[00:00:00] Speaker 03:
Our next case is in Guran.

[00:00:04] Speaker 03:
The business says S.T.

[00:00:05] Speaker 03:
Genetics versus A.B.S.

[00:00:07] Speaker 03:
Global.

[00:00:08] Speaker 03:
2022-13-85 Mr. Chin.

[00:00:15] Speaker 01:
May it please the court, Julius Genfer, Appellant Inger and LLC, also known as ST.

[00:00:21] Speaker 01:
In ABS 1, ABS stipulated to the only infringement claim at issue, namely direct infringement.

[00:00:28] Speaker 01:
On its face, the judgment that the parties negotiated to address that infringement, referring to, quote, a straw of sex semen sold by ABS, end quote, does not grant ABS the right to sub-license the 987 patent.

[00:00:42] Speaker 03:
Well, it was certainly a forward ongoing royalty.

[00:00:47] Speaker 01:
That's true, Your Honor.

[00:00:48] Speaker 03:
It had to include something, and it seemingly was based in part on the expert's report, which talked about licensing and sales.

[00:00:57] Speaker 01:
Well, Your Honor, first of all, I think we would first go to the language of what the royalty is.

[00:01:04] Speaker 01:
And we think that on its face, when we're talking about straws of sex semen that are being sold by us, that just doesn't map on to a licensing

[00:01:13] Speaker 01:
or a sale of a GSS machine.

[00:01:16] Speaker 01:
Remember, it's a straw sold by ABS.

[00:01:19] Speaker 01:
It is not a machine sold by ABS.

[00:01:21] Speaker 01:
I think that is the difference as well.

[00:01:23] Speaker 01:
And when we're talking about ABS licensing to a third party, it's GSS technology for a third party to use.

[00:01:32] Speaker 01:
ABS is not selling a straw.

[00:01:35] Speaker 01:
And so it just doesn't match the language.

[00:01:37] Speaker 01:
But even if you want to say that this language could be interpreted in any other way and you have some doubt, we think that the judgment has to be read in a way that avoids running into legal limitations that are set forth in this court's precedent.

[00:01:52] Speaker 01:
And first and foremost, I would go to the rightness concern that is very prevalent here.

[00:01:57] Speaker 01:
What we have in this case is ABS basically coming to court and in its opening statement it tells the jury what it wants to do is to deal with semen from its own bulls

[00:02:15] Speaker 01:
And to provide a sorting service to other bull studs that refers to ABS actually performing the method and the evidence that ABS offers in terms of whether or not it's induced infringement and sub licensing claim would have been ripe for ST at this point is

[00:02:35] Speaker 01:
a document that is internal facing and which its deponent actually admits is an internal brainstorming document.

[00:02:44] Speaker 01:
That's Appendix 3347.

[00:02:47] Speaker 01:
That is not enough under this court's precedent.

[00:02:51] Speaker 01:
What the court's precedent says is that you have to have a concrete step

[00:02:55] Speaker 01:
to induce, and you have to take meaningful preparation to induce.

[00:03:00] Speaker 01:
And so there's no bright line rule.

[00:03:03] Speaker 01:
It is case specific.

[00:03:04] Speaker 01:
But the court's precedents, like Cat Tech, give plenty of examples of those types of concrete steps, for example, drafting literature.

[00:03:14] Speaker 01:
And here, we simply have the opposite of that.

[00:03:19] Speaker 01:
You have a brainstorming document.

[00:03:21] Speaker 01:
And if there's any doubt, you don't have to take my word on this.

[00:03:26] Speaker 01:
I think it's telling that both the district court and ABS use the word considering.

[00:03:32] Speaker 01:
If you look at the court's decision below at Appendix 6, and you look at ABS's brief at page 10, they say that what that evidence shows is that ABS was considering three different models.

[00:03:46] Speaker 01:
Under this court's decision in the Association for Molecular Pathology, this is cited on page seven of our reply brief, it says that the word considering, if you are considering engaging in infringing activity, that is a classic case of something that is not right.

[00:04:05] Speaker 01:
Beyond the rightness concerns, I think you can see all of this reflected very easily as well in the trial record.

[00:04:14] Speaker 01:
I think the foundational fact to understand here is that there is a stipulation

[00:04:20] Speaker 01:
to direct infringement.

[00:04:22] Speaker 01:
There is no litigation over infringement itself.

[00:04:26] Speaker 01:
The only things that went to trial were the invalidity defenses and damages.

[00:04:30] Speaker 01:
So the baseline for what everybody is talking about, what the expert is talking about is... Am I correct that at some point you obtained an injunction, correct?

[00:04:40] Speaker 02:
Is that right?

[00:04:41] Speaker 01:
Well, Your Honor, we obtained royalty, so yes.

[00:04:46] Speaker 04:
In lieu of an injunction, that is basically the same.

[00:04:49] Speaker 04:
Yes, correct.

[00:04:52] Speaker 02:
And an injunction enjoins, you can say that an injunction enjoins future conduct.

[00:05:01] Speaker 01:
Yes, that's true, Your Honor.

[00:05:04] Speaker 02:
Why couldn't we have sought or extended this injunction to cover the sale of the technology itself?

[00:05:12] Speaker 01:
Well, Your Honor, I don't think that speaks to the rightness concern.

[00:05:15] Speaker 01:
It certainly doesn't solve that.

[00:05:16] Speaker 01:
Parties cannot go into court and say, hey, look, we have a direct infringement claim.

[00:05:21] Speaker 01:
We'd like to fold other things into the judgment.

[00:05:23] Speaker 01:
I think under this court's precedent, that's both an Article III problem and I think a district court, if it knew that was happening, would say, no, you can't come and litigate something that's not actually right.

[00:05:35] Speaker 02:
You can come in and say, I have evidence to show that

[00:05:41] Speaker 02:
that the ABS is going to engage in this type of conduct.

[00:05:45] Speaker 02:
It's immediate.

[00:05:46] Speaker 02:
It's going to harm me.

[00:05:47] Speaker 02:
And it's against the public interest, all the classical elements of an injunction.

[00:05:52] Speaker 02:
Why couldn't you have done that?

[00:05:53] Speaker 01:
Well, Your Honor, because by ABS's own admission, they were only considering engaging in that contact.

[00:06:00] Speaker 01:
And we don't disagree about the prospective nature of the case.

[00:06:06] Speaker 01:
But I think maybe it can be clarified by looking at the fact that the direct infringement claim

[00:06:13] Speaker 01:
Yes, there was a prospective remedy for that.

[00:06:15] Speaker 01:
But the reason there was a prospective remedy for that is because ABS stipulated to direct infringement.

[00:06:22] Speaker 01:
It said at trial that we would be competing today in terms of using the GSS technology ourselves.

[00:06:29] Speaker 01:
This is at appendix 4251.

[00:06:32] Speaker 01:
And with respect to past infringement as well, they had, of course, already conducted the field trials.

[00:06:38] Speaker 01:
This is appendix 30 at 14, where they explained that in the trial record.

[00:06:41] Speaker 01:
And so I think there was a stark contrast by saying, well, look, there is some future infringement that's going to happen.

[00:06:50] Speaker 01:
Direct infringement was both stipulated to.

[00:06:53] Speaker 01:
And ABS said very clearly, we are going to continue doing this.

[00:06:57] Speaker 01:
So you need an ongoing royalty that covers that conduct.

[00:07:01] Speaker 01:
By contrast, you cannot say the same thing about sub-licensing.

[00:07:06] Speaker 04:
Now, suppose that the parties had agreed

[00:07:09] Speaker 04:
contemplation of the possibility that there would be this sub-licensing arrangement have agreed to a form of judgment that did include the sales by third parties of goods that were made pursuant to the technology, the licensed technology.

[00:07:28] Speaker 04:
Would there be any inherent flaw in that judgment?

[00:07:31] Speaker 01:
Well, Your Honor, as long as it would satisfy the rightness concerns, then.

[00:07:36] Speaker 04:
Well, but that sort of begs the question.

[00:07:38] Speaker 04:
The question, sure.

[00:07:40] Speaker 04:
Would you say that that sort of judgment would go beyond what would be permissible for under Article III to have a judgment that affects conduct that has not yet gone beyond the stage of consideration?

[00:07:58] Speaker 01:
Not if it hasn't gone beyond the stage of consideration, because I think that raises the Article III problem squarely.

[00:08:07] Speaker 04:
So you're saying that that kind of agreed upon judgment would have been impermissible?

[00:08:15] Speaker 01:
Yes, Your Honor.

[00:08:16] Speaker 01:
I think as a matter of Article III, and also as a matter of this case law, this Court has said time and again, and has actually admonished district courts for going beyond what was actually mitigated in the case.

[00:08:28] Speaker 01:
And so they've said, you know, you can't just say anything that infringes the patent can be included in the injunction.

[00:08:37] Speaker 01:
So there are legal limits here that go to what can be folded into the judgment.

[00:08:44] Speaker 01:
Again, the courts are not permitted to just sort of say, look, we're going to have a private agreement about something that may or may not happen in the future, that somebody is only considering.

[00:08:57] Speaker 01:
That is the classic formulation, in our view, of what is impermissible in the judgment.

[00:09:04] Speaker 01:
I'm also happy to talk about the expert report, which has been brought up.

[00:09:14] Speaker 01:
You know, I'd start with the evidence of the other potential expansion opportunities.

[00:09:21] Speaker 01:
I actually think this cuts in our favor.

[00:09:24] Speaker 04:
When the expert is talking... This is Shuttlecoat or Shuttlecotti?

[00:09:28] Speaker 04:
Yes, that's, yeah.

[00:09:30] Speaker 01:
Sure, sure.

[00:09:31] Speaker 01:
What's the pronunciation?

[00:09:32] Speaker 01:
I believe it's Shuttlecotti?

[00:09:34] Speaker 01:
Shuttlecotti, okay.

[00:09:35] Speaker 01:
Sure.

[00:09:36] Speaker 01:
And so what the expert is saying here is that

[00:09:41] Speaker 01:
I'm providing an opinion on direct infringement.

[00:09:45] Speaker 01:
That's the baseline for his opinion.

[00:09:47] Speaker 01:
That's what's been stipulated to.

[00:09:49] Speaker 01:
And so he is providing damages and royalty analysis specific to that infringement.

[00:09:58] Speaker 01:
consistent with Georgia Pacific, Factor 6, he says, well, what are other, other is the key word, other expansion opportunities?

[00:10:05] Speaker 01:
And so while ABA says, well, this is just evidence that licensing was actually compensated for and that a sub-licensing right was actually granted here, that's simply not true.

[00:10:17] Speaker 01:
On its face, the reasoning under Factor 6 is that you take other opportunities

[00:10:23] Speaker 01:
and factor that into their royalty.

[00:10:26] Speaker 01:
Other distinguishes, it's the non-patented activity at issue.

[00:10:31] Speaker 01:
I think the same thing can be said of their emphasis on the word unrestricted.

[00:10:35] Speaker 01:
Unrestricted does not mean that you have a sub-licensing right when what is being litigated is direct infringement.

[00:10:43] Speaker 01:
And in fact, if you look at Appendix 828,

[00:10:46] Speaker 01:
The expert refers to ABS's use of GSS technology.

[00:10:54] Speaker 01:
That doesn't say anything about other third parties using the technology.

[00:10:59] Speaker 01:
So we just don't think that the word unrestricted can be read in that way.

[00:11:08] Speaker 01:
The last thing I'd say, barring further questions, Your Honors, is that even if you were to think that the judgment could be read in various ways, what the district court did here is he said, look, I think it's reasonable for the judgment to encompass.

[00:11:24] Speaker 01:
Well, reasonableness, we think, has legal limits here.

[00:11:27] Speaker 01:
And those are the rightness concerns and the Rule 65 concerns that we think should constrain the judgment.

[00:11:32] Speaker 01:
And so if there is any way to read the judgment in our favor, we certainly think it reads in our favor according to the plain text.

[00:11:41] Speaker 01:
But even if you think there is some sort of ambiguity in the words straw sold by ABS, you should read it to avoid those Article III and Rule 65 types of limitations.

[00:11:52] Speaker 04:
This is a factual matter.

[00:11:55] Speaker 04:
Has the sub-licensing and sales by third parties, has that already occurred?

[00:12:02] Speaker 04:
in this case, to your knowledge?

[00:12:04] Speaker 01:
To my knowledge, yes.

[00:12:05] Speaker 04:
And when did that start, to your knowledge?

[00:12:08] Speaker 01:
To my knowledge, sometime after the judgment was entered.

[00:12:12] Speaker 01:
After 2017.

[00:12:13] Speaker 01:
Yes, correct.

[00:12:15] Speaker 04:
And presumably, there's been no payment for those sales?

[00:12:23] Speaker 01:
Your Honor, that's unclear to me.

[00:12:24] Speaker 01:
Mr. Horowitz may know better on that.

[00:12:31] Speaker 03:
Mr. Horowitz.

[00:12:33] Speaker 03:
And we'll give you three minutes back for a bottle.

[00:12:41] Speaker 04:
Mr. Trink.

[00:12:41] Speaker 04:
Could you, at the outset, could you clarify for me the question, the factual question of whether, when this started, this licensing and sales by third parties, and whether

[00:12:55] Speaker 04:
Any payments have been made?

[00:12:57] Speaker 04:
I assume not, but maybe you can clarify that.

[00:13:00] Speaker 04:
Why ABS to ST pursuant to those sales?

[00:13:04] Speaker 00:
So I'm going to try to be clear about what's in the record and what's not as I answer the question.

[00:13:07] Speaker 00:
I do know the answer to the question.

[00:13:09] Speaker 00:
So what's in the record is that, for sure, there's a foreign licensing in Europe.

[00:13:16] Speaker 04:
We understand.

[00:13:16] Speaker 00:
You understand that.

[00:13:17] Speaker 00:
Payments have been made for that, and the judge decided.

[00:13:19] Speaker 04:
Pursues right after the district judge injured an order.

[00:13:22] Speaker 04:
directing that payments be made for those.

[00:13:24] Speaker 00:
Correct.

[00:13:25] Speaker 04:
And how about the licensing?

[00:13:27] Speaker 04:
And just to be clear, incorporated domestic licensing for which straws were sold by third parties.

[00:13:35] Speaker 00:
OK.

[00:13:35] Speaker 00:
And that was incorporated into the judgment.

[00:13:37] Speaker 00:
That's the preclusive one.

[00:13:38] Speaker 00:
That's the Europe one.

[00:13:39] Speaker 00:
In terms of domestic licensees, the record as it comes to the court is that there is no known existence of any licensing to date of domestic licensees.

[00:13:49] Speaker 00:
So there hasn't been.

[00:13:50] Speaker 00:
That's what the record is.

[00:13:52] Speaker 00:
They have in their preliminary injunction papers a supposition that it has happened, that there's been offers.

[00:13:59] Speaker 00:
They have a declaration from Juan Moreno that's in the appendix about how he heard that there's been some offers.

[00:14:05] Speaker 00:
As the case comes to the court, there's no evidence of such licensing yet occurring.

[00:14:10] Speaker 00:
The status of payments is actually even more complicated.

[00:14:13] Speaker 00:
And it's beyond the record, but also, for confidentiality reasons, have limits to what I can say.

[00:14:18] Speaker 00:
The parties have settled the judgment in ABS 1.

[00:14:21] Speaker 00:
So in terms of the ongoing royalty today, there's no payments.

[00:14:24] Speaker 00:
There is a settlement that has resulted.

[00:14:28] Speaker 04:
Was it a settlement that the parties incorporated the question of licensing and third party sales into the settlement?

[00:14:41] Speaker 00:
The only thing that's public that I can say is that the judgment has been satisfied.

[00:14:48] Speaker 00:
Yeah, I mean, I'm sorry.

[00:14:49] Speaker 04:
The judgment asked construed by Judge Connolly, or the judgment as?

[00:14:52] Speaker 00:
That's how I would read it, but they might read it differently.

[00:14:54] Speaker 00:
OK.

[00:14:55] Speaker 00:
So that's where it is.

[00:14:56] Speaker 00:
Judge Raina, I'd like to start with the question that you raised, because couldn't they have asked for this royalty on an ongoing basis?

[00:15:02] Speaker 00:
Our position is that they absolutely did.

[00:15:04] Speaker 00:
They decided in ABS 1 to litigate the question of the licensing program.

[00:15:09] Speaker 00:
Now, they say it's unripe.

[00:15:11] Speaker 00:
They couldn't possibly have done it, but that's not what they told the jury.

[00:15:14] Speaker 02:
At that time, was there evidence that DOS

[00:15:17] Speaker 00:
So that the key evidence that I would point you to which is that I believe during appendix page five eight Excuse me five seven eight five what their damages expert told the jury What the damages expert told the jury is that AVS decided decided past tense when they commercialized the technology they would offer licenses and

[00:15:39] Speaker 00:
Didn't say it in the abstract.

[00:15:40] Speaker 00:
They said it very specifically to three customers by name, Kogent, Cimex, Goyaki.

[00:15:46] Speaker 00:
Then the damages expert went on to say, and they had a projected royalty rate, $2.05.

[00:15:50] Speaker 00:
So the idea that this is an abstract, someday-infringed concept is totally inconsistent with the evidence that was before the jury.

[00:15:58] Speaker 04:
But that meant to the question of what the right royalty rate is, i.e.

[00:16:02] Speaker 04:
compare with other royalty rates, including the 205, right?

[00:16:06] Speaker 04:
That didn't go to the question of whether

[00:16:11] Speaker 04:
of inducement.

[00:16:12] Speaker 04:
As I understand it, there was no inducement presented to the jury, no instructions on inducement.

[00:16:18] Speaker 04:
The jury was not asked to rule on inducement.

[00:16:21] Speaker 04:
This was a direct infringement case from beginning to end, was it not?

[00:16:24] Speaker 00:
Well, when you say from beginning to end, that includes the judgment in 2020.

[00:16:27] Speaker 00:
That clearly includes at least what you... You know, beginning to end of the trial.

[00:16:31] Speaker 04:
When this trial ended, the determination was made with respect to direct infringement.

[00:16:36] Speaker 04:
There was never any instruction or

[00:16:40] Speaker 00:
Verdict as I understand it There was no instruction on any infringement infringement was stipulated well for passing with respect to future infringement Which is the subject of the reasonable royalty right that's an injunction first of all that's the nature of the order the district judge is the one who entered the order and

[00:16:58] Speaker 00:
And they entered it based on a royalty that was decided by the jury for future infringement.

[00:17:04] Speaker 00:
What kind of future infringement?

[00:17:05] Speaker 00:
The only thing that had happened so far is direct infringement for internal research purposes.

[00:17:10] Speaker 00:
The future royalty was based on activities that were all planned future activities.

[00:17:15] Speaker 00:
And the number might say their position is it would have been higher for inducement and lower for direct.

[00:17:21] Speaker 00:
They could have made that argument.

[00:17:22] Speaker 00:
They could have asked for different rates.

[00:17:24] Speaker 00:
They asked for one blended rate based on all of the anticipated uses of the technology.

[00:17:28] Speaker 00:
And this wasn't just like a hypothetical.

[00:17:30] Speaker 00:
It might happen.

[00:17:31] Speaker 00:
And we want to think about it.

[00:17:33] Speaker 04:
It strikes me if the idea of inducement was really in the parties' minds at that point.

[00:17:40] Speaker 04:
If that was really part of the way the parties viewed the litigation, including Judge Connick.

[00:17:46] Speaker 04:
The judgment would not have said sold by ABS.

[00:17:50] Speaker 04:
That language sounds very restrictive to me.

[00:17:53] Speaker 04:
It doesn't seem like it includes, and by third parties, pursuant to the use with the permission of ABS technology.

[00:18:03] Speaker 00:
So I'd say a couple of things about that.

[00:18:04] Speaker 00:
First, as the evidence came in, it wasn't an afterthought.

[00:18:08] Speaker 00:
It was a key sort of thematic point.

[00:18:09] Speaker 00:
They used the words, they're planning to displace XY, which is the company that licenses the technology to ST.

[00:18:15] Speaker 00:
They're planning to displace XY with their own technology and go to XY's licensees and take them away.

[00:18:21] Speaker 00:
It's not an abstract background concern.

[00:18:22] Speaker 00:
It's part of it.

[00:18:23] Speaker 00:
And what about the language?

[00:18:25] Speaker 00:
The language sold by, if you're just coming to this fresh with no background on the case or on the law,

[00:18:30] Speaker 00:
I grant you it might be read that way.

[00:18:32] Speaker 00:
But there are a few things cutting the other direction.

[00:18:34] Speaker 00:
First, we know from page 1522 of the Joint Appendix that the parties didn't restrict it to literally straws sold by ABS.

[00:18:41] Speaker 00:
They included straws sold by third parties for whom ABS did the processing.

[00:18:45] Speaker 00:
And they treated the processing event as the same.

[00:18:48] Speaker 00:
No, I'm talking about domestic processing for third parties.

[00:18:52] Speaker 00:
with the fee-for-service model, which is both of these hadn't happened.

[00:18:56] Speaker 00:
There hadn't been a single customer for fee-for-service, and there hadn't been a single customer for licensing.

[00:19:01] Speaker 00:
These were two alternative go-to-market strategies.

[00:19:04] Speaker 00:
In the same document that Mr. Chan identified as hypothetical, there were different go-to-market strategies.

[00:19:10] Speaker 00:
One was fee-for-service, one was licensing.

[00:19:13] Speaker 00:
Neither had happened.

[00:19:14] Speaker 00:
Both are part of the judgment.

[00:19:15] Speaker 00:
It's undisputed that fee-for-service is, and we have that record at 1522 where we confirm it.

[00:19:21] Speaker 00:
And then the foreign licensee point, that's part of the judgment.

[00:19:25] Speaker 00:
Now, Judge Bryson, you might have viewed it differently if you were the district court entering the judgment in the first instance.

[00:19:31] Speaker 00:
You might have used different language.

[00:19:32] Speaker 00:
But this district judge understood his own order to encompass production by foreign licensees that are then incorporated into the US.

[00:19:39] Speaker 00:
So he's imported into the US.

[00:19:41] Speaker 00:
And that's incorporated into the judgment already expressly in the 2020 re-entry, which is the preclusive judgment here.

[00:19:48] Speaker 00:
So we have an undisputed fee-for-service as part of sold.

[00:19:52] Speaker 00:
That's not selling, but it counts.

[00:19:54] Speaker 00:
We have undisputed importation of foreign-licensed seed production.

[00:19:59] Speaker 00:
Doesn't sound like sold, but it counts.

[00:20:02] Speaker 00:
And we have ST's own position below, which they can see it again on the field.

[00:20:05] Speaker 04:
The formal processing, if that's what you're referring to.

[00:20:09] Speaker 04:
processed overseas and returned to the US for sale by ABS.

[00:20:14] Speaker 04:
So that's sold by ABS, surely.

[00:20:19] Speaker 04:
Yes.

[00:20:19] Speaker 00:
It is within the scope of the judgment, and I agree with you.

[00:20:23] Speaker 00:
That's fine.

[00:20:24] Speaker 00:
And it's incorporated in the scope of the judgment, even though foreign licensee processing wasn't part of it.

[00:20:28] Speaker 00:
And their position was that this wasn't known at the time.

[00:20:32] Speaker 00:
That has been determined, and it is preclusively determined.

[00:20:34] Speaker 00:
The last point is their position below

[00:20:38] Speaker 00:
and they conceded on appeal as well, is that sold by, in this context, they cite the case Transocean, which is cited throughout the briefs.

[00:20:43] Speaker 00:
It's a district court case.

[00:20:45] Speaker 00:
Sold is ordinarily understood to include things like licenses and leases.

[00:20:49] Speaker 04:
And Transocean, that's Judge Rosenpol's case, right?

[00:20:52] Speaker 00:
I believe that's right.

[00:20:53] Speaker 04:
And that's a case in which you're talking about whether licensing a machine is equivalent to selling the machine.

[00:21:01] Speaker 04:
not licensing a machine which results in sales by someone else is equivalent to sales of the things sold by the licensed source.

[00:21:12] Speaker 00:
So the context of the licensing here is actually quite similar to the parallel that you were just drawing in the Rosenthal case.

[00:21:19] Speaker 00:
So when we talk about fee-for-service model and a licensee model, let me describe what happens on the ground.

[00:21:24] Speaker 00:
In either event, ABS makes the machine.

[00:21:27] Speaker 00:
It's the same machine, it's the accused technology.

[00:21:30] Speaker 00:
They make the machine.

[00:21:31] Speaker 00:
The customer doesn't make it.

[00:21:32] Speaker 00:
For both models, ABS makes the machine, they deliver it to the customer.

[00:21:37] Speaker 00:
In both models, a fee-for-service model or a licensee model,

[00:21:41] Speaker 00:
And this is throughout the ABS-1 trial record.

[00:21:43] Speaker 00:
Because of the nature of the animal genetics at play, you want the machines close to the animals.

[00:21:48] Speaker 00:
So if the animals are in a different state, ABS will make the machine, deliver it to the customer's location in a different state.

[00:21:54] Speaker 00:
And that's ST's whole business.

[00:21:56] Speaker 00:
They do the same thing.

[00:21:58] Speaker 00:
In a fee-for-service model, the machine sits at the customer's location.

[00:22:02] Speaker 00:
It's operated by people who are paid by ABS and are instructed by ABS how to operate the machine.

[00:22:09] Speaker 00:
In a licensee model,

[00:22:11] Speaker 00:
The same machine sits in the same spot, right?

[00:22:15] Speaker 00:
But it's operated by people who are paid by the customer and instructed by ABS how to operate it.

[00:22:21] Speaker 00:
So it's not like a sub-licensing arrangement where it's, we're just licensing the technology and see you later.

[00:22:27] Speaker 00:
It's really a function of the same exact activity undertaken by people who are wearing ABS name tags or wearing a different name tag.

[00:22:35] Speaker 04:
So it's much more like the vertical-side situation.

[00:22:40] Speaker 04:
In this case, if ABS were to hire a much larger staff in order to deal with the problem of trying to have a wider distribution, rather than doing licensing, there'd be no doubt that the sales by ABS pursuant to their larger staff would be covered.

[00:23:04] Speaker 04:
It does matter who's doing the actual selling.

[00:23:07] Speaker 00:
So this goes to sort of a point of basic economics as they describe it in their briefing.

[00:23:11] Speaker 00:
As a matter of basic economics, inducement actually is going to be different.

[00:23:14] Speaker 00:
That's sort of what's behind your question.

[00:23:17] Speaker 00:
Two observations.

[00:23:18] Speaker 00:
Number one, in the Glenair Electronics case, this court more or less said the opposite.

[00:23:23] Speaker 00:
After a trial on direct infringement, they wanted a trial on induced infringement.

[00:23:27] Speaker 00:
And this court said the damages are going to be the same, whether it's direct or induced, based on the nature of the activity.

[00:23:32] Speaker 00:
So too here.

[00:23:33] Speaker 00:
The second point is, even if you don't agree with that, the law or the economics of it, we have a decision that ST made.

[00:23:40] Speaker 00:
I mentioned this before.

[00:23:41] Speaker 00:
They could have sought separate rates,

[00:23:44] Speaker 00:
for the licensee model, which they said, again, not abstract.

[00:23:49] Speaker 00:
ABS had decided to license to XY licensees at a particular price.

[00:23:54] Speaker 00:
They could have said, that activity hurts us more.

[00:23:57] Speaker 00:
It's worse.

[00:23:58] Speaker 00:
We want an injunction as to that activity, or we want a higher royalty.

[00:24:02] Speaker 04:
What's the page?

[00:24:05] Speaker 04:
that you signed, I think you did, for the idea that they had already decided the license.

[00:24:12] Speaker 04:
Because my reading of Shuttlecotti's report was this was something they were considering, not something that had actually been decided.

[00:24:21] Speaker 00:
It says 5785?

[00:24:22] Speaker 00:
5785?

[00:24:23] Speaker 00:
5785.

[00:24:24] Speaker 00:
And what it says is?

[00:24:26] Speaker 00:
As we know, the GSS technology is what's being accused in this case.

[00:24:34] Speaker 00:
My understanding is that GSS, excuse me, that ABS, genus, once they commercialized the technology, decided that they would license it.

[00:24:43] Speaker 00:
You'll see in the box at the top right, he's referring to a slide, it says their intent was to license the technology to current XY licensees.

[00:24:50] Speaker 00:
He names them, Cogent, CMEX, and Goyaki.

[00:24:53] Speaker 00:
So almost to try to displace XY with their own technology.

[00:24:56] Speaker 00:
Judge Bryson, in this respect, the case is just like the Forrest Labs case, in which CIPLA, in that case, this is the Lexapro case, comes in and says on appeal, the judge enjoined our induced infringement.

[00:25:08] Speaker 00:
We're not doing any inducement.

[00:25:09] Speaker 00:
This is a Hatch-Waxman case.

[00:25:10] Speaker 00:
Nothing's been sold.

[00:25:11] Speaker 02:
Isn't that what you read, the statement of the expert?

[00:25:15] Speaker 02:
At bottom, it's just speculation.

[00:25:19] Speaker 02:
I mean, nobody knows what's going to happen in the future.

[00:25:22] Speaker 02:
They could license a technology, or they could not.

[00:25:25] Speaker 02:
Not even the expert knows.

[00:25:26] Speaker 02:
Not even, you know, as learned as they are, doesn't have a crystal ball.

[00:25:32] Speaker 00:
Absolutely.

[00:25:32] Speaker 00:
The future is hard to predict.

[00:25:34] Speaker 00:
I agree with that.

[00:25:35] Speaker 02:
Yeah.

[00:25:36] Speaker 02:
Well, how can you base a cause of action on something that hasn't happened yet?

[00:25:43] Speaker 02:
I mean, it seems to me that you're arguing against a very basic notion in risk judicata cases or claim conclusion, dealing with transactional.

[00:25:54] Speaker 02:
You have to deal with the same transactional facts.

[00:25:57] Speaker 02:
And here, you're not dealing with the same transactional facts.

[00:26:01] Speaker 02:
If you're going to build in, if you're going to import in this type of speculation.

[00:26:10] Speaker 00:
Number one, he said it was decided.

[00:26:13] Speaker 00:
We might have objected that it was speculative.

[00:26:14] Speaker 00:
We didn't.

[00:26:15] Speaker 00:
That was the evidence before the jury.

[00:26:17] Speaker 00:
But the question of what was actually the transaction, what was litigated?

[00:26:20] Speaker 02:
But his actual words, what he actually says is that they may.

[00:26:23] Speaker 02:
It could happen.

[00:26:25] Speaker 00:
No, what he said was they decided they would license.

[00:26:27] Speaker 00:
But let me go to the broader point.

[00:26:29] Speaker 02:
What he's saying seems to me that it's only natural that in the future they could go on and license a technology

[00:26:39] Speaker 00:
So that's how you interpret it, and that's fair.

[00:26:41] Speaker 00:
Let me just say that the district judge... No, I'm asking you.

[00:26:44] Speaker 00:
Yes.

[00:26:45] Speaker 00:
And what I'm saying is, it's not how I interpret it, but more importantly, the district judge, who's the one who issued the injunctive relief and presided over this trial, he decided that they already pursued these claims in that case.

[00:26:58] Speaker 00:
And the interpretation of his own injunctive relief is something that this court gives deference to.

[00:27:02] Speaker 00:
I want to make two additional points.

[00:27:03] Speaker 02:
Did the district court decide that the transactional facts are the same?

[00:27:07] Speaker 00:
That's what it means when the district court.

[00:27:09] Speaker 00:
I mean, did he say that?

[00:27:11] Speaker 00:
He didn't use the word the transactional facts are the same.

[00:27:14] Speaker 00:
He was presented with the case law around race judicata.

[00:27:16] Speaker 00:
And what he said was a page seven of joint appendix.

[00:27:19] Speaker 00:
They knew about it.

[00:27:20] Speaker 00:
They made this part of their royalty ask.

[00:27:23] Speaker 00:
And the judgment incorporates.

[00:27:24] Speaker 02:
But does he ever say that we're dealing with the same transactional facts?

[00:27:28] Speaker 00:
He doesn't use those words.

[00:27:30] Speaker 02:
But that's the law.

[00:27:32] Speaker 00:
That's an element of the test.

[00:27:35] Speaker 00:
But what he said was this was already litigated in ABS 1.

[00:27:39] Speaker 00:
And the question of what was litigated in ABS 1 is one that he is uniquely well-situated to answer.

[00:27:44] Speaker 00:
If I may, I'd just like to make two remaining points in my remaining time.

[00:27:47] Speaker 00:
What I was going to say about the Forest Labs case is that CIPLA's point there was that inducement hadn't happened.

[00:27:53] Speaker 00:
Nonetheless, this court affirmed the injunction based on the planned commercialization that included CIPLA doing this activity.

[00:27:59] Speaker 00:
It's the same thing here.

[00:28:00] Speaker 00:
It's a plan for commercialization.

[00:28:02] Speaker 00:
It might not happen.

[00:28:04] Speaker 00:
The last thing I wanted to say, Josh Bryson goes back to your question earlier, could we have agreed the parties to an injunction, even if it was sort of unripened in a sense?

[00:28:12] Speaker 00:
There's no question that the court had jurisdiction over the matter.

[00:28:14] Speaker 00:
And here we go to the Supreme Court's 1928 decision in Swift against the United States.

[00:28:19] Speaker 00:
Once the court has jurisdiction to settle the matter, the power to enjoin includes the power to enjoin too much.

[00:28:26] Speaker 00:
If they thought the injunction was overbroad, they could have appealed it, but they didn't.

[00:28:30] Speaker 00:
There's no jurisdictional problem with an injunction that turns out to have been overbroad.

[00:28:34] Speaker 02:
Wouldn't you have to show a likelihood of success if you bring an injunction?

[00:28:40] Speaker 00:
For purposes of a preliminary injunction, yes.

[00:28:42] Speaker 00:
This is a permanent injunction so that success is given by the judgment.

[00:28:45] Speaker 02:
How can you show that you would succeed in a cause of action on conduct on an event that has yet to come?

[00:28:52] Speaker 00:
We stipulated to infringement.

[00:28:54] Speaker 00:
Likelihood of success and the merits is part of the preliminary injunction analysis.

[00:28:58] Speaker 00:
This is a permanent injunction following a determination of infringement.

[00:29:02] Speaker 00:
And the nature of the infringement was discussed at trial in the damages trial.

[00:29:06] Speaker 00:
It was not abstract.

[00:29:07] Speaker 00:
It had been decided with specific customers at specific prices.

[00:29:12] Speaker 03:
Thank you, Thompson.

[00:29:16] Speaker 03:
Mr. Chen, you have three minutes.

[00:29:21] Speaker 01:
Thank you.

[00:29:22] Speaker 01:
Let me make two points.

[00:29:24] Speaker 01:
First, I'd like to start with Appendix 5785, which seems to be the primary, if not only, evidence that ABS is relying on for both its rightness points and I think for its actually litigated.

[00:29:36] Speaker 01:
As I think some of the questions have probed, what the expert is doing here

[00:29:40] Speaker 01:
is providing context for a direct infringement data point.

[00:29:46] Speaker 01:
He is saying, what is out there in the market to inform my hypothetical negotiation analysis in terms of one party licensing its technology to another?

[00:29:58] Speaker 01:
That is direct infringement, nothing more.

[00:30:01] Speaker 01:
He's not factoring in in that $2.05.

[00:30:04] Speaker 01:
anything about infringement.

[00:30:06] Speaker 01:
So for example, what ABS would have to sort of pay upstream to ST to sub-license the 987 patent.

[00:30:13] Speaker 01:
And I think that's really the telling thing more broadly, which this excerpt I think really represents.

[00:30:19] Speaker 01:
You don't see anything in the record.

[00:30:22] Speaker 01:
that talks about the harms that you would expect an expert to be discussing and the remedy that he would be opining on for sublicensing and induced infringement.

[00:30:34] Speaker 01:
You don't see him talking about what S.T.

[00:30:36] Speaker 01:
would be paid as a royalty

[00:30:39] Speaker 01:
in terms of ABS selling GSS machines themselves, right?

[00:30:45] Speaker 01:
That's a separate line of revenue that ST would be entitled to under the laser dynamics piece.

[00:30:52] Speaker 01:
You don't see anything about sub-licensing.

[00:30:54] Speaker 01:
Once ABS is adjudged to be an infringer, it's not just charging the $2.05 that it thought it might when it thought that it could get past the patents.

[00:31:04] Speaker 01:
Keep in mind that it said that it didn't think it actually, while it stipulated to the infringement, didn't think the patents were valid.

[00:31:10] Speaker 01:
So when it's talking about this $2.05 back in 2014 in this internal presentation, it is not

[00:31:18] Speaker 01:
I'm saying that well if we were to sub license and to gain the separate right to do that how much would that cost you don't see anything about that and with respect to market harm you don't see the expert in this passage or elsewhere say anything about the harms that would be visited on ST if ABS were able to basically stand in the shoes of ST

[00:31:41] Speaker 01:
and say, we now have the 987 patent.

[00:31:43] Speaker 01:
We can license it to as many people as we want.

[00:31:46] Speaker 01:
And perhaps they can even use it to sort.

[00:31:49] Speaker 01:
Third parties could use the 987 patent and GIS technology to sort for other parties.

[00:31:57] Speaker 01:
The only other thing I would say very quickly.

[00:31:59] Speaker 04:
This is a forced license situation, right?

[00:32:02] Speaker 04:
That's correct.

[00:32:02] Speaker 04:
And the question, isn't it one way of looking at this to say, well, what was the scope that the forced license should have?

[00:32:11] Speaker 04:
And your argument, the other side is saying the forced license should include any way that ABS has of exploiting the technology.

[00:32:20] Speaker 04:
And your argument is no, it only applies to the form that you say was litigated for exploiting the technology.

[00:32:27] Speaker 04:
Brings us right back to the question of is it reasonable to say that this forced license included more than just the sales in the conventional sense of by ABS?

[00:32:40] Speaker 04:
We know it.

[00:32:41] Speaker 04:
How about the question of fee for service?

[00:32:45] Speaker 01:
I think fee for service in terms of it being... Why is that?

[00:32:49] Speaker 04:
Does that fall within the sold by ABS rubric?

[00:32:54] Speaker 01:
Well, your honor, I think it fits squarely within.

[00:32:57] Speaker 01:
It's ABS using its own technology and charging a fee to produce straws.

[00:33:03] Speaker 04:
Is it producing straws in their situation?

[00:33:06] Speaker 01:
Yes, your honor.

[00:33:06] Speaker 04:
ABS is actually producing and then selling the straws or is it

[00:33:11] Speaker 01:
Yeah, so it's one of two things.

[00:33:13] Speaker 01:
And perhaps the first doesn't strictly fall within feed-for-service.

[00:33:17] Speaker 01:
But it's either sorting for itself with its own bull studs, or it is taking a third party's unsorted semen and then producing a straw using GSS technology.

[00:33:28] Speaker 01:
The third party does not do any sorting.

[00:33:30] Speaker 01:
And then it gives the straw to the third party.

[00:33:33] Speaker 04:
And the third party pays the fee.

[00:33:34] Speaker 01:
Yes, correct.

[00:33:36] Speaker 01:
And so that's why the language of the judgment reads exactly as you would expect.

[00:33:42] Speaker 03:
Council, thank you both for your arguments.

[00:33:44] Speaker 03:
The case is submitted.