[00:00:00] Speaker 00: The next case for argument is 22-2207, Intellectual Tech versus Zebra Technology. [00:00:08] Speaker 00: Mr. Perkins, whenever you're ready. [00:00:10] Speaker 03: Good morning, Your Honors, and may it please the Court. [00:00:12] Speaker 03: James Perkins on behalf of the Appellant, Intellectual Tech. [00:00:17] Speaker 03: Now, this case is about standing, and it largely takes off, picks up where the Court left off in a trio of Unilock cases a couple years ago, because the lower court based its ruling on the same district court decision in that case. [00:00:28] Speaker 03: So first, Intellectual Tech, as the owner of the 247 patent, has Article III standing to sue Zebra. [00:00:34] Speaker 03: To the best of our knowledge, this court's never held otherwise. [00:00:37] Speaker 04: And the only issue here is Article III standing. [00:00:39] Speaker 04: We are assuming, for purposes here, that there is what sometimes is still called, but less often happily, statutory standing. [00:00:50] Speaker 04: That is, we're assuming the existence of the cause of action under 281 to [00:00:59] Speaker 04: intellectual tech. [00:01:01] Speaker 03: I think that's right, your honor. [00:01:02] Speaker 03: So below, um, zebra raised, uh, prudential or statutory standing as well. [00:01:07] Speaker 03: The court decided the case solely on constitutional standing and didn't get to prudential standing. [00:01:11] Speaker 03: So, um, I think for today we can assume that we have prudential standing or that that's just maybe left for another day, depending on the outcome of this article three standing. [00:01:20] Speaker 00: Well, there's another case pending, right? [00:01:21] Speaker 00: You refiled or is there something else? [00:01:24] Speaker 03: Yeah. [00:01:24] Speaker 03: So there is another case that's currently stayed, um, following [00:01:28] Speaker 03: the court's order that we're here on appeal. [00:01:32] Speaker 03: We entered into a clarification of rights agreement between Main Street and Intellectual Tech to say that the parties didn't think the court's order was correct, explain their rights vis-a-vis the agreements. [00:01:43] Speaker 03: Then the court issued their unilog decision, and obviously with the collateral estoppel, there were some concerns. [00:01:46] Speaker 03: And so that case has then stayed pending appeal in this case. [00:01:49] Speaker 00: Do we agree with you on the power of attorney clause issue? [00:01:53] Speaker 00: Do we even need to reach the unilog questions? [00:02:00] Speaker 03: I don't think so. [00:02:00] Speaker 03: I think there's a couple of ways to resolve this. [00:02:02] Speaker 03: I think first, the fact that Intellectual Tech is the owner of the patent gives them Article III standing, which is what I began with. [00:02:07] Speaker 03: No courts ever said otherwise. [00:02:09] Speaker 03: I think everyone agrees here, at least the district court said at the page 21 of the appendix that, and this was in denying the reconsideration, but just affirming that upon default, the title to the 247 patent remained with Intellectual Tech. [00:02:22] Speaker 03: And so as this court said in [00:02:24] Speaker 03: intellectual property development, 248 F3rd at 1345, title in the patent, quote, confers constitutional standing on the assignee to sue another for patent infringement in its own name. [00:02:36] Speaker 03: Similarly, in Pandrell, 320 F3rd at 1368, the court said, quote, establishing ownership of a patent that has been infringed satisfies the requirement of article 3 standing. [00:02:45] Speaker 03: Court said the same in Shindaman, which is discussed in our briefing as well. [00:02:48] Speaker 03: So I don't even know if you have to get to the issue on the [00:02:53] Speaker 03: Attorney in fact to find article three standing, but we certainly think that support as well. [00:02:57] Speaker 04: I guess what I was thinking about it is that we do have to get to it. [00:03:00] Speaker 04: And it turns on the question whether if I make you my attorney in fact, that does authorize you to do things. [00:03:09] Speaker 04: Maybe in my interest, maybe not, but it certainly authorizes you to do things. [00:03:13] Speaker 04: And my understanding, and this is my question, under Texas law, it doesn't deprive me of the right to do them myself, does it? [00:03:23] Speaker 04: If it does, then I think you have a serious problem. [00:03:25] Speaker 03: No, and I think that's the case we point out. [00:03:27] Speaker 03: It doesn't give you substantive rights like an assignment would. [00:03:30] Speaker 03: So it just allows Main Street to kind of step into the shoes of really not even intellectual tech, but Adam Krosno, the sole member of intellectual tech. [00:03:37] Speaker 04: Let me see. [00:03:37] Speaker 04: I at least have a clear idea of what I'm trying to ask. [00:03:41] Speaker 04: And I just want to make sure that either I've not communicated it or that I'm wrong about it. [00:03:48] Speaker 04: If I make you [00:03:50] Speaker 04: my attorney in fact, irrevocably, that gives you certain powers as an attorney in fact, to take certain action. [00:03:58] Speaker 04: My understanding is that my giving you that authority does not deprive me of the right to take those same actions unless you sort of step in the way and prevent me from doing it. [00:04:12] Speaker 03: That's correct, Your Honor. [00:04:14] Speaker 03: And I think that's supported by section six at, I believe that's page 233 of the appendix, I believe. [00:04:23] Speaker 03: And section six lays out the remedies that Main Street could have in default, but it says, while the fault exists, Main Street may add its option. [00:04:30] Speaker 03: And so I think that clarifies what you're saying, is the parties agreed that in the event of default, Main Street could foreclose, which no one's really contesting here, or they could take action as attorney, in fact. [00:04:40] Speaker 03: But they had the option also to do nothing and to allow intellectual tech continue to [00:04:44] Speaker 03: prosecute the case as far as this patent and any other intellectual property. [00:04:54] Speaker 03: And so we do kind of disagree with the court's interpretation agreements. [00:04:57] Speaker 03: But I think even if you take the court and say it was correct at appendix 13 that Main Street possessed an unfettered right to license the 247 patent, that still doesn't mean that intellectual tech lost constitutional standing. [00:05:10] Speaker 03: And the court reiterated that in the Unilogged decision, which it didn't ultimately reach the conclusion. [00:05:15] Speaker 03: But it did say that its prior rulings and aspects in Alfred E. Mann, quote, held that the patentee's grant of a license that includes the right to sublicense did not deprive the patent owner of Article III standing. [00:05:26] Speaker 03: So we think even if the court's somehow correct about these agreements, the fact that in Zebra's opinion and the court's opinion that mainstream had this unfettered right, that that doesn't mean that intellectual tech lost standing. [00:05:38] Speaker 00: What about our opinion in YF? [00:05:40] Speaker 00: I'm sorry, Your Honor? [00:05:41] Speaker 00: What about our court's opinion in YF? [00:05:46] Speaker 00: Cited in the briefs, I think. [00:05:47] Speaker 00: And I think the district court may have cited it, too. [00:05:52] Speaker 00: I'd have to check. [00:05:53] Speaker 00: It was about an exclusive licensee. [00:05:56] Speaker 00: Y-A-V? [00:05:57] Speaker 00: Oh, YF. [00:05:58] Speaker 00: I'm sorry. [00:05:59] Speaker 03: I'm sorry. [00:06:00] Speaker 03: I meant to say YF. [00:06:01] Speaker 03: Oh, sorry. [00:06:02] Speaker 03: Yes sir, so I do think that's, I think Judge DeLorey in his separate writing in the Unilock case explained why, why it was about exclusive licensees and why Unilock, the district court in Unilock, which is applied the same understanding as the district court here, was wrong in extending Y.E.B. [00:06:19] Speaker 03: and exclusive licensees to a patent owner. [00:06:21] Speaker 02: But why? [00:06:22] Speaker 02: I mean, the logic of Y.A.V. [00:06:26] Speaker 02: seems to [00:06:28] Speaker 02: doesn't really seem like it needs to be confined to exclusive licensees. [00:06:33] Speaker 02: If somebody has the potential to obtain a license, at least under YAV, why does it matter that they could obtain a license from the exclusive licensee, the patent holder, somebody else? [00:06:50] Speaker 02: If somebody here can obtain a license, wouldn't the logic of YAV [00:06:57] Speaker 02: lead to a finding of no standing? [00:07:01] Speaker 03: I don't think so here, especially because Zebra could not obtain a license from Main Street. [00:07:06] Speaker 03: I mean, that's the whole point of this power of attorney provision is Main Street could grant a license, but it had to do so in the name of and on behalf of intellectual tech. [00:07:13] Speaker 03: So the license would be from intellectual tech, not from Main Street. [00:07:19] Speaker 04: Assume the opposite of that. [00:07:21] Speaker 04: Assume that the authority to sell or assign [00:07:26] Speaker 04: incorporates an authority to grant somebody else a license. [00:07:35] Speaker 04: Still the same answer? [00:07:37] Speaker 03: It's still the same because here, and I think that was the district court's, really his order was this unfettered right. [00:07:43] Speaker 03: But if you look at footnote four, he goes on to talk about this right to assign. [00:07:47] Speaker 03: The problem here is as the court reiterated and as everyone seems to agree is intellectual tech had title to the patent. [00:07:53] Speaker 03: So Main Street could not assign. [00:07:55] Speaker 03: the patent as Main Street. [00:07:58] Speaker 03: So you still get back to the fact that the only way Main Street can act to do these things is to foreclose, take the asset and then do what they want with it, or use this attorney in fact to slide in and really in the place of Adam Krosna, the member of Intellectual Tech, to do these things in the name of and on behalf of Intellectual Tech. [00:08:13] Speaker 03: So the answer is really the same. [00:08:15] Speaker 03: The assignment would still be, the assignment agreement would have to be signed. [00:08:18] Speaker 03: Whoever signs it, whether it's Main Street or their delegate, it would still be Intellectual Tech assigning the patent or granting the license. [00:08:26] Speaker 03: I think that largely distinguishes the case from the Fortress case and the Unilock decision, but I think it's also why it wouldn't apply either, because ultimately they can't get an assignment, a license, anything from Main Street. [00:08:39] Speaker 03: It all would be coming from intellectual tech, even if [00:08:42] Speaker 00: That may be right or wrong, but I think maybe the answer to Judge, one of the hard answers to Judge Hughes' question, which I appreciate because I had similar questions, lies in Judge Lurie's dissent, concurrence most specifically, where he does differentiate between the rights of an exclusive licensee and a patent owner. [00:09:02] Speaker 00: Pointing out that the patent owner is different, the patent owner still retains the right to sue unlicensed licensees. [00:09:09] Speaker 00: whereas the licensee does not. [00:09:11] Speaker 00: I don't know that the court's ever said that officially, but he made that distinction in his concurrency. [00:09:17] Speaker 03: Yeah, I think that is consistent with the cases I read initially about all you need is, and I think it's Schwindleman that said this, is that you're the owner of the patent and that the defendant is accused of infringement. [00:09:26] Speaker 03: That's all you need for standing. [00:09:28] Speaker 03: And I think it's also consistent with the way that it was discussed in Morrow. [00:09:31] Speaker 03: Morrow said there's basically three plaintiffs, types of plaintiffs. [00:09:34] Speaker 03: One, the patentee who has the right to sue in their own name. [00:09:37] Speaker 03: to the exclusive licensee, which may or may not need to add the patentee. [00:09:40] Speaker 03: And I think that maybe, Judge Prost, getting to your question that your question, Judge, uses. [00:09:45] Speaker 03: And I think this was discussed in some of the, maybe even one of your questions in the Unilock World argument is, at some point, maybe the patentee can give away so many rights to the exclusive licensee that they're no longer, they're a nominal owner, right? [00:09:57] Speaker 03: And so I think that can apply in the exclusive licensee context, but that's not what we have here. [00:10:02] Speaker 03: We don't have an exclusive license. [00:10:04] Speaker 03: And it really wouldn't make sense to have an exclusive license in this case because Main Street, they're an investment bank. [00:10:09] Speaker 03: They're not the typical exclusive licensee that gets the rights. [00:10:12] Speaker 03: They want to exploit the patent and make a product and keep people out of their market. [00:10:15] Speaker 03: That's not really here. [00:10:16] Speaker 03: So it doesn't apply on the face of these agreements. [00:10:19] Speaker 03: It also really wouldn't make practical sense here to consider Main Street. [00:10:23] Speaker 03: Main Street would not want to be an exclusive licensee. [00:10:27] Speaker 03: I see I'm into my rebuttal time. [00:10:29] Speaker 03: Yes. [00:10:29] Speaker 03: Why don't we hear from the other side? [00:10:30] Speaker 00: Thank you. [00:10:43] Speaker 01: Thank you. [00:10:43] Speaker 01: May it please the court. [00:10:44] Speaker 01: William Peterson on behalf of Zebra Technologies Corporation. [00:10:48] Speaker 01: I'm happy to defend the district court's analysis, but I would like to start with talking about what we argued below. [00:10:55] Speaker 01: My friend suggests that we didn't make the argument that Main Street was the sole possessor of these rights following the default. [00:11:02] Speaker 01: I'll point you to appendix page 309 to 310. [00:11:05] Speaker 01: That's the summary judgment motion in question. [00:11:10] Speaker 01: And what you'll see there [00:11:12] Speaker 01: is that we were arguing that Main Street was the possessor of all substantial rights following the default. [00:11:21] Speaker 01: And you see this on appendix page 316 that we believe that on-assets rights were divested upon default and that those rights were transferred from on-asset to Main Street, leaving essentially nothing for on-asset to give to IT. [00:11:37] Speaker 01: So that was our principal argument in front of the district court. [00:11:41] Speaker 01: was not that there are no plaintiffs, but that at the time this case was filed, that Main Street was the correct plaintiff. [00:11:48] Speaker 01: Now, we're not suggesting, Judge Toronto, that it was the power of attorney provision in Section 3J that accomplished this. [00:11:54] Speaker 01: What we're suggesting is two things. [00:11:57] Speaker 01: It's the most natural reading of the transfer of rights within Section 6, in part because of just how counterintuitive it would be to give 100% of the patent rights, both pertaining by the party with title to it and to the creditor as well. [00:12:14] Speaker 01: Extraordinarily unusual. [00:12:15] Speaker 01: When you look at cases where, say for example, the right to sue is divided up, and I'm thinking of Alfred E. Mann, [00:12:20] Speaker 01: You see agreements talking about how the parties will interact, who will make the decisions. [00:12:25] Speaker 01: It's an unnatural reading to suggest that all of these rights would be completely possessed at the same time by two parties, which is why this ends up in many ways being almost something of an academic exercise. [00:12:36] Speaker 04: Why for Article 3 purposes? [00:12:38] Speaker 04: Is the issue properly framed as all of the rights in one place or the other? [00:12:47] Speaker 04: What's happening here is a lender has a security interest, which at its option, it can exercise until it exercises it. [00:12:57] Speaker 04: The borrower here, the title holder of the patent, clearly has a Article 3 stake [00:13:07] Speaker 04: has a ability, as long as it's left uninterrupted by the lender, to go and sue. [00:13:18] Speaker 01: Judge, the parties certainly could have written their agreements that way. [00:13:22] Speaker 01: That's not how we understand their agreements to have been written. [00:13:25] Speaker 01: It would have been very straightforward for Main Street and On Asset to say that Main Street is simply allowed to foreclose on the collateral as soon as there's a default. [00:13:34] Speaker 01: It has no rights to enforce anything. [00:13:36] Speaker 01: It has no rights to license anything. [00:13:37] Speaker 01: Those rights remain with On Asset until Main Street takes control of it and forecloses on it. [00:13:43] Speaker 01: For whatever reason, that's not the agreement that On Asset and Main Street drafted. [00:13:47] Speaker 01: As soon as there was a default, it was Main Street. [00:13:51] Speaker 01: that had the right to exercise any or all remedies to sell, assign, transfer, pledge, encumber, or dispose of the patents. [00:13:57] Speaker 01: And keep in mind, patents here doesn't just mean the 247 patent. [00:14:01] Speaker 01: Patents is defined broadly to include the right to sue for infringement, to include licenses under those patents, to include any sort of interest under there. [00:14:09] Speaker 01: And the other provision I'd point you to, this is appendix page, can you forgive me? [00:14:17] Speaker 01: printed over, it's appendix page 232, and that's the debtor's use of the patents and trademarks. [00:14:23] Speaker 01: And that to us is really one of the strongest clauses here, that the debtor that is on asset shall be permitted to control and manage the patents and trademarks, including the right to exclude others. [00:14:33] Speaker 01: And that last clause in there says, so long as no default exists. [00:14:38] Speaker 01: Now, I think my friend wants to say, regardless of whether any default exists, when we look at this agreement, [00:14:44] Speaker 01: when there's a default for whatever reason, why ever the parties chose to draft it this way, as soon as that default happened, Main Street immediately and without taking any other action had all sorts of rights to enforce these patents. [00:14:58] Speaker 04: But I guess what I'm not clear about is it does seem to me that on the face of the thing, Main Street had a right if it wished to step in and do all of these things that would destroy any ability of [00:15:12] Speaker 04: intellectual tech to exclude. [00:15:15] Speaker 04: But as long as it doesn't do that, why does intellectual tech not have a cognizable, legally and factually cognizable interest in proceeding? [00:15:25] Speaker 04: And in this instance, presumably, actually, it's pretty darn unlikely Main Street's going to step in. [00:15:31] Speaker 04: What Main Street wants is for this patent to be monetized so it can get its money back. [00:15:35] Speaker 01: The parties agree that Main Street has the right under these agreements to foreclose on the 247 patent to take title to it, and that Main Street didn't exercise that right. [00:15:45] Speaker 01: And if that were the only right that Main Street had under these agreements, [00:15:49] Speaker 01: I would absolutely agree with you, Judge Toronto. [00:15:51] Speaker 01: It's this additional grant of rights in Section 6 that, in our view, Main Street exercises without any need to foreclose on the patent. [00:16:00] Speaker 01: And that's why you see the power of attorney in Section 3J that allows Main Street, without consulting [00:16:07] Speaker 01: with IT or on asset without any control by them to take these actions. [00:16:14] Speaker 00: I guess I'm really unclear what you're saying. [00:16:16] Speaker 00: I mean, how is what you're saying different from what Judge Toronto said? [00:16:19] Speaker 00: Under Section 6, it says while a default exists, they may at their option take any of the following actions, none of which they've done. [00:16:28] Speaker 00: So how is that different than the situation that Judge Toronto posed to you? [00:16:37] Speaker 01: What I would suggest is a patentee, for example, if I go and acquire a patent and have my patent application granted, I at that point have, I may at my option sell that patent that I have, I may at that option license that patent that I have, I may at that option enforce or otherwise dispose of it. [00:16:57] Speaker 01: That's the sort of rights that a traditional patentee has. [00:17:01] Speaker 01: There's no mandatory obligation on that. [00:17:03] Speaker 01: Eyes of a patentee don't have to sell, don't have to enforce it, don't have to assign it. [00:17:08] Speaker 01: So what we see Main Street acquiring in Section 6 is just the traditional rights that any owner of a patent ordinarily has. [00:17:18] Speaker 01: not this right to foreclose and then subsequently have the right to license, but the right just like anyone else ordinarily would have with a patent that they own. [00:17:28] Speaker 01: But let me, let me step aside. [00:17:29] Speaker 01: That's our primary reading the contract. [00:17:31] Speaker 02: Can I ask you? [00:17:32] Speaker 01: Yes. [00:17:34] Speaker 02: Hypothetically, let's say you have a patentee that has all substantial rights and would have constitutional standing to enforce the patent, but it also grants an exclusive license to another entity to enforce it in, say, one part of the country or some kind of thing. [00:17:54] Speaker 02: Does that deprive the original patentee of its ability to enforce a patent? [00:18:04] Speaker 02: But let me make it clear. [00:18:05] Speaker 02: That part of the country thing muddies it up. [00:18:08] Speaker 02: If a patent owner grants an exclusive license to a licensee that is sufficient for that exclusive licensee to itself have standing to assert patent infringement claims, does that deprive the original patent owner of standing to also assert patent infringement claims? [00:18:28] Speaker 01: And Judge Hughes, in your hypothetical, has the exclusive licensee received all substantial rights? [00:18:35] Speaker 02: Well, that's the question. [00:18:37] Speaker 02: Is giving an exclusive licensee sufficient rights to assert patent infringement, so standing? [00:18:45] Speaker 02: So I guess, yes, substantial rights. [00:18:47] Speaker 02: Does that necessarily deprive [00:18:50] Speaker 02: the patent owner. [00:18:51] Speaker 01: So when we're talking about the assignment context, this court has sometimes talked about the first... I'm not talking about an assignment. [00:18:57] Speaker 02: I'm talking about an exclusive license. [00:18:59] Speaker 02: Well, certainly. [00:18:59] Speaker 01: Except I think what the court has said is that an exclusive license... I don't know what the court has said. [00:19:05] Speaker 02: I don't understand half of these cases because I think our case law is very muddled and I'm trying to figure out what it means. [00:19:12] Speaker 01: I think that's right, Your Honor. [00:19:13] Speaker 01: I look at the cases and I see a transfer of all substantial rights means that the party who has received the substantial rights is going to have both the right to sue under Section 281 and is going to have standing for purposes of Article 3. [00:19:30] Speaker 02: Now, when you're dealing with... Sure, but does that mean the patentee, without saying it is transferring the... [00:19:41] Speaker 02: some other sufficient clause, does that mean the patentee can't go out and file a patent infringement suit? [00:19:46] Speaker 01: Yes, Your Honor. [00:19:47] Speaker 01: My understanding is that it does. [00:19:49] Speaker 01: When you look at the facts that constitute a transfer of all substantial rights, what we're really talking about is a transfer of not just the exclusionary rights, which are enough to give an exclusive licensee standing to sue, but you're also talking about a transfer of even more, those exclusionary rights plus sufficient for purchase in Section 281 to constitute a de facto assignment of the patent. [00:20:12] Speaker 01: Let me talk about exclusionary rights, though, because I do think YAV or his, the case that as we see it defines... So your view is that Clause 6 is doing that? [00:20:23] Speaker 01: Yes. [00:20:24] Speaker 01: Clause 6 combined with Clause 4. [00:20:26] Speaker 01: Our suggestion is that it's not a rational reading to say that these rights belong 100% both to Main Street and on asset at the same time, and that, again, the parties could have written this just to say, [00:20:40] Speaker 01: Once there's a default, Main Street made its option for close. [00:20:43] Speaker 01: The parties didn't say that. [00:20:44] Speaker 01: They said, once there's a default, Main Street made its option, just independently go forth and take all of these actions with respect to the patents. [00:20:53] Speaker 01: That to us implicitly means, when you look at section four there, that [00:20:58] Speaker 01: IT couldn't, which means that Maine... In other words, the default automatically transferred all substantial rights. [00:21:05] Speaker 01: That was our argument below, and that certainly remains what we think is a basis to affirm this. [00:21:09] Speaker 02: If Clause 6 weren't in there, you wouldn't have that argument, right? [00:21:13] Speaker 01: I wouldn't be making this argument. [00:21:14] Speaker 01: Let me turn now to the district court's analysis. [00:21:16] Speaker 01: So let's assume we have completely shared rights here. [00:21:20] Speaker 01: We do think the case that defines substantial rights... I'm sorry, the case that defines exclusionary rights [00:21:26] Speaker 01: is YAV and it looked at exclusionary rights admittedly in the context of exclusive licensees but it tells us that [00:21:35] Speaker 01: an exclusionary right, an exclusive licensee lacks standing to sue a party who has the ability to obtain a license from another party with the right to grant it, and that is because the exclusive licensee does not have an exclusionary right with respect to such an alleged infringer and therefore is not injured by that alleged infringer. [00:21:56] Speaker 01: So unless the same term, exclusionary rights, [00:22:00] Speaker 01: means something different for exclusive licensees? [00:22:02] Speaker 02: I find that language kind of troubling and read as broadly as you to be just legally unsound. [00:22:12] Speaker 02: I mean, if a patent owner sues somebody, that somebody could always try to get a license from that patent owner. [00:22:20] Speaker 02: That doesn't deprive the patent owner of standing to it. [00:22:24] Speaker 02: So it can't be the mere fact that you can get a license from somebody deprives [00:22:30] Speaker 02: the person that owns the patent or has exclusionary rights to assert the patent, that that destroys standing. [00:22:38] Speaker 02: You're not reading it that properly, are you? [00:22:39] Speaker 01: No, it's from another party, so a party other than the plaintiff. [00:22:43] Speaker 01: So that would be the suggestion, that if you are, when the plaintiff in a lawsuit sues an alleged infringer, and that alleged infringer has the ability to obtain a license from someone other than the plaintiff in the lawsuit, [00:22:53] Speaker 01: that plaintiff doesn't have an exclusionary right. [00:22:56] Speaker 04: So if the patent owner gives a license, if I'm patent owner, I give a license to you, you're not exclusive, but you're allowed to sub-license. [00:23:07] Speaker 04: So have I just lost my ability to sue your friend over there because you could grant him a license even though you have it? [00:23:17] Speaker 01: Yes, Your Honor, with certain caveats. [00:23:19] Speaker 01: Now that assumes it is a completely unfettered right to self-license. [00:23:23] Speaker 02: I don't understand why we're talking about any of this, honestly. [00:23:26] Speaker 02: The fact that you can get a license [00:23:29] Speaker 02: should just mean that you can get a license and then you can assert it as a defense to patent infringement. [00:23:35] Speaker 02: How this all got mixed up in Article III standing baffles me. [00:23:39] Speaker 02: I mean, and it seems like it got mixed up because we were trying to define what exclusive licensees are, and it is bled into the rights of patent owners. [00:23:50] Speaker 02: And if somebody owns a patent, they should be allowed to sue somebody on that patent. [00:23:55] Speaker 02: unless they have somehow clearly given all those rights away. [00:24:01] Speaker 01: So I understand the intuition, Judge Hughes, but all I can do is say that intellectual property rights are to some degree special. [00:24:09] Speaker 01: That the right that is in a patent is the right to exclude others from practicing that patent. [00:24:15] Speaker 01: And Judge Toronto, if I were to grant you a license to a patent that I own and say you may license this patent to whomever you please, you don't have to tell me, you don't have to pay me, you don't have to compensate me, what I am doing is essentially saying I am indifferent to who practices this patent because I am letting you decide who has the rights, who gets to practice it. [00:24:37] Speaker 01: I am giving up my ability to control. [00:24:39] Speaker 01: This is, again, a bit counterintuitive. [00:24:41] Speaker 01: The closest analogy we've been able to find [00:24:43] Speaker 01: is in the trademark context where you have a naked license to a trademark? [00:24:48] Speaker 04: Even in that circumstance. [00:24:51] Speaker 04: I'm not sure who the licensee is, whether it's you or me in this situation. [00:24:55] Speaker 01: I think I would be giving you a license. [00:24:57] Speaker 04: OK. [00:24:57] Speaker 04: We switched it up. [00:24:59] Speaker 04: So you still have a monetizable interest in giving somebody a license that might have asked me for a license. [00:25:11] Speaker 04: And I've said, no, because you're not going to pay me enough. [00:25:15] Speaker 04: And you can say, oh, I'll give a license, because I'll take half of that. [00:25:19] Speaker 04: That's a part of it. [00:25:21] Speaker 04: an interest rate. [00:25:22] Speaker 04: And why is that not enough for Article III to say you can exclude that person, and it's a valuable right to exclude them because they might be willing to pay you. [00:25:33] Speaker 01: And the fact is, in most of those cases, we simply don't know whether you would have offered those licenses, whether you would have refused them. [00:25:40] Speaker 01: Perhaps it's a situation that needs to be cured by the joiner of both of us, of both of us suing together. [00:25:45] Speaker 01: as plaintiffs. [00:25:47] Speaker 04: Right, but questions of Joinder, questions of 281, cause of action, whatever you want to call it, prudential standing, statutory standing, I thought we were kind of more or less beyond that because it's so confusing, but just Article 3 standing, I mean those other questions are about other things. [00:26:07] Speaker 01: Let me try the redressability point and I noted to it in the brief, patent damages are compensatory, they're not punitive, [00:26:13] Speaker 01: These are not liquidated damages. [00:26:15] Speaker 01: Even the reasonable royalty rate is intended to compensate the plaintiff for the royalty that would have been negotiated had there not been infringement. [00:26:23] Speaker 01: And I think the problem that arises when you have another party out there that could grant a license is you're simply not able to show [00:26:31] Speaker 01: as a party who is filing suit? [00:26:32] Speaker 02: I don't understand this argument at all. [00:26:34] Speaker 02: The fact that somebody else could grant a license that would give you a defense doesn't mean at the time the suit was filed against you, if you don't have a license, that they're not suffering damages by your alleged infringement. [00:26:47] Speaker 02: If you want to run and get a license and you can get it from somebody, you can assert it as a defense. [00:26:53] Speaker 02: And that will be to the cause of action. [00:26:57] Speaker 02: But the patent owner is still damaged by you infringing it without a license. [00:27:04] Speaker 01: I think we see it differently. [00:27:06] Speaker 01: Well, I know. [00:27:07] Speaker 02: My AV is very, very confusing and troubling. [00:27:11] Speaker 02: And the easy way to deal with it is to say, this is dealing with exclusive licensees. [00:27:16] Speaker 02: It's not dealing with patent owners itself, where the rights are much clearer. [00:27:20] Speaker 02: And say that this is the patent owner. [00:27:22] Speaker 02: It hasn't given away an exclusive license. [00:27:24] Speaker 02: It's entered into some kind of debt agreement that involves a default. [00:27:28] Speaker 02: And that until the bank [00:27:33] Speaker 02: asserts those rights or grants a license to somebody, they still have the right to sue. [00:27:39] Speaker 02: Your Honor, and I think the difficulty there would be defining... Isn't that what we essentially... I know that in Unilock, we went off on collateral stoppable because we had to, but I think we very heavily suggested that that's the argument, or that's [00:27:53] Speaker 02: the view of what that panel was, was the right interpretation in limiting YAV to the exclusive licensing situation. [00:28:01] Speaker 01: I think that's the suggestion there, but I'll just say, and I realize I'm over time and I appreciate the panel's indulgence, that YAV is about defining the term [00:28:08] Speaker 01: exclusionary rights, it gives us a clear definition, which says that they don't exist where there's a right to obtain a license from another party who's not the plaintiff. [00:28:18] Speaker 01: And I do think it would be an elevation of form over substance to say that the phrase exclusionary rights, the touchstone of constitution. [00:28:24] Speaker 02: So you think we need to go on bonk if we're going to overturned by AB? [00:28:30] Speaker 01: I think it would be necessary and I think it would probably require some different reasoning on that point as well just because why he says I think we've made our reasoning very clear I mean I didn't sign on to Judge Lurie's concurring views but he's laid out the reasoning on that point fairly clearly I think certainly I'll also offer the easiest way of affirmance would be to agree with us on the meaning of the contracts and not to have to address the harder issue but thank you thank you [00:29:12] Speaker 03: So I do want to briefly just defend the way this agreement is structured, because I think it actually makes sense in context. [00:29:17] Speaker 03: And we know this agreement is governed by Texas law. [00:29:19] Speaker 03: And the Texas Supreme Court said in Lenape 925 Southwest 2D at 574, quote, a court should construe a contract from a utilitarian standpoint, bearing in mind the particular business activity sought to be served. [00:29:32] Speaker 03: I think if you see it in this agreement, what Main Street is doing, they're an investment bank, right? [00:29:36] Speaker 03: They make a loan. [00:29:36] Speaker 03: They want to recover their loan. [00:29:38] Speaker 03: And they secure that loan, buy some assets, in this case, patents and trademarks. [00:29:42] Speaker 03: And what they say is, they know, if you're in default, I can foreclose. [00:29:46] Speaker 03: I can take the assets, and I can do with them what I want to do. [00:29:48] Speaker 03: But they're also a bank. [00:29:50] Speaker 03: That's not their main job. [00:29:51] Speaker 03: It's not monetizing and enforcing patents. [00:29:54] Speaker 03: So they also say, we have these remedies, and the way we can enforce those is through this power of attorney. [00:29:59] Speaker 03: It would make sense in this context. [00:30:01] Speaker 03: Honest, that's a small company. [00:30:02] Speaker 03: I think they have 12 to 14 employees. [00:30:05] Speaker 03: Obviously, if they went out of business and their wholly owned subsidiary [00:30:08] Speaker 03: they just left to the wayside. [00:30:09] Speaker 03: It's the ability to step into that as managing the LLC. [00:30:14] Speaker 02: What do you argue about clause 6, though, which does seem to fairly track the types of language you would use to get an exclusive license? [00:30:27] Speaker 03: Well, I think there are a few things that are missing. [00:30:28] Speaker 03: And I think Judge Albright actually noted that it doesn't. [00:30:31] Speaker 02: I mean, the first answer is, obviously, they're not an exclusive licensee. [00:30:36] Speaker 02: Oh, yes, they're not an exclusive licensee. [00:30:38] Speaker 02: They're a debt holder. [00:30:40] Speaker 02: Right. [00:30:41] Speaker 02: Whatever banking term. [00:30:43] Speaker 02: I can't keep patent and banking terms in my head at the same time. [00:30:48] Speaker 02: So that's the first answer, but assume that they could still be considered an exclusive licensee if the right language is given. [00:30:54] Speaker 02: Why isn't that what clause six does? [00:30:58] Speaker 03: I think in part, as Judge Albright recognized, it doesn't actually give the right to license in Section 6. [00:31:03] Speaker 03: And I think we've cited some cases in our brief that you need to read this agreement as a whole. [00:31:07] Speaker 03: And what it does in Section 3 says, specifically, to facilitate Main Streets taking action under Subsection I and exercising its rights under Section 6. [00:31:17] Speaker 03: So we take the agreement as a whole. [00:31:19] Speaker 03: One, it makes sense in the context of the parties and this utilitarian standpoint we're supposed to interpret it from. [00:31:23] Speaker 03: But it also just clearly says, this is how you exercise those rights. [00:31:27] Speaker 03: And because, you know, and I think that was an error. [00:31:30] Speaker 02: So your view is that Clause 6 isn't some kind of independent grant. [00:31:33] Speaker 02: It's part and parcel of the whole agreement that if the default occurs and they exercise the option to take this property, that's what they can do with it. [00:31:45] Speaker 03: Correct. [00:31:46] Speaker 03: And I think that's clear if you look at a sign and at the case law from this court. [00:31:49] Speaker 03: They didn't have title to assign to anyone. [00:31:52] Speaker 03: So I think by its own definition and the rights as they were construed and given here, and as everyone agrees that Intellectual Tech still has title to the patent, Main Street couldn't exercise these rights as Main Street. [00:32:03] Speaker 03: They had to use this power of attorney. [00:32:05] Speaker 03: And then they're really just stepping into the shoes of Adam Krosno, not Intellectual Tech, as he's the sole member of the LLC. [00:32:11] Speaker 03: So they step into his shoes and they could take certain actions in case he wasn't fulfilling their obligations. [00:32:16] Speaker 03: But here we know they didn't. [00:32:21] Speaker 03: And I think you're right, Judge, she's about this being a defense, getting a license. [00:32:24] Speaker 03: And we know they keep saying about the right to get a license, but we know that that is, as in most of these cases, completely illusory. [00:32:32] Speaker 03: They know who Main Street is. [00:32:33] Speaker 03: They've opposed them multiple times in this case. [00:32:34] Speaker 03: They took discovery. [00:32:35] Speaker 03: They never got a license. [00:32:37] Speaker 03: And so they're asking you to construe this agreement solely to the benefit of Zebra, who's a non-party to the agreement, to the detriment of Main Street, who bargained for this flexibility to have these options to continue to enforce this to recover their investment. [00:32:53] Speaker 03: Any other questions? [00:32:55] Speaker 03: I can see there is some time. [00:32:56] Speaker 00: Thank you. [00:32:56] Speaker 00: Thank you. [00:32:57] Speaker 00: Thank both sides and the case is submitted.