[00:00:00] Speaker 02: The next case for argument is 23-1772, Halo Electronics versus Pulse Electronics. [00:00:09] Speaker 02: Hard to believe we're still on Halo Electronics, is it not? [00:00:13] Speaker 04: It keeps giving. [00:00:14] Speaker 04: May it please the Court. [00:00:16] Speaker 04: Unless the Court redirects me, I plan today to handle the issues in the order that we brief them. [00:00:21] Speaker 04: So first, the issue of enhancement and fees, and then the Rule 41 issue. [00:00:28] Speaker 02: That's fine with me. [00:00:28] Speaker 02: Can I just ask you a preliminary question? [00:00:30] Speaker 02: You keep on repeatedly in the briefs, you talk about enhancement and fees. [00:00:37] Speaker 02: I don't see any argument with respect to attorney's fees anywhere in this case. [00:00:41] Speaker 02: So what are we looking at? [00:00:43] Speaker 02: We're looking at the enhancement. [00:00:45] Speaker 04: Enhancement and attorney's fees. [00:00:46] Speaker 02: Below, we did ask for attorney's fees as part of the- But what argument have you made here with respect to the issue of the entitlement of attorney's fees? [00:00:54] Speaker 04: It's the same argument as for the enhanced. [00:00:58] Speaker 04: having the case declared an exceptional case would trigger both an ability to obtain enhancement and an ability to obtain fees. [00:01:07] Speaker 00: So enhancement and exceptional is the same? [00:01:12] Speaker 04: Not necessarily. [00:01:14] Speaker 04: There's still an ability to determine how much. [00:01:16] Speaker 00: Do you argue this case was exceptional? [00:01:18] Speaker 04: Excuse me? [00:01:18] Speaker 00: Is there argument that the case is exceptional? [00:01:22] Speaker 04: Our argument is that we presented evidence that could [00:01:26] Speaker 04: be used to find that this case is exceptional, but the district court used the wrong legal test in denying enhancement fees. [00:01:32] Speaker 02: But isn't our analysis of attorneys using enhancements different? [00:01:37] Speaker 04: It may be, but I think the first thing that we have to do is find whether the case is exceptional or not. [00:01:41] Speaker 04: Both of those flow from the Seventh Amendment issue with the jury. [00:01:45] Speaker 00: But you made no specific argument, at least I can see it, on enhancement. [00:01:54] Speaker 00: I'm exceptional. [00:01:55] Speaker 00: This is an exceptional case, entitled to attorney's fees. [00:01:59] Speaker 04: I think we ask for both enhancement in fees, but use the same argument using the reverse of cortex factors. [00:02:08] Speaker 00: That's not my question. [00:02:09] Speaker 00: Did you make a specific argument that this is an exceptional case that entitles you to attorney's fees under our exception jurisdiction, jurisprudence? [00:02:22] Speaker 04: I think both of those were made in the original briefing under Reid versus Portek. [00:02:27] Speaker 04: And I don't think our opponent has made any argument that there was fall or rise or fall together. [00:02:32] Speaker 04: And under the rule of party presentment, they would have to make that argument for this court to affirm under Reid versus Portek. [00:02:39] Speaker 00: I'm just wondering whether you waived it. [00:02:42] Speaker 04: There's been no argument that we waived it at all. [00:02:44] Speaker 04: And I think the party has to present that to court. [00:02:46] Speaker 04: I don't think Consuelo Espante raised that issue. [00:02:48] Speaker 04: All right. [00:02:50] Speaker 04: On enhancement, I want to start by explaining what our fundamental issue is because the red brief at 39 has said that we misstated the law in this area. [00:02:59] Speaker 04: Our position is not that you must enhance or award fees if there is a finding of willfulness by a jury. [00:03:08] Speaker 04: Our position is [00:03:09] Speaker 04: that in considering all of the factors, the Reed versus Portek factors, or whatever factors are relevant, you have to give credit to the jury finding of willfulness. [00:03:20] Speaker 04: And there are, if you look at Reed versus Portek, factors one and two, I think, eight and nine, and some of them less so, involve a mens rea element to them. [00:03:29] Speaker 04: And the district court here did not [00:03:31] Speaker 03: do that, the district court. [00:03:34] Speaker 03: I assume you're not arguing that there are no circumstances in which, in this situation, the court cannot say that the evidence just doesn't support what the jury did. [00:03:47] Speaker 03: And just as I would do in Rule 50B situation, I disregard the jury's verdict. [00:03:52] Speaker 03: I'm not suggesting that. [00:03:54] Speaker 04: I put past Jamal on willfulness, on the mens rea issues that are incorporated in the willfulness. [00:04:00] Speaker 03: But on willfulness, why is the analysis, I mean, you say the Seventh Amendment absolutely forecloses the district judge from saying, from overriding, directly overriding the jury's verdict. [00:04:12] Speaker 03: Why doesn't the kind of Seventh Amendment analysis that says, yes, the judge may do that under Rule 50B, [00:04:20] Speaker 03: Why does that apply equally to your Seventh Amendment analysis here? [00:04:24] Speaker 04: Well, first of all, I think it's agreed that there's substantial evidence to support those findings. [00:04:29] Speaker 03: OK, but I'm trying to get the breadth of your Seventh Amendment argument. [00:04:34] Speaker 03: And what you just said a moment ago suggests to me that you think that there is an absolute prohibition on the judge overriding the jury's verdict. [00:04:44] Speaker 03: because of the Seventh Amendment, and yet the Seventh Amendment permits the judge to override a jury's verdict under Rule 50B. [00:04:51] Speaker 03: Why should this standard be different from the one that applies to 50B? [00:04:56] Speaker 04: Well, because I think, and this, again, is not an argument that's been made by our opponent, but I will answer your question. [00:05:03] Speaker 04: Rule 50B has a long law on saying if there is no substantial evidence, that's why it doesn't interfere with the Seventh Amendment. [00:05:11] Speaker 04: But here we have substantial evidence. [00:05:13] Speaker 04: Right. [00:05:13] Speaker 03: But what you now seem to be saying is that if there's no substantial evidence, then the Seventh Amendment would not foreclose the district judge from doing what the judge you say did here. [00:05:24] Speaker 04: That's fine. [00:05:25] Speaker 04: But that's not this case. [00:05:26] Speaker 02: Can I ask you a more fundamental question, still on your point on enhancement? [00:05:30] Speaker 02: In our remand decision to the district court, which he cited snippets of in his opinion, we said thus, in assessing the culpability of Pulse's conduct, the district court should consider as one factor in its analysis what Pulse knew or had reason to know at the time of the infringement of the HALO patents. [00:05:54] Speaker 02: Isn't that at least [00:05:55] Speaker 02: Is that confusing in your view? [00:06:11] Speaker 02: broader, that that's one factor in the analysis, but the district court should consider what they knew or had reason to know at the time of the halo patents. [00:06:22] Speaker 02: So wasn't this court saying that for egregiousness purposes or whatever, we can look at the facts? [00:06:29] Speaker 02: Granted, the jury says they knew or they had reason to know. [00:06:34] Speaker 02: But egregiousness is a bit of a different inquiry. [00:06:37] Speaker 02: So iDistrict Court can evaluate the facts again, not differently, but under a different rubric. [00:06:45] Speaker 02: And why is it that fair game? [00:06:47] Speaker 04: So I think you've framed it well. [00:06:49] Speaker 04: I think in isolation, it might be confusing. [00:06:52] Speaker 04: I think in the law that we've cited in our briefing, it's not confusing. [00:06:55] Speaker 04: I think what you can do, saying it's one factor, is in deciding egregiousness, there are other factors, like the size of the parties, action in litigation, things that aren't mens rea factors. [00:07:09] Speaker 03: What's that? [00:07:10] Speaker 03: The closeness of the case. [00:07:11] Speaker 04: There are non-mens rea factors to look at. [00:07:15] Speaker 04: But on the mens rea factors, some of them are just straight up square on with willfulness. [00:07:22] Speaker 04: Some of them are related to the mens rea, like the opinion letters, for example. [00:07:26] Speaker 04: On those, you have to start with the jury finding on willfulness and go from there. [00:07:32] Speaker 04: So there are other things to consider. [00:07:34] Speaker 02: But if I'm the district court, on the copying or whatever, can I say, yes, the jury found this? [00:07:41] Speaker 02: but I'm evaluating the egregiousness of the conduct. [00:07:45] Speaker 02: So I'm looking at [00:07:48] Speaker 02: both arguments made, thinking it was close, not dislodging what the jury concluded. [00:07:53] Speaker 02: That's a given. [00:07:54] Speaker 02: But saying, yeah, this was close. [00:07:57] Speaker 02: There was evidence on both sides. [00:07:59] Speaker 02: Isn't that a valid consideration and one that's completely proper for the district court to employ in his enhancement analysis? [00:08:07] Speaker 04: I think in the way you framed it, that would be OK. [00:08:10] Speaker 04: But I don't think that's what the district court did here. [00:08:12] Speaker 04: The district court said, these guys went and got opinion letters. [00:08:16] Speaker 04: and could have relied on them. [00:08:18] Speaker 04: That is something that is directly mens rea related. [00:08:21] Speaker 04: And if they relied on their opinions, they couldn't have been acting with reckless disregard, as the jury found. [00:08:28] Speaker 04: So there are certain questions. [00:08:30] Speaker 04: I don't want to say they can't consider that, because the court has a broad range of things it can consider. [00:08:35] Speaker 04: But as an example of the opinion letters, the court has to say, well, wait a minute. [00:08:39] Speaker 04: The jury has told me that they acted willfully. [00:08:42] Speaker 04: And that's contrary to saying that they relied on these opinions. [00:08:46] Speaker 04: And so that is the sort of factor. [00:08:48] Speaker 04: And that was the central factor for the district court here, was those opinion letters, along with the other mens rea issues that we raised. [00:08:55] Speaker 04: And again, our opponent has not raised this issue at all. [00:08:57] Speaker 04: Their whole argument is about that we are arguing that you have to grant additional damages if there's willfulness. [00:09:06] Speaker 04: That's not our argument. [00:09:06] Speaker 04: So they have not presented the arguments that the court has today. [00:09:12] Speaker 02: Except for the opinion letters, any other arguments to be made that are contrary to what you nicely said was a good way of my framing of the issue? [00:09:22] Speaker 04: I think also the opinion of the engineer that the court relied on. [00:09:27] Speaker 04: Also that Pulse wasn't put on notice by Halo's licensing letter. [00:09:32] Speaker 04: I think that that's an implied finding of the willfulness. [00:09:37] Speaker 04: And also the copying evidence, and that's an implied finding of the jury verdict. [00:09:42] Speaker 04: Basically, almost everything is not everything. [00:09:46] Speaker 02: Hypothetically, though, that we were to agree with you that the opinion letters just were a step too far. [00:09:55] Speaker 02: Is there really any reason to conclude or to even opine that the district court's decision on remand as his analysis of the remainder of the record outside of those opinion letters would lead him to an enhancement conclusion? [00:10:12] Speaker 04: I think if you go to the bottom line, the court goes through the factors. [00:10:16] Speaker 04: It has a paragraph that says, well, certainly, the HALO presented other evidence. [00:10:21] Speaker 04: And then that next paragraph, I think it's maybe A21 of the opinion, the bottom line paragraph of the opinion is almost all about the opinion letters and the engineer's opinion. [00:10:33] Speaker 04: So to your question, if we take those opinion letters out, that undermines the exercise of discretion [00:10:41] Speaker 04: and it would have to be redone without the opinion letters. [00:10:44] Speaker 04: So I don't think the court can affirm if the opinion letters go out. [00:10:51] Speaker 04: Rule 41, I think, again, what our argument is here is that the district court really made two fundamental errors at the front end of its analysis. [00:11:03] Speaker 04: Number one, [00:11:04] Speaker 04: it used its reasonableness analysis from 2017. [00:11:09] Speaker 04: That analysis was premised on the idea that on September 6, there was a final judgment. [00:11:18] Speaker 04: Of course, any delay after that is unreasonable. [00:11:20] Speaker 04: We had 30 days to react to a final judgment. [00:11:24] Speaker 04: So it's very hard for us to say that if you accept the premise that there was a final judgment on September 6, that any time after that was unreasonable. [00:11:34] Speaker 04: But that's not true anymore. [00:11:35] Speaker 04: This court told the court that it wasn't a final judgment. [00:11:38] Speaker 04: So that goes off the board. [00:11:39] Speaker 04: And then the other basis that the court provided. [00:11:42] Speaker 03: There's a difference between a judgment, which is the final judgment of a district court, and a judgment that we decide turns out not to have been final for purposes of appeal. [00:11:56] Speaker 03: I mean, if I enter a judgment and I think I'm done with this case, that's a final judgment as far as I'm concerned. [00:12:02] Speaker 03: And lots of things flow from that, including things like prejudgment interest. [00:12:08] Speaker 03: That doesn't mean that I have necessarily addressed all the issues that needed to be addressed. [00:12:13] Speaker 03: And the Court of Appeals may tell me so and send it back. [00:12:16] Speaker 03: It's a different notion of finality, right? [00:12:19] Speaker 04: True that, but that's a lie. [00:12:21] Speaker 03: The question is, why isn't the judgment? [00:12:25] Speaker 03: Well, first of all, there was a judgment back in 2013, right? [00:12:29] Speaker 04: Non-final judgment, right? [00:12:31] Speaker 04: Final but foreign accounting. [00:12:32] Speaker 03: But for purposes of calculation of prejudgment interest, that was the final judgment. [00:12:37] Speaker 04: I don't think so. [00:12:38] Speaker 04: It was final judgment. [00:12:38] Speaker 03: And you said so back in 2016. [00:12:40] Speaker 03: Because that's when you were making the argument that the prejudgment interest should be calculated from that date. [00:12:47] Speaker 03: That's the date you picked. [00:12:49] Speaker 04: Right. [00:12:49] Speaker 04: But that was never ruled on for that date. [00:12:53] Speaker 04: So there's no judicial estoppel. [00:12:54] Speaker 04: And again, our opponent has not made this argument. [00:12:57] Speaker 03: OK. [00:12:57] Speaker 03: But as of 2016, [00:13:02] Speaker 03: It seems to me that that's the point at which, OK, 2017, I guess it is, 2017, that's the point at which the court says the case is closed. [00:13:16] Speaker 03: As far as the court is concerned, he's done with the case. [00:13:19] Speaker 04: Correct. [00:13:19] Speaker 04: And that's fundamental. [00:13:20] Speaker 04: As far as the court is concerned, he's done. [00:13:23] Speaker 04: He never communicated that expressly, implicitly, or otherwise to the parties. [00:13:28] Speaker 03: If I say the case is closed, and I don't say it's administrative closed or whatever, that seems to me to signal about as clearly as the court could do that the case is over as far as that judge is concerned. [00:13:44] Speaker 03: Why not? [00:13:45] Speaker 04: So I disagree with that. [00:13:46] Speaker 04: Number one, we presume that judges [00:13:51] Speaker 04: do the right thing. [00:13:52] Speaker 04: And final judgments, as the court knows, used to be a mess. [00:13:56] Speaker 04: And the rules changed to provide some daylight on what was a final judgment and what was not. [00:14:03] Speaker 04: And the court has to jump through certain hoops. [00:14:05] Speaker 04: And the court here didn't jump through any of those hoops. [00:14:07] Speaker 04: What the court did is they closed the case. [00:14:10] Speaker 04: They didn't label anything final, never labeled. [00:14:13] Speaker 04: The brief says at footnote two on page five that it was labeled final. [00:14:17] Speaker 04: It was not labeled final. [00:14:18] Speaker 04: This is critical. [00:14:20] Speaker 04: The court did not tell parties that it was final. [00:14:22] Speaker 04: The court did not tell the parties that he intended it to be final. [00:14:25] Speaker 04: The court did not say anything in that regard. [00:14:27] Speaker 04: And we cite various cases that tell us courts can close cases. [00:14:31] Speaker 03: You mean administrative closing. [00:14:33] Speaker 03: I looked at those cases that you cited. [00:14:37] Speaker 03: In those cases, the circumstances or even the language used by the court seemed to me to be consistent with saying that that was administrative closure, whatever that means. [00:14:48] Speaker 03: But it's permitted, but only limited circumstances in place of a stay, let's say, or perhaps a dismissal without prejudice. [00:14:56] Speaker 03: But here, the case is closed. [00:15:00] Speaker 03: no associated language suggesting this is administrative closure. [00:15:04] Speaker 03: So your whole argument, seems to me, on 41B depends on that action not being the final action in the case. [00:15:13] Speaker 03: But as far as the judge was concerned, it seems to me it artificially was. [00:15:18] Speaker 04: Again, I think [00:15:19] Speaker 04: There's two issues there. [00:15:20] Speaker 04: What did the judge think? [00:15:21] Speaker 04: That's irrelevant. [00:15:22] Speaker 04: I think that's the other error of the judge is by saying that we knew he made a mistake when he never told us he made a mistake. [00:15:28] Speaker 04: But then you have the objective framework of were we on notice that we had an obligation? [00:15:35] Speaker 04: And you say that administrative closure is narrow, and I disagree with that. [00:15:39] Speaker 04: There is no rule on administrative closure. [00:15:41] Speaker 04: The courts have said that it's something judges do on their own. [00:15:46] Speaker 04: And that is a power judges have. [00:15:48] Speaker 04: But I think it comes with a responsibility. [00:15:50] Speaker 04: So when we look at a closure, and it's not labeled final, it's not labeled administrative, I think that's on the court, not on us. [00:16:00] Speaker 04: If you want to take a party with a duty to act, then the judge needs to make clear that there's a duty to act. [00:16:09] Speaker 03: So the judgment that entered on that day in 2017 that said judgment, if it had the word final in front of it, then you would be [00:16:17] Speaker 04: Much better case. [00:16:19] Speaker 03: Dispensary. [00:16:20] Speaker 04: If it truly was a final judge, you know, separate document requirement, all of that, yes. [00:16:24] Speaker 03: That's a different, yeah. [00:16:26] Speaker 03: All right, I think I understand. [00:16:27] Speaker 04: But just labeled final, but not truly final, I think it's a much better case. [00:16:30] Speaker 04: But that is definitely not this case. [00:16:33] Speaker 04: And they've never made an argument that somehow our notice came in later in time and our duty arose later. [00:16:39] Speaker 04: And that's another party presentation issue that the court cannot sue a sponte fine, that the delay somehow raised it. [00:16:47] Speaker 04: Their position has been always that on September 6, we were on notice, and that this was the final judgment. [00:16:52] Speaker 04: It always has been. [00:16:53] Speaker 04: It was labeled the final judgment, which is not true at all. [00:16:56] Speaker 04: I'll do the rest of my time. [00:17:14] Speaker 01: Good morning, Your Honor. [00:17:16] Speaker 01: My name is West Allen. [00:17:18] Speaker 01: I'm here on behalf of the Defendants and Cross-Appellants Pulse Electronics Inc. [00:17:21] Speaker 01: and Pulse Electronics Corporation, which are now owned by another entity, third-party purchaser, called EAGO. [00:17:29] Speaker 01: In three months, this case will be 18 years old. [00:17:33] Speaker 02: Can you start with any comment you might have on the questions we posed to your friend at the outset with regard to [00:17:40] Speaker 02: preservation or the analysis of the argument regarding attorneys? [00:17:46] Speaker 01: We can't. [00:17:46] Speaker 01: I can't. [00:17:47] Speaker 01: Your Honor, in truth, this appeal right now today is really about one thing and that's the prejudgment interest. [00:17:54] Speaker 02: You never called that out in your briefing here, right? [00:17:57] Speaker 02: I mean, bought into this is about enhancement and fees. [00:18:01] Speaker 01: Right. [00:18:02] Speaker 01: My colleague's team filed the appeal, kind of jumped us filing the appeal because the real issue that was always in question was [00:18:10] Speaker 01: How do you assess prejudgment interest from what day and was it the right amount? [00:18:13] Speaker 01: And that was our appeal and that is our cross appeal. [00:18:16] Speaker 01: The issues raised by my colleague concern enhanced damages, which both the first district judge and the second district judge addressed. [00:18:26] Speaker 01: Of course, this is the famous halo case. [00:18:28] Speaker 01: And so the halo case went back and we had to decide are there enhanced damages. [00:18:32] Speaker 01: Ten years of history now show us that those enhanced damages were not appropriate in this case because of all the reasons your honor has already alluded to. [00:18:40] Speaker 01: The standards for enhanced damages, the standards for a new trial on damages or have even attorney's fees, [00:18:47] Speaker 01: Those issues have rightly been decided by the district court. [00:18:51] Speaker 02: OK, but that's not my question. [00:18:52] Speaker 02: My question is, was there an adequate preservation of the issue, not just of enhancement, but of attorney's fees in this case? [00:18:59] Speaker 01: No, we believe there is not. [00:19:00] Speaker 01: We believe those issues are long close. [00:19:01] Speaker 02: You never made that argument. [00:19:02] Speaker 02: I mean, you obviously never made an argument on attorney's fees specifically, because they never did. [00:19:07] Speaker 01: Right. [00:19:08] Speaker 01: The issue is not even really, I don't believe, a dispute that the issue of enhanced, or I'm sorry, the issue of attorney's fees is long since closed. [00:19:14] Speaker 02: OK, can we move on to enhancement then? [00:19:16] Speaker 02: Your friend made a number of arguments, but one of them that has some impact, in my view, is the question of allowing the opinions of counsel, which were never part of the record that was before the jury, whether the district court's reliance on those is appropriate and proper. [00:19:35] Speaker 02: One, including in your answer, can you say the extent to which your friend says that that was a central piece or a major piece of the district court's conclusions in this case? [00:19:50] Speaker 01: I disagree. [00:19:50] Speaker 01: And I think the record shows that we would disagree that those opinion letters were the central issue that the court had to focus on. [00:19:57] Speaker 01: There were a litany of factors the court focused on, including under the totality of all the issues, the fact that [00:20:05] Speaker 01: The Halo folks had been involved in microchip manufacturing since 1975. [00:20:09] Speaker 01: There was significant testimony given, and this is in our briefing, there was significant testimony given concerning an expert that said the patent is obvious. [00:20:20] Speaker 01: There were these two opinion letters that were clear that the patent was obvious. [00:20:25] Speaker 01: I went back and said, how is it possible that those important critical opinion letters weren't presented? [00:20:32] Speaker 01: The answer is quite simple, I believe. [00:20:34] Speaker 01: There's two reasons. [00:20:35] Speaker 01: Back in 2007, there was a worry that litigation counsel would waive attorney-client privilege if they disclosed leads of letters. [00:20:42] Speaker 02: You're telling us now it was all in the record, right? [00:20:46] Speaker 02: Well. [00:20:46] Speaker 02: The information you've gleaned as new counsel. [00:20:49] Speaker 01: The only thing that's in the record is that the opinion letters were relied on by the district judge in considering the totality of the circumstances. [00:20:56] Speaker 02: How do we know what what? [00:20:57] Speaker 02: I thought there was some indication in the briefing that you didn't want to put them forward because of the attorney-client privilege. [00:21:04] Speaker 01: That is one reason. [00:21:05] Speaker 01: Yes, that was in the briefing. [00:21:06] Speaker 01: And also another reason is probably the fact that this case changed the old Seagate standard, which is there's objective and subjective reasoning. [00:21:14] Speaker 01: And the Supreme Court decided we don't want to let dumb pirates free. [00:21:18] Speaker 01: And the essence was you can't get off just because it turned out that there was literally a way that you could have had a defense, but you never even bothered to look at that defense. [00:21:26] Speaker 01: And so what happened now is what I call a halo problem, which is what every single plaintiff in every single patent case [00:21:32] Speaker 01: petitions the district court for enhanced damages. [00:21:35] Speaker 02: Okay, but how is it appropriate for the district court having a jury verdict to rely on evidence that was not presented not before the jury? [00:21:46] Speaker 01: I think the short answer is that the Supreme Court made clear in this case on remand that the district judge's job is to look at the totality of the circumstances. [00:21:54] Speaker 01: considerably more perhaps than what a jury would know and decide, is this party a pirate? [00:22:00] Speaker 01: That's the ultimate decision that the Supreme Court made. [00:22:03] Speaker 01: And so what this district court did, having not the 10 years of experience we have now, he simply said, let's look at the facts. [00:22:09] Speaker 01: Did this Pulse party become a pirate by ignoring something that they should have known was a valid patent? [00:22:16] Speaker 02: And all the evidence was... I guess we can all define facts how we want to, but are they really facts in terms of the propriety of their use when they weren't facts presented by you to the jury and they weren't facts considered by the jury or even on its plate? [00:22:33] Speaker 02: I mean, just how far can this go? [00:22:35] Speaker 02: in terms of the view that district courts can consider stuff outside of the record that wasn't before the jury in terms of enhancement or attorney's fees. [00:22:44] Speaker 02: How far can that go? [00:22:47] Speaker 01: I believe there would be no truth that should be left unpresented. [00:22:51] Speaker 01: I honestly believe that would be what the Supreme Court would ask. [00:22:53] Speaker 00: Let me ask the question this way. [00:22:57] Speaker 00: If we read that, shouldn't we also instruct the district court that it cannot consider the two opinion letters that were withheld from the jury? [00:23:06] Speaker 01: No, I do not believe that would be correct. [00:23:08] Speaker 01: I believe the Supreme Court has required the district court judge, as the district court judge says, to consider all the evidence. [00:23:14] Speaker 00: Isn't that unfair? [00:23:14] Speaker 00: It gives Paul safety, sword and shield type protection with respect to this issue. [00:23:22] Speaker 00: You got the letters that are withheld from the jury? [00:23:24] Speaker 01: Yeah, again, they were withheld for the reason of the law at that time. [00:23:28] Speaker 01: created trial canceling concern. [00:23:30] Speaker 02: It's one thing if you open the verdict. [00:23:32] Speaker 02: If you reopen the jury trial and you say, OK, you can consider them, they weren't subject to cross-examination by the other side, right? [00:23:40] Speaker 02: I mean, how do we know what would have gleaned, what would have come out, or what the jury would have thought of those, or even the district court judge, if they had been subject to the normal process in terms of directing cross-examination? [00:23:52] Speaker 01: Yeah, importantly, the district judge didn't look at those opinion letters for the truth of the matter of the opinion letters and what they actually said, which was that there was probably an obvious patent here. [00:24:01] Speaker 01: What they looked at is the fact that this party did due diligence like any responsible corporation would. [00:24:09] Speaker 01: not just relied on their own expert internally, they went out and got objective lawyers or patent lawyers to say, is this patent valid or not, considering what's out there? [00:24:17] Speaker 02: Well, did the jury know that? [00:24:19] Speaker 02: What was allowed and not allowed to come before? [00:24:21] Speaker 01: No, they did know that. [00:24:22] Speaker 02: And that's the... I'm sorry, they did... They did not know that. [00:24:25] Speaker 01: Because you said... This entire case is based on the fact that the jury never knew competent patent lawyers decided... It's on your test. [00:24:32] Speaker 01: Not my choice, prior counsel's choice. [00:24:35] Speaker 01: Whatever the reason was, and I think the reason was Seagate was the standard. [00:24:38] Speaker 01: They didn't have to worry about it. [00:24:40] Speaker 01: And mostly they were worried about turning client privilege. [00:24:41] Speaker 01: I believe that's really what happened there. [00:24:43] Speaker 01: And so that case went forward and hindsight says, wow, that was an unusual strategic decision. [00:24:48] Speaker 02: I know that some of the issues in this case are based on the timing and the intervening Supreme Court decision. [00:24:55] Speaker 02: and that makes it hard to know how typical this is going forward and what things may be done and not done differently at the outset based on the new standards. [00:25:09] Speaker 01: I believe the enhanced damages issues, because this case has been here twice and to the Supreme Court once, those enhanced damages issues were rightly decided and brought on appeal and sent back, and those issues really truly are closed. [00:25:22] Speaker 01: I believe you look at the record, you'll concur that the issue of enhanced damages, a new trial on damages, those are rightly closed. [00:25:29] Speaker 01: I started by saying this is an 18-year-old case, but it's even worse because the dispute goes back to over two decades. [00:25:37] Speaker 03: And let me see if I understand what your position is with respect to the foreclosing effect, if any, of the jury's verdict. [00:25:49] Speaker 03: Number one, do you believe that the jury's verdict has some effect to foreclose certain types of issues from the judge's consideration in the enhancement stage? [00:26:03] Speaker 01: I believe that's possible. [00:26:04] Speaker 01: I don't believe it's the case with respect to these opinion letters. [00:26:07] Speaker 03: Okay, okay. [00:26:08] Speaker 01: I'm just trying to get the lay of the land. [00:26:10] Speaker 03: The Seventh Amendment argument that's made by your opposing counsel was brooded about in the Supreme Court and never decided. [00:26:18] Speaker 03: But it's, as far as I can see, unresolved. [00:26:21] Speaker 03: But you're saying, yes, it does have some bite. [00:26:25] Speaker 01: Under the right circumstances, I believe it's true. [00:26:27] Speaker 01: But I think the basic principles, the Supreme Court said, district judges, you look at everything. [00:26:31] Speaker 01: Find the truth. [00:26:32] Speaker 01: That's what they said. [00:26:32] Speaker 03: Everything except that which has already been decided by the jury, correct? [00:26:37] Speaker 01: Right, and willfulness often is a decision by a jury. [00:26:41] Speaker 01: But it's not willfulness that de facto creates enhanced damages. [00:26:44] Speaker 01: And that's the concern that we would have and everybody has, which is what my opponent would like to say. [00:26:49] Speaker 03: So in terms of what evidence the judge, thinking about enhancement, may not consider, tell me how you would characterize that evidence in this case. [00:27:01] Speaker 03: That he may not consider? [00:27:02] Speaker 03: That he may not consider, that he may not second guess the jury on. [00:27:06] Speaker 03: What is it that he may not say as a basis for his decision? [00:27:11] Speaker 01: Certainly the jury averted. [00:27:12] Speaker 01: That's the seventh amendment. [00:27:13] Speaker 03: Yeah, but what exactly, what factual questions are foreclosed from his second guessing the jury on? [00:27:23] Speaker 01: I believe there likely would almost ever be any. [00:27:26] Speaker 01: because of the issues we've discussed. [00:27:28] Speaker 01: If there are some that can be raised by a party, I would hear that argument. [00:27:32] Speaker 01: But in this case, the reason it was appropriate to rely on those letters is because it was a totality of the circumstances, and it was an important fact to decide, is this a pirate or not? [00:27:40] Speaker 01: And hindsight says, well, they should have let the jury know about that. [00:27:43] Speaker 01: I would concur with that. [00:27:44] Speaker 01: But they didn't. [00:27:45] Speaker 01: But the points I really want to get to as well, Your Honor. [00:27:48] Speaker 01: Go ahead. [00:27:50] Speaker 03: You would not argue, I take it from your earlier answer to me, that the judge could say, [00:27:56] Speaker 03: The jury found willfulness, which means that they found that the party knew or should have known that there was a valid patent. [00:28:05] Speaker 03: But I don't believe that's true. [00:28:07] Speaker 03: The judge can't do that in enhancement, correct? [00:28:10] Speaker 01: Correct. [00:28:10] Speaker 01: And I don't believe he did that here. [00:28:12] Speaker 03: OK. [00:28:12] Speaker 03: I just wanted to make sure how much ground you were ceding to the seventh amendment. [00:28:17] Speaker 01: That is correct. [00:28:17] Speaker 01: That is correct. [00:28:18] Speaker 01: They found that. [00:28:19] Speaker 01: But what the judge [00:28:21] Speaker 01: didn't [00:28:32] Speaker 01: Dr. Dean Lawrence Larson, the Dean of Engineering at Brown University, who this is all he did. [00:28:37] Speaker 01: And he talked about why this was obvious. [00:28:39] Speaker 01: But ultimately, the important thing isn't that the opinion letter said it's obvious. [00:28:42] Speaker 01: The important thing is that a corporate respected organization did everything they could that a reasonable corporation would do to say, do we have a problem or do we not? [00:28:51] Speaker 01: Did we do this first or did they? [00:28:53] Speaker 02: No, no, no. [00:28:53] Speaker 02: We'll listen to another aspect, whether they relied on the opinion letters. [00:28:57] Speaker 02: I mean, wouldn't you need someone to say, is there [00:29:00] Speaker 02: I assume there's no record evidence because they would never submit it. [00:29:04] Speaker 02: I mean, what if your client gets up on the stand and somebody says, did you rely on these? [00:29:09] Speaker 02: And he said, nah, somebody decided to spend the money on these, but I could care less. [00:29:13] Speaker 02: That would obviate the extent to which one could rely on the opinion letters for intent, right? [00:29:21] Speaker 02: So they would deny that opportunity at trial because the evidence wasn't put in. [00:29:25] Speaker 02: Isn't that a problem for us here? [00:29:28] Speaker 01: I don't think so because, again, the Supreme Court said, look at the truth. [00:29:32] Speaker 01: Define and discern what the truth is. [00:29:33] Speaker 02: But we don't know what the truth is. [00:29:35] Speaker 02: There's record evidence that there were opinion letters. [00:29:40] Speaker 02: There's no record evidence, is there? [00:29:42] Speaker 02: I guess that's a question. [00:29:42] Speaker 02: I haven't read the entire record line by line. [00:29:45] Speaker 02: But I assume there's nothing in the record to establish that your client relied on the opinion letter. [00:29:51] Speaker 01: That's correct. [00:29:52] Speaker 01: The prior counsel made the decision not to bring that to the decision. [00:29:55] Speaker 02: OK, so isn't that a problem? [00:29:57] Speaker 02: Not the opinion letters per se, but how can one use the opinion letters in the analysis of either willfulness or enhancement if there's no testimony saying I relied on those opinion letters? [00:30:13] Speaker 01: Because the Supreme Court said consider all the circumstances and it is a factor, not what the letters say, which the other side will always have to examine. [00:30:20] Speaker 02: Yeah, but the question is whether they relied on the letters. [00:30:23] Speaker 01: Right. [00:30:25] Speaker 01: Right. [00:30:25] Speaker 01: The question is, in that case, the question is, yes, would they rely on the letters, but the judge... And we don't have any evidence from the record that they relied on. [00:30:35] Speaker 02: I mean, the judge seems to have... I'm unaware of any record. [00:30:38] Speaker 00: The judge withheld the letters from the jury, right? [00:30:42] Speaker 00: The judge withheld the letters from the jury. [00:30:45] Speaker 01: The letters were never presented to the jury by the prior counsel. [00:30:48] Speaker 00: Because the judge withheld them. [00:30:49] Speaker 00: The judge would not allow the letters to be presented. [00:30:51] Speaker 01: No, actually, the prior trial counsel decided not to do it. [00:30:53] Speaker 00: I thought it was a failure of authentication. [00:30:55] Speaker 01: No, no. [00:30:56] Speaker 01: The trial counsel made a litigation decision based on their concern, I believe, of waiving attorney-client privilege back in 2007. [00:31:04] Speaker 01: Before your time runs out, Judge Bryson may have questions. [00:31:07] Speaker 03: From the cross appeal. [00:31:10] Speaker 03: Yeah, what do you think is the date [00:31:14] Speaker 03: of the judgment for purposes of determining the amount owed in prejudgment interest. [00:31:21] Speaker 01: That's one of the important reasons I'm here today, Your Honor. [00:31:22] Speaker 01: The date, as Your Honor has disclosed, it's the judgment date, the monetary judgment date is what I'll call it. [00:31:28] Speaker 01: And that date was in May of 2013. [00:31:30] Speaker 01: 2013. [00:31:31] Speaker 01: And not only that, well, there's a satisfaction of judgment in this case, which is a point that must be made today, which is this party, the Pulse, has paid the judgment [00:31:40] Speaker 01: has paid all post-judgment interest from 2013. [00:31:44] Speaker 03: But does that include the $571,000 that Halo asked for in 2020 as the pre-judgment interest ending in 2013? [00:31:55] Speaker 01: No amount could be paid for pre-judgment interest. [00:31:57] Speaker 01: OK. [00:31:57] Speaker 01: But you're correct that that's the date they did. [00:31:59] Speaker 03: So don't do you not at least owe that much? [00:32:01] Speaker 03: Even if you don't owe $1.3 million, why don't you at least owe the $571,000 or $569,000? [00:32:06] Speaker 03: There are three reasons. [00:32:09] Speaker 01: And those are the last three reasons I quickly have to go through. [00:32:11] Speaker 01: Number one is the issue of 41B. [00:32:13] Speaker 01: The case should have been closed. [00:32:15] Speaker 01: The court said it was closed. [00:32:17] Speaker 01: The parties relied on it being closed. [00:32:18] Speaker 01: A new purchaser, third party, innocent third party purchaser decided and understood it was closed. [00:32:23] Speaker 01: They come into the fact that three years late, this other side says, oh, by the way, you forgot prejudgment interest. [00:32:30] Speaker 01: Well, that's true. [00:32:31] Speaker 01: In 2017, we all knew that. [00:32:33] Speaker 01: And the other side's arguments that somehow that's a surprise, we weren't put on notice, that's disingenuous. [00:32:39] Speaker 01: I was the attorney on the other side at the time. [00:32:41] Speaker 01: Their counsel called me and we talked about, it appears there has been a mistake. [00:32:45] Speaker 01: Their briefing admits that there was a mistake. [00:32:47] Speaker 01: There likely or clearly was a mistake. [00:32:50] Speaker 01: That is the date that everybody knew we may have a problem. [00:32:53] Speaker 01: Three years go by, a new party comes in and buys the companies. [00:32:57] Speaker 01: And now that party is injured because the case was closed as far as this party understood the United States court system, how it worked. [00:33:04] Speaker 01: That's reason number one. [00:33:06] Speaker 01: There should be no prejudgment interests allowed at this stage. [00:33:09] Speaker 01: Number two is the date factor. [00:33:11] Speaker 01: They calculated interest by the wrong date. [00:33:14] Speaker 01: Everybody forgot, because the case is so long, that the judgment was actually May of 2013. [00:33:19] Speaker 03: Well, yeah, I'm asking why don't they get at least prejudgment interest up to 2013? [00:33:26] Speaker 03: So that's the date you're talking about. [00:33:28] Speaker 01: The only reason would be the prejudice issue for an innocent third party and the three-year delay that this court, the district court, has actually found it was substantial. [00:33:36] Speaker 01: It was material. [00:33:38] Speaker 01: It was real. [00:33:40] Speaker 01: It, in fact, is the reason the court dismissed the case early on and why we're here again is because the court actually found that it was too long. [00:33:48] Speaker 01: And the first argument we have today is prejudgment interest is inappropriate here because it was too long. [00:33:53] Speaker 01: Three years is, by definition, too long. [00:33:55] Speaker 01: The other side knew it. [00:33:56] Speaker 01: They said nothing. [00:33:57] Speaker 01: And we go three years later and the third party was prejudiced. [00:34:00] Speaker 01: And that's the injury that why there shouldn't be any prejudgment interest now. [00:34:03] Speaker 01: And then the other quick two issues is the amount was wrong because they applied the wrong standard. [00:34:09] Speaker 01: The Lane Tram case for this court and other progeny make it clear that if you're going to give it a super high interest rate, there's got to be a reason for it or it's punitive. [00:34:17] Speaker 01: And they didn't do that. [00:34:18] Speaker 01: They didn't present any evidence that they borrowed money at a higher rate. [00:34:21] Speaker 01: So the T bill rate is the appropriate rate under the Lane Tram case. [00:34:25] Speaker 03: Judges have an immense amount of discretion in choosing what to use. [00:34:28] Speaker 03: And the state law is frequently used. [00:34:33] Speaker 01: They do, but I would invite this court to make that clear, because what I call the halo problem is not just everybody petitions. [00:34:40] Speaker 01: The other problem is that this prejudgment interest becomes a replacement for punitive damages. [00:34:44] Speaker 01: And that's what's actually happening in this case. [00:34:46] Speaker 01: They're trying to get so much punitive damages because the interest rate is multiple times higher than the post-judgment. [00:34:51] Speaker 01: There's clarity on post-judgment. [00:34:53] Speaker 01: In this case, we have had a satisfaction of judgment, and we've paid post-judgment since May 2013. [00:34:58] Speaker 01: There's nothing else after 2013. [00:34:59] Speaker 01: We pay that completely in full plus interest. [00:35:02] Speaker 01: Both sides stipulated that. [00:35:04] Speaker 01: Thank you. [00:35:04] Speaker 00: This is just, if I can, a quick question for clarification. [00:35:08] Speaker 00: And this is to the prejudice to the third parties that purchased Pulse. [00:35:12] Speaker 00: Yes. [00:35:14] Speaker 00: Was there any, like, due diligence? [00:35:17] Speaker 00: I'm having a hard time understanding how a third party can be prejudiced under these circumstances. [00:35:23] Speaker 00: Surely they must have known that this potential risk was out there. [00:35:27] Speaker 01: Thank you, Judge Raina. [00:35:28] Speaker 01: Excellent question. [00:35:29] Speaker 01: And they were aware of all the facts that the records show. [00:35:33] Speaker 01: There was a judgment in 2013. [00:35:34] Speaker 01: There was a closure of the case in 2017. [00:35:38] Speaker 01: There was a satisfaction of judgment in 2016. [00:35:41] Speaker 01: Everything had been paid, including the full judgment and all post-judgment interest from 2013. [00:35:45] Speaker 01: The only issue was, was there going to be pre-judgment interest allowed? [00:35:49] Speaker 01: And three years had passed, or at this time, almost two. [00:35:53] Speaker 01: had passed since the case was closed and the other side said nothing. [00:35:57] Speaker 01: Arguably, we always have the defense that there shouldn't be any prejudgment interest. [00:36:00] Speaker 01: We never even had that discussion with the district judge, ironically, in this case. [00:36:04] Speaker 01: But for that reason, our party said we shouldn't have prejudgment interest, but there is this risk. [00:36:09] Speaker 01: But after three years, the federal rules make it clear that's too late. [00:36:13] Speaker 01: And that's what was conveyed to the other side, and that's what they relied on. [00:36:16] Speaker 01: The big question to us now is how is this possible? [00:36:19] Speaker 01: Three years went by, and suddenly springing to life is the request for prejudgment interest again. [00:36:25] Speaker 01: Thank you. [00:36:30] Speaker 02: Will we start two minutes? [00:36:32] Speaker 04: Let me start where you ended. [00:36:33] Speaker 04: There's no evidence whatsoever of the last part about what Yagio knew or didn't know. [00:36:37] Speaker 04: I think all the declaration was that Yagio purchased them. [00:36:41] Speaker 04: And the gray brief, which we haven't had a chance to reply to, [00:36:45] Speaker 04: refers to successor and interest, merger, that didn't occur. [00:36:49] Speaker 04: This is a parent subsidiary. [00:36:51] Speaker 04: These are two different companies under corporate law. [00:36:53] Speaker 04: You would have to pierce the veil for Yageo's prejudice to be relevant. [00:36:57] Speaker 04: So that alone is a reason that this court would have to vacate both the interest and the Rule 41, because the district court depended for its prejudice finding, which the finding it has to make. [00:37:11] Speaker 04: 100% or at least 90% on Yagio and not on Pulse. [00:37:15] Speaker 03: If we disagree with you on the seventh amendment in the Rule 41, and we're down to the interest calculation, I guess I have two questions. [00:37:23] Speaker 03: One is, isn't it correct that the judgment for purposes of prejudgment interest is 2013, May 28, 2013? [00:37:32] Speaker 04: I don't think that's true. [00:37:34] Speaker 04: And I don't think they raised it again. [00:37:36] Speaker 03: That's what you said to the district judge back in 2016 and again in 2020. [00:37:41] Speaker 03: when you calculated the prejudgment interest. [00:37:44] Speaker 03: It seems to me, though, that the one thing you can't do is change your position on that at this point. [00:37:48] Speaker 04: Well, I think we can, because we finally have a final judgment, right? [00:37:51] Speaker 03: If you've lost on the question of whether the 2017 was a final judgment. [00:37:58] Speaker 04: No, I think we can update it. [00:37:59] Speaker 04: The only way that we would lose that is if there was judicial estoppel and the premise for judicial estoppel was in place. [00:38:05] Speaker 03: They haven't asked for it. [00:38:06] Speaker 03: There was a lot of court decision saying [00:38:09] Speaker 03: You look at the time of the first judgment, even if something happens on appeal, they tinker with this or that. [00:38:17] Speaker 03: Still, unless they throw the judgment out altogether, that's the date that counts for prejudgment interest. [00:38:22] Speaker 03: Why isn't that true here? [00:38:23] Speaker 04: So you have me flat-footed because this wasn't briefed at all. [00:38:26] Speaker 04: And so I don't know exactly what those cases say. [00:38:29] Speaker 04: The 2013 issue of stopping, that was never made. [00:38:33] Speaker 04: They talked only about stopping in 2016. [00:38:37] Speaker 04: And if you look at our presentation toward the end of the appendix, we actually did reduce by $1.5 million in 2016. [00:38:47] Speaker 04: So the one argument they make about the end of the interest period at appendix 253A, you'll see, [00:38:54] Speaker 04: our table reduced to one and a half million. [00:38:56] Speaker 04: So we took care of that. [00:38:57] Speaker 04: They haven't made this 2013. [00:38:59] Speaker 03: But after 2016 and 2017, in 2020, you made the argument to the district court that the amount of prejudgment interest traceable to 2013 judgment was $571,000. [00:39:13] Speaker 03: Why aren't you stuck with that? [00:39:18] Speaker 03: I think... You know the plating I'm talking about. [00:39:21] Speaker 04: I do a lot deeply aware of it, because again, they haven't raised it, so I didn't study it in preparing for this argument. [00:39:26] Speaker 04: But I think what we said was, that's what we gave. [00:39:30] Speaker 04: Times have moved on. [00:39:30] Speaker 04: We now have a final judgment. [00:39:33] Speaker 03: But nothing happened. [00:39:36] Speaker 03: Neither the 16 nor the 17 order, those had both occurred prior to the 20 order. [00:39:42] Speaker 03: Correct. [00:39:43] Speaker 03: So nothing has happened since then that changed [00:39:46] Speaker 03: the finality of the judgment, right? [00:39:50] Speaker 04: It was never a final judgment. [00:39:53] Speaker 03: Well, if it's not a final judgment, the judgment interest doesn't stop running until this case is actually completely over. [00:40:01] Speaker 03: You're not contending that. [00:40:03] Speaker 03: That is, after we rule and if we remand it to the district judge, it does whatever he does, and nobody takes any appeals. [00:40:10] Speaker 03: That's not your argument, right? [00:40:12] Speaker 04: I think the line between pre-judgment interest and post-judgment interest is the final judgment. [00:40:17] Speaker 03: So in other words, there's no such thing. [00:40:19] Speaker 03: If you say that, then it seems to me you've abolished post-judgment interest, because nothing happens until the case is completely over. [00:40:28] Speaker 03: And everything before that is pre-judgment interest, in which case there's nothing to post-judgment interest unless you delay making an account. [00:40:37] Speaker 04: So there's interest on the $1.279 million that [00:40:40] Speaker 04: that we don't have that is post-judgment interest. [00:40:43] Speaker 04: And the court recognized that in a footnote near the end of its opinion. [00:40:47] Speaker 04: Just real quick, I need a site for the preservation of the fees issue. [00:40:51] Speaker 04: I'll point the court to A756. [00:40:53] Speaker 04: It's our motion for enhanced damages and attorney fees. [00:41:00] Speaker 04: And we rely on the willfulness for both of those. [00:41:04] Speaker 04: It starts at 756. [00:41:05] Speaker 04: It goes for 20 pages. [00:41:06] Speaker 04: But it is in the appendix. [00:41:08] Speaker 02: Thank you. [00:41:09] Speaker 02: We thank both sides of cases.