[00:00:00] Speaker 01:
Our first case is a kiss, if that's the way one pronounces it, versus EMC Corporation, 2024, 1649.

[00:00:10] Speaker 01:
Mr. Ferencob.

[00:00:14] Speaker 04:
Good morning, Your Honors.

[00:00:15] Speaker 04:
May it please the court.

[00:00:17] Speaker 04:
At summary judgment, the district court decided an open and contested issue as to what the PCI specification requires for a transaction.

[00:00:28] Speaker 04:
Both parties submitted evidence supporting their position.

[00:00:32] Speaker 04:
The district court agreed with EMC and disagreed with ACAS.

[00:00:37] Speaker 01:
You're here on an award of attorney fees, right?

[00:00:40] Speaker 04:
That's correct.

[00:00:41] Speaker 01:
That abuse of discretion?

[00:00:43] Speaker 04:
It is, and the district court abused its discretion, Your Honor.

[00:00:46] Speaker 01:
District court decided you took inconsistent

[00:00:51] Speaker 01:
positions in the district court and the PTO.

[00:00:55] Speaker 01:
And you had the claim construction in Texas and then in Massachusetts.

[00:01:02] Speaker 01:
And there were aspects of the claim that a defendant didn't have and you still persisted.

[00:01:10] Speaker 01:
And so the court abused its discretion.

[00:01:13] Speaker 04:
The court abused its discretion by finding that ACAS's claims had become barred or, in effect, baseless after the claim construction order.

[00:01:22] Speaker 04:
The finding of inconsistent positions was not an independent basis for the district court's exceptionality finding.

[00:01:31] Speaker 04:
It added weight to the heart of the matter, which the district court found was that ACAS's claims were barred after the claim construction order, and that

[00:01:41] Speaker 04:
was an abuse of discretion.

[00:01:43] Speaker 04:
At claim construction, the district court construed PCI bus transaction to mean a transaction in accordance with the industry standard PCI local bus specification.

[00:01:56] Speaker 04:
ACUS had agreed to that construction.

[00:01:58] Speaker 00:
Where in the opinion does it say it's dispositive, the continued litigation of the claims?

[00:02:04] Speaker 00:
I just see where it says it weighs it in favor of exceptionality, and then also, too,

[00:02:09] Speaker 00:
shifting key claim terms weighs in favor of exceptionality.

[00:02:13] Speaker 00:
I'm just trying to figure out how you are determining how the district court weighed these various factors.

[00:02:20] Speaker 04:
And maybe I would frame it a little bit a different way.

[00:02:23] Speaker 04:
The court would not have found exceptionality absent the finding of claims being barred after claim construction.

[00:02:31] Speaker 04:
Without that finding.

[00:02:32] Speaker 00:
Where do you see that?

[00:02:33] Speaker 00:
Where do you see barred in all of this?

[00:02:36] Speaker 04:
Yeah, so barred is on Appendix 14.

[00:02:39] Speaker 04:
The first sentence of the first full paragraph on that page.

[00:02:45] Speaker 04:
The court finds that after its claim construction order, Accus knew or reasonably should have known that the court's constructions barred infringement.

[00:02:54] Speaker 04:
So that's where the term barred comes from.

[00:02:57] Speaker 04:
And separately.

[00:02:59] Speaker 00:
I just want to make sure I understand.

[00:03:03] Speaker 00:
Because I was not necessarily understanding them to be saying,

[00:03:07] Speaker 00:
One of these was more important out there.

[00:03:12] Speaker 04:
I would say also, Your Honor, if I may, on the inconsistent positions, on appendix 20, the district court found that although the court finds that Accus's unreasonable conduct began when it took inconsistent positions, I'll skip forward, which weighs in favor of exceptionality,

[00:03:28] Speaker 04:
The court finds that the totality of the circumstances did not warrant finding the case exceptional until after the court's claim construction order.

[00:03:37] Speaker 04:
So the heart of the matter was the court's determination on claim construction and then resolution of the separate question on summary judgment as to what the PCI specification requires.

[00:03:48] Speaker 00:
And you don't think that sentence just goes to timing and consideration of the totality of the circumstances.

[00:03:53] Speaker 00:
Instead, it doesn't really much matter, but OK.

[00:03:57] Speaker 04:
Yeah, I think the fair reading of the order is that the finding the claims were barred is required for the exceptionality determination.

[00:04:05] Speaker 04:
And I'd like to address that one first.

[00:04:07] Speaker 04:
At summary judgment, both parties submitted evidence on this open question as to what the PCI specification required for a transaction.

[00:04:18] Speaker 04:
EMC raised at summary judgment that the specification provides a robust and specific definition of a transaction.

[00:04:27] Speaker 04:
That robust and specific definition was not raised by EMC at claim construction.

[00:04:34] Speaker 04:
It is not inherent in the district court's claim construction.

[00:04:38] Speaker 03:
But the district court said it was readily understandable, that it was quite clear that when Judge Burroughs said and Judge Davis said all information required by the PCI standard, that's going to include control signals and parity bits.

[00:04:57] Speaker 03:
So what's so unclear about that?

[00:05:01] Speaker 04:
It was not readily understandable.

[00:05:03] Speaker 03:
I know you're saying that, but why are you saying that when it's quite clear that both courts communicated to you that this PCI bus transaction necessarily required all information required by the PCI standard?

[00:05:18] Speaker 03:
Are you saying that it was less than clear that the PCI standard included control signals or parity bits?

[00:05:24] Speaker 04:
That's correct.

[00:05:25] Speaker 04:
At Judge Davis' claim construction order, Judge Davis said all information required without specifying what that information is.

[00:05:34] Speaker 04:
In Judge Burroughs' claim construction order, the court adopted a transaction in accordance with the specification without explaining what in accordance with means.

[00:05:44] Speaker 04:
What information was required for a transaction was an open question.

[00:05:49] Speaker 04:
It cannot be the entire specification because the specification describes a PCI bus.

[00:05:55] Speaker 04:
And in the same claim construction order, the district court found that a PCI bus was not required for a transaction.

[00:06:02] Speaker 03:
A bus is different from information, right?

[00:06:05] Speaker 03:
Correct.

[00:06:06] Speaker 03:
It is.

[00:06:06] Speaker 03:
And then the construction both times said all information.

[00:06:10] Speaker 04:
The Judge Davis' construction said all information.

[00:06:13] Speaker 04:
Judge Burroughs' construction said transaction.

[00:06:14] Speaker 03:
Judge Burroughs never repeated all information?

[00:06:17] Speaker 04:
Judge Burroughs quoted Judge Davis' claim construction.

[00:06:19] Speaker 03:
So it's in there.

[00:06:20] Speaker 04:
It is.

[00:06:21] Speaker 03:
So all information.

[00:06:22] Speaker 03:
I don't understand what the confusion is.

[00:06:24] Speaker 04:
The question is what is all information?

[00:06:27] Speaker 04:
And that issue was presented at summary judgment.

[00:06:30] Speaker 04:
EMC submitted 16 findings of fact on what that information is according to the PCI specification.

[00:06:36] Speaker 03:
If we were to agree with the disparate court that it was, in fact, understandable what the PCI standard requires when it comes to all information, and that it includes control signals and parity signals,

[00:06:52] Speaker 04:
Even so, ACUS submitted additional evidence at summary judgment that EMC's products satisfied that construction.

[00:07:00] Speaker 04:
The specific definition, robust definition, that EMC set forth at summary judgment.

[00:07:06] Speaker 03:
Yeah, but did you cite that evidence in your opposition to the other side's fees motion?

[00:07:11] Speaker 04:
The opposition to the fees motion referred to the summary judgment arguments.

[00:07:15] Speaker 04:
It did not reiterate the evidence.

[00:07:17] Speaker 03:
That's right.

[00:07:17] Speaker 03:
So I mean, I think there's an argument here that

[00:07:22] Speaker 03:
Here, this particular argument, this evidence-based argument, was simply way too underdeveloped, at least in terms of the fees motion, for really it to be preserved and for us to now consider it, given that you didn't cite to or discuss or evaluate or present that evidence to the district court for times of the fees motion.

[00:07:42] Speaker 04:
At appendix 7027 to 7028, that is, act as brief in opposition to the fees motion, the summary judgment arguments were referenced.

[00:07:50] Speaker 04:
and said that the district court did not take those into consideration in the summary judgment order.

[00:07:56] Speaker 04:
So to find it exceptional by referring to the arguments but not reciting all the evidence in those briefs and award $4 million, that is not something that stands out.

[00:08:06] Speaker 04:
That is a punishment for losing, not a pursuing baseless claims following the claim construction order.

[00:08:16] Speaker 04:
Now here, I did also want to address there was no independent basis in the summary judgment order on the three terms at issue beyond PCI bus transaction for entering summary judgment.

[00:08:28] Speaker 04:
There's two other terms, encoded and communicating.

[00:08:32] Speaker 04:
Both of those referred to PCI bus transaction and in the district court's determination entry of summary judgment, the district court referred back to

[00:08:41] Speaker 04:
its determination that PCI bus transaction required control signals or, quote, the entirety of the specification in finding summary judgment on those terms.

[00:08:50] Speaker 04:
So the summary judgment order was determined based on PCI bus transaction and what information from the specification is required.

[00:08:59] Speaker 03:
During the IPRs, did you or your expert ever say that PCI bus transaction includes control signals?

[00:09:12] Speaker 04:
Axis Council did not.

[00:09:13] Speaker 04:
Axis Council said control did.

[00:09:16] Speaker 03:
My question to you was, and let me repeat it, did you or your expert during the IPRs ever say that control signals are part of the PCI bus transaction?

[00:09:29] Speaker 04:
There is an expert deposition, Your Honor, where some of the control signals are required.

[00:09:33] Speaker 03:
I just need a yes or no.

[00:09:34] Speaker 04:
I don't think the expert said that control signals are required for a transaction, which is why I'm answering the way I am.

[00:09:41] Speaker 04:
He mentioned he was asked about certain control signals, whether they can be within a transaction.

[00:09:45] Speaker 04:
I believe he said yes.

[00:09:47] Speaker 04:
That testimony was not relied upon by the PTAB in its determination of upholding any of the paths at issue.

[00:09:54] Speaker 04:
And at summary judgment,

[00:09:57] Speaker 04:
is presented evidence showing that the information required by the PCI specification for a transaction does not require the control signals like frame and T ready and I ready that are required for manipulating and controlling a PCI bus which the district court had found was not required by its construction there were simply competing positions at summary judgment on the scope of this claim the interpretation of the extrinsic

[00:10:27] Speaker 04:
PCI specification, which is a question of fact for the district court to decide, but it wasn't presented to the district court.

[00:10:34] Speaker 04:
It wasn't presented in the Eastern District of Texas until summary judgment in the District of Massachusetts when the court adopted for the first time EMC's position at summary judgment that control signals and parity were required.

[00:10:52] Speaker 04:
So on this record,

[00:10:54] Speaker 04:
the district court also did not consider as we've discussed those summary judgment arguments that act is made did not consider its evidence in rendering summary judgment finding that it should have presented the evidence at claim construction instead while not applying that same standard

[00:11:11] Speaker 04:
to EMC.

[00:11:13] Speaker 04:
The first time this was resolved was at summary judgment.

[00:11:16] Speaker 04:
This is like the Biax versus NVIDIA case where there was a construction, but an open question as to what part of that construction meant and what was required by the construction.

[00:11:29] Speaker 03:
Are these patents expired?

[00:11:30] Speaker 04:
They are.

[00:11:34] Speaker 04:
That determination was made at summary judgment.

[00:11:37] Speaker 04:
This case is not exceptional.

[00:11:39] Speaker 04:
The district court abused its discretion

[00:11:41] Speaker 04:
by finding that after the claim construction order, which merely said transaction or even all information from East Texas, by finding that that barred the claims, it wasn't until later.

[00:11:52] Speaker 04:
I'll reserve the remainder of my time unless there are any questions.

[00:11:54] Speaker 01:
We will save it for you.

[00:11:56] Speaker 04:
Thank you.

[00:11:57] Speaker 01:
Mr. Torture.

[00:12:05] Speaker 02:
Good morning.

[00:12:05] Speaker 02:
May it please the court, Paul Torsha for EMC.

[00:12:10] Speaker 02:
Judge Burroughs' fees order was the product of careful, methodical application of discretion.

[00:12:17] Speaker 02:
She ordered and considered three rounds of briefing on EMC's fees motion alone.

[00:12:24] Speaker 02:
She gave ACUS the benefit of the doubt several times.

[00:12:27] Speaker 02:
She constrained the amount of time that she found the exceptionality period.

[00:12:31] Speaker 02:
She reduced the amount of fees.

[00:12:33] Speaker 02:
She did the work that this court has said that the district courts should do when considering a fees order.

[00:12:39] Speaker 02:
It was a methodical application of discretion.

[00:12:43] Speaker 02:
There was no error.

[00:12:44] Speaker 02:
And there was certainly no clear error.

[00:12:46] Speaker 02:
Judge Burroughs' order should not be disturbed unless there is a finding of an abuse of discretion.

[00:12:52] Speaker 02:
And fundamentally, what Axis is arguing is that until the summary judgment order, there was an absolute surprise that these constructions would lead to non-infringement.

[00:13:02] Speaker 02:
That's not credible.

[00:13:04] Speaker 02:
She also found that there was inconsistent litigation positions taken.

[00:13:08] Speaker 02:
That was a separate and independent basis for her fees were.

[00:13:11] Speaker 02:
It is not correct, going back to your questions Judge Stoll, that she isolated that out and said that that was not important.

[00:13:18] Speaker 02:
And the law, the law is that exceptionality can be found either based on the merits, the weakness of the merits of the case, or separately and independently.

[00:13:29] Speaker 00:
It's always supposed to be found based on the totality of circumstances.

[00:13:32] Speaker 02:
Yes, absolutely.

[00:13:33] Speaker 02:
In other words, it's not just one, it's a ball of wax.

[00:13:37] Speaker 02:
You look at the merits positions, and you look at the clarity and how they should have known these constructions led to non-infringement.

[00:13:45] Speaker 02:
And you separately look at the litigation positions.

[00:13:48] Speaker 02:
And you take into account the entire degree of circumstances, and that is what is supposed to be evaluated for an abuse of discretion.

[00:13:57] Speaker 02:
And very respectfully, this is not close.

[00:14:00] Speaker 02:
She applied careful discretion.

[00:14:03] Speaker 02:
She limited the fees that EMC was awarded to a small portion of what was incurred in this case and less than what would have been supported by this record.

[00:14:13] Speaker 02:
That was not an abuse of discretion.

[00:14:15] Speaker 02:
Now, going to some of the specific issues that were raised during my friend's argument, I think it's important to actually note what happened because there's this, again, there's this argument that we were shocked, shocked to learn at summary judgment that by agreeing to a construction,

[00:14:32] Speaker 02:
that was tethered to the PCI local bus specification, that there was going to be finding that controlled signals were required.

[00:14:40] Speaker 02:
No, not a surprise.

[00:14:42] Speaker 02:
And I think we should go back to, yes, let's go back to the expert declaration that we were just discussing.

[00:14:48] Speaker 02:
Judge Chen asked, did your expert ever suggest that PCI signals were required?

[00:14:54] Speaker 02:
It wasn't muddy.

[00:14:55] Speaker 02:
He said it unequivocally in the PTAAC positions.

[00:14:59] Speaker 02:
And I'll give you an appendix number.

[00:15:01] Speaker 02:
That's appendix number 1394 to 1395.

[00:15:03] Speaker 02:
And the question, the end of Mr. Beroper's question was, are these control lines part of what the claims require as a PCI bus transaction?

[00:15:14] Speaker 02:
Answer, since they are required to define what is going on at the bus at any point in time, the answer is yes.

[00:15:22] Speaker 02:
That is not ambiguous.

[00:15:23] Speaker 02:
That should shut this down.

[00:15:25] Speaker 02:
They should not be now heard to say that there's confusion about whether control signals are required.

[00:15:30] Speaker 02:
Certainly not that a district judge abused her discretion by finding that they should have known that.

[00:15:37] Speaker 02:
So that alone, that alone is sufficient.

[00:15:40] Speaker 02:
But that's not all.

[00:15:42] Speaker 02:
They've suggested that they were surprised because this was never raised before Judge Davis.

[00:15:46] Speaker 02:
Or Judge Davis, the control signals didn't come up before Judge Davis.

[00:15:51] Speaker 02:
Yes, it did.

[00:15:52] Speaker 02:
This was many, many years ago, but Mr. Hershkowitz, who argued that hearing, it was over 10 years ago, before Judge Davis, said, wait a second, they're going for construction, Judge Davis, that doesn't include all information when it needs to.

[00:16:05] Speaker 02:
And he said specifically, they're emitting control signals.

[00:16:09] Speaker 02:
And Judge Davis disagreed with ACAS and said, no, all information is required.

[00:16:13] Speaker 02:
If you look at his order, and we should go to Judge Davis' order,

[00:16:17] Speaker 02:
you will see that he talks about control signals as information in accordance with the standard.

[00:16:23] Speaker 02:
And he then says all information is required.

[00:16:26] Speaker 02:
So let's take a look at Judge Davis's order.

[00:16:29] Speaker 02:
894, appendix 894.

[00:16:30] Speaker 02:
If you look at his opinion, what he does is he first quotes the patent, and he says control signals, that is information that can be encoded into a serial channel.

[00:16:42] Speaker 02:
And then he says, ACAS is taking the position here that only command, data, and address is required.

[00:16:52] Speaker 02:
And he says, but that's not all information.

[00:16:54] Speaker 02:
So he doesn't give them that.

[00:16:56] Speaker 02:
And he finds all information is required.

[00:16:58] Speaker 02:
Control was raised at the earliest time.

[00:17:02] Speaker 02:
And they lost.

[00:17:04] Speaker 02:
They lost before Judge Davis.

[00:17:05] Speaker 02:
Judge Burroughs gave them the benefit of the doubt.

[00:17:08] Speaker 02:
And in her order, she says this.

[00:17:09] Speaker 02:
She doesn't say that Judge Davis was wrong there or that control signals weren't required.

[00:17:13] Speaker 02:
She said, look, I'm not going to find exceptionality yet because maybe Actus will re-argue this before me and go for a different result.

[00:17:19] Speaker 02:
But they didn't.

[00:17:21] Speaker 02:
And she rightly found they agreed to...

[00:17:24] Speaker 02:
a definition that included the PCI local bus specification, included control signals.

[00:17:30] Speaker 02:
And yes, Your Honor, also parity.

[00:17:31] Speaker 02:
Parity in some ways is even clearer.

[00:17:33] Speaker 02:
This PCI local bus spec says parity is not optional.

[00:17:37] Speaker 02:
Parity is clearly information.

[00:17:39] Speaker 02:
So it's part of all information.

[00:17:41] Speaker 02:
It's part of the construction.

[00:17:43] Speaker 02:
That's it.

[00:17:43] Speaker 02:
So separately, they also told you that there wasn't a separate and independent basis for fees, the parallel to serial conversion argument.

[00:17:53] Speaker 02:
Also,

[00:17:54] Speaker 02:
not credible, not correct.

[00:17:56] Speaker 02:
I mean, never mind clear error.

[00:17:57] Speaker 02:
It's just wrong.

[00:17:58] Speaker 02:
That was a separate basis for claim construction and summary judgment.

[00:18:02] Speaker 02:
It was argued about, hotly contested for two days at a Markman hearing, where the whole point was this was an independent basis for summary judgment.

[00:18:11] Speaker 02:
We weren't just fighting for two days in the District of Massachusetts for an additional argument that was dependent on the parallel to serial construction.

[00:18:18] Speaker 02:
This was a new basis for non-infringement, and it was clear.

[00:18:21] Speaker 02:
Anyway, so what happens?

[00:18:22] Speaker 02:
They're now saying, well, that's all dependent on the construction of PCI bus transactions, because what has to be converted from parallel to serial is a PCI bus transaction.

[00:18:32] Speaker 02:
That's their argument.

[00:18:33] Speaker 02:
The problem is that argument was rejected.

[00:18:36] Speaker 02:
By who?

[00:18:36] Speaker 02:
By Judge Burroughs in the fees order.

[00:18:39] Speaker 02:
We joined issue on this in the fees papers.

[00:18:42] Speaker 02:
They argued this was not an independent basis for judgment and for exceptionality.

[00:18:48] Speaker 02:
On Appendix 14, Judge Burroughs disagrees.

[00:18:51] Speaker 02:
She said, even if I'm wrong with respect to the PCI bus transaction term, there's independent bases for my summary judgment.

[00:18:59] Speaker 02:
What are those independent bases?

[00:19:01] Speaker 02:
We know what they are.

[00:19:01] Speaker 02:
They're parallel to serial and the all bits construction.

[00:19:04] Speaker 02:
So the idea that there's only this all hinges on PCI bus transaction is wrong.

[00:19:10] Speaker 02:
Even if it did, that's enough.

[00:19:13] Speaker 02:
And it doesn't even all hinge on these one constructions because there's also the

[00:19:18] Speaker 02:
The conduct, which again, is reasonable for a judge, a district court judge, applying her discretion to take into account.

[00:19:27] Speaker 02:
I think the last point I'd like to make is this.

[00:19:30] Speaker 02:
This isn't even the first time this court has heard these arguments.

[00:19:34] Speaker 02:
This is what Accus argued during the merits appeal of Judge Burroughs' summary judgment order.

[00:19:41] Speaker 02:
Judge Burroughs

[00:19:43] Speaker 02:
Accus challenged Judge Burroughs on the same basis.

[00:19:45] Speaker 02:
They said, well, we got ambushed by Judge Burroughs at summary judgment.

[00:19:49] Speaker 02:
And she changed her claim construction at summary judgment for the first time and required things that surprised us.

[00:19:55] Speaker 02:
That, she argued to this court.

[00:19:57] Speaker 02:
This court confronted Accus with the PCI local bus specification, the signal definitions that said control is required.

[00:20:04] Speaker 02:
They didn't have a good answer for that.

[00:20:06] Speaker 02:
This court found, adopted Judge Burroughs' constructions, all three of them.

[00:20:11] Speaker 02:
This court found.

[00:20:13] Speaker 02:
that those constructions flowed directly to infringement.

[00:20:16] Speaker 02:
Judge Burroughs quoted that finding of a panel of this court in her exceptionality order.

[00:20:21] Speaker 02:
It's a basis, one of her bases, her many bases in considering the ball of wax of exceptionality is that this court found that the constructions flowed directly to infringement.

[00:20:31] Speaker 02:
How is that an abuse of discretion?

[00:20:33] Speaker 02:
It's not an abuse of discretion.

[00:20:35] Speaker 02:
We didn't get all the fees we wanted out of this order, but Judge Burroughs exercised discretion.

[00:20:42] Speaker 02:
So the order should stand.

[00:20:44] Speaker 02:
Thank you.

[00:20:46] Speaker 01:
Thank you, Mr. Torture.

[00:20:48] Speaker 01:
Mr. Farron-Krogh has some rebuttal time.

[00:20:55] Speaker 04:
Thank you, Your Honors.

[00:20:56] Speaker 04:
The district court abused its discretion because it never considered whether ACASIS positions on summary judgment were reasonable.

[00:21:04] Speaker 04:
never considered them at all as to what information is required.

[00:21:08] Speaker 04:
The question is not whether ACAS is surprised.

[00:21:11] Speaker 04:
The question is not whether this court ultimately affirmed the summary judgment outcome in the constructions.

[00:21:17] Speaker 04:
The question is whether ACAS took a reasonable position in continuing to pursue its claims.

[00:21:23] Speaker 04:
There was evidence that it did and the expert declaration

[00:21:28] Speaker 04:
The PCI specification itself explaining exactly how a transaction is performed and what information is required was sufficient for ACAS to pursue its claims.

[00:21:39] Speaker 04:
They were not barred.

[00:21:40] Speaker 04:
They were not baseless.

[00:21:41] Speaker 04:
They were not unreasonable.

[00:21:43] Speaker 04:
This is simply a run of the mill dispute that resolved at summary judgment.

[00:21:48] Speaker 04:
Thank you.

[00:21:49] Speaker 01:
Thank you to both counsel.

[00:21:51] Speaker 01:
The case is submitted.