[00:00:00] Speaker 04:
We will hope to hear argument in number 21, 1695, Gorge design against meaning Shushan.

[00:00:11] Speaker 04:
Oh, yes.

[00:00:11] Speaker 04:
Please come forward.

[00:00:14] Speaker 04:
OK, Mr. Oliver, please begin.

[00:00:16] Speaker 00:
Thank you, Your Honor.

[00:00:18] Speaker 00:
And like Your Honor, I don't know the pronunciation of the second party, but my client is appellant neomagic.

[00:00:26] Speaker 00:
May it please the court, though the dollar value of this individual case is not high, this case presents an excellent opportunity for the federal circuit to meaningfully weigh in on a problematic and proliferating form of abusive litigation.

[00:00:44] Speaker 00:
Professor Updike-Toller's amicus brief here highlights a due process problem and confirms that due process through notice and hearing has historically been

[00:00:56] Speaker 00:
and should still be provided before depriving a party of property.

[00:01:01] Speaker 00:
That due process does not occur in this type of cases.

[00:01:06] Speaker 00:
Professor Goldman's forthcoming article.

[00:01:09] Speaker 04:
I would just say for me, it's a little hard to think of this as a type of case.

[00:01:14] Speaker 04:
So I'm trying to think about what happened here.

[00:01:17] Speaker 04:
What happened here was the presentation of a handful or half a dozen or something of causes of action through a very quick TRO process.

[00:01:29] Speaker 04:
Whole thing from beginning to end is three weeks.

[00:01:34] Speaker 04:
At least maybe two of the causes of action on their face are superficially plausible, namely the unfair competition ones, including trade dress.

[00:01:46] Speaker 04:
forget about the patent claim.

[00:01:48] Speaker 04:
It wasn't, in fact, a presented copyright claim.

[00:01:53] Speaker 04:
And there was a voluntary withdrawal

[00:01:59] Speaker 04:
Basically, as soon as you guys had a conversation in which you provided both an assertion and then with maybe a little bit of follow-up discovery, that's not entirely clear to me.

[00:02:11] Speaker 04:
They're not obliged to take your word for it.

[00:02:15] Speaker 04:
But they quickly decided you weren't selling enough, so suit gun, voluntarily.

[00:02:20] Speaker 04:
Now, that's not a particularly, I don't know, poster child case for abuse.

[00:02:31] Speaker 00:
Your Honor, if I may, I would like to address each of the causes of action.

[00:02:39] Speaker 00:
I would like to also point direct, Your Honor, specifically to Professor Goldman's forthcoming article, which we submitted as supplemental authority at docket number 72-2.

[00:02:50] Speaker 04:
At least I don't feel I'm in the position to look at a law review article

[00:02:58] Speaker 04:
and decide facts on the basis of that law review article.

[00:03:03] Speaker 04:
We have facts in the sense that we have all of this on essentially pleading, but something very similar to pleading.

[00:03:12] Speaker 04:
And that's all we have.

[00:03:14] Speaker 00:
Correct.

[00:03:15] Speaker 00:
We're not at all asking you to address the facts based on the law review article.

[00:03:19] Speaker 00:
The law review article highlights how this form of litigation, this kind of robo-pleading has become a problem in the courts and has grown.

[00:03:29] Speaker 00:
Regarding the patent claim, the patent claim was facially deficient.

[00:03:33] Speaker 04:
I wanted to put that aside.

[00:03:36] Speaker 04:
The other side clearly has a problem with two threads versus one thread.

[00:03:40] Speaker 04:
Put that aside.

[00:03:41] Speaker 04:
There's no independent harm

[00:03:44] Speaker 04:
from that if there is at least one non-bad faith plausible claim here.

[00:03:54] Speaker 04:
And the ones that at least are in my mind are the unfair competitions, ones whether federal or state common law.

[00:04:03] Speaker 00:
So the harm that came here, the harm that was presented here is the plaintiff

[00:04:12] Speaker 00:
Got an order from the court allowing them to seize all of the plaintiff's assets and to prohibit the defendant, my client, from transferring any assets as well as to shut down their website.

[00:04:23] Speaker 00:
Now they chose not to shut down the website, but the order allowed that.

[00:04:27] Speaker 00:
They seized $300,000.

[00:04:30] Speaker 04:
On without notice.

[00:04:33] Speaker 04:
By seized you meant this was money in the hands of Amazon or PayPal or somebody.

[00:04:38] Speaker 04:
I believe it was PayPal.

[00:04:39] Speaker 04:
It didn't go to them.

[00:04:41] Speaker 04:
Correct.

[00:04:41] Speaker 04:
So on October 6th when the voluntary dismissal occurred, that money was back in your possession.

[00:04:48] Speaker 04:
That is true.

[00:04:49] Speaker 00:
That is true.

[00:04:50] Speaker 00:
They did have to notify PayPal after that.

[00:04:53] Speaker 00:
But they took hold of or froze $300,000 that my client could not use to pay

[00:05:00] Speaker 04:
any of its obligations and they... Does that violate a rule like Rule 65 or something governing temporary restraining orders or not?

[00:05:14] Speaker 00:
Well here, Rule 65 does require that the plaintiff either give notice to the defendant of the motion for temporary restraining order or

[00:05:25] Speaker 00:
show the court that they attempted to give notice to the defendant, and that was not done here.

[00:05:30] Speaker 00:
They did not attempt to give notice.

[00:05:33] Speaker 00:
In fact, they obtained an order from the court saying, you don't have to ever give notice until after you've seized assets.

[00:05:42] Speaker 00:
So plausibly, they could have gone through the preliminary injunction hearing under this order without ever giving notice.

[00:05:50] Speaker 04:
What they did was that we held last winter in that pair of ABC cases involving a similar procedure to go after online sellers that, at least for the preliminary injunction stage, the notice requirement doesn't allow a real restriction.

[00:06:19] Speaker 04:
But that wasn't a TRO case.

[00:06:22] Speaker 00:
As far as I know, I'm not familiar with all the facts of the ABC cases.

[00:06:26] Speaker 00:
I have read them.

[00:06:27] Speaker 04:
Yes, sometimes with that case, even after you've read it, it might be hard to be familiar with all the facts.

[00:06:35] Speaker 00:
But in this case, again, there's no showing with respect to any of the other defendants that notice was given of the preliminary injunction hearing.

[00:06:46] Speaker 00:
Here notice was given on

[00:06:51] Speaker 00:
September 29, for the first time to my client, for a hearing that was on October 2.

[00:06:59] Speaker 00:
My client was faced at that time.

[00:07:02] Speaker 04:
I'm sorry.

[00:07:03] Speaker 04:
But for purposes of the preliminary injunction, that's a moot point to you.

[00:07:09] Speaker 04:
They dropped you out of the case before there was the... They agreed to do it the morning of the preliminary injunction hearing.

[00:07:21] Speaker 04:
How can you complain of that?

[00:07:26] Speaker 00:
Well, first, it forced the burden on my client to have to respond within two days to do an immense amount of research, briefing, having attorneys work 20 hours a day to respond to the numerous allegations, to prepare the papers, to make the emergency filing with the court.

[00:07:46] Speaker 00:
We filed a Rule 12 motion.

[00:07:49] Speaker 00:
with numerous grounds, after which the plaintiff responded and said, well, still, if you pay us $9,500, we will release your $300,000.

[00:08:02] Speaker 00:
We again responded that the case was frivolous, filed a second motion to dissolve many of the orders and attempting to have the preliminary injunction lifted.

[00:08:14] Speaker 00:
They then dismissed us hours before the hearing,

[00:08:19] Speaker 00:
The reason that even the dismissal was abusive here was we pointed out that two-thirds of the defendants could not have used the trademark based on the evidence and the pleadings.

[00:08:32] Speaker 00:
We pointed out that none of the defendants could have used the patent.

[00:08:36] Speaker 00:
And we pointed out that the copyright claim, which was stated in the complaint in the motion for temporary restraining order,

[00:08:48] Speaker 00:
And in an email to my client, their first notice of the case, three places they point out that we infringed a federally registered copyright that was non-existent.

[00:08:59] Speaker 00:
They then went to the preliminary injunction here.

[00:09:02] Speaker 04:
The email you're referring to is the September 29th one from Gorge.

[00:09:09] Speaker 00:
From Gorge's attorneys.

[00:09:11] Speaker 04:
Not the September 23rd email from PayPal, which put you on notice of the TRO within 36 hours.

[00:09:20] Speaker 00:
sent an email saying your money was seized.

[00:09:23] Speaker 04:
And they identified the case and they identified the plaintiff's lawyer who you could have contacted, right?

[00:09:28] Speaker 00:
They gave an incorrect email address that my client attempted to contact and got a bounce back from.

[00:09:34] Speaker 04:
The name of the outfit, it should have taken about five seconds to find it online.

[00:09:42] Speaker 00:
The name that they gave for the case was Orange Screw.

[00:09:47] Speaker 04:
Which is not a name of the name of the plaintiff's representative, which the PayPal PayPal's email said plaintiff's representative is the same name as we have in front of us.

[00:09:58] Speaker 04:
Ference.

[00:10:01] Speaker 04:
Right.

[00:10:01] Speaker 00:
I mean, so that takes five seconds to find my client attempted to contact them and got a bounce back email because the email address provided was incorrect.

[00:10:14] Speaker 00:
My client contacted me with the case number, which we looked up.

[00:10:21] Speaker 00:
It was a sealed case.

[00:10:22] Speaker 00:
I called the court to try and find out what the case was, and they said, we can't tell you because it's a sealed case.

[00:10:29] Speaker 00:
I don't believe that the attorney's name was listed.

[00:10:33] Speaker 00:
I don't have the documents sitting in front of me.

[00:10:35] Speaker 00:
Barrence and Associates LLC, Appendix 786.

[00:10:42] Speaker ?:
OK.

[00:10:46] Speaker 00:
something, Your Honor, that my clients, you know, unsophisticated in legal matters, as they may be, did not notice or was not able to track down.

[00:11:02] Speaker 00:
But when they contacted me with the email on the 29th, we were able to then download the documents.

[00:11:11] Speaker 04:
So what are your best legal arguments for reversible error, in a precise way?

[00:11:18] Speaker 04:
This is a terrible thing, and it's got to be stopped systemically.

[00:11:24] Speaker 00:
Sure, Your Honor.

[00:11:27] Speaker 00:
First, the district court did not follow the appropriate standards and procedures for assessing whether the claims were

[00:11:40] Speaker 00:
legitimate or frivolous claims.

[00:11:44] Speaker 00:
The third circuit law says if you don't follow the right, if you don't apply the right legal or factual criteria, the district court is not entitled to the deference that would otherwise be entitled.

[00:11:56] Speaker 00:
So where the district court compares product to product rather than product to patent claims, that's a problem.

[00:12:04] Speaker 00:
Where the district court looks at the color and the shape of the product rather than looking to see if any of the words in the word trademark are used, that's a problem.

[00:12:13] Speaker 02:
Where the district court looks at photos that don't even show the product in any meaningful manner and says that could be an un... I'm still confused what you're actually arguing was legal error and under which statutory provision you're entitled to attorney fees.

[00:12:32] Speaker 02:
Even if we agree with you that this is abuse of litigation, what statute entitled you to attorney's fees?

[00:12:39] Speaker 00:
So first, the court's inherent power does entitle us to attorney's fees.

[00:12:48] Speaker 00:
Second, 28 USC 1927 talks about vexatious litigation or litigationous conduct that multiplies proceedings.

[00:12:59] Speaker 00:
Here, the proceedings were multiplied

[00:13:02] Speaker 00:
significantly by filing the TRO, by filing under seal, by obtaining, filing and obtaining an order for discovery that was very abusive and that was to be answered in 14 days and served by publication on a website for a U.S.

[00:13:23] Speaker 00:
client whose address and corporate information was clearly listed on their website.

[00:13:31] Speaker 00:
If a complaint had been filed, we would have had an opportunity to publicly see the complaint, to contact them, to deal with that through the normal process of either a Rule 12 motion or an answer without having to do an extraneous amount of briefing and research into both the facts and the law on all of these other issues to file the motions before the preliminary injunction hearing.

[00:14:00] Speaker 04:
that you reserve or restore at the end of the time.

[00:14:06] Speaker 04:
Thank you.

[00:14:07] Speaker 04:
Thank you.

[00:14:08] Speaker 04:
Mr. Ferentz.

[00:14:09] Speaker 01:
May it please the court?

[00:14:11] Speaker 01:
Reading Mr. Oliver's briefing and listening to his argument, I'm struck by how NeoMagic refuses to recognize what this case is about.

[00:14:21] Speaker 01:
It's about a small family-owned company building a business off of one product and that business being threatened by NeoMagic and others

[00:14:29] Speaker 01:
selling knockoffs of that product online.

[00:14:33] Speaker 01:
To put things in perspective, Gorge Design's very economic survival was being threatened by these knockoff sales.

[00:14:41] Speaker 04:
What are the causes of action that you think has muster as above frivolous?

[00:14:50] Speaker 01:
I think all of the causes of action do... How could the patent cause of action?

[00:14:55] Speaker 04:
Your patent requires at least two threads on the screw, neither your product nor the one you're accused of has two threads.

[00:15:03] Speaker 01:
We disagree with that claim interpretation, Your Honor.

[00:15:07] Speaker 01:
And if you look at... I'm prepared to address that in my argument or I'll address it right now.

[00:15:16] Speaker 01:
What's your preference, Your Honor?

[00:15:17] Speaker 04:
Why don't you start how you can get to a plurality of threads and say that reads on one thread.

[00:15:24] Speaker 01:
Because if you look at the drawing in the patent, Your Honor, it shows the product that is sold by Gorge Design and also the product that was sold by NeoMagic.

[00:15:36] Speaker 01:
And the threads that are shown, what is shown in the drawing is

[00:15:47] Speaker 01:
A continuous spiral is described as having multiple threads.

[00:15:52] Speaker 01:
For example, I refer you to column 2 of the patent.

[00:15:56] Speaker 01:
It appears at appendix page 019.

[00:16:00] Speaker 01:
It says, as seen in reference to figure 2, the helical threads 32 are positioned approximately, yada, yada, yada.

[00:16:10] Speaker 01:
It goes on, further threads 32 defined.

[00:16:14] Speaker 01:
And wherever 32 is referenced in the specification, it's referred to as threads.

[00:16:26] Speaker 04:
OK.

[00:16:26] Speaker 01:
OK, good.

[00:16:27] Speaker 01:
Go on.

[00:16:27] Speaker 01:
OK.

[00:16:29] Speaker 01:
So after we brought this litigation and the listings for the 39 sellers in the litigation were removed from the internet, sales of Gorge Design's product increased by 20%.

[00:16:41] Speaker 01:
One of NeoMagic's main defenses is that it only sold one knockoff product.

[00:16:47] Speaker 01:
Although we haven't had discovery, we know there are at least two sales.

[00:16:51] Speaker 01:
One is the test buy for the underlying litigation.

[00:16:55] Speaker 01:
And the second is the one purchased by a frustrated consumer who contacted Gorge Design to complain about the knockoff product that it received from NeoMagic.

[00:17:06] Speaker 01:
Moreover, a rights owner doesn't know how many knockoffs a seller has sold until litigation has been commenced.

[00:17:12] Speaker 04:
Can I ask you a question focusing on, I guess, the procedural matter of the TRO and the Rule 65 provisions governing when

[00:17:24] Speaker 04:
you can ask for and obtain a TRO without giving notice to those who would be covered by it.

[00:17:35] Speaker 04:
What did you tell the district court in seeking the TRO?

[00:17:40] Speaker 01:
Well, the reason this case was filed under seal and the defendant's PayPal accounts were frozen

[00:17:53] Speaker 01:
is that's typically what's done in cases like this and there's nothing exceptional about how this case unfolded.

[00:18:00] Speaker 01:
This is a necessary process.

[00:18:03] Speaker 01:
It's not an abusive process.

[00:18:05] Speaker 04:
It's a defensive process that's... I guess I was asking the question about, is it Rule 65B1A?

[00:18:11] Speaker 04:
And did you say, give specific facts about why you didn't have to give notice or whatever the standard is?

[00:18:21] Speaker 01:
That's what I meant.

[00:18:23] Speaker 01:
Sorry, I misunderstood the question.

[00:18:25] Speaker 01:
Yes, we gave specific facts.

[00:18:27] Speaker 01:
And the concern is that history has shown

[00:18:30] Speaker 01:
In these types of cases, when defendants have notice, they move the funds out of the accounts, depriving the plaintiffs of a remedy.

[00:18:40] Speaker 01:
And they typically will open a new storefront under a different name, sometimes within days.

[00:18:47] Speaker 04:
And when it came time for NeoMagic to

[00:18:56] Speaker 04:
either oppose the preliminary injunction or seek fees.

[00:19:03] Speaker 04:
Do you recall what did it say about the validity of the TRO in terms of compliance with Rule 65 or not?

[00:19:16] Speaker 04:
Did it make an argument that the TRO was improper because Rule 65 was not complied with in either

[00:19:27] Speaker 04:
Either filing, right?

[00:19:28] Speaker 04:
It made a filing opposing the PI?

[00:19:31] Speaker 01:
It made a filing opposing the PI.

[00:19:33] Speaker 04:
And then obviously made a filing in support of its fees request.

[00:19:38] Speaker 01:
Correct.

[00:19:40] Speaker 01:
I don't believe they argued in the court below that the TRO was improper.

[00:19:52] Speaker 01:
But with regard to the notice,

[00:19:57] Speaker 01:
We gave PayPal the information regarding our contact information and the court order.

[00:20:04] Speaker 01:
That was given on September 22nd.

[00:20:07] Speaker 01:
On September 23rd, PayPal sent out a notice to its customers that had a typo

[00:20:15] Speaker 01:
in our email address.

[00:20:18] Speaker 01:
We found out about that typo later on the 23rd when folks reached out to us through the general email address on our website.

[00:20:30] Speaker 01:
We set up another email account to receive emails sent to that typo address.

[00:20:37] Speaker 01:
We also requested PayPal send out another notification with the correct email address.

[00:20:43] Speaker 01:
And PayPal confirmed that they did that to us on the 25th, so two days after they sent out the email with their mistake in it.

[00:20:59] Speaker 01:
So if NeoMagic wasn't able to reach us, other defendants did.

[00:21:08] Speaker 01:
And the reason they couldn't reach us was a lack of effort on their part.

[00:21:13] Speaker 01:
Okay.

[00:21:18] Speaker 04:
You happen to know, has the third circuit specifically held that the kind of rule 41 voluntary dismissal that you effectuated here is not one that entitles the other side to be a prevailing party?

[00:21:42] Speaker 01:
I believe the case law is pretty clear on that, Your Honor, including federal circuit cases.

[00:21:51] Speaker 04:
But on that question, at least outside the Title 35 context, that would not be our law.

[00:21:58] Speaker 04:
That would be Third Circuit law.

[00:21:59] Speaker 01:
That's what happened.

[00:22:00] Speaker 01:
That is correct.

[00:22:02] Speaker 04:
I mean, it's at least one old, pre

[00:22:04] Speaker 04:
What is it Buchanan?

[00:22:05] Speaker 04:
I don't remember the name.

[00:22:06] Speaker 04:
The Supreme Court case that came out in early 2000s, there's a third circuit case about the counterpart language in Rule 54D, which is just costs, not attorneys fees, but it's counterpart language that goes the other way, right?

[00:22:25] Speaker 01:
It's not ringing available to me, Your Honor.

[00:22:30] Speaker 01:
Okay.

[00:22:30] Speaker 01:
I mean, our research has shown that,

[00:22:34] Speaker 01:
Rule 41, voluntary dismissal before an answer has been served does not entitle one to be a prevailing party.

[00:22:44] Speaker 01:
It is a dismissal without prejudice.

[00:22:49] Speaker 01:
You had referenced in Mr. Oliver's opening remarks the pair of ABC cases.

[00:22:57] Speaker 01:
I am familiar with the facts in those cases.

[00:23:00] Speaker 01:
And those cases did start off with a temporary restraining order and then a preliminary injunction.

[00:23:07] Speaker 04:
Right.

[00:23:07] Speaker 04:
But the litigation there was about, I mean, on appeal.

[00:23:11] Speaker 04:
The challenges were about the preliminary injunction, not about the TRO.

[00:23:14] Speaker 01:
That's correct.

[00:23:22] Speaker 01:
Most of NeoMagic's

[00:23:24] Speaker 01:
arguments center around defenses it contends it has to our claims.

[00:23:30] Speaker 01:
I'll run through each of those claims in our responses to their defenses.

[00:23:37] Speaker 01:
But what NeoMagic ignores are two critical themes that run through the district court's decision.

[00:23:45] Speaker 01:
First, NeoMagic's arguments and briefs try to quietly skip past the fundamental nature of its conduct.

[00:23:51] Speaker 01:
NeoMagic advertised and sold a product that is nearly, if not completely, identical in form, and did so by using our photographs, including photographs actually taken by the principal of Gorge Design, Kirby Erderly.

[00:24:07] Speaker 01:
NeoMagic doesn't even try and deny these facts.

[00:24:11] Speaker 01:
Thus, the essence of NeoMagic's position is that it can make a knockoff imitation product

[00:24:17] Speaker 01:
pirate our pictures to confuse consumers into believing they are buying our product and that there should be no legal consequence for this behavior.

[00:24:26] Speaker 01:
And second, a motion for attorney's fees is not- I'm sorry.

[00:24:30] Speaker 04:
And they have various arguments about why, even though you might not think so, that that's actually a quite correct statement of the law.

[00:24:42] Speaker 04:
That is, you can't, I think you didn't, but you can't assert a copyright claim without having registration.

[00:24:49] Speaker 04:
That's correct.

[00:24:49] Speaker 04:
And you haven't identified that.

[00:24:52] Speaker 04:
Their view is that plurality on the patent claim means more than one, not whatever the spec might suggest about how each turn of a single screw is a separate thread, that there's no

[00:25:11] Speaker 04:
unfair competition based on at least 1145 or Title 15 or other aspects of the Lanham Act without just because the product looks the same and maybe even trade dress under the Supreme Court's case law can't qualify just by, as you say, the form of the product?

[00:25:37] Speaker 01:
They have a series of arguments, and those are all arguments on the merits.

[00:25:41] Speaker 01:
The second theme in the district court's decision denying the motion for attorney's fees is the motion for attorney's fees

[00:25:48] Speaker 01:
is not the form to adjudicate their claims on the merits.

[00:25:54] Speaker 04:
Well, of course not to adjudicate them on the merits in full.

[00:25:58] Speaker 04:
But if the standard is something like bad faith, then we can see if the merits are so apparently weak.

[00:26:10] Speaker 04:
That is actually part of the job if you get past prevailing party and so on.

[00:26:15] Speaker 01:
Well, the district court did determine

[00:26:18] Speaker 01:
that Gorge Design had a legitimate purpose in bringing its case, and whether Gorge Design would have ultimately prevailed on its claim isn't what was before the court, and it's not what's before this court.

[00:26:32] Speaker 01:
So after carefully evaluating the conduct of the parties, the district court found Gorge Design had not engaged in bad faith, vexatious, or wanton conduct.

[00:26:45] Speaker 01:
The district court didn't stop there.

[00:26:47] Speaker 01:
It added.

[00:26:48] Speaker 01:
Perhaps NeoMagic itself has approached across that line, and it's zealed to obtain fees.

[00:26:57] Speaker 01:
Briefly, what NeoMagic did is they used 15 photographs.

[00:27:05] Speaker 01:
Every single photograph they used on their listing was a photograph of Gorge Design.

[00:27:14] Speaker 01:
And the way people shop today is they

[00:27:19] Speaker 01:
go to Amazon, they go to a brick and mortar store, and then they look at the product, and then they try and find the product at a lesser price.

[00:27:31] Speaker 01:
So when you are using the photographs, what you're doing is creating market confusion.

[00:27:40] Speaker 01:
I have a few examples of the photographs that they used.

[00:27:45] Speaker 01:
This is a photograph of Buford the dog, which is owned by the owner of the local coffee shop in Bingham, Washington, which is where Gorge Design is based.

[00:27:58] Speaker 01:
This is a montage of photographs which include Suki the dog, which is the dog owned by the mother of Kirby Hurderly, the principal of Gorge Design.

[00:28:10] Speaker 01:
And the only purpose of using these dogs

[00:28:15] Speaker 01:
is to make consumers think it's the same product.

[00:28:20] Speaker 01:
When they see those dogs, they're thinking that it's the product, because the dog has no rational relationship to the product, and there's no possible reason to use the dog's image except to create market confusion.

[00:28:37] Speaker 01:
And there's a long line of 43A cases.

[00:28:42] Speaker 01:
So the district court did not abuse its discretion in denying NeoMagic's motion for attorney's fees.

[00:28:50] Speaker 01:
Again, the district court wove through its decision two themes.

[00:28:55] Speaker 04:
I think your time has run out, and it's beginning to sound repetitive to me.

[00:29:01] Speaker 04:
So I think I'd like to hear rebuttal from you.

[00:29:04] Speaker 01:
If I may state two more sentences.

[00:29:09] Speaker 01:
OK, go ahead.

[00:29:09] Speaker 01:
Nothing highlights the district court's concern about NeoMagic's conduct than the fact that NeoMagic was dismissed from the case three days after its counsel was retained, yet NeoMagic believes it is entitled to an award of over $57,000 in attorney's fees.

[00:29:27] Speaker 01:
For these reasons, we respectfully request that this court affirm the district court's decision denying NeoMagic's motion for attorney's fees.

[00:29:37] Speaker 00:
Thank you your honor first Very briefly I want to address two factual assertions made by council that are not part of the record and that are new to us today an alleged second sale by it to a frustrated owner and an alleged second email from PayPal neither of those are in the record and

[00:29:58] Speaker 00:
And neither of those are here before us today.

[00:30:04] Speaker 00:
The news of the second email is completely shocking to me, as is the second sale, where my client offered a declaration saying that only one sale was made.

[00:30:16] Speaker 00:
What we're looking at here is a case where a company has a product that looks a certain way, and they don't want anybody to be able to compete in the market with them.

[00:30:26] Speaker 00:
without a patent that covers it, without a copyright on their photographs, without a trademark that's even arguably used.

[00:30:35] Speaker 00:
Page 26 in our opening brief, we put in a diagram showing the photos and showing that we're used.

[00:30:42] Speaker 02:
You know you're just re-arguing the facts.

[00:30:44] Speaker 02:
We're here on an abuse of discretion standard.

[00:30:47] Speaker 02:
So re-arguing the facts is not going to do you any good.

[00:30:49] Speaker 02:
You have to explain how the facts are so disproportionately in your favor that the district court abused its discretion.

[00:30:56] Speaker 00:
Exactly.

[00:30:57] Speaker 00:
So Your Honor, on page 27 and 28 of our opening brief, we point to the Supreme Court's statements about unfair competition.

[00:31:06] Speaker 00:
And the Supreme Court says, unless an intellectual property rights such as a patent or copyright protects an item, it's subject to copying.

[00:31:16] Speaker 00:
This is in the context of unfair competition, as was alleged here.

[00:31:22] Speaker 00:
The district court abused its discretion by not applying the legal standards here.

[00:31:27] Speaker 00:
It said, the district court said, you sold a product that looks like theirs.

[00:31:32] Speaker 00:
You use their photos without any concern to what are the legal standards.

[00:31:39] Speaker 00:
Is the product patented?

[00:31:41] Speaker 00:
Is there an actual trademark?

[00:31:44] Speaker 00:
Are there copyrights on the photos?

[00:31:47] Speaker 00:
Is it an inferior product?

[00:31:49] Speaker 00:
There's no suggestion of any of that here, and the district court

[00:31:56] Speaker 00:
abused discretion by implying the improper standards as the... Well, it's abused its discretion to use its inherent authority.

[00:32:05] Speaker 03:
Isn't that what you're saying?

[00:32:08] Speaker 03:
Because you don't have any... You haven't made a strong argument that you have any statutory basis for attorney's fees.

[00:32:18] Speaker 03:
What I hear you saying, I mean, your brief actually asked us to invoke our inherent authority at the appellate level.

[00:32:24] Speaker 00:
No.

[00:32:24] Speaker 03:
I believe.

[00:32:25] Speaker 00:
No, Your Honor, that's what the appellee said that we said.

[00:32:30] Speaker 00:
Our brief actually said that we wanted you to reverse the district court by finding that the district court abused discretion in not applying its own inherent authority.

[00:32:44] Speaker 03:
The Third Circuit case law, and that's its own inherent authority, would depend on it

[00:32:50] Speaker 03:
agreeing with you that this was this nature of this litigation itself is abusive at its core?

[00:32:58] Speaker 00:
Not just the nature, but also the specific facts of the entire litigation.

[00:33:02] Speaker 00:
As we pointed out in our reply brief at page 8, I believe, the Third Circuit says where the district court improperly applies or identifies the legal... That's for the district court to abuse this discretion in that respect.

[00:33:18] Speaker 03:
You'd have to point to

[00:33:21] Speaker 03:
clear error in a fact-finding or a misapplication of law.

[00:33:28] Speaker 00:
Yes, and we believe we did, Your Honor, in that we pointed out the district court applied the product to another product, not to the patent claims, that the district court looked at the color and the shape of the product rather than looking at the words in the alleged trademark, that the district court looked at these photos and said you use their photos

[00:33:49] Speaker 00:
that are not copyrighted.

[00:33:50] Speaker 00:
There's no suggestion or evidence that the photos are copyrighted.

[00:33:53] Speaker 00:
The Supreme Court has said they have to be patented or copyrighted or trademarked to fall into unfair competition.

[00:34:01] Speaker 00:
So the district court applied the wrong legal criteria in all instances by just looking at the product and saying, you use their photos.

[00:34:11] Speaker 00:
As you saw here, these were photos of dogs.

[00:34:14] Speaker 00:
They don't even show the product.

[00:34:16] Speaker 00:
There's no suggestion of the product in the photo of the dog.

[00:34:20] Speaker 00:
There's other photos of tents that don't show the product.

[00:34:25] Speaker 04:
So I think you've more than used your rebuttal, so we're going to take the case under submission.

[00:34:33] Speaker 00:
Thank you, Your Honor.