[00:00:00] Speaker 04:
Our next case is Carnegie Institution, Washington v. Phoenix Diamonds, LLC, Docket No. 24-1804.

[00:00:09] Speaker 04:
And, Counselor Goldenberg, you have reserved three minutes of your time for rebuttal, correct?

[00:00:16] Speaker 00:
Yes, Your Honor.

[00:00:18] Speaker 04:
And, Counselor Leidigson, you have reserved two minutes for the cross-appeal? For the rebuttal and the cross-appeal, correct. Okay. All right.

[00:00:28] Speaker 00:
Thank you, Your Honor, and may it please the Court. The District Court abused its discretion in declaring this case exceptional and in awarding attorneys' fees and non-taxable costs against Carnegie Science for three reasons. First, plaintiffs presented reasonable infringement theories under the Court's claim constructions. While plaintiffs lost at summary judgment, their positions were not objectively baseless. Second, the Court misapplied the law regarding non-taxable costs, awarding expert fees untethered to the purported misconduct.

[00:00:59] Speaker 00:
The same purported misconduct also cannot independently support the exceptional case finding. And third, the court unfairly held Carnegie Science jointly and severably liable for M70's purported misconduct. The district court's exceptional case determination and fee award should be reversed.

[00:01:15] Speaker 03:
Can I ask you about what I think is at the heart of the district court's exceptional case finding, and that is...

[00:01:28] Speaker 03:
clear meritlessness starting in July of 2020 once you had a time to digest the mid-June picture that came from India, the kind of muffin tin with a whole lot of dark around a bunch of nice clean eyelids in the middle, right? And it struck me that the district court in the claim construction had said, the growth surface is wherever diamond occurs, and you lost that, and that's fine, but did not say that the only thing that can grow on the growth surface is the nice clean diamonds, the single crystal diamonds.

[00:02:11] Speaker 03:
Later in the summary judgment ruling, the district court did seem to say that as long as there's a lot of, the polycrystal diamonds, the dark stuff in the pictures, on the whole field, that's clearly under my claim construction non-infringing. And that seems to me not what the claim language says. The claim language says you have to grow single crystal diamond on the growth surface, but it doesn't say that's the only thing you have to grow.

[00:02:47] Speaker 03:
Am I understanding what I just said correctly?

[00:02:52] Speaker 03:
to be what you're saying is the core flaw of the core finding of exceptional case.

[00:02:59] Speaker 00:
Basically, yes. The difference here is we're not up here to discuss whether or not the claim construction was correct. Right.

[00:03:06] Speaker 03:
Only that your position after July, in fact, said that, although I think maybe your expert or whoever drafted his declaration used some bad language at a certain point. But he said, I think this still fits because I can carve out all the dark stuff and I'll have a – you know, eight or ten or something beautiful single crystal diamonds, as long as I can do that, then I have actually grown single crystal diamond on the growth surface, even if I've grown a lot of other bad stuff.

[00:03:39] Speaker 00:
Yes, Your Honor, I completely agree with that assessment. And what the district court said was that the standalone diamond would have insubstantial non-monocrystalline growth, but it didn't tell us what insubstantial meant. So our expert said what you just characterized as what he said, which was that Well, to me, it's insubstantial if I can remove it and I'll still have a diamond. That seems insubstantial because my process was successful.

[00:04:03] Speaker 04:
And that was his... Did that entail a factual finding at that point?

[00:04:09] Speaker 00:
It was a factual finding as to whether or not there was infringement the district court found against us.

[00:04:14] Speaker 02:
But that it wasn't a summary judgment.

[00:04:17] Speaker 00:
Yeah. Sorry. Yeah. Well, yeah. Sorry. Beg your pardon. We thought it was a factual finding. The district court said that no reasonable jury could make that finding. And once again, we're not here to re-argue the merits of that appeal for financial reasons. They decided not to pursue it. But then they were shocked to come back and be hit with almost $3.25 million in fees over a position that they always thought, plaintiffs always thought was reasonable.

[00:04:42] Speaker 03:
So now just assuming, well, we're obviously going to hear from the other side, assuming that I do think that that core of the exceptional case finding is missing, and I'm trying to figure out what happens next. There's a bit of misconduct there. and I don't think the district court said that that alone would be sufficient for the exceptional case finding. I think he did say that you really should have stopped in July, that that was enough even independent of the misconduct, but not the misconduct independent of the other thing.

[00:05:19] Speaker 03:
And then there's the question about the second patent, how you should have given up in a formal way earlier than you did, and the fact that you didn't give up early enough meant they did a bunch of work that they wouldn't have done.

[00:05:39] Speaker 03:
Am I right in thinking that, first of all, a recalculation would be needed to figure out first whether the remaining conduct would be exceptional, make it an exceptional case, and even if it would, what work is traceable to those remaining items?

[00:05:57] Speaker 00:
Absolutely, Your Honor. And we think this could just be reversed because there's just only one reasonable outcome here, which is that if you look at those remaining items, there isn't misconduct. I'm going to start with the second patent. So the plaintiffs struggled to get discovery on it. They alerted, still during the fact discovery period, they alerted the defendants that they were having trouble getting fact discovery. They were considering withdrawing it. And then a few weeks later, They made the formal declaration that they were withdrawing it via an expert report, which under this court's Alcon Research Standard is enough to alert everyone that the patent's out of the case.

[00:06:33] Speaker 03:
What date was the report?

[00:06:35] Speaker 00:
September 18th, 2020 was the date of the declaration via the expert report.

[00:06:41] Speaker 03:
But the covenant not to sue was not until November 17th.

[00:06:45] Speaker 00:
That came later, but it wasn't required. because they said, we're no longer pursuing this. Now, defendants chose to continue to pursue their invalidity case and their counterclaims of declarations of non-infringement, which they could do until the court said they no longer had standing to do. But there was no misconduct in the procedure that happened when they learned, because, well, first of all, there's obviously no harm to defendants because they decided to move forward with their counterclaims.

[00:07:12] Speaker 03:
And also... Did any of the...

[00:07:16] Speaker 03:
work that the defendants did in support of their summary judgment motion focus on infringement?

[00:07:23] Speaker 00:
They only had a few sentences.

[00:07:25] Speaker 03:
So some of that might, in fact, have not been done had you given formal notice earlier that you were withdrawing your infringement contention on that back.

[00:07:42] Speaker 00:
Perhaps a paragraph might not have been written, Your Honor, but it's not substantial work.

[00:07:47] Speaker 03:
Most of their work with Receptor 189 that appeared in the summary judgment, did the summary judgment cover summary judgment, their motion for summary judgment of invalidity?

[00:07:59] Speaker 00:
They did not move, I don't believe, for invalidity. So I think it was just a short description of why there can no longer be infringement. But their counterclaim was still live as to infringement at that time.

[00:08:11] Speaker 03:
I'm just trying to understand, what work did, and I don't or anyway, not made findings, I think this is right, on what work would have been saved had you given a full earlier notice, I guess, of your withdrawal of the 189. There are two things. One, you're not pressing it. Second, a covenant not to sue would ultimately kill their invalidity counterclaim.

[00:08:42] Speaker 00:
Yeah. I don't think the district court made those findings, but if you look at the record, the answer is a few paragraphs of work. So it couldn't be more than a few hours of attorney time. Certainly not the large fee verdict that came. And that's even assuming that our actions were unreasonable, which, remember, they didn't need to do that because as of September 18th, they knew that we were no longer pursuing it. So it was their choice that they still chose to include it in the summering judgment motion.

[00:09:08] Speaker 02:
Can I step off the other patent for a minute? Going back to the first patent.

[00:09:13] Speaker 02:
The district court seems to also be relying on whether there was a reasonable argument for infringement based on the temperature limitation in Claim 12.

[00:09:25] Speaker 02:
I'm wondering whether that, controlling the temperature at 20 degrees, isn't... Is that an independent basis for the finding, you know, I mean, looking at the totality of circumstances? I think that is one of the totality of circumstances that the District Court relied on in finding the case exceptional. Do you disagree with that?

[00:09:46] Speaker 00:
It referenced it briefly in the order. I think even appellees have admitted in their briefing that it was not the driving factor, that it had minimal effect, minimal bearing is their own terminology on his ruling. And they didn't even move for it. So that wasn't a basis in their motion for exceptional fees that they explained to the court. The court just referenced it. So we didn't really – that wasn't the focus.

[00:10:10] Speaker 02:
What about when – I mean, I'll be honest with you. It spans a page or so, and also it's discussed in the facts section. So what is the basis for knowing that it's not something that was important to the district?

[00:10:24] Speaker 00:
I think the parties have effectively stipulated to that as one basis.

[00:10:28] Speaker 02:
I hear you with the parties, but do I just defer to the parties on how to read district court's opinion? Is that how I do my job?

[00:10:36] Speaker 00:
You, Your Honor, can certainly read the opinion, and you're more than capable of doing so. The question here, I think, regardless of this, is that there's no basis to award exceptional fees on measuring temperature in view of the claim construction. The claim construction said that you didn't need to measure temperature to control the temperature. Controlling was broader than that. Our expert said, here's some evidence of how they can control temperature by managing plasma uniformity, by placement of the diamond seeds such that the top surface uniformly interacts, by cooling of the diamonds.

[00:11:11] Speaker 00:
He gave a litany of ways you can control temperature without measuring it. Under the court's claim construction, it wasn't until summer judgment and the exceptional fee motion that suddenly the court said, oh, you have to measure temperature. There's no evidence they measure temperature, so you're not only do you lose, but you're your position was objectively baseless. So I think, putting aside, you could very well read this opinion and say that's a separate reason to find this, and then overturn it, because that was an abuse of discretion as well.

[00:11:39] Speaker 00:
I'd like to hit on a little bit of the other conduct, particularly the access to the factory in India. The district court seemed very angry about statements that were made saying we couldn't get in in August of 2020, when in fact, I think all the parties acknowledged the facts, which are They did offer us a way to get in. You had to sign something saying that you understood that it was a COVID hotspot. Attorneys from the U.S. would have had to figure out how to get into India in August of 2020 or find Indian attorneys that were willing to get paid. We know from the record the Indian attorneys that represented the other side made about $6,000 for their work getting into the factory.

[00:12:13] Speaker 00:
So they would have had to find attorneys that were willing to risk their lives for $6,000. It was effectively impossible to get in. And the district court really took great anger at the way that it was framed in the briefing, but the record was quickly corrected by the other side. We didn't deny what had happened there. And the district court seemed to think that somehow we misrepresented something to the court. That was never the intention, and I don't think that that alone can support any exceptional case finding.

[00:12:43] Speaker 04:
Yes, Your Honor.

[00:12:48] Speaker 00:
So as an additional reason, the district court very briefly addressed joint and several liability, relied on one case, and he said, because the parties have the same counsel, effectively, they're in this together, and I'm going to punish both of them. But a lot of the conduct that the district court mentioned, including presentations from M70, Carnegie Science had no knowledge of. It was the patent holder. It wasn't directing the litigation. And suddenly, the district court didn't really weigh the equities. And since then, there's been case law about how It should be weighed from the Supreme Court.

[00:13:20] Speaker 00:
So at minimum, the court should remand so that the district court would re-look at that and say that Carnegie Science, there's a way to weigh the equities here and assign percentages that the district court didn't do.

[00:13:33] Speaker 00:
Thank you. I'll reserve the rest of my time.

[00:13:39] Speaker 01:
May it please the court, Laura Liddickson, Kroll & Mooring for Phoenix Diamonds. Before I address your question, Timmis Goldenberg, I want to remind the court that the crux of this case is about whether or not there was an abuse of discretion here by Judge Rakoff in deciding to award an exceptional case compensation to Phoenix Diamonds. Judge Rakoff lived with this case closely for years. If you look at the docket sheet, Appendix 38, you count up the number of hearings, teleconferences, status conferences, hearings, over 25 times. He knew these facts well, and based on them, he felt this case was exceptional.

[00:14:13] Speaker 01:
Now, the question you asked, Judge Toronto, was about the claim construction, whether or not this case was really unreasonable after June 2020. General.

[00:14:21] Speaker 01:
Well, so we gave them a month's leeway to consider things. But the Novo Declaration comes in June 2020, and the claim construction is in May 2020. And Your Honor asked about the growth surface, and I think that only gets half of it, because there's this one claim phrase, and it says, growing single crystal diamond on the growth surface. So one piece of that is the growth surface construction. But the district court at Appendix 265 through 267 also construed single crystal diamond in May 2020.

[00:14:51] Speaker 01:
And that single crystal diamond construction requires that there be insubstantial non-monocrystalline growth. Judge Soule asked about the temperature limitation. The two are tied together.

[00:15:02] Speaker 03:
I mean, I think maybe just to be absolutely clear at the risk of repeating what is already absolutely clear, the fact that there's a whole bunch surrounding the single crystal diamond that does not establish whether if you cut out Pieces, you know, in the center, which Capano, is that his name? Yes. Capano said, that's what I would do.

[00:15:31] Speaker 03:
It's then an additional question whether in those superficially quite nice, seemingly single crystal diamond, there's substantial polycrystal. And the district court did not find that.

[00:15:46] Speaker 01:
No, he did.

[00:15:47] Speaker 03:
He said that there has to be... All of the dark in the muffin tins.

[00:15:52] Speaker 01:
He did – so the entire point of this patent is about not having that substantial non-monocrystalline growth when you grow the single crystal diamond. So when you look at the – That's not what the claim language says.

[00:16:06] Speaker 03:
The claim language says you have to grow single crystal diamond on the growth surface. That can be true if you're also growing other stuff on the growth surface.

[00:16:16] Speaker 01:
Well, so this is a process patent. So if you look at the prior art, which there's an image of that, just to give some background of what the merits were, of the Yan diamond, it has the ring of non-monocrystalline growth around it. So the thing that the inventors for this patent said that they had discovered was a way to create that single crystal diamond. without all that substantial non-monocrystalline growth around it. And so that's what Judge Rakoff was looking at. And he was looking to, according to the patent, you should be able to get a single crystal diamond without all of that stuff on it. And as it turns out, that's not what NOVA was doing.

[00:16:45] Speaker 03:
Just press back one more time and then try to remain quiet. No promises. That's not what the claim construction said.

[00:16:54] Speaker 01:
The claim construction, when you combine gross surface and single crystal diamond together, does in fact say that.

[00:16:59] Speaker 03:
No, it just says you have to have a single crystal diamond on the gross surface, even if there's a whole lot of other junk on the gross surface.

[00:17:07] Speaker 01:
I respectfully disagree, Your Honor. It says that there has to be any place where diamond is growing, which is the growth surface, any place that's growing in this reactor has to have non, it has to have insubstantial non-monocrystalline growth. That was the district court's claim construction, and when you read his opinion, and he explains that at Appendix 267, you know, that all of the stuff that's growing on the diamond, whether it's polycrystalline, non-diamond carbon, it has to be insubstantial. And so Carnegie plaintiffs had that as of May and June 2020.

[00:17:41] Speaker 01:
That first appeal, they dropped it. This case was baseless as of that point. And when you look at the contradictions between Capano's testimony and what the district court held in its claim construction, it's really striking.

[00:17:55] Speaker 02:
Do you think the district court...

[00:17:59] Speaker 02:
decision is more emphasizing that the expert seems to have used the same language that he was being used in their claim construction proffer prior to claim construction. When he analyzed it and said, I'm not going to interpret growth surface as what the It's the proffered construction that was rejected by the district court. Do you think that was the reason why the district court thought that this was exceptional? Or is it more that the district court thought that going forward after claim construction, it was unreasonable to go forward?

[00:18:35] Speaker 01:
Well, it was both things. The district court, he really closely supervised this case and had a strong understanding of what the patent was about. And so he felt the case was baseless. But those direct contradictions certainly highlighted just how exceptional it was. And these were lengthy reports that Phoenix had to respond to. And there were two independent bases by which he granted summary judgment. One was the temperature control, and the other was the growth surface, single crystal diamond on the growth surface limitation. And...

[00:19:06] Speaker 01:
In both instances, the process that NOVA was using was just so different from what was in the patent that this case should not have been pursued further. They do kind of go hand in hand.

[00:19:14] Speaker 02:
I do agree, though, going back to the word growth service. The district court interpreted it as...

[00:19:22] Speaker 02:
The surface on which diamond is grown.

[00:19:24] Speaker 01:
Any surface.

[00:19:25] Speaker 02:
Any diamond. Right. Any diamond. Right. Okay, so both single crystal and diamond, which can't have insubstantial amounts of other carbon, and also anything else, right? There's any other kind of diamond.

[00:19:38] Speaker 01:
Right.

[00:19:40] Speaker 01:
Right. So Carnegie's brief tries to raise some kind of ambiguity about what polycrystalline versus non-monocrystalline diamond is, but the district court explained that everything is considered non-monocrystalline growth, and that's consistent with the patent, too. If you look at the table at column 14, the patent treats non-diamond growth as an undesirable diamond or non-monocrystalline diamond.

[00:20:02] Speaker 03:
Under temperature gradient limitation, at page 34 of your red brief, you say Phoenix did not rely on temperature gradient limitation to argue baselessness in its exceptional case motions.

[00:20:14] Speaker 01:
No, we did not. But I wanted to just highlight they're linked together because NOVO didn't measure the temperature gradient.

[00:20:24] Speaker 01:
It wasn't going to get the kind of high quality single crystal diamond without the non-monocrystalline growth on it.

[00:20:28] Speaker 03:
I thought that there was from the other side's expert testimony that you don't have to measure temperature directly to draw a sound inference that the temperature gradient would meet this limitation. The other kinds of things that Ms. Goldenberg referred to and that Or to create a tribal fact issue.

[00:20:56] Speaker 01:
Yes, Your Honor. There is that testimony, and that's why in the fee brief, Phoenix sought fees based solely on the growing on the single crystal diamond limitation because it was cleaner. It's very, very clear that these diamonds that NOVA makes are not, they require a lot of processing. There's a lot of other stuff growing on them. It's not in line with what the patent envisioned, which is having a diamond that comes out of this reactor that requires minimal processing.

[00:21:25] Speaker 01:
I want to talk about a couple of the specific pieces of conduct that Ms. Goldenberg raised. One, she talked about the inspection in India and said that it was impossible to inspect, but it wasn't. Phoenix hired Indian counsel. This could have been done. There's no evidence that they made any effort to do so. And when you look at the actual letter that they sent in response to the offer to inspect, it says, we decline. There was no, we think this is impossible, or complaints. But the problem was that they kept telling the district court, and then this court and the briefing to the Federal Circuit and the prior appeal, that they didn't have an offer.

[00:22:00] Speaker 01:
And that went on for quite some time.

[00:22:03] Speaker 03:
Supposing that were the only thing, supposing that the merits were such that by mid-July you should have folded on this, and it was just that, what kind of...

[00:22:19] Speaker 03:
consequences would have followed from that, what's now by assumption, mischaracterization of just how difficult it was to get access to the factory. What work did you do because of that mischaracterization that would be traceable to that mischaracterization by assumption? What kind of work did Phoenix do? Right, and fees have to be, have to be limited to the work that's done caused by whatever makes the case exceptional.

[00:22:54] Speaker 03:
And if we're down to, you made, the other side, the other side made some statements that the court could find to be really quite misleading about access to the facility in India. What legal work was traceable to that by assumption and misrepresentation?

[00:23:14] Speaker 01:
Well, so with respect to that particular statement, so that misleading statement was at the heart of what Carnegie argued to keep certain evidence out at the summary judgment stage. So that's – you know, Carnegie in its brief says that Judge Rakoff – when you look at Phoenix's conduct, Judge Rakoff refused to look at some of this testing that Phoenix did because – If you look at the transcript from the hearing, he was influenced by this misstatement from Carnegie, or not Carnegie, from plaintiffs jointly about the inspection. And so a lot of that briefing that was at the summary judgment stage and those discovery disputes about Novo's cooperation were directly caused by this misstatement.

[00:23:54] Speaker 01:
I also think that It's not correct to look at each individual piece of misconduct in this context and look for causation based on each one. It's a pattern of conduct.

[00:24:03] Speaker 03:
So when we talk about the octane... That's generally the case if the basis of the exceptional case determination is extreme meritlessness at some point as of July, at which point no further work should have been done. But is it really the case if there are three misstatements along the way, each one of which caused, I'm just making this up as hypothetical, an hour of extra attorney's work?

[00:24:36] Speaker 01:
Well, in Octane Fitness, the Supreme Court talks about the totality of the circumstances. So here we have a pattern of conduct, which is about delaying the decision.

[00:24:44] Speaker 03:
That's a special determination of whether it's an exceptional case. There then follows a principle I've always associated with our Rembrandt case that says the amount of fees awarded has to be – tied to the work that was done because of the basis for the exceptional case determination. We're talking about three or four bits of misconduct.

[00:25:11] Speaker 01:
But the Rembrandt case deals with, I can't remember the exact number, but I want to say it's like $50 million in attorney's fees. And they said, no, we're not going to award $50 million without looking for some causation. But I believe that same case says that in sort of a more run-of-the-mill patent case, which is what we have here, two patents, a small defendant defending itself against a very aggressive patent enforcer here with M7D and its partner, Carnegie, that it would be appropriate to perhaps award all the fees based on a pattern of conduct.

[00:25:41] Speaker 01:
So I think Rembrandt leaves a hole for this kind of case. I also don't think it makes sense to be parsing each individual thing and having sort of a case within a case to have to attribute each piece of fees. Phoenix was really the victim here of a very aggressive enforcement action. where at every stage the plaintiffs were trying to push back dismissing the 189 patent, misstating what offers Phoenix had made to cooperate with Discovery, dealing with a third party, its supplier, that didn't want to give Phoenix any confidential information either.

[00:26:11] Speaker 01:
So I do think it is fair in this instance to apply all of those. those fees that were related to the delay and treat it as the totality of circumstances. Do you have questions about any other individual actions that you want me to highlight?

[00:26:24] Speaker 01:
I want to talk a little bit about joint and several liability because you raised that, Judge Reina. Here, it was definitely appropriate to apply joint and several liability. The contract that Carnegie cites itself at Appendix 1660 makes clear that Carnegie was to receive 10% of any award that it got through the litigation. It stood to benefit financially very substantially here. It also received money under that contract, a substantial amount even outside of what it would have gotten in the litigation. It had the ability to control aspects of the litigation and also was entitled to information about the litigation from M7D.

[00:27:02] Speaker 01:
Now, Carnegie's counsel said, oh, we didn't know about some of these actions, but, in fact, that contract makes it clear that M-70 was supposed to inform Carnegie of things.

[00:27:12] Speaker 04:
It appeared to me kind of weak for the court to find that Carnegie and M-70 had a close, intertwined relationship, and that was one of the reasons for the joint liability.

[00:27:26] Speaker 04:
But yet...

[00:27:29] Speaker 04:
You have joint appellants and joint defendants, and they rely on each other in different parts of the case, and they march together as one in the same direction. Isn't that the case that almost in all situations where there's multiple parties that you're going to have close and intertwined relationships? What's so unusual about that?

[00:27:52] Speaker 01:
Here they held themselves out jointly throughout the case, so it's exactly the same as Evident v. Church v. Dwight. in which the two parties were jointly represented. You don't always see that when you have a licensor and licensee. I do a lot of pharmaceutical cases. Often, there's separate counsel, and the patent owner may present itself and its arguments separately from the licensee. That's not what happened here. Throughout the litigation, up until the time the M7D declared bankruptcy, they were a united front, presenting arguments jointly as plaintiffs and even calling one another partners.

[00:28:26] Speaker 01:
It was only after it became clear that Carnegie might be stock-footing the bill in view of M-70's bankruptcy that they tried to separate themselves. So it's very different from those typical co-defendant situations.

[00:28:38] Speaker 01:
Are there any further questions?

[00:28:44] Speaker 01:
I didn't touch on the cross-appeal, so I think my time is seated.

[00:28:47] Speaker 04:
Thank you, Your Honor.

[00:28:57] Speaker 00:
I'll just briefly address a few points that were raised. I heard argument from opposing counsel about, well, if you look at the patent and if you understand what's going on in this case, Judge Radkoff's understanding of the patent was something different than what was in the claim construction order. We followed the claim construction order, and with that claim construction order, which was the rule of the land at the time, regardless of what was going on in Judge Radkoff's head, we had a reasonable basis to assert infringement under all the limitations.

[00:29:25] Speaker 03:
I want to address... What about the portion where Dr. Capano seems to say, and maybe he'll tell me seemingly is wrong, he really didn't say, I'm proceeding on an understanding of the claim different from what's in the claim construct.

[00:29:45] Speaker 00:
That was the next point I was going to address, which is that there are a couple of misstatements in his report, and I think he attempted to correct them at deposition. I'm going to point your honors to Appendix Page 1519, Paragraph 173. He says, I do not interpret growth surface to include the non-diamond or a polycrystalline diamond that grows at the periphery of the single crystal diamond. That or probably should have been an and, because that's what he explains later during deposition testimony. This is at Appendix Page's...

[00:30:15] Speaker 02:
1851 and 1852, he explains that what he's saying is that if there's a substantial amount of carbon that's mixed in, such that it doesn't look like a diamond anymore, that he's not counting that as being... His theory was really relying on, as I understand it, his theory was relying on the definition of single crystal diamond, which was that it can't have, it has to have an insubstantial amount of carbon. Right, and as soon as there's... He wasn't relying on a theory that even if there's some parts where there's single crystal diamond growing, it doesn't matter that there's this hatch mark of carbon around it.

[00:30:52] Speaker 00:
Right, and I think the opposing sides expert, Dr. Pineo, agreed with that. So then it becomes this sort of the muffin tin that Judge Chiranto was referencing before. All of that he looked at and he said, I'm not seeing that. That doesn't look like polycrystalline diamond to me. I've seen no evidence that that's pure polycrystalline diamond. That looks like It's mixed with a lot of carbon.

[00:31:14] Speaker 00:
The polycrystalline would be the black stuff that's around it. So he was looking at that and saying, I don't think that's a diamond anymore. So it's not part of the gross surface. And that's what he explained at Appendix Pages 1851 and 1852.

[00:31:27] Speaker 02:
He says that the polycrystalline diamond, which has a lot of graphite in it, he says in his view that's not even diamond.

[00:31:36] Speaker 00:
Right, to that extent, because he said he had seen no evidence that it was pure polycrystalline diamond at that point, because he understood the court's claim construction to say that it could include polycrystalline diamond, intending, as Judge Stoll said, to cover maybe those little hatch marks, those little bits of extra that would still make a usable diamond. But he's saying as soon as you begin looking at what's around there, that doesn't seem to be part of the gross surface anymore. He was applying his interpretation of the district court's insubstantial language

[00:32:06] Speaker 02:
in that way, and that was... But it didn't say a diamond has insubstantial carbon graphite. The court held that a single crystal diamond has to have insubstantial carbon graphite, right?

[00:32:21] Speaker 00:
The claim construction says that in the, yeah, the single crystal diamond.

[00:32:25] Speaker 02:
The definition, the court construction of growth surface just was a surface on which a diamond is grown, right? Diamond generically.

[00:32:33] Speaker 00:
That is correct, but he interpreted that as the single crystal diamond in view of the claims.

[00:32:39] Speaker 02:
He interpreted the court's construction, which was diamond generically, to be single crystal diamond?

[00:32:45] Speaker 00:
In view of reading the claims. The court didn't say that it was or wasn't, so it was his reasonable interpretation of the claims because he wasn't counting the substantial carbon and polycrystalline diamond that was surrounding it as part of the growth surface.

[00:33:02] Speaker 00:
Thank you, Your Honor.