[00:00:00] Speaker 00:
Our final case this morning is the Lexam versus Etner, 2022-2036.

[00:00:07] Speaker 00:
Mr. Richardson.

[00:00:11] Speaker 02:
Thank you and good morning.

[00:00:16] Speaker 02:
May it please the court.

[00:00:18] Speaker 02:
The district court for the district of Connecticut erred when it apparently applied its own heightened pleading standards.

[00:00:26] Speaker 02:
and subsequently found that Alex Sam had failed to plead a sufficiently plausible claim of patent infringement.

[00:00:32] Speaker 02:
Specifically, the district court found at APPX 0028 that Alex Sam had failed to articulate exactly how Etna's use is infringing beyond its provisions of hardware and the use of a processing hub.

[00:00:46] Speaker 02:
The court continued to find the second amendment complaint lacks precise and clear detail as to allegedly infringing conduct.

[00:00:54] Speaker 02:
The level of specificity required by the district court does not satisfy this court's current standard.

[00:01:00] Speaker 02:
Applying the proper standard, which we believe is found in Botmate versus Sony Corp of America, the allegations in Alexam's second amended complaint were sufficient to provide notice of plausible claims of patent infringement, which should have permitted Alexam to proceed past the initial pleading stage.

[00:01:18] Speaker 02:
Specifically, at pages 1352 to 1353,

[00:01:22] Speaker 02:
The Botmate Court provides guidance regarding what is required to satisfy pleading standards.

[00:01:28] Speaker 02:
After first affirming that a patentee did not prove its case at the pleading stage and that a patentee is not required to plead infringement on an element by element basis, the court provided a context-specific framework to determine what the required level of detail is for a given patent.

[00:01:46] Speaker 02:
The Botmate Court stated that the level of detail in any given case will vary depending upon a number of factors.

[00:01:52] Speaker 02:
including the complexity.

[00:01:53] Speaker 01:
But let's talk about this case, then.

[00:01:57] Speaker 01:
Second amended complaint is the operative complaint, correct?

[00:02:00] Speaker 01:
Yes.

[00:02:01] Speaker 01:
And in paragraph 141, you allege that Aetna Inc.

[00:02:05] Speaker 01:
is responsible for activation transactions, or at least some of them, over the MasterCard network.

[00:02:11] Speaker 01:
You now tell us that it was a mistake to include that, but the district court had an obligation, as do we, to take as true what you allege as a specific fact in your complaint.

[00:02:22] Speaker 01:
How can we now let you say that's a mistake?

[00:02:25] Speaker 02:
Your Honor, if we turn to, for example, the patent itself, reading the claims at issue, we can see that activation is not an element of the claim.

[00:02:35] Speaker 01:
It may not be an element of the claims, but you specifically alleged as a factual matter that Aetna Inc.

[00:02:41] Speaker 01:
is responsible for activation transactions.

[00:02:43] Speaker 01:
I'm just asking you, we have to take that as true, do we not?

[00:02:46] Speaker 02:
Yes, but it's not relevant to the issue of whether we properly asserted a claim, a plausible claim of patent infringement, because the patent infringement rests on the elements in 32 and 33, which do not include that.

[00:03:00] Speaker 01:
But it's relevant to the license question, correct?

[00:03:03] Speaker 02:
It has some relevance to the issue of the MasterGuard license, yes.

[00:03:07] Speaker 01:
Because as I understand it, your argument is that the license only extends to the whole value chain

[00:03:14] Speaker 01:
a chain that includes an activation or an added value transaction, correct?

[00:03:19] Speaker 02:
That's what the license says.

[00:03:21] Speaker 01:
And so we have to take as true that Aetna, at least some of the time, is responsible for activation transactions, as you specifically alleged.

[00:03:30] Speaker 02:
Your Honor, I understand where you're getting is a clear typographical error from our perspective and regrettable.

[00:03:37] Speaker 02:
However, it doesn't substitute the fact.

[00:03:38] Speaker 02:
It's not a typographical error.

[00:03:40] Speaker 04:
It's a whole paragraph.

[00:03:42] Speaker 02:
Well, it's typographical in nature of the compilation of this particular complaint included a passage that did not relate to this set of claims.

[00:03:53] Speaker 02:
But again, this doesn't substitute for the license itself.

[00:03:57] Speaker 02:
The license itself is the operative document that confers or does not confer the rights.

[00:04:03] Speaker 01:
I'm interested in your view on the license, but before we move on to that,

[00:04:09] Speaker 01:
It does seem odd to call it a typographical error, but did you point out to the district court, this is a typographical error, we didn't mean to include this, or wasn't the court below, and us now obligated to take as true what you chose to put in your complaint that you filed in the court?

[00:04:24] Speaker 02:
Your Honor, I believe that it was raised in the transcript, although I do not have that immediately in my mind.

[00:04:30] Speaker 02:
But again, the nature of the claims here do not match up to the license.

[00:04:35] Speaker 02:
The license cannot cover these claims, even if for the sake of argument they were involved with activation of a card somewhere.

[00:04:44] Speaker 02:
We're not suing them on that.

[00:04:46] Speaker 02:
The license doesn't cover that.

[00:04:49] Speaker 02:
The specific claims cover a particular type of card that does not include activation.

[00:04:54] Speaker 02:
We could say that they've also launched a manned mission to the moon as part of the general description.

[00:05:01] Speaker 02:
But the fact that they did that isn't relevant to the claim of the plausible claim of patent infringement here before your honor, which relates only to 32 and 33.

[00:05:11] Speaker 02:
So whether you accept my characterization of it as a typographical error or a compilational error or whatever it is, it was an error that has no effect on determining whether the claims of 32 and 33 are covered by the license to MasterCard.

[00:05:29] Speaker 02:
Because those claims don't require it.

[00:05:31] Speaker 02:
That conduct doesn't require it.

[00:05:33] Speaker 02:
That license can't provide a shield to those claims.

[00:05:37] Speaker 01:
Can you talk about the termination of the license dispute?

[00:05:43] Speaker 01:
Because you say that you raised that as a factual question, and the district court didn't really address it.

[00:05:51] Speaker 01:
I want to make sure I understand your position.

[00:05:53] Speaker 01:
And has the termination question been argued to any court?

[00:05:57] Speaker 01:
Do you have any decisions on whether it terminated before the patent expired?

[00:06:03] Speaker 02:
Your Honor, there is no district court decision or any other decision yet on that.

[00:06:07] Speaker 02:
But I am duty bound to tell you that there was an appeal last month of Alex Amm versus MasterCard.

[00:06:13] Speaker 02:
I believe Judge Laurie may have been involved in that panel.

[00:06:16] Speaker 02:
I believe that the

[00:06:18] Speaker 02:
The issue of termination was discussed.

[00:06:21] Speaker 02:
I was not counsel on that appeal and I do not know what the outcome of that is.

[00:06:28] Speaker 02:
But to answer your question, yes, the issue of the applicability under the license transaction was raised as was the issue of termination.

[00:06:38] Speaker 02:
As we pointed out, there was a dispute and is a dispute currently that may not be resolved by the current appeal.

[00:06:46] Speaker 02:
As to whether the

[00:06:48] Speaker 02:
The agreement terminated in 2013, as MasterCard argues, or 2015, as it argues in the alternative, which would both be before the date of accruing damages in this case, in which case the MasterCard license would have no effect for that additional reason.

[00:07:12] Speaker 02:
And with respect to the activating transaction, just for the sake of the record,

[00:07:17] Speaker 02:
The key language is on the activating or adding value that we discussed is at APPX 0656.

[00:07:26] Speaker 02:
One of the reasons I'd like to talk a little bit about BotMate, though, is with respect to its impact on what needs to be proved.

[00:07:33] Speaker 02:
That is what elements.

[00:07:34] Speaker 02:
We know that we're not pleading on element by element basis.

[00:07:38] Speaker 02:
It does beg the question, well, what elements do we need to plead?

[00:07:41] Speaker 02:
And BotMate tells us.

[00:07:43] Speaker 02:
It tells us in a way that one of the courts, the Northern District of California, has described as a search for the critical elements.

[00:07:50] Speaker 02:
What are the critical elements?

[00:07:51] Speaker 02:
And here, the critical elements are the debit medical services card itself, which is shown in a variety of images, both in the infringement contentions attached to the complaint, as well as within the complaint, that shows the Aetna name, the Aetna brand, and the bin that are required by claim 32.

[00:08:12] Speaker 01:
The district court said that a lot of your allegations were just conclusory.

[00:08:17] Speaker 01:
What standard of review do we apply to that?

[00:08:20] Speaker 02:
The standard of review is a de novo review of the evidence that we submitted, Your Honor.

[00:08:25] Speaker 01:
So we decide for ourselves whether certain allegations you've made are conclusory.

[00:08:31] Speaker 02:
Yes.

[00:08:31] Speaker 02:
And in that regard, all of the evidence, I think, is marshaled well in our grave brief.

[00:08:38] Speaker 02:
But there are some things that deserve being highlighted.

[00:08:42] Speaker 02:
There are a number of, the key feature here is the process, well, before I get to that, the key feature here is the processing hub in terms of bleeding.

[00:08:52] Speaker 02:
We know from, even from the abstract of the patent itself, that this is the device that is coordinating all of the functions of the system.

[00:09:01] Speaker 02:
And we know from column four, it's described as the nerve center of the system.

[00:09:06] Speaker 02:
This is the device that you see at 32C and D as being involved with the accessing of two databases.

[00:09:16] Speaker 04:
But what do you say Etna Inc.

[00:09:19] Speaker 04:
had to do with that processing hub specifically?

[00:09:23] Speaker 02:
We allege that they are responsible for all aspects of it, including the creation and assembly of it.

[00:09:31] Speaker 02:
They performed.

[00:09:32] Speaker 04:
They performed.

[00:09:33] Speaker 04:
So somebody who is an actual employee

[00:09:36] Speaker 04:
of Aetna Inc.

[00:09:38] Speaker 04:
actually operates that processing hub.

[00:09:41] Speaker 04:
Is that your contention?

[00:09:42] Speaker 02:
That is our contention, and that's as expressed in the complaint.

[00:09:44] Speaker 04:
And it turns out that Aetna Inc.

[00:09:46] Speaker 04:
is just a holding company.

[00:09:48] Speaker 04:
it doesn't actually have employees who are on the spot, on the job, operating that, then you lose?

[00:09:55] Speaker 02:
Is that your... During the process of litigation, you frequently find whether parties, the actual roles of parties, we have strong evidence here that that assertion is not true, that they are not a mere holding company.

[00:10:09] Speaker 04:
Okay, what's your evidence that they're not?

[00:10:11] Speaker 04:
And A, and B, why isn't that evidence in the complaint?

[00:10:16] Speaker 02:
It is.

[00:10:16] Speaker 02:
It's attached to the complaint, Your Honor.

[00:10:18] Speaker 04:
What is it that shows that Etna Inc.

[00:10:21] Speaker 04:
and its employees actually have a hands-on relationship to the infringing mechanism?

[00:10:28] Speaker 02:
Well, they are the final assembler of the entire system.

[00:10:33] Speaker 02:
What does that mean, final assembler?

[00:10:35] Speaker 02:
It means that they put it by installing the processing hub into the existing banking network.

[00:10:43] Speaker 02:
they have created the system.

[00:10:45] Speaker 02:
So there is an Etna Inc employee who's actually installing something physically?

[00:10:51] Speaker 02:
We have the only entity that we have evidence of that has done anything relative to this, the primary one at least, is Etna Inc.

[00:11:00] Speaker 02:
And that is attached to our complaint, if I could direct you, at beginning

[00:11:10] Speaker 02:
This is a document with the Aetna trademark, which is registered to Aetna, Inc.

[00:11:20] Speaker 02:
It says, Welcome to Aetna High Deductible HSA Plan Guide for 2017.

[00:11:29] Speaker 02:
And this is attached as Exhibit C to the Second Amendment Complaint.

[00:11:34] Speaker 02:
And if I could just briefly

[00:11:37] Speaker 02:
ask you to look at 0567, at that point you will see that the creator of this by virtue of the copyright, at least that's the plausible explanation, the creator of this document is Etna Inc.

[00:11:52] Speaker 02:
So this Etna Inc.

[00:11:53] Speaker 02:
has created this, at least plausibly, we can understand that they created this as the copyright owner.

[00:11:59] Speaker 02:
And within this, they provide some of the teachings and some of the advice to their customers that they call members about how to use this debit medical services card.

[00:12:14] Speaker 02:
And that's found at 0549.

[00:12:16] Speaker 01:
And someone on behalf of your client, knowing their rule 11 obligations, has signed a complaint

[00:12:23] Speaker 01:
Yes.

[00:12:24] Speaker 01:
Indicating that you're willing to go on the record as saying we have a plausible basis to believe that Etna, Inc., the only party we sued, is directly responsible for all this activity.

[00:12:35] Speaker 02:
We have their fingerprints everywhere.

[00:12:38] Speaker 02:
We have a suggestion that at least one other entity may be implicated, but because of the nature of this system, the fact that Etna, Inc., the parent company,

[00:12:48] Speaker 02:
may use other of its resources to infringe does not mean that they're not liable.

[00:12:54] Speaker 04:
In fact, under the final assembler... Well, use other of its resources.

[00:12:57] Speaker 04:
If by that you mean that a holding company can be liable for all of its subsidiaries' activities because it is using its subsidiaries' resources.

[00:13:08] Speaker 02:
No, Your Honor.

[00:13:09] Speaker 04:
That's not your theory.

[00:13:10] Speaker 02:
Not at all.

[00:13:11] Speaker 02:
Not at all.

[00:13:12] Speaker 02:
There is no evidence anywhere in the record.

[00:13:15] Speaker 02:
that they are a mere holding company.

[00:13:17] Speaker 02:
In fact, the facts we're pointing to show the contrary.

[00:13:21] Speaker 02:
So the idea or the argument that they are a mere holding company is a response that they have from outside of the pleadings.

[00:13:28] Speaker 02:
We should be entitled to go against the party whose fingerprints are on this under rule level.

[00:13:34] Speaker 02:
And if it's determined that others are implicated, we may very well seek leave to add them.

[00:13:40] Speaker 02:
But fundamentally, this is a dispute right now between this party, Edna Inc.

[00:13:46] Speaker 02:
and Alex Sam, as to these particular claims, which are not covered by license or otherwise.

[00:13:52] Speaker 00:
And very briefly, if I could... Very briefly, because you're almost through your principal time.

[00:13:59] Speaker 02:
Your Honor, I'd like to save my remarks.

[00:14:01] Speaker 02:
Thank you very much.

[00:14:16] Speaker 03:
Good noon, your honors.

[00:14:21] Speaker 03:
May it please the court.

[00:14:24] Speaker 03:
This is a case about Twomley and Ickball and pleadings.

[00:14:28] Speaker 03:
All we have here is conclusory pleadings.

[00:14:31] Speaker 03:
In Twomley, it was you can't make a deal with your competitors, and if that's all you allege,

[00:14:40] Speaker 03:
It's not enough.

[00:14:41] Speaker 03:
That's conclusory.

[00:14:42] Speaker 03:
In Iqbal, it was, well, you're the attorney general.

[00:14:46] Speaker 03:
You're the FBI director.

[00:14:48] Speaker 03:
There's mistreatment of a prisoner.

[00:14:51] Speaker 03:
You're responsible for that because you were animated by race discrimination or national origin discrimination.

[00:15:00] Speaker 03:
All they're doing is reciting the statute and saying, you're responsible.

[00:15:04] Speaker 03:
And the Supreme Court has held, you have to say more than that.

[00:15:07] Speaker 04:
But why is it not the case that, for example, at 478 of the appendix, paragraph 110, defendant employs staff, e.g.

[00:15:18] Speaker 04:
an IT department, to operate the processing hub in order to interface with, install, configure, manage, dot, dot, dot?

[00:15:25] Speaker 04:
Why isn't that an allegation of a fact, not simply an assertion of a conclusion?

[00:15:32] Speaker 03:
Your Honor, let me answer that question.

[00:15:35] Speaker 03:
Because that is, and when we're talking about Edna Inks fingerprints and they actually have people there, this is on information and belief.

[00:15:45] Speaker 03:
It's pled.

[00:15:45] Speaker 03:
And you can do that.

[00:15:47] Speaker 03:
But we don't know what the source of that information is.

[00:15:49] Speaker 03:
They're not required to give the source.

[00:15:51] Speaker 03:
But what we do know on the record is that the names of the Edna subsidiaries are listed within specific exhibits to their complaint.

[00:16:03] Speaker 01:
Edna is a brand name and you can find this... I'm not seeing how that's responsive to Judge Bryson's question.

[00:16:10] Speaker 01:
Is it conclusory?

[00:16:12] Speaker 01:
I have the same question.

[00:16:13] Speaker 01:
Is it conclusory to say that your client, Aetna Inc., has employees who operate the processing hub?

[00:16:19] Speaker 01:
Is that conclusory?

[00:16:20] Speaker 03:
It's a bootstrap allegation.

[00:16:23] Speaker 01:
I'll tell you why.

[00:16:24] Speaker 01:
Is it conclusory?

[00:16:25] Speaker 03:
Because what they say is it is conclusory.

[00:16:29] Speaker 03:
Because the reason they say it is Aetna owns or controls the entire system, quote, in order to provide the benefit of debit medical services cards to its customers.

[00:16:42] Speaker 03:
to its customers.

[00:16:44] Speaker 03:
There are no customers of Edna, Inc.

[00:16:46] Speaker 03:
How do we know that?

[00:16:49] Speaker 03:
It's not in the complaint.

[00:16:51] Speaker 03:
And they wouldn't.

[00:16:52] Speaker 03:
We're limited to the complaint it's attached to.

[00:16:54] Speaker 03:
And there you have artful pleading.

[00:16:58] Speaker 03:
Here, they're not pleading that.

[00:16:59] Speaker 03:
But they were told, and there's no dispute about that, they were told early on in the case, Edna, Inc.

[00:17:05] Speaker 01:
What case requires them to put in their complaint things that you tell them as they defend it?

[00:17:11] Speaker 03:
They're not required to put it in the complaint, but they're on notice.

[00:17:15] Speaker 03:
And when they went on notice, that's when they should look at their own exhibits, which say that Edna is a brand name for the insurance company subsidiaries.

[00:17:28] Speaker 03:
And it identifies them.

[00:17:30] Speaker 01:
Can you point to any

[00:17:34] Speaker 01:
direct contradiction of any point that's alleged in the complaint versus what's in the attachments to the complaint.

[00:17:43] Speaker 01:
You want us to see this as a direct contradiction and line it up with bot M8.

[00:17:48] Speaker 01:
I haven't seen the direct contradictions.

[00:17:51] Speaker 03:
Well, when you allege that this is the company that's doing everything and

[00:18:00] Speaker 03:
What business are they in?

[00:18:02] Speaker 03:
What is the product that Edna Inc.

[00:18:05] Speaker 03:
is selling?

[00:18:06] Speaker 03:
Is it the card?

[00:18:07] Speaker 03:
They identify other people who provide the card.

[00:18:10] Speaker 03:
Most of the cards, but not all of them.

[00:18:13] Speaker 03:
They identify the card, they identify companies that are administrators.

[00:18:17] Speaker 04:
They identify the cards, specifically designated, for example, Johnson & Johnson and so forth, Payflex.

[00:18:23] Speaker 04:
One of the cards, at least, does not.

[00:18:25] Speaker 04:
It just says that

[00:18:26] Speaker 03:
And just as Aetna, and it has a footnote that says, Aetna is a brand name for the subsidiaries that sell insurance products and services.

[00:18:36] Speaker 04:
And that's connected with the card that just says Aetna?

[00:18:39] Speaker 03:
Yeah.

[00:18:40] Speaker 04:
Can you point me that?

[00:18:41] Speaker 04:
Because I didn't see that.

[00:18:43] Speaker 04:
There are several.

[00:18:44] Speaker 04:
I saw that at 572, there is a sentence at the bottom which talks about Aetna being the brand name for products and services provided by one or more of the Aetna Group.

[00:18:56] Speaker 04:
Well, that's fine.

[00:18:58] Speaker 04:
That does exclude, however, Aetna participating in the acts of infringement by, for example, having employees.

[00:19:12] Speaker 03:
On Appendix 572?

[00:19:15] Speaker 03:
That's what I'm just ready for.

[00:19:18] Speaker 03:
OK.

[00:19:19] Speaker 03:
Edna is a brand name for the products and services.

[00:19:21] Speaker 03:
I was just reading that.

[00:19:21] Speaker 04:
OK.

[00:19:22] Speaker 04:
So we have that.

[00:19:23] Speaker 04:
But that doesn't say that Edna Inc.

[00:19:25] Speaker 04:
isn't also participating in that.

[00:19:28] Speaker 03:
And that doesn't cover, by its terms, all of the cards.

[00:19:32] Speaker 03:
Edna Inc.

[00:19:33] Speaker 03:
is not an insurance company.

[00:19:35] Speaker 03:
It doesn't sell insurance products.

[00:19:37] Speaker 03:
So what product is it talking about?

[00:19:38] Speaker 03:
Are they talking about selling?

[00:19:40] Speaker 01:
We're not at an evidentiary phase.

[00:19:42] Speaker 03:
This is something that's a matter of public record.

[00:19:46] Speaker 03:
Public record.

[00:19:47] Speaker 04:
You mean if we went to the Connecticut Secretary of State, we would find that it's not an insurance company?

[00:19:56] Speaker 03:
Every document in this exhibit identifies the insurance companies that are involved.

[00:20:03] Speaker 03:
We assume that the product they're talking about is somehow related to this system.

[00:20:08] Speaker 03:
And the system is these cards that provide employees of group health programs a way of

[00:20:17] Speaker 03:
of putting some money away from their salaries tax-free and then using it to pay the deductibles or for co-pays.

[00:20:28] Speaker 03:
That's something that the employers who have been identified provide to their employees.

[00:20:34] Speaker 03:
And that's in relation to insurance.

[00:20:38] Speaker 03:
Edna Inc.

[00:20:38] Speaker 03:
is not the insurance company.

[00:20:40] Speaker 03:
the insurance companies are identified here is that this products and services for edna are provided by these subsidiaries they've when we were told you've got the wrong party

[00:20:52] Speaker 03:
They said, we're not going to amend.

[00:20:54] Speaker 03:
The judge said, you have till December 6.

[00:20:57] Speaker 03:
You can amend your complaint.

[00:20:58] Speaker 03:
You can add parties.

[00:21:00] Speaker 03:
And they amended their complaint to throw in the MasterCard license.

[00:21:04] Speaker 03:
But they did nothing.

[00:21:05] Speaker 03:
They did nothing to say, all right, we're going to include these subsidiaries.

[00:21:08] Speaker 01:
But nothing, I haven't seen you point to anything that requires them to do any of that.

[00:21:14] Speaker 01:
They're signing under possible penalties of Rule 11,

[00:21:18] Speaker 01:
possible malpractice or other disciplinary proceedings, a 285 motion if you win this case.

[00:21:25] Speaker 01:
But I don't see how Rule 12 allows you to deny well-pled, nonconclusory factual allegations.

[00:21:32] Speaker 03:
They're not well-pled because they're contradicted by the evidence in their own exhibits.

[00:21:38] Speaker 01:
Well, I see inconsistencies or tensions.

[00:21:42] Speaker 01:
I don't see a direct contradiction.

[00:21:45] Speaker 01:
You need a direct contradiction, don't you?

[00:21:48] Speaker 03:
There are exhibits that list the insurance companies, appendix 203.

[00:21:52] Speaker 03:
That's in their original complaint, 375.

[00:21:55] Speaker 03:
There's another one at 567.

[00:22:00] Speaker 03:
There's another one at 572.

[00:22:03] Speaker 03:
We've talked about that one.

[00:22:06] Speaker 01:
There's one at 5.

[00:22:07] Speaker 01:
I'm sorry.

[00:22:08] Speaker 01:
I understand our allegations to be it's not just insurance companies.

[00:22:12] Speaker 01:
that are infringing our patent.

[00:22:14] Speaker 01:
It's also Etna, Inc.

[00:22:16] Speaker 03:
Well, they're not saying that.

[00:22:19] Speaker 03:
They're saying, Etna, Inc., for some reason, you asked a question about the processing hub, the hub, the central part.

[00:22:27] Speaker 03:
Why is it plausible that this holding company is the one that has nothing to do with the insurance?

[00:22:32] Speaker 03:
It just owns these companies that are insurance companies.

[00:22:34] Speaker 04:
They don't agree that it's a holding company, or not at least a purely a holding company.

[00:22:38] Speaker 04:
There's nothing in the complaint that would lead us to be sure that that's right.

[00:22:42] Speaker 03:
And I also heard him say, well, after some discovery, we might want to add some of these companies.

[00:22:47] Speaker 03:
This is what Twombly was all about.

[00:22:49] Speaker 03:
You can't just unleash these companies to say, we're going to sue you.

[00:22:53] Speaker 03:
We've got nothing here.

[00:22:54] Speaker 03:
We have absolutely nothing.

[00:22:56] Speaker 03:
You tell us who the right parties are, and we're still not going to sue them.

[00:22:59] Speaker 03:
Let me ask you a question.

[00:23:01] Speaker 04:
Why, in this case, did you not move for a limited summary judgment based on

[00:23:09] Speaker 04:
discovery limited to this question of Aetna's role.

[00:23:13] Speaker 04:
You could have gotten out of this case a lot cheaper, it strikes me, had you been able to prove in a narrow summary judgment motion targeted to that issue that none of these allegations are true.

[00:23:27] Speaker 04:
If you're right as to Aetna, and you seem very confident that you are, and you may be.

[00:23:32] Speaker 04:
But that seems to me a lot cheaper than having to deal with the burdens of Rule 12b6.

[00:23:39] Speaker 04:
the constraints on your ability to introduce evidence, which is to say that you can't.

[00:23:44] Speaker 03:
Your Honor, if you look at the Ickball case, they sued the attorney general and the head of the FBI and said you're responsible for people in custody being treated.

[00:23:55] Speaker 04:
But I'm just sort of curious why you didn't follow what strikes me as the more sensible course of simply seeking a narrow targeted summary judgment motion.

[00:24:08] Speaker 04:
directed exactly to this question.

[00:24:10] Speaker 03:
The narrow targeted discovery motion sounds wonderful.

[00:24:16] Speaker 03:
I've actually done it.

[00:24:18] Speaker 03:
It works.

[00:24:21] Speaker 03:
Your honor, you may have actually been successful in cabiding in that type of discovery.

[00:24:26] Speaker 03:
And then cabiding is the word used in Trombley.

[00:24:29] Speaker 03:
You don't even get to that ability.

[00:24:31] Speaker 03:
to get that discovery.

[00:24:33] Speaker 03:
You don't have the right to that discovery until you've at least alleged more than a conclusory fashion.

[00:24:40] Speaker 03:
Because when they talk about that Edna Inc.

[00:24:43] Speaker 03:
on information and belief has IT people to service the processing hub, to serve their customers, they're building on an assumption that they have customers, an assumption that they have to hire their own IT personnel to service

[00:25:01] Speaker 03:
that processing hub to serve customers that they don't have.

[00:25:06] Speaker 04:
But what can we look to to say that's just flat out wrong?

[00:25:11] Speaker 03:
You look at all the other allegations that they have and their exhibits that point you to and say, here are the parties.

[00:25:19] Speaker 03:
Every one of these cards, one of them says on the back of it, Edna Light Insurance Company of El Paso, Texas.

[00:25:26] Speaker 03:
I was going to give you the site for that one.

[00:25:30] Speaker 04:
Yeah, several of the cards have designate.

[00:25:32] Speaker 04:
The Johnson and Johnson card, for example, designates somebody other than Etna Ink.

[00:25:37] Speaker 03:
There was another one?

[00:25:38] Speaker 04:
There's one card that does not, as far as I can tell, limit itself in that way.

[00:25:42] Speaker 03:
There's not one of them says Etna Ink.

[00:25:45] Speaker 03:
Not one of them.

[00:25:46] Speaker 03:
Not one.

[00:25:46] Speaker 03:
In all the exhibits they have, not one of them says Etna Ink.

[00:25:50] Speaker 01:
And when you get to the evidentiary phase, that's going to be a problem for them.

[00:25:54] Speaker 03:
Well, their hope then, and they said it out loud, is once we can get into discovery, maybe we'll find some others.

[00:26:01] Speaker 03:
Maybe we'll add them then.

[00:26:02] Speaker 03:
This is what the judge said.

[00:26:04] Speaker 03:
We were at that stage, the simplest thing.

[00:26:07] Speaker 03:
He said to them, you've been told, you want to add parties, do it now.

[00:26:12] Speaker 03:
And they said, no, we're not going to add parties.

[00:26:14] Speaker 03:
We're not going to name these companies.

[00:26:17] Speaker 03:
And then they came back.

[00:26:18] Speaker 03:
later and said, now that it's too late to amend, because the judge has to control his docket.

[00:26:25] Speaker 03:
He says, here's the time.

[00:26:26] Speaker 03:
You want to add parties?

[00:26:28] Speaker 03:
You want to amend your complaint?

[00:26:29] Speaker 03:
Do it now.

[00:26:31] Speaker 03:
And it's later then.

[00:26:32] Speaker 03:
And they said, we're not appealing that part when they ask for reconsideration.

[00:26:36] Speaker 03:
That's when the judge says, look, it's too late.

[00:26:38] Speaker 03:
It's rule 15.

[00:26:39] Speaker 03:
It's rule 16.

[00:26:40] Speaker 03:
It's my inherent right to control the docket.

[00:26:42] Speaker 03:
You've missed it.

[00:26:43] Speaker 03:
And now they're saying, well, let us go ahead with this discovery.

[00:26:46] Speaker 03:
Hopefully we can get it limited then.

[00:26:48] Speaker 03:
And they don't want it limited.

[00:26:50] Speaker 03:
They want to find out, what can we find out about these other parties?

[00:26:53] Speaker 01:
Do you agree with appellants that our standard of review of the district court's conclusions

[00:27:00] Speaker 01:
that certain allegations are conclusory is de novo.

[00:27:03] Speaker 01:
Do we decide that over for ourselves?

[00:27:05] Speaker 03:
You do, Your Honor.

[00:27:07] Speaker 03:
And this is something the Supreme Court, and the guidance for that is not a technical patent analysis, because that's not an element of the claim.

[00:27:13] Speaker 03:
Customers, this is quintessential Twombly and Ickball.

[00:27:19] Speaker 03:
This is saying, and you know,

[00:27:20] Speaker 03:
It's the FBI director?

[00:27:22] Speaker 03:
Well, you know, what's the basis for that?

[00:27:24] Speaker 04:
So that's a de novo inquiry on Apple.

[00:27:27] Speaker 03:
It is, Your Honor.

[00:27:28] Speaker 04:
So we don't defer in any way to the district court's conclusion that this was confirmed.

[00:27:33] Speaker 03:
I think you should defer.

[00:27:35] Speaker 03:
Whoa, whoa, whoa.

[00:27:35] Speaker 03:
If it's de novo, we don't defer.

[00:27:37] Speaker 03:
It's de novo, Your Honor.

[00:27:39] Speaker 03:
It was well-reasoned.

[00:27:40] Speaker 03:
It makes sense.

[00:27:41] Speaker 03:
And if you look at the exhibits, you look at everything else in this case.

[00:27:44] Speaker 03:
And this is critical, Your Honor.

[00:27:46] Speaker 03:
You talk about trying to be efficient.

[00:27:48] Speaker 03:
This is not a game where we were hiding the ball.

[00:27:52] Speaker 03:
We came right out front and told them up front.

[00:27:55] Speaker 03:
They don't have to believe us.

[00:27:56] Speaker 03:
That's not evidence.

[00:27:57] Speaker 03:
But we told them, you've got the wrong party, and the right parties are identified in your own exhibits.

[00:28:06] Speaker 03:
Pay flex, you don't have to go to the exhibits.

[00:28:09] Speaker 03:
They're all over the complaint.

[00:28:11] Speaker 03:
They're all over the complaint.

[00:28:12] Speaker 03:
Look at that.

[00:28:14] Speaker 03:
It says,

[00:28:16] Speaker 03:
Let me get this right here.

[00:28:19] Speaker 03:
That's right in the complaint.

[00:28:21] Speaker 03:
Paragraph 55 shows a picture of the Payflex MasterCard.

[00:28:25] Speaker 03:
No Aetna brand there.

[00:28:28] Speaker 03:
It says, defendant offered a Payflex card through its subsidiary, Payflex.

[00:28:34] Speaker 03:
Well, that's kind of a conclusory backhanded way of saying, well, we're going to get Aetna.

[00:28:39] Speaker 03:
Aetna does it through Payflex, its subsidiary.

[00:28:41] Speaker 03:
But it knows that Payflex is the one doing it.

[00:28:44] Speaker 03:
469 in the appendix.

[00:28:46] Speaker 03:
Paragraph 55 works with www.payflex.com, products and services, Payflex cards and video.

[00:28:53] Speaker 03:
It alleges providing Payflex's explanation of how Payflex card works.

[00:28:59] Speaker 03:
Paragraph 56 states, etnus etnus, Payflex provides information on its Payflex debit card.

[00:29:07] Speaker 03:
Exhibit D, they talk about their infringement analysis for Payflex.

[00:29:13] Speaker 03:
They switch from 32 and 33 claims.

[00:29:16] Speaker 03:
Just to avoid the license to go down to, well, we're just going to allege 33.

[00:29:20] Speaker 03:
You put the medical numbers on this multifunction card.

[00:29:26] Speaker 03:
They're not talking about the processing hub there.

[00:29:31] Speaker 03:
They knew about these subsidiaries.

[00:29:34] Speaker 03:
They alleged in their complaint that Payflex is the one doing this.

[00:29:38] Speaker 03:
It's the Payflex.

[00:29:39] Speaker 03:
You've seen the picture of the Payflex MasterCard.

[00:29:42] Speaker 03:
That sure isn't Etna, Inc.

[00:29:44] Speaker 03:
There's nothing there.

[00:29:46] Speaker 03:
That's right in their own complaint.

[00:29:47] Speaker 03:
They don't have to go to an exhibit to see that.

[00:29:49] Speaker 00:
Counsel, do you want to conclude your argument?

[00:29:56] Speaker 00:
The time has expired.

[00:29:58] Speaker 03:
It does show that the card was administered by JP Morgan, Bank of America, other parties, MasterCard, much more of an interest in any of these things.

[00:30:08] Speaker 03:
We're talking about plausible.

[00:30:09] Speaker 03:
What's plausible?

[00:30:10] Speaker 03:
Look at all the other parties that are involved.

[00:30:13] Speaker 03:
And the real interest?

[00:30:15] Speaker 03:
that is shown through their exhibits and their allegations.

[00:30:19] Speaker 03:
And nothing in the air points to Edna, Inc.

[00:30:21] Speaker 03:
Thank you, Your Honor.

[00:30:25] Speaker 00:
Mr. Richardson, take three minutes if you need it.

[00:30:27] Speaker 02:
Thank you, Your Honor.

[00:30:28] Speaker 02:
I'm going to try to respond to just four particular points, unless you have any questions.

[00:30:34] Speaker 02:
First, with respect to the issue about customers, I'm not sure if that's truly something that is of interest to the court, but at 560 of the appendix, we see the customers referred to as Aetna members.

[00:30:47] Speaker 02:
And again, this is in the document that was plausibly authored by Aetna, Inc.

[00:30:53] Speaker 02:
Um, I'd also like to briefly note, uh, I, I don't want to disagree with my friend, but, um, we were actually never allowed to amend.

[00:31:00] Speaker 02:
There was a, I think the suggestion that the judge said, you can go ahead and amend, uh, that we were never granted leave to amend after the dismissal.

[00:31:08] Speaker 02:
All we were granted was the opportunity to move for leave to amend, which of course shifts the burden to us under rule 16, as opposed to, uh, under the more liberal interpretations of 15.

[00:31:20] Speaker 04:
If you were to get a remand in this case, to reverse the dismissal, would you agree to a targeted summary judgment proceeding in which the discovery is limited just to the question of Aetna, Inc.'

[00:31:36] Speaker 04:
's involvement in these infringements?

[00:31:41] Speaker 02:
Your Honor, no.

[00:31:42] Speaker 02:
And the reason is, is that there was outstanding discovery.

[00:31:45] Speaker 02:
The suggestion from my colleague was that we sat idly, and that's not true.

[00:31:50] Speaker 02:
We sought information... Why don't we get this resolved?

[00:31:53] Speaker 04:
Because this question could be... We do.

[00:31:55] Speaker 04:
...case dispositive.

[00:31:56] Speaker 04:
Here's my concern.

[00:31:59] Speaker 04:
We see a lot of cases in which the parties are

[00:32:02] Speaker 04:
filing and hoping that their opposing counsel will have to spend so much money getting to summary judgment.

[00:32:10] Speaker 04:
And getting to summary judgment can be extraordinarily expensive that they say, there's a lot of room here to extract settlements.

[00:32:19] Speaker 04:
So I'm looking for something that the parties, if we send it back, that the parties will be able to resolve this question in a much more efficient way than motions to dismiss might be, which is to say, let's look at what evidence there is.

[00:32:33] Speaker 04:
Is it enough to say, I think is conceivably responsible for these infringements?

[00:32:39] Speaker 04:
Why not agree to that?

[00:32:40] Speaker 02:
The reason simply is that there is a procedure in every case that you're asking me to to disadvantage myself by not taking advantage of.

[00:32:49] Speaker 04:
What's the disadvantage?

[00:32:50] Speaker 02:
The disadvantage is we were initially heard about the possibility of there being others implicated in the 26th motion which is about six weeks before the time to amend expired.

[00:33:02] Speaker 02:
We immediately serve discovery.

[00:33:04] Speaker 02:
There has been and the appearance

[00:33:07] Speaker 02:
of ball hiding here and you're asking me to agree to something that in any other case i would be allowed to say to the judge i would be happy to discuss under whatever the judge's rules are whether that's a single summary judgment motion or other serial motions are allowed i'd be happy to willing to discuss this but they wouldn't have to bring a summary judgment motion if i knew

[00:33:26] Speaker 02:
They weren't the proper party and I knew who the proper party was because there is one there and right now it's Edna Inc.

[00:33:34] Speaker 02:
and that's what the document says and I really appreciate the idea of getting to the heart of this.

[00:33:41] Speaker 02:
That's our job too and I hope you don't think that we are a firm or a group of lawyers that are looking for a stick up

[00:33:48] Speaker 04:
There may not be, but there are such activities out there.

[00:33:54] Speaker 02:
We have to watch out for it.

[00:33:55] Speaker 04:
One way to watch out for it is to get quick resolution of threshold questions.

[00:34:02] Speaker 02:
Well, I know the District of Delaware had some wonderful procedures that allow for this sort of accelerated.

[00:34:08] Speaker 02:
I just don't think this is something that's available in the District of Connecticut.

[00:34:11] Speaker 02:
And because we haven't been able to get these answers, and there has been at least the appearance of

[00:34:18] Speaker 02:
uh... desire not to be forthcoming that is something that we need to get to the bottom of it i can assure you that if we know that they are the wrong people they won't need to bring a summary thank you counsel we have both arguments this is submitted