[00:00:00] Speaker 06:
That leads to our final case this morning, number 231111, Clowder Change LLC versus NCR Corporation.

[00:00:09] Speaker 06:
Mr. Hughes?

[00:00:11] Speaker 00:
Thank you, Your Honor.

[00:00:12] Speaker 00:
May it please the court, Paul Hughes, for appellant NCR?

[00:00:16] Speaker 00:
There are several issues in the case.

[00:00:18] Speaker 00:
I tend to focus on three.

[00:00:20] Speaker 00:
I'd be happy to begin wherever the court may like.

[00:00:23] Speaker 00:
But I'd start with first that we think the patents are plainly invalid, which the PTAB recently concluded.

[00:00:29] Speaker 00:
The second point I'd make is the district court invented a new infringement theory, applying ACMI 5 to system claims after post-trial briefs were filed.

[00:00:37] Speaker 00:
This theory never went to the jury, and it's wrong in any event.

[00:00:41] Speaker 00:
And our third point is there was a blatant misuse of entire market value evidence in assessing damages.

[00:00:46] Speaker 00:
So for these reasons and the others in the briefs, we believe that there should be reversal.

[00:00:52] Speaker 00:
But I'll start with invalidity unless the court would prefer me to begin elsewhere.

[00:00:57] Speaker 00:
Turning to invalidity, we don't think the district court provided any substantive reasoning to really wrestle with the invalidity position we presented.

[00:01:07] Speaker 00:
Our expert worked through very substantial evidence demonstrating how Wochek meets each of the structural limitations.

[00:01:13] Speaker 06:
OK, but your problem is that the jury rejected the evidence.

[00:01:20] Speaker 00:
Well, to the extent that it's evidence of the structural limitations, I think what the court said in mobile media ideas, this was a 2015 case, quote, conclusory statements by an expert are insufficient to sustain a jury's verdict.

[00:01:33] Speaker 00:
And when you look at the passage that my friend quotes from Mr. Chatterjee, this is appendix pages 91.8.

[00:01:41] Speaker 06:
Could you just back up so we're clear about what was allegedly missing from your prior art?

[00:01:49] Speaker 06:
As I understand it, it's different with respect to the 012 and 640 patents.

[00:01:55] Speaker 06:
With respect to the 640, it's the subscription module, and with respect

[00:02:02] Speaker 06:
to the 012, it's this wherein clause about using the internet, right?

[00:02:07] Speaker 00:
That's right, Your Honor.

[00:02:08] Speaker 00:
I think that's right.

[00:02:09] Speaker 00:
Although with respect to the 012, the wherein clause using the internet, the only evidence that COC presents that it's missing is Mr. Krauss saying in conclusory fashion, it's not there.

[00:02:23] Speaker 00:
He doesn't actually look at the Wochek reference and provide any substantive reasoning as to why Wochek doesn't disclose it.

[00:02:30] Speaker 00:
And in fact, that's really the essential

[00:02:31] Speaker 00:
invention that Wochek describes is an integrated system where there's information going from the programming module to the kiosks via an internet connection via a server system.

[00:02:43] Speaker 06:
And it's described in the abstract of... And I thought the evidence that you presented to the jury on this was that Wochek described using a LAN and not the internet.

[00:02:55] Speaker 00:
Well, I think Wochek is pretty clear that it's a communication system where you have a central server and that it goes to the, ultimately it goes to the kiosk device and it has that communication mechanism.

[00:03:08] Speaker 00:
I don't think there was any material distinction that was drawn between a LAN server versus

[00:03:12] Speaker 00:
an internet connection.

[00:03:14] Speaker 00:
I don't think that's an argument that Mr. Krauss ever pressed.

[00:03:17] Speaker 06:
Is my statement not correct that what you presented to the jury was that Wojciech shows this using a LAN and not the internet?

[00:03:29] Speaker 00:
No, I think Wojciech is broader.

[00:03:30] Speaker 00:
I mean, Wojciech talks about a central server providing the software media updates to local servers.

[00:03:35] Speaker 00:
And I think that is the

[00:03:36] Speaker 00:
the communication.

[00:03:36] Speaker 06:
OK, but in terms of what you presented to the jury, am I mistaken?

[00:03:41] Speaker 06:
I thought that what was presented to the jury was that Wojciech showed providing it through a LAN and not the internet.

[00:03:53] Speaker 00:
Your Honor, I don't think that was an obvious distinction that was really presented to the jury as being any sort of meaningful distinction.

[00:04:01] Speaker 02:
But it was a distinction.

[00:04:03] Speaker 00:
I'm not sure there was, Your Honor.

[00:04:05] Speaker 00:
I think at paragraph 75 and 76, it talks about an administrative tool loaded on a remote computer so it can be configured and to make the communication to the local server.

[00:04:16] Speaker 00:
So that notion of having a remote server then interacting with the local kiosk via remote connection is made.

[00:04:22] Speaker 00:
I don't think there was any notion that there was a material distinction between LAN or an internet connection.

[00:04:28] Speaker 00:
I think that would be

[00:04:28] Speaker 00:
you know, obvious in any event.

[00:04:30] Speaker 00:
And again, it goes back to Mr. Krauss doesn't provide any substantial evidence because there's no substantive explanation as to why there's any sort of plausible distinction.

[00:04:40] Speaker 02:
But, Your Honor, to determine... What site were you going to give you earlier?

[00:04:43] Speaker 02:
You're going to give a site to what you confused with conclusory testimony?

[00:04:47] Speaker 00:
Yes, Your Honor, it's Dr. Krauss, or sorry, Mr. Krauss's explanation.

[00:04:51] Speaker 00:
It appears at the appendix page 93, 64 to 68.

[00:04:56] Speaker 00:
That's the

[00:04:57] Speaker 00:
portions that they rely upon.

[00:05:00] Speaker 00:
When you look at what Mr. Krauss says at 93, 64, and 68, he's just asked, is it present?

[00:05:05] Speaker 00:
And he says, no, no, no.

[00:05:06] Speaker 00:
But what this court in mobile media has said, that sort of conclusion, without any explanation, doesn't qualify as substantial evidence.

[00:05:14] Speaker 00:
But if I could turn to the 640 patent, as the court noted, the only distinction there is the notion of a subscription service.

[00:05:22] Speaker 00:
I think there are two core problems with that, one's anticipation.

[00:05:26] Speaker 00:
Because as we demonstrate with the in-running Schreiber, if your distinction is going to be acclaimed functional limitation, that functional limitation has to add some structure to distinguish from the prior art.

[00:05:37] Speaker 00:
And here, there's no structure that a subscription limitation adds.

[00:05:41] Speaker 00:
But even if we are wrong about that, the Michaud reference, the entire point of the Michaud reference, is taking the prior art point of sale terminal systems and adding a subscription service to it.

[00:05:51] Speaker 00:
And Michaud, very clearly on the face of it, as we describe, provides the motivation

[00:05:55] Speaker 00:
for why you would make that combination.

[00:05:56] Speaker 00:
And the motivation that we describe in the briefs and is on the face of Michaud is that large and medium businesses can afford to purchase that kind of technology because they have the capital base in order to do so.

[00:06:08] Speaker 00:
But small businesses can't necessarily purchase the infrastructure.

[00:06:11] Speaker 00:
So it's advantageous to small businesses to be able to lease it rather than to purchase it.

[00:06:15] Speaker 02:
Why was the jury not entitled to adopt any contrary

[00:06:20] Speaker 02:
testimony presented by the expert.

[00:06:24] Speaker 00:
Ultimately, I don't think there was any substantial evidence that would support that.

[00:06:27] Speaker 00:
And I think it's pretty difficult to say that it's not obvious that if you have a product that can be sold, can be leased.

[00:06:34] Speaker 00:
Again, we're looking at conclusory testimony from Mr. Kraus.

[00:06:37] Speaker 00:
saying, well, I disagree, but there's no substantive weight as to why he disagrees.

[00:06:42] Speaker 00:
And I think it's just a correct point to say that it's obvious to one skilled in the art, but even a part being obvious to one skilled in the art.

[00:06:48] Speaker 02:
Because this is the same thing where you're saying that the expert's testimony is conclusory and therefore he can't support.

[00:06:54] Speaker 02:
Yes, Your Honor.

[00:06:55] Speaker 00:
Ultimately, our position on invalidity that I have to convince the court to win on the balance of invalidity, but I think the court's agreed.

[00:07:01] Speaker 02:
It's a tough burden that you have on substantial evidence in a jury, right?

[00:07:04] Speaker 00:
I don't disagree, Your Honor, but what this court said in mobile media, which is essentially our point here, I think is correct.

[00:07:10] Speaker 00:
It's not enough to go to a jury where all that the plaintiff's expert says is, I disagree.

[00:07:17] Speaker 00:
If that is the sole substance of the testimony is, is there an element missing?

[00:07:21] Speaker 00:
Yes.

[00:07:22] Speaker 00:
And then the other side actually shows where in the prior art that element is.

[00:07:26] Speaker 00:
That is not the kind of dispute that is properly put to a jury because there's no substance behind the opposing expert who says, I disagree.

[00:07:34] Speaker 00:
They have to give reasons.

[00:07:35] Speaker 00:
And the court has repeatedly said a conclusory statement is not substantial evidence.

[00:07:41] Speaker 00:
May I turn to infringement?

[00:07:42] Speaker 00:
I'm happy to spend more time on validity.

[00:07:44] Speaker 06:
Why don't you turn to infringement?

[00:07:45] Speaker 06:
And if we were to rule for you on infringement, do we need to reach invalidity?

[00:07:51] Speaker 00:
No, Your Honor.

[00:07:51] Speaker 00:
Infringement would be a sufficient basis to resolve this case, either infringement or invalidity.

[00:07:56] Speaker 02:
Do you still have a counterclaim of invalidity that's pending?

[00:08:01] Speaker 00:
Your Honor, that's a good question.

[00:08:02] Speaker 00:
I don't think that's been resolved, but I will go verify that.

[00:08:06] Speaker 02:
I don't have to go again.

[00:08:07] Speaker 02:
You saw it.

[00:08:08] Speaker 02:
You filed a counterclaim seeking declaratory judgment of invalidity of the patent, right?

[00:08:12] Speaker 00:
I believe we did.

[00:08:13] Speaker 02:
Yes, ma'am.

[00:08:13] Speaker 02:
Are you willing to drop that right now if we find there's no infringement?

[00:08:18] Speaker 02:
Because under Cardinal Chemical, I mean, I don't know.

[00:08:20] Speaker 02:
Under Cardinal Chemical, we as a court have to resolve issues of validity if there's a counterclaim, right?

[00:08:27] Speaker 00:
Your Honor, that is a good question.

[00:08:28] Speaker 00:
And let me verify if we have an outstanding

[00:08:31] Speaker 00:
But I think I can say, and I think the court has accepted this before, if the court were to find in our favor on the basis of infringement, we would be content with winning this case on the basis of infringement, assuming it's a reversal and not a remand.

[00:08:44] Speaker 00:
And I do think that would be an appropriate basis for the court to resolve this matter.

[00:08:49] Speaker 02:
For your infringement argument, I understand your argument to be that

[00:08:54] Speaker 02:
The district court was correct in concluding that it's the user that makes beneficial use of the system.

[00:09:01] Speaker 02:
Where the district court got it wrong was in finding that because there may have been direction of control of one step or one part of the system, that that is not sufficient under Centillion.

[00:09:14] Speaker 02:
It has to be that the

[00:09:15] Speaker 02:
accused infringer directs and controls the use of the consumer's use of the entire system.

[00:09:25] Speaker 00:
Yes, Your Honor, I think that that's all accurate.

[00:09:27] Speaker 00:
I think the court agreed with us that Centillion, as Centillion appears on this face, does not support this verdict.

[00:09:33] Speaker 00:
And the district court, again, in that portion of the decision, fully agreed with NCR.

[00:09:37] Speaker 00:
The only way that the district court was able to affirm is to incorporate

[00:09:41] Speaker 00:
the broader infringement standard from Akamai 5 and to essentially graph that onto centillion.

[00:09:46] Speaker 00:
And I think that doesn't work for a couple of reasons.

[00:09:48] Speaker 06:
The theory being that NCR controls the customers?

[00:09:53] Speaker 00:
Well, no, it's a broader theory than that, Your Honor.

[00:09:55] Speaker 00:
I think that the centillion theory is really a command control theory.

[00:09:58] Speaker 06:
It says that if one actor... I understand what the centillion... Of course, Your Honor.

[00:10:02] Speaker 06:
I'm talking about the Akamai here.

[00:10:07] Speaker 06:
He says that NCR doesn't

[00:10:10] Speaker 06:
directly infringed the claims under the centillion theory that customers do, right?

[00:10:15] Speaker 06:
That's right.

[00:10:16] Speaker 06:
Right.

[00:10:16] Speaker 06:
So then he goes on to say, but looking to Akamai, I find that NCR controls the customers and therefore there's infringement under Akamai.

[00:10:28] Speaker 06:
Is that what it is?

[00:10:29] Speaker 00:
I think that's what the district court is saying.

[00:10:30] Speaker 00:
I think that analysis is a little difficult, Your Honor.

[00:10:34] Speaker 02:
Is it specifically that customers control

[00:10:37] Speaker 02:
that NCR controls the customer's hookup to the internet?

[00:10:42] Speaker 00:
Well, no, they don't.

[00:10:44] Speaker 00:
I think he finds it's more under the Akamai encouragement prong about conditioning participation activity.

[00:10:49] Speaker 03:
He's looking at that Akamai's expanded in... Was he really looking at the Akamai at that point, or was he expanding Centillion?

[00:11:00] Speaker 00:
Well, I think what he was doing was taking the Akamai standard and adding it to Centillion to expand Centillion.

[00:11:05] Speaker 00:
is what I think the court thought he was doing.

[00:11:08] Speaker 00:
But the first problem is the jury was never given an instruction beyond the centillion theory.

[00:11:12] Speaker 00:
So this new theory the district court came up with was never requested by cloud of change.

[00:11:18] Speaker 00:
Actamite 5 was never discussed in the case in any party's briefing until the district court, Sue Esponti, added that in the decision on the j-malls.

[00:11:27] Speaker 00:
And it's just too late at this point to add in that theory.

[00:11:30] Speaker 02:
At page A14, the court says, unlike questions in Tillian, NCR directs its customers to perform by requiring its merchants to obtain and maintain internet access.

[00:11:44] Speaker 02:
What does that mean?

[00:11:45] Speaker 02:
Because I think this might be an error, because he's looking at one component.

[00:11:51] Speaker 02:
of the system, internet access.

[00:11:54] Speaker 02:
And even if it's true that NCR directed its customer to perform, maybe maintaining internet access isn't enough.

[00:12:01] Speaker 02:
It has to be that you would, under Centillion, direct and control

[00:12:07] Speaker 02:
beneficial use in the entire system.

[00:12:10] Speaker 00:
I think that's entirely correct, Your Honor, but let me add one additional point.

[00:12:12] Speaker 00:
Under Act Mi-5, it is a control or direct test.

[00:12:16] Speaker 00:
There's a disjunctive there, because under Act Mi-5, control is not strictly required.

[00:12:21] Speaker 00:
The condition of the benefit is something less than control, which I think Act Mi-5 explicitly recognizes that the test is more flexible than control.

[00:12:29] Speaker 00:
Centillion, though, because of the distinction of a system claim and the singular nature of that act,

[00:12:34] Speaker 00:
requires the actor who is the direct infringer to be able to control, command that all elements of the system be put into service.

[00:12:42] Speaker 00:
That's what's lacking here.

[00:12:43] Speaker 02:
So you have two things, control versus direction or control.

[00:12:47] Speaker 02:
I mean, control and direct versus control or direct.

[00:12:49] Speaker 02:
And also, what is it that's being controlled?

[00:12:53] Speaker 00:
Yes, Your Honor.

[00:12:53] Speaker 00:
I think that's exactly right.

[00:12:56] Speaker 00:
And I think this is very different than Act MI-5 because the pragmatic considerations that gave rise to Act MI-5 following the Supreme Court's decision in limelight.

[00:13:05] Speaker 00:
Yeah, it's a method claim, Your Honor.

[00:13:06] Speaker 00:
And the issues that Akamai 5 resolves in method claims aren't present in system claims.

[00:13:11] Speaker 00:
And when one looks to Centillion, Centillion's pretty clear of saying, look, the folks who use this are the customers.

[00:13:18] Speaker 06:
The customers use a system of the software.

[00:13:22] Speaker 06:
Supplying the software doesn't make you an infringer.

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

[00:13:25] Speaker 00:
But what Centillion suggests is it leaves open the possibility of secondary liability for those who supply the software.

[00:13:30] Speaker 00:
You can make an inducement or a contributory infringement claim.

[00:13:33] Speaker 00:
you have to see how that shapes out, but you have a secondary liability claim that you can pursue.

[00:13:38] Speaker 00:
The problem here is, as Cloud of Change recognizes, they've waived those claims, expressed that they only brought a direct liability theory.

[00:13:46] Speaker 00:
That might work as to a customer, but it doesn't work as to NCR.

[00:13:51] Speaker 00:
Just briefly, if I can touch on damages, or I'm happy to spend any more time on infringement, the entire market value rule, there was

[00:13:58] Speaker 00:
no ability to access that for two independent reasons.

[00:14:01] Speaker 00:
One, there was never a connection between the claimed patented features and the entire value of the product.

[00:14:08] Speaker 00:
And just to jump to the core issue, what Cloud of Change's contention is, is that if you have a system claim that takes a prior art system and then adds something, you can, in order to access entire market value, take all of the elements of the system, including everything that was in the prior art.

[00:14:22] Speaker 00:
That's just not correct, though, because as Garrett's in the foundational apportionment case from the Supreme Court says,

[00:14:27] Speaker 00:
You have to look not to the entire claim system.

[00:14:30] Speaker 00:
You have to look specifically to the thing that's the improvement over the prior art.

[00:14:33] Speaker 00:
Here, in validity contentions, we don't see any improvement over the prior art.

[00:14:39] Speaker 00:
But even spotting that there is some improvement over the prior art systems, there has to be a demonstration that it's that improvement that creates the entire market value of the product.

[00:14:48] Speaker 00:
That has not been demonstrated, which shows why entire market value, a very narrow exception, which rarely applies, should not have been allowed here.

[00:14:56] Speaker 04:
There was some evidence submitted, correct?

[00:14:59] Speaker 04:
It was kind of scant.

[00:15:00] Speaker 00:
Well, the Strahecker report had those four factors about those four things.

[00:15:04] Speaker 00:
The problem is none of them, there's no nexus between those and what is the improvement over the prior art.

[00:15:10] Speaker 00:
Those four factors that are described exist in all of the prior art systems.

[00:15:13] Speaker 00:
So what Cloud of Change says is, well,

[00:15:15] Speaker 00:
We took a prior art system and added something on top of it.

[00:15:18] Speaker 00:
We can claim everything, including what was, because of a system claim, the patented features include all of this.

[00:15:25] Speaker 00:
But that's the wrong way to look at it.

[00:15:27] Speaker 00:
You have to look at what is the specific improvement over the prior art in order to access the entire market value.

[00:15:32] Speaker 00:
And I think that was a fail here.

[00:15:36] Speaker 06:
OK.

[00:15:36] Speaker 06:
I think we're out of time.

[00:15:37] Speaker 06:
We'll give you two minutes.

[00:15:52] Speaker 01:
Thank you, Your Honors.

[00:15:53] Speaker 01:
Good morning, and may it please the Court.

[00:15:55] Speaker 01:
I'm Jerry Selinger for Appellee Cloud of Change.

[00:16:00] Speaker 01:
I'm going to respond to the three points counsel raised.

[00:16:05] Speaker 01:
Unless the Court has a different view, let me do it in the order counsel raised them.

[00:16:11] Speaker 01:
So as far as invalidity.

[00:16:17] Speaker 01:
Our expert, Mr. Krauss, did provide evidence as to reasons why each of White, Czech, and Brown was deficient and did not anticipate.

[00:16:28] Speaker 01:
Oh, by the way, counsel several times refers to global media.

[00:16:32] Speaker 01:
I don't believe I was cited in either of their briefs.

[00:16:38] Speaker 01:
But Mr. Krauss explained that White, Czech,

[00:16:46] Speaker 01:
from appendix pages 9361 through 9366, Wojciech used a LAN connecting the POS terminal in the web server, while the claim required an internet connection.

[00:17:01] Speaker 01:
And having the system on the internet was an important aspect of the invention.

[00:17:09] Speaker 01:
Second, Mr. Kraus pointed out that Wojciech required in-store

[00:17:15] Speaker 01:
servers while the Patent well our patent claims neither claim in-store servers and in fact the the Common specification teaches those are not required.

[00:17:33] Speaker 01:
That's it appendix page 97, which is column 5 and

[00:17:38] Speaker 01:
lines 41 through 42.

[00:17:40] Speaker 01:
And then what check also does not meet the vendor subscription service language, which isn't just three.

[00:17:51] Speaker 06:
That's the only differences to the 645, right?

[00:17:54] Speaker 01:
Those are three.

[00:17:55] Speaker 01:
Those are the three differences.

[00:17:58] Speaker 02:
But there's two different patterns, right?

[00:18:02] Speaker 06:
Yes, that's right.

[00:18:04] Speaker 06:
Just focusing on the 640, what are the differences?

[00:18:08] Speaker 01:
OK, so for the 640, it's the vendor subscription service hardware.

[00:18:17] Speaker 01:
But it's not just those three words.

[00:18:20] Speaker 01:
It's that clause which has interconnections and hardware-software interactivity.

[00:18:28] Speaker 01:
It's not just buy or lease a car.

[00:18:33] Speaker 01:
It's far more complicated.

[00:18:35] Speaker 01:
And Mr. Kraus made those.

[00:18:37] Speaker 02:
Where does he talk about how it's complicated?

[00:18:41] Speaker 01:
Pardon me?

[00:18:41] Speaker 02:
Where does the expert talk about how it's complicated?

[00:18:45] Speaker 01:
How it's complicated?

[00:18:48] Speaker 01:
Well, Mr. Kraus' testimony for Wojciech is from A, 9361 to 9366.

[00:18:58] Speaker 01:
And now, NCR says, well.

[00:19:07] Speaker 02:
That's for the other patent.

[00:19:10] Speaker 02:
Where is the testimony from the expert on the subscription service?

[00:19:17] Speaker 01:
In that case, it would be $9,397 to $9,400, Your Honor.

[00:19:26] Speaker 05:
Which volume is that in?

[00:19:27] Speaker 05:
Pardon me?

[00:19:28] Speaker 05:
Which volume of the appendix is that in?

[00:19:29] Speaker 01:
That's going to be volume four.

[00:19:34] Speaker 01:
It's right on the cusp.

[00:19:39] Speaker 01:
NCR made the same conclusory arguments for the district.

[00:19:44] Speaker 01:
Wait, wait, wait.

[00:19:45] Speaker 01:
I'm sorry.

[00:19:46] Speaker 06:
Where is his testimony that the subscription service wasn't something that was

[00:19:57] Speaker 02:
So you gave the site to 93, 97, 400.

[00:20:04] Speaker 02:
We're specifically in there.

[00:20:09] Speaker 02:
93, 97, I don't think even has expert testimony on it.

[00:20:19] Speaker 01:
Give me one second, John.

[00:20:29] Speaker 06:
It seems to be objections to the jury, George.

[00:20:34] Speaker 01:
Page 9366.

[00:20:41] Speaker 01:
Question at line 11.

[00:20:44] Speaker 01:
Does Whitechak disclose a vendor subscription service?

[00:20:49] Speaker 01:
Line 12 answers, not once.

[00:20:52] Speaker 02:
Is there anything about why it would have been obvious to modify?

[00:20:57] Speaker 02:
to provide a vendor subscription service?

[00:21:03] Speaker 01:
There was no testimony from NCR's expert above and beyond the you can lease a car, you can buy a car.

[00:21:20] Speaker 01:
That was it.

[00:21:21] Speaker 01:
And so the patent is presumed valid.

[00:21:28] Speaker 01:
The other side didn't offer any evidence about the details of the modification.

[00:21:35] Speaker 01:
And Mr. Kraus identified things, both in Wojciech and in Brown, that were not in prior art.

[00:21:45] Speaker 01:
And let me just point out.

[00:21:47] Speaker 06:
But I understand what you're saying.

[00:21:49] Speaker 06:
You're saying that the patent requires a specific method of a subscription service.

[00:21:58] Speaker 06:
that's not in the prior art.

[00:22:00] Speaker 06:
But I don't see your expert as saying that there's anything unusual about the subscription feature.

[00:22:07] Speaker 01:
So I'm not saying that's a method.

[00:22:09] Speaker 01:
The patent claim requires the web server as a vendor subscription service.

[00:22:19] Speaker 01:
And what our expert did is identify differences between the claim subject matter

[00:22:28] Speaker 01:
in the prior art, because the other side was arguing anticipation.

[00:22:34] Speaker 01:
And in response, Dr. Chatterjee, their expert, argued that things were there either inherently or expressly.

[00:22:49] Speaker 01:
He admitted not everything was there.

[00:22:53] Speaker 01:
And the jury, his inherency argument

[00:22:58] Speaker 01:
really isn't traditional patent law inherency.

[00:23:02] Speaker 01:
It's you can lease a car, you can buy a car.

[00:23:05] Speaker 01:
Therefore, everything's not inherent.

[00:23:07] Speaker 02:
This is not necessarily the case.

[00:23:09] Speaker 01:
That's right.

[00:23:10] Speaker 01:
And so now, as far as somebody being conclusory, if I ask you, does that patent show a widget?

[00:23:21] Speaker 01:
And the answer is no.

[00:23:22] Speaker 01:
I don't think that's conclusory.

[00:23:27] Speaker 01:
And let me say.

[00:23:28] Speaker 01:
If NCR had thought that the patent actually showed something, it had the right to cross-examine.

[00:23:38] Speaker 06:
OK, but did he say it wouldn't be obvious to use it with a subscription service?

[00:23:47] Speaker 01:
My expert certainly did not.

[00:23:49] Speaker 01:
And their expert had a, I think it was a three

[00:24:01] Speaker 01:
OK, so on obviousness, their expert failed to say anything about motivation to combine at all.

[00:24:16] Speaker 01:
And in its reply brief, NCR points its appendix page 91-81 to say, yes, we did, but that page actually

[00:24:29] Speaker 01:
was its expert opinion on inherent anticipation, not motivation to combine.

[00:24:38] Speaker 01:
And pages, appendix pages 9401 through 9403, I think Mr. Crafts further elaborated about why the evidence would not have shown

[00:25:00] Speaker 01:
obviousness of the prior combinations.

[00:25:06] Speaker 06:
Maybe you should turn to anticipation with my colleagues.

[00:25:10] Speaker 06:
Any further questions on invalidity?

[00:25:13] Speaker 02:
I was just going to say, we don't have pages 9401 to 9403, for what it's worth.

[00:25:20] Speaker 01:
I apologize.

[00:25:22] Speaker 01:
I'm sorry, Judge Stein, could you repeat the question?

[00:25:25] Speaker 06:
Why don't you move on to infringement?

[00:25:29] Speaker 01:
Let me do that.

[00:25:30] Speaker 01:
I think NCR unfairly characterizes what the district judge did in the record it had before.

[00:25:45] Speaker 01:
When we went to trial, we had NCR as the only defendant.

[00:25:53] Speaker 01:
We didn't accuse NCR's customers of direct infringement

[00:25:58] Speaker 01:
we had abandoned indirect infringement claims.

[00:26:03] Speaker 06:
So the- So you didn't argue that the customers were direct infringers.

[00:26:08] Speaker 06:
Then how do you come under Ackerman?

[00:26:12] Speaker 01:
Well, first, and I think this is important, what the district court did- No, no, no.

[00:26:19] Speaker 01:
Answer my question.

[00:26:21] Speaker 01:
We didn't argue Akamai.

[00:26:22] Speaker 06:
You didn't argue that the customers were direct infringement.

[00:26:25] Speaker 06:
How do you come under Akamai?

[00:26:26] Speaker 01:
We argued centillion data and direct use infringement.

[00:26:31] Speaker 06:
So you didn't argue Akamai.

[00:26:33] Speaker 01:
Under 271A.

[00:26:33] Speaker 01:
Did you argue Akamai?

[00:26:36] Speaker 01:
We did not argue Akamai.

[00:26:39] Speaker 01:
We argued centillion data.

[00:26:42] Speaker 01:
And we argued direct use infringement based on centillion data itself having

[00:26:51] Speaker 06:
Centillion says supplying the software doesn't make the supplier of the software an infringer.

[00:26:57] Speaker 06:
Maybe it could be induced, contributory, but it's not direct infringement, correct?

[00:27:02] Speaker 01:
That's right.

[00:27:03] Speaker 01:
But what Centillion did do is it looked to see, before it said there was no infringement, the court looked to see if Quest on its own

[00:27:19] Speaker 01:
had control of any of the elements that were missing.

[00:27:24] Speaker 01:
And so what we did is, NCR had all of the elements except the internet connection.

[00:27:33] Speaker 06:
And the- Wait a minute.

[00:27:35] Speaker 06:
Centillion says, supplying the software doesn't make you direct infringing.

[00:27:38] Speaker 06:
That's what happened here.

[00:27:39] Speaker 06:
They supplied the software, right?

[00:27:41] Speaker 01:
No.

[00:27:42] Speaker 01:
There's far more than that, Your Honor.

[00:27:45] Speaker 01:
But the record showed- What did they do besides supply the software?

[00:27:49] Speaker 01:
Well, so the NCR had a whole back office service where it provided, it took input from customers, dealt with that input, then returned that input to the customers.

[00:28:13] Speaker 01:
The only thing that was missing, because NCR also had the software,

[00:28:18] Speaker 01:
What was missing was NCR didn't provide an internet connection.

[00:28:25] Speaker 02:
But the district- Did NCR provide the one or more point of sale terminals?

[00:28:29] Speaker 02:
Did NCR provide the- One or more point of sale terminals?

[00:28:34] Speaker 01:
The district court found they did, or either the district court found either they did or NCR controlled that.

[00:28:45] Speaker 01:
And NCR did not appear.

[00:28:46] Speaker 02:
Where did they find that NCR controlled that?

[00:28:50] Speaker 01:
So an appendix page.

[00:29:12] Speaker 01:
Appendix page.

[00:29:14] Speaker 01:
18 going over to 19.

[00:29:20] Speaker 01:
HCR argues that it did not supply or control the majority of POS terminals.

[00:29:26] Speaker 01:
It cannot directly infringe.

[00:29:30] Speaker 01:
Appendix 18.

[00:29:34] Speaker 01:
The heading sub 3.

[00:29:38] Speaker 01:
Substantial evidence supports the jury's infringement finding for the, quote, POS terminal, end quote, limitation.

[00:29:52] Speaker 01:
Did you find that, Your Honor?

[00:29:53] Speaker 02:
Yeah.

[00:29:54] Speaker 02:
It says, OK, which sentence were you referring to on this?

[00:30:00] Speaker 01:
I'm just starting with the front.

[00:30:02] Speaker 01:
And it's pointing out that, first of all, NCR admits that it

[00:30:08] Speaker 01:
supplies or controls at least some of the terminals.

[00:30:11] Speaker 01:
But then it argued about the majority.

[00:30:24] Speaker 01:
So that was there.

[00:30:27] Speaker 01:
It's fairness to Judge Albright.

[00:30:30] Speaker 01:
What he did in his analysis was he did a centillion

[00:30:38] Speaker 01:
data analysis by looking at our trial record, and he concluded that under Centillion data, substantial evidence supported infringement.

[00:30:52] Speaker 06:
On page 12, he says, the accused infringer did not control the accused system, the customers did.

[00:30:59] Speaker 06:
And as in Centillion, it is no moment that MCR supplies the software for the customer use.

[00:31:06] Speaker 01:
He did, but then he goes on on pages 13, 14, and 15 and provides much more context.

[00:31:14] Speaker 01:
And the way I read his first sentence is, keep in mind that Centilion had both quest merchant use, which was personal, where the question was whether there was personal infringement

[00:31:34] Speaker 01:
And the alternative in centillion was, if there wasn't personal infringement, whether there was vicarious infringement, it cost one or more of the elements could be attributed under the principle of vicarious liability.

[00:31:50] Speaker 06:
OK, just to be clear, so what you're saying is you're not relying on acrimide theory here, correct?

[00:31:57] Speaker 06:
That's correct.

[00:31:58] Speaker 06:
And so you're saying this comes under centillion?

[00:32:00] Speaker 01:
That's correct.

[00:32:01] Speaker 01:
And if I can just add, what Judge

[00:32:04] Speaker 01:
What Judge Albright did is he did a sanity check, saying, I conclude under centilian data that there's infringement.

[00:32:16] Speaker 01:
But I'm also going to look at Akamai to see the new vicarious liability, expanded vicarious liability, as had an analogous to what centilian data did when it first looked at some method claim language to conclude

[00:32:34] Speaker 01:
there was system claim or could be system claim infringement.

[00:32:39] Speaker 01:
And so what Judge Albright did was he considered that Akamai 5 was an additional, quote, viable theory.

[00:32:49] Speaker 01:
And he used that to confirm he was correct in finding infringement under centillion data.

[00:33:00] Speaker 02:
So applying centillion.

[00:33:03] Speaker 02:
I'm having a hard time understanding why it is that there would be infringement here.

[00:33:09] Speaker 02:
And the reason why is because just like in Centillion,

[00:33:12] Speaker 02:
This, in centillion, the court said, Quest in no way directs its customers to perform, nor do its customers act as agents.

[00:33:19] Speaker 02:
Law of Quest provides software and technical assistance.

[00:33:22] Speaker 02:
It is an entirely decision of a customer whether to install and operate this software on its personal computer or data processing means.

[00:33:29] Speaker 02:
And I think your situation is exactly the same, with the exception that if you're going to use the system, you should hook up to the internet.

[00:33:38] Speaker 01:
So Judge Albright,

[00:33:41] Speaker 01:
made some specific findings based on that.

[00:33:45] Speaker 01:
And at appendix 14.

[00:33:47] Speaker 06:
No, he doesn't make findings.

[00:33:51] Speaker 01:
This is Jamal.

[00:33:51] Speaker 01:
Jamal.

[00:33:51] Speaker 06:
Jamal didn't make findings.

[00:33:53] Speaker 06:
The jury made findings.

[00:33:54] Speaker 01:
That's correct.

[00:33:55] Speaker 01:
I stand corrected, Your Honor.

[00:33:56] Speaker 01:
But what he looked at was the testimony of he looked at the training video testimony.

[00:34:08] Speaker 01:
He looked at NCR.

[00:34:10] Speaker 01:
NCR's Quinn, who testified that items in the Silver Merchant Agreement are things NCR is requiring of the merchant.

[00:34:18] Speaker 01:
That's appendix 8757.

[00:34:21] Speaker 01:
And Mr. Quinn also said, NCR requires its customer to provide internet access.

[00:34:28] Speaker 02:
That's just one.

[00:34:29] Speaker 02:
Internet access isn't the whole system.

[00:34:32] Speaker 01:
That's correct.

[00:34:34] Speaker 01:
But we proved NCR direct.

[00:34:38] Speaker 01:
directly used itself, all of the other elements.

[00:34:42] Speaker 02:
No, that was not the theory that was adopted in the Jamal decision.

[00:34:47] Speaker 02:
A theory that was adopted was that the consumer is the one who uses the system, not the accused infringer.

[00:35:00] Speaker 01:
Your Honor, let me ask you to take another look at appendix pages

[00:35:08] Speaker 01:
14 and 15.

[00:35:12] Speaker 02:
Because the court says that NCR's merchants put the acute system into service.

[00:35:18] Speaker 02:
And therefore, right?

[00:35:21] Speaker 01:
Well, and that's why he didn't fund NCR and itself committed personal direct use

[00:35:32] Speaker 06:
OK, but the NCR doesn't care whether its customers use the software or put the system into use.

[00:35:38] Speaker 06:
I mean, they sell them the software, right?

[00:35:42] Speaker 01:
No, they don't.

[00:35:43] Speaker 01:
They sell software.

[00:35:44] Speaker 01:
They sell hardware.

[00:35:45] Speaker 01:
They have back office system.

[00:35:48] Speaker 01:
I mean, NCR's silver merchant agreement is a complicated agreement that provides much more.

[00:35:57] Speaker 01:
This isn't off-the-shelf software.

[00:36:00] Speaker 01:
as may have been the case in Centillion.

[00:36:02] Speaker 01:
This is a whole package of hardware and software.

[00:36:07] Speaker 01:
And the loose end here was with the internet connection, as you asked about, to install the terminals.

[00:36:18] Speaker 01:
But NCR complained about those in its JMAW motion, did not appeal that here.

[00:36:32] Speaker 06:
Thank you, Mr. Selinger.

[00:36:34] Speaker 06:
Thank you.

[00:36:35] Speaker 06:
Thank you, Your Honor.

[00:36:37] Speaker 06:
Mr. Hughes, you have two minutes.

[00:36:44] Speaker 00:
Thank you, Your Honor.

[00:36:45] Speaker 00:
On infringement, we heard cloud of change doesn't advance an Akamai-5 theory.

[00:36:49] Speaker 00:
They're resting on centillion.

[00:36:51] Speaker 00:
I just pointed out Judge Albright agreed with us that as centillion is adopted, he even agrees that JMAW is appropriate.

[00:36:57] Speaker 00:
We think that's the right outcome.

[00:37:00] Speaker 00:
On the 640 patent, I just point the court to appendix page 9,199 to 9,200.

[00:37:07] Speaker 00:
That's the evidence from Dr. Chatterjee, where he explains the Mashad reference and the basis to combine and what Mashad discloses.

[00:37:16] Speaker 00:
There's just no rebuttal to why.

[00:37:17] Speaker 00:
That would be an obvious combination.

[00:37:20] Speaker 00:
Finally, we talked about damages.

[00:37:22] Speaker 00:
If the court reaches it, we think that the damages

[00:37:25] Speaker 00:
is fully inappropriate for reasons in the brief.

[00:37:28] Speaker 06:
I'd be happy to answer any questions that the court may have.