesn't seem to fit.

[00:18:40] Speaker 00:
But here, why isn't it plausible?

[00:18:43] Speaker 03:
Because under BVI law, what needed to occur was someone would come to the government and say, we want this back.

[00:18:51] Speaker 03:
And the evidence that was submitted to the court was that that right had been abandoned.

[00:18:55] Speaker 03:
That's what the district court found.

[00:18:57] Speaker 00:
When you say I want this back, what is this?

[00:19:02] Speaker 03:
Any property that was

[00:19:03] Speaker 03:
given to the crown as a result of the dissolution.

[00:19:07] Speaker 00:
What about page 582 of the appendix that says when a company is restored to the register any property that was vested in the crown on dissolution of the company that has not been disposed of must be returned to the company.

[00:19:19] Speaker 03:
I don't argue with that legal path of reacquiring the patent.

[00:19:27] Speaker 00:
I don't see where you're getting that.

[00:19:32] Speaker 00:
All they had to do was get their company restored to the register.

[00:19:35] Speaker 00:
Who is they?

[00:19:38] Speaker 03:
No, this would be LTD.

[00:19:40] Speaker 03:
The BVI company goes to the Crown and pays one of the declarants, talks about all of the back payments that would need to be paid to do this.

[00:19:53] Speaker 03:
And then, according to the statute, gets the property back.

[00:19:58] Speaker 03:
We still have a different entity than the one that sued Motorola in this case.

[00:20:02] Speaker 02:
Are the shareholders the same of the two entities?

[00:20:05] Speaker 03:
I think so.

[00:20:06] Speaker 01:
There's an assertion in the briefs that they are.

[00:20:09] Speaker 03:
Yes.

[00:20:09] Speaker 01:
Here's where there's a lot of... Does it make a difference under the BDI law when you looked at it that the BDI entity not just deregistered, but was liquidated?

[00:20:26] Speaker 01:
Isn't there an additional step where a company has been dissolved?

[00:20:29] Speaker 01:
You actually have to go to a court to get it?

[00:20:32] Speaker 01:
Yes.

[00:20:32] Speaker 01:
OK.

[00:20:32] Speaker 01:
And that, I don't think we even heard about that.

[00:20:34] Speaker 03:
I'm not sure that's occurred.

[00:20:35] Speaker 03:
Certainly, it's not on the record that anything like that's occurred.

[00:20:38] Speaker 03:
During the time that it's struck from the record, it can do nothing.

[00:20:42] Speaker 03:
It can make no legal actions.

[00:20:44] Speaker 01:
But this happened in the States, right?

[00:20:47] Speaker 01:
I mean, it was struck from the rolls or something in 2016 or some period, and then after, what, a seven-year waiting period or something?

[00:20:55] Speaker 03:
Didn't pay its fees for seven years, struck, dissolved a year after that.

[00:21:00] Speaker 01:
And there are different provisions for dissolved companies and non-dissolved but struck companies.

[00:21:05] Speaker 03:
Yes, Your Honor.

[00:21:06] Speaker 03:
Yes, Your Honor.

[00:21:07] Speaker 03:
So at that point, we still don't have any property ownership in the as-and-ors of the 2019 assignment to the plaintiff here.

[00:21:19] Speaker 02:
I mean, there are plenty of standing cases that say a remote interest or a remote possibility isn't sufficient for standing.

[00:21:28] Speaker 03:
These are the inventors.

[00:21:29] Speaker 03:
They're not the owners of the company.

[00:21:31] Speaker 03:
They have conveyed their right in 2005.

[00:21:34] Speaker 03:
They have conveyed all ownership rights to the Ynet BVI company.

[00:21:40] Speaker 03:
All rights.

[00:21:42] Speaker 03:
Nothing in that assignment, in that 2005 assignment, which this court reviewed the first time we were here.

[00:21:49] Speaker 02:
We're talking about something different.

[00:21:50] Speaker 02:
We're talking about the possibility of getting the patent back and assigning it to the plaintiff here is sufficiently certain

[00:22:01] Speaker 02:
are so remote that it's insufficient to create standing.

[00:22:08] Speaker 03:
The point here is that the assignment that led to this action being filed was filed by a company that didn't have any ownership interests at all.

[00:22:20] Speaker 02:
Right, but we're talking about the possibility that they could acquire it as giving them standing.

[00:22:25] Speaker 03:
The possibility that is only discussed

[00:22:30] Speaker 03:
Now, after standing has been found not to exist, that cannot be the way standing can be created, Your Honor, that I can go back and acquire the patents that I have been determined to not own in order to be able to proceed with a lawsuit.

[00:22:48] Speaker 03:
The reversionary interest that's been alleged and argued here doesn't exist.

[00:22:52] Speaker 03:
the claims for reformation aren't based on any applicable law that we could find or facts.

[00:22:58] Speaker 01:
Do you have a particular view about what law, what jurisdiction's law should apply to the question of reformation?

[00:23:07] Speaker 03:
No.

[00:23:10] Speaker 03:
I know no effort has been made to establish what that law is from the entity that has the burden of proof on this issue, which is the plaintiff.

[00:23:20] Speaker 03:
Illinois law was what was briefed, but I see no connection between Illinois law and this contract for BVI entity.

[00:23:27] Speaker 01:
I think you also argue in any event.

[00:23:30] Speaker 01:
Illinois law on reformation follows the restatement, which occurred mutual mistake.

[00:23:38] Speaker 01:
And the judge found as a fact there was no mutual mistake, just now a retrospective wish.

[00:23:44] Speaker 03:
Correct.

[00:23:44] Speaker 03:
Even if Illinois law applies, they lose.

[00:23:47] Speaker 03:
So the last two issues that are before the court are the form of the dismissal, which I think everyone is in agreement is without prejudice.

[00:23:54] Speaker 03:
And the finding of exceptional case, which this court has held repeatedly, is not an appealable order.

[00:23:59] Speaker 03:
And that part of the appeal should be dismissed.

[00:24:02] Speaker 02:
OK.

[00:24:02] Speaker 02:
Is that it?

[00:24:05] Speaker 03:
Yes, Your Honor.

[00:24:05] Speaker 03:
I'll submit.

[00:24:06] Speaker 02:
OK.

[00:24:06] Speaker 03:
Thank you.

[00:24:07] Speaker 02:
Mr. Orzan, you've got a minute.

[00:24:18] Speaker 04:
Unless the court has questions, I have nothing further.

[00:24:21] Speaker 02:
OK.

[00:24:21] Speaker 02:
Thank you.

[00:24:22] Speaker 02:
Thank both counsel.

[00:24:22] Speaker 02:
The case is submitted.