[00:00:00] Speaker 04:
Our fourth and final oral argument today is Doctrine No. 25-1367, Imre Iver.

[00:00:06] Speaker 00:
May it please the Court, my apologies. I hope the mask won't be an issue. I started to not feel well on the train riding down. We called the Court. The Court said I'd better come, so I'm here. I'm going to power through this, but I figure better safe than sorry. I don't think what I have is contagious. I think it's something I ate. But I went to – I did not go to medical school. I went to law school, so I won't make those judgments. I'll just assume. Okay.

[00:00:31] Speaker 04:
Well, I'm glad you're here.

[00:00:33] Speaker 01:
Can I ask you a question like housekeeping? The agreement that you filed the other day is under seal.

[00:00:42] Speaker 01:
Do you consider paragraphs 2.4 and 2.5 of the agreement confidential?

[00:00:50] Speaker 01:
I mean, are they considered confidential? Is the preamble confidential?

[00:00:58] Speaker 00:
today? The counterparty, I am okay discussing it publicly.

[00:01:04] Speaker 00:
My client and I are fine with that. We did comply with the confidentiality obligation to notify the counterparty that we were doing this. They raised no objections. So I'm going to just go with that it's okay to discuss publicly.

[00:01:19] Speaker 01:
The entire agreement or just parts 2.4? The entire agreement.

[00:01:22] Speaker 00:
Okay.

[00:01:24] Speaker 00:
The counterparty is aware, being software, is aware that I'm here today. So if they had any objection, they may have waived it.

[00:01:32] Speaker 02:
I don't see anybody in the courtroom anyway, except our law clerks and our staff. So if we cleared the courtroom, we would still have the same people.

[00:01:41] Speaker 01:
Oh, I just, I wanted to know for purposes of any opinion or anything like that, really. I just...

[00:01:50] Speaker 00:
The advantage of being last, I suppose. But as your honor, let's point out an issue.

[00:02:00] Speaker 00:
They have been silent, so I'm just assuming they're waving, they're aware that this is an issue that your honors want to discuss, so that's it. That's my position on that. And my client is fine with it.

[00:02:14] Speaker 00:
So I guess you probably, I guess the court wants to start with this issue, because it's a threshold issue as to whether you want to address the other issues.

[00:02:21] Speaker 01:
Yes. Do you have an argument to distinguish this court's decision in avid and why it is that in this case the appeal isn't moved?

[00:02:31] Speaker 00:
Yes. Those two decisions and others, but two that the court pointed out, the all flex and the avid decisions, In both cases, there was a definitive resolution of the case depending on the outcome of the appeal. The appeal went one way, then it was this. The appeal went another way, this is, they either pay it or they don't pay it. It was definitive, meaning regardless, there was no other decision to be made after that.

[00:02:59] Speaker 00:
There was no discretion. The fact is, if the appeal was won one way, there would be an exchange of money, and if it wasn't, there wasn't.

[00:03:09] Speaker 00:
in this agreement, that's not the case. In this agreement, the patent that's at issue in this appeal, in this case, is specifically excluded from this agreement, and then there's an option on behalf of the counterparty, the VM software, to have it be included after they get to see how this appeal comes out.

[00:03:29] Speaker 01:
Why isn't it kind of obvious that if the claims are found eligible, then someone's going to pay $100 to license the patent, and if the claims are found ineligible, then they won't?

[00:03:42] Speaker 00:
Right. The money is not the issue here.

[00:03:45] Speaker 01:
The issue is... I'm just saying that it doesn't seem too unclear to me what the outcome is. Why isn't that...

[00:03:53] Speaker 01:
going to happen as a result of this appeal, why is it unclear?

[00:03:58] Speaker 00:
Okay. This is a limited license, and if your honors determine that the Section 1 determination was wrong and they vacate and we're back to the district court, it's quite likely that the defendant will want to take another crack at invalidating the patent another way.

[00:04:17] Speaker 03:
The limitation... You don't think that game will just pay the $100? No. No.

[00:04:22] Speaker 03:
They'll want to keep pursuing litigation?

[00:04:25] Speaker 00:
Yeah. And the reason is because this is a limited license, and in section... No, keep going. Okay. In section 2.1, the license... Explicitly, it says the license... The end of the section says, the license will not extend to any third-party entity that becomes an affiliate, as defined herein, after the effective date for any product, service, or solution that is both one, not associated with that of Veeam, and two, existed as a separate product offering or other solution or service of the third-party entity prior to becoming an affiliate.

[00:05:01] Speaker 00:
So what that means is if Veeam, the defendant, had acquired another company, that company's technology would not be covered by this license. So they would be most likely motivated to try to take a third crack, because we've already gone through IPRs, That limited down to six claims. Now we've had this ruling on the 101. But because of that limitation on the license, they may very well decide that they have to fight this.

[00:05:31] Speaker 01:
And in fact... The question is whether there's a real case of controversy. It has to be eminent. It has to be concrete. And all we've got is you standing here saying it's most likely they will want to do this or that without any evidence or any...

[00:05:50] Speaker 01:
It feels hypothetical, I would say.

[00:05:54] Speaker 00:
Well, I was only giving that in response to Your Honor's question. Why wouldn't they? Your Honor's asked me their motivations, so I answered the motivation. The agreement has this limited language. It limits the license. It can't include an entity.

[00:06:09] Speaker 02:
Let me ask you this. If the agreement wasn't they have the option to pay $100, but they have to pay $100, would it be moved under that case?

[00:06:16] Speaker 00:
Potentially, yes, because it's a definitive resolution. In that sense, it would be the same as those two other cases.

[00:06:22] Speaker 02:
I still don't understand why they wouldn't pay $100, even if sometime down the line they might purchase a company that's subject to it again. They're getting rid of the dispute for now, and this dispute, and they'll still have a one-on-one argument down the road if it happens. That seems, why would they have ever agreed to this agreement at all for $100 if they didn't intend to exercise it?

[00:06:50] Speaker 00:
Again, now you're asking me to – now I'm going to speculate as to their motivation.

[00:06:55] Speaker 02:
Your argument is you're speculating. That's why you are – you're speculating about the fact that this doesn't resolve the case because you think they might choose not to pay $100 and go ahead and defend on other invalidity grounds. I mean if they were really concerned about this patent being invalid or ineligible, they would be sitting here defending it now. Instead, they got the option, we don't have to do anything. Even if we lose this appeal, all we have to do is pay $100.

[00:07:26] Speaker 00:
Right, and for that $100, they... That moots this case.

[00:07:32] Speaker 02:
It may not moot future cases where you can sue their later acquired companies, but doesn't that moot this infringement action?

[00:07:38] Speaker 00:
If they pay the money, it moots the case is over.

[00:07:42] Speaker 00:
The fact that they have the option to pay the money is different than prior moot cases.

[00:07:47] Speaker 02:
That seems very temporary to me.

[00:07:52] Speaker 00:
There are other restrictions that come if they exercise this option. For example, Section 2.7.

[00:07:58] Speaker 02:
Let me ask you this. If they exercise the option, is the case moot?

[00:08:05] Speaker 00:
I don't think that, with all due respect, I don't think it's a fairly worded question. The issue of whether it's moot is today.

[00:08:13] Speaker 00:
Is the case moot today? Every case is moot after it settles.

[00:08:18] Speaker 00:
If a case settles, well, but not entirely, the patent that issue in this case is not included in the agreement. It's explicitly excluded, so it's not currently licensed. And if they choose, it's up to them not my client, what happens if, you know, what the disposition of this is.

[00:08:40] Speaker 00:
There are other restrictions that would come into play if they exercise it, just to continue answering the section. Section 2.7 would restrict their ability to challenge the validity of the patent. So, again, if their affiliate is an issue, they would not be able to participate in that defense.

[00:08:57] Speaker 00:
And then there's other provisions about... It's restrictions on assignment and breach, so they would be limited by all of those restrictions in this agreement should they choose to exercise the option.

[00:09:08] Speaker 00:
So, again, I could speculate all day, and then you would say, I'm speculating, but I don't know how else to answer those questions. Why wouldn't they do this?

[00:09:17] Speaker 00:
The agreement speaks for itself. It has some restrictions that weigh against it.

[00:09:27] Speaker 00:
In any event, it's in fact not a definitive resolution. It is just an option, so it is distinguishable from those prior cases on that basis.

[00:09:37] Speaker 00:
And there are other cases from this court, like the Unilock v. Hulu case.

[00:09:45] Speaker 00:
which have said that a case is moot only if it's impossible not to grant effectual relief whatsoever. So here, it's not impossible. It's possible to grant effectual relief. The patents could be revalidated. The decision to invalidate could be overturned.

[00:10:03] Speaker 00:
And again, that provides the option to defend it, as well as gives my client the option to pursue other infringers.

[00:10:12] Speaker 00:
which is a value that was recognized by this court in the Sandhoff v. Kijet case. I'm probably mispronouncing that, so for the record, I'll just say that it's 108F4-1376, which recognized as an equally illegally cognizable interest in the outcome of an appeal could be the ability to assert a patent against others. So it's really not about the $100. That's consideration, in effect. That's just minimal consideration.

[00:10:43] Speaker 00:
Any other questions about this issue? And would you want me to actually address the substance?

[00:10:49] Speaker 04:
I do have one question about the substance, and that's when I read the background of this patent in column one. I was just trying to understand what is the nature of the associated deaths in this patent claim.

[00:11:03] Speaker 04:
Because when I look around...

[00:11:08] Speaker 04:
Column 1, line 44, talks about how there were already various techniques for reducing the size of backups.

[00:11:18] Speaker 04:
And that was to not copy data already backed up. And one technique for reducing the size of backups is to only copy the files that do not already exist. This technology utilizes...

[00:11:33] Speaker 04:
a CRC32 as a checksum along the file name destinators to determine if a file is already in the repository.

[00:11:42] Speaker 04:
And this sounds a lot like the claim dimensions, which is to use descriptors, here it would be the CRC32 as a checksum, to compare potential to be stored files against a ready repository stored set of files and checking these shorthand descriptors against each other to see if there's a need at all to copy in a particular file.

[00:12:13] Speaker 04:
Isn't that the claimed invention?

[00:12:16] Speaker 00:
No, Your Honor. So that, what you're describing, there's a difference between client-side versus server-side checking. So what this is describing is the server-side technique where they get all the data from the client computers... And then they run compares to see do I have this file already, do I have this file already. What this invention is is client-side checking. So basically the use of the signatures without having to send all of the files, without having to send the entire contents of the hard drive to the server, you just send the list of the signatures.

[00:12:49] Speaker 04:
Then the server... The descriptors.

[00:12:53] Speaker 00:
Yes.

[00:12:53] Speaker 04:
And descriptors include things like a CRC32.

[00:12:58] Speaker 00:
In this case, the particular claims talk about cryptographic signatures. Claims are limited to cryptographic signatures generated based on the content of the file. Sure.

[00:13:08] Speaker 04:
It's different than... It's just like CRC32. Your claim is cryptographic. That was known in the ARC to do that.

[00:13:18] Speaker 04:
So then the claim intervention boils down to sending a list of descriptors to the server. I mean, this is already at the server during the comparison.

[00:13:29] Speaker 00:
Right.

[00:13:29] Speaker 04:
So that's already off the table. It just comes down to transmitting a list of descriptors. Is that right?

[00:13:35] Speaker 00:
Yes. And what the industry calls client-side checking.

[00:13:44] Speaker 00:
Okay. The main problem we had, just because I have a minute left, I'll just... And on page Appendix 14, in the judge's... Judge Talabani's ruling...

[00:13:55] Speaker 00:
This kind of just epitomizes the problem that we have, which is that she says the only potentially unique element of the 043 patent is the backup application, which combines the device backups, thereby reducing storage and network requirements.

[00:14:12] Speaker 00:
However, patenting the descriptive generating process would be patenting the algorithm itself. The problem is that she's sort of recognizing, on the one hand, that there's a technological environment, and of a backup system, which is not just a generic computer, like in the personal web decision. But then she's incorrectly, in our view, saying that, well, this would preempt, essentially, the entire algorithm, which it wouldn't, because it's limited to a particular environment. So that is why we have been trying to argue in the brief that this case is closer to the CardioNet case, where the same judge made the same mistake, and this court corrected and said, no, The algorithm may be abstract, but it's used in a heart detection device.

[00:14:58] Speaker 00:
So the question really is, would the court consider a backup system closer to a specific piece of technology like a heartbeat detection device, or is it just generic processing?

[00:15:12] Speaker 00:
I'm over at times.