[00:00:00] Speaker 03:
With that, we will move to the second case on the argument calendar, hold security versus Microsoft.

[00:00:27] Speaker 04:
He's blind.

[00:00:30] Speaker 04:
That way you could have talked to him.

[00:00:38] Speaker 04:
I'll tell you what it was about.

[00:00:54] Speaker 04:
There's a button right below there you push on it it'll lower the if you'd like I Don't know if it goes low enough you want All right, whenever you're ready council

[00:01:27] Speaker 01:
I will be short with you.

[00:01:30] Speaker 01:
That wasn't funny.

[00:01:32] Speaker 01:
I'm ready.

[00:01:34] Speaker 01:
May I please the court?

[00:01:34] Speaker 01:
My name is Nika Aldrich.

[00:01:35] Speaker 01:
I'm with the law firm Schwabe, Williamson and Wyatt, and we represent hold security.

[00:01:43] Speaker 01:
I'd like to reserve five minutes for rebuttal, and I intend to focus my arguments as the court has directed on the unfair business practices claim.

[00:01:51] Speaker 01:
The unfair business practices claim was improperly dismissed in this case for four reasons.

[00:01:58] Speaker 01:
First, the district court improperly concluded that hold security had an unequal bargaining position with Microsoft, an equal bargaining position with Microsoft.

[00:02:11] Speaker 01:
Second, the court placed a pleading burden on hold security that is beyond what Washington state law requires with respect to the solicitation factor.

[00:02:21] Speaker 01:
That factor says, did defendant actively solicit this particular plaintiff indicating potential solicitation of others?

[00:02:33] Speaker 01:
And that was satisfied here.

[00:02:35] Speaker 01:
We pleaded that the defendant, Microsoft, solicited this particular plaintiff, which would be indicative of the fact that Microsoft had solicited others.

[00:02:46] Speaker 01:
It was not necessary for us to name the others.

[00:02:49] Speaker 01:
Third, after finding that the first factor favors hold security, the court improperly weighed the factors at the pleading stage.

[00:02:59] Speaker 01:
And fourth, the court failed to provide a reasonable opportunity to amend the unfair business practices claim, holding that no amendment could cure these issues.

[00:03:09] Speaker 04:
What part of the agreement between the parties prohibited Microsoft from doing what they did?

[00:03:19] Speaker 01:
Um, so I, I believe this gets to the contract claim.

[00:03:23] Speaker 01:
Yes.

[00:03:24] Speaker 01:
So the contract said, um, and I will quote it directly, compromised account credential data will be used to check against Microsoft, Microsoft's own services brands and domains.

[00:03:38] Speaker 01:
And I, I think that the contract claim is actually rather simple here.

[00:03:41] Speaker 01:
I think, frankly, it all comes down to one word and that word is the word will.

[00:03:46] Speaker 02:
or the word only, which is missing.

[00:03:50] Speaker 02:
To say that I will have a cucumber sandwich for lunch says nothing about whether I'm also going to have an apple.

[00:03:58] Speaker 02:
And so I guess for my part, I would appreciate knowing why

[00:04:08] Speaker 02:
in the unfair business practices claim, assuming that there is no contract claim, and I know you disagree with that, where is the sort of public interest?

[00:04:20] Speaker 02:
This is a dispute between private parties that have had a long-standing relationship, and I'm struggling.

[00:04:27] Speaker 02:
I don't fully appreciate, I guess, Washington law on this, but where's the public interest?

[00:04:36] Speaker 01:
So I've got one question on the contract claim, and I've got another question on the unfair business practices claim.

[00:04:41] Speaker 01:
If I could address the contract claim first.

[00:04:43] Speaker 02:
Sure.

[00:04:44] Speaker 01:
So to me, it all comes down to the word will.

[00:04:47] Speaker 01:
And it's kind of as simple as this.

[00:04:49] Speaker 01:
My 10-year-old the other day asked if we ran out of milk at the house.

[00:04:54] Speaker 01:
And I asked him to go to the store and get some milk.

[00:04:56] Speaker 01:
And I gave him a $5 bill.

[00:04:58] Speaker 01:
And I said, you will get milk with this money.

[00:05:01] Speaker 01:
Do you understand?

[00:05:03] Speaker 01:
Now he came back.

[00:05:04] Speaker 01:
with a pint of milk and a pocket full of candy.

[00:05:07] Speaker 01:
He knows he's in trouble because in context there, the word will means will only, in context.

[00:05:15] Speaker 01:
And the problem here is that the court refused to consider all of the extrinsic evidence that would be necessary to construe the word will.

[00:05:25] Speaker 01:
And there was a variety of extrinsic evidence that's been quoted.

[00:05:28] Speaker 01:
The court refused to consider all of that extrinsic evidence to understand how the word will

[00:05:33] Speaker 01:
is used here.

[00:05:35] Speaker 01:
The agreement said you will use it in a particular way and listed 19 domains and said you will use it in relation to these 19 domains.

[00:05:44] Speaker 01:
When you say the word will and then you identify 19 domains that you're going to be using it for, in context you have created a closed set.

[00:05:53] Speaker 01:
And the court aired at the pleading stage by saying that this contract can't be construed otherwise, we believe that the word will here means will only.

[00:06:03] Speaker 01:
in context and with all of this extrinsic evidence about the party's conduct and the negotiations, et cetera.

[00:06:09] Speaker 01:
So to me, the contract claim is rather simple, and that is the breach right there.

[00:06:13] Speaker 01:
That is the language where we believe the district court erred in misunderstanding.

[00:06:19] Speaker 01:
Now, moving on to Judge Graber's question, if I may.

[00:06:24] Speaker 01:
What we've alleged here is that Microsoft has engaged in a practice of using these form agreements, a nondisclosure agreement,

[00:06:33] Speaker 01:
the MSSA and statements of work in order to basically take intellectual property rights from small companies through interpreting their agreements in ways that are Byzantine, and then they use that in order to take intellectual property and to squeeze those competitors out of the market.

[00:06:52] Speaker 04:
Is this in the record, what you're describing now?

[00:06:55] Speaker 01:
Well, it is in the record that they have a practice of doing this, and in fact, I believe there was a

[00:07:01] Speaker 01:
a quote referenced in the complaint that said, something extend and extinguish.

[00:07:08] Speaker 01:
So Microsoft actually had a practice that was known as this, that's been known in the field as

[00:07:13] Speaker 01:
taking intellectual property rights from third parties and extinguishing.

[00:07:16] Speaker 01:
Now to the extent the court finds that the pleading is insufficient here because we didn't allege enough of this type of practice.

[00:07:24] Speaker 02:
Council, can I get you to move back to the other claim if I could and I want you to assume for the sake of this question that the contract actually authorizes Microsoft's conduct here

[00:07:41] Speaker 02:
And if that's true, how does it help you to say, well, they keep entering into contracts that authorize them to do things that we don't like or that people in our situation also don't like?

[00:07:57] Speaker 02:
How does that become an unfair business practice if the parties signed a contract that permits this conduct?

[00:08:06] Speaker 01:
Well, the Washington State Supreme Court in the Hayman case said that private contracts

[00:08:12] Speaker 01:
private contracts can constitute unfair business practices and gave a list of factors that need to be considered.

[00:08:21] Speaker 01:
And there are four factors that need to be considered.

[00:08:23] Speaker 01:
Right.

[00:08:23] Speaker 02:
That's what I'm trying to get at, though, is why this isn't just an ordinary private contractual problem, given the longevity of the relationship.

[00:08:34] Speaker 02:
And it just seems difficult to say that there will be other members of the public

[00:08:42] Speaker 02:
Who will face an identical problem?

[00:08:45] Speaker 01:
Well, we've actually in our brief cited another case where there was an identical problem, and that's the Drute case.

[00:08:52] Speaker 01:
And the Drute case... Is one enough?

[00:08:55] Speaker 02:
Is that under Washington law?

[00:08:57] Speaker 01:
Well, the Drute case is an example, and we could add the facts from the Drute case into our pleading as necessary.

[00:09:03] Speaker 02:
Well, it's still one thing.

[00:09:06] Speaker 02:
If the requirement is that this be something that could affect the public,

[00:09:12] Speaker 02:
You know, maybe two examples are enough if it's something like what happens to people at a bus stop that's, you know, clearly out there in the public.

[00:09:22] Speaker 02:
But when it's this kind of a contractual relationship, I guess I'm having trouble making that connection.

[00:09:28] Speaker 01:
Well, and we already pleaded in the complaint, this Microsoft practice that's known as something extended and extinguished, right?

[00:09:34] Speaker 01:
So get the intellectual property rights, extend the intellectual property rights.

[00:09:37] Speaker 03:
Counsel, you're certainly not arguing you weren't familiar with the terms of the contract when you entered into it, right?

[00:09:43] Speaker 03:
And the contract seems to me very clear where it says supplier grants Microsoft a worldwide, non-exclusive, perpetual, irrevocable, royalty-free, fully paid upright and license under all current and future IP to do everything in the world.

[00:10:03] Speaker 01:
Yes, subject to the limitations that are in the Statement of Work, which are in Section 3B.

[00:10:09] Speaker 02:
And those limitations are... But it doesn't say subject to that, the master agreement that I think... Paragraph 3D, which I think is what Judge Bennett was quoting.

[00:10:24] Speaker 02:
So even assuming that Microsoft has a license

[00:10:28] Speaker 02:
to use the data rather than an ownership interest are still permitted by this expressly permitted to use the data for additional services.

[00:10:39] Speaker 02:
So I don't understand why the description of work imposes limitations on the use of the data.

[00:10:50] Speaker 02:
It says what it will be used for, but it doesn't say only that, and particularly in light of the other provision, it couldn't.

[00:10:58] Speaker 01:
Well, at the top of the Master Services Agreement, it says that the agreement consists of multiple parts.

[00:11:03] Speaker 01:
So we need to read these multiple parts as if it is a comprehensive agreement.

[00:11:08] Speaker 01:
One of those parts is going to be Section 3D of the Master Services Agreement.

[00:11:12] Speaker 01:
One of those parts is going to be Section 3B of the Statement of Work, and we have to harmonize those two parts with each other to read the will statement out of the agreement.

[00:11:23] Speaker 02:
No, it's descriptive of what will happen, but it's not exclusively what will happen.

[00:11:27] Speaker 02:
There's nothing conflicting about that, is there?

[00:11:30] Speaker 01:
Well, it would render that language superfluous with the top of Section 3B, which says that Microsoft will use this data to check against its own in order to reveal and protect against threats to services, brands, domains owned by Microsoft.

[00:11:46] Speaker 03:
So we should read 3D.

[00:11:49] Speaker 03:
We should read into that.

[00:11:52] Speaker 03:
Microsoft has

[00:11:54] Speaker 03:
the most extensive license you can ever grant forever to do anything at all that they ever want to do with this, except if they use the data to check against someone else's services?

[00:12:08] Speaker 01:
Correct.

[00:12:08] Speaker 03:
In order to harmonize Section 3D with Section 3B... I'm having a lot of trouble seeing how that harmonizes vice rewriting.

[00:12:18] Speaker 03:
I mean, you certainly could have asked for that, right?

[00:12:21] Speaker 01:
I suppose we could have asked for that, sure.

[00:12:24] Speaker 01:
But to harmonize section 3D with section 3B, we need to put weight on section 3B.

[00:12:31] Speaker 01:
It has to mean something, and it has to mean something more than what is cited in the top of section 3B.

[00:12:36] Speaker 01:
The top of section 3 gives us a statement of purpose.

[00:12:40] Speaker 01:
We would be rendering superfluous the language at the bottom of 3B entirely,

[00:12:45] Speaker 01:
as an extraneous secondary statement of purpose, unnecessary, unless we give it some weight in the contract.

[00:12:52] Speaker 01:
And again, we're at the pleading stage here.

[00:12:57] Speaker 01:
We think that the extrinsic evidence helps to inform what Section 3B means in this contract in the totality of facts that have been pleaded, and we think it was error.

[00:13:08] Speaker 01:
I'd like to reserve some time for rebuttal if I may.

[00:13:10] Speaker 03:
Yes, you have three and a half minutes.

[00:13:11] Speaker 01:
Okay.

[00:13:12] Speaker 01:
Thank you, Your Honors.

[00:13:24] Speaker 00:
May it please the court, David Perez representing Microsoft.

[00:13:27] Speaker 00:
This is a case about Microsoft, this is a case about Microsoft purchasing data, specifically credential data of compromised user accounts and passwords to protect its users.

[00:13:48] Speaker 00:
And it entered into a very straightforward, plain language contract that the terms aren't unusual.

[00:13:54] Speaker 00:
They're industry standard with a sophisticated party, Hold, that's been around for decades.

[00:13:59] Speaker 00:
At all times, Hold was represented by counsel.

[00:14:03] Speaker 00:
They didn't enter into these contract negotiations as a small startup or as a pro se party negotiating.

[00:14:10] Speaker 00:
They had counsel throughout.

[00:14:12] Speaker 00:
They've had counsel throughout this litigation.

[00:14:14] Speaker 00:
And the contract calls for hold to pull from its vast repository of data certain compromised usernames and passwords.

[00:14:22] Speaker 00:
That list in the SOW is a list of requirement for hold to pull specific user accounts.

[00:14:28] Speaker 00:
It is not a limitation that Microsoft could only use the user accounts in those domains.

[00:14:34] Speaker 00:
It's more of a search term list.

[00:14:36] Speaker 00:
That's why you see asterisks next to it.

[00:14:38] Speaker 00:
It's not just hotmail.com, it's hotmail.uk, hotmail.fr.

[00:14:43] Speaker 00:
And the contract, the MSSA, which controls in any conflict over any other agreement, that's 12G of the MSSA, states that those user accounts, that data, is what we call a deliverable.

[00:14:59] Speaker 00:
And there's really no real argument that this is not a deliverable.

[00:15:04] Speaker 00:
Deliverables are literally defined as the credential data.

[00:15:08] Speaker 00:
And under the MSSA, Microsoft owns deliverables outright.

[00:15:13] Speaker 00:
There's no limitations.

[00:15:14] Speaker 00:
In fact, the deliverable language in section three states that Microsoft has all ownership in IP and that hold, here's the verb waves, that's the verb, waves all moral rights into the deliverables.

[00:15:29] Speaker 00:
The supplier IP argument that it's actually a license is new.

[00:15:32] Speaker 00:
They didn't make it in any iteration of the motions that's dismissed below.

[00:15:36] Speaker 00:
It first appeared in the opening brief to your honors.

[00:15:40] Speaker 00:
But that's what the contract allowed.

[00:15:42] Speaker 00:
Now, Holt now has buyer's remorse.

[00:15:44] Speaker 00:
Fair enough.

[00:15:45] Speaker 00:
And that's why we're here.

[00:15:46] Speaker 00:
They want their subjective intent to control over the objective manifestation in the contract.

[00:15:52] Speaker 00:
But nothing about that is deceptive.

[00:15:55] Speaker 00:
And nothing about that implicates the CPA.

[00:15:58] Speaker 00:
And here's why.

[00:15:59] Speaker 00:
There is a long line of cases, and with respect, we have not found a contrary case, where a party exercising its contractual rights, a party just simply exercising its contractual rights can be found to be

[00:16:15] Speaker 00:
That exercise is a deceptive conduct.

[00:16:18] Speaker 00:
And that starts with the Haywood v. Amazon case.

[00:16:21] Speaker 00:
And that was a CPA claim based on a contract claim.

[00:16:24] Speaker 00:
And there's no question this is based on the contract claim.

[00:16:26] Speaker 00:
It's the exact same conduct in both cases.

[00:16:30] Speaker 00:
And Amazon had removed certain content from its website.

[00:16:35] Speaker 00:
And the district court dismissed and said that Amazon's exercise in its rights can't be a CPA violation.

[00:16:41] Speaker 00:
The contract clearly states that Amazon can do that.

[00:16:45] Speaker 00:
And then we see the T-Mobile case, which this court affirmed.

[00:16:48] Speaker 00:
And the T-Mobile case is relevant for several reasons.

[00:16:50] Speaker 00:
In that case, the consumers brought a CPA claim.

[00:16:53] Speaker 00:
for a regulatory fee T-Mobile had charged its consumers.

[00:16:57] Speaker 00:
The district court dismissed, Ninth Circuit affirmed.

[00:17:00] Speaker 00:
And the Ninth Circuit said T-Mobile, the contract clearly stated T-Mobile could charge these fees.

[00:17:05] Speaker 00:
You were put on notice, they were put on notice.

[00:17:08] Speaker 00:
It was clearly disclosed, wasn't smaller font or section 156, this is section three.

[00:17:16] Speaker 00:
It was right there in front in the contract.

[00:17:18] Speaker 00:
And in the T-Mobile case, this court said you can't have a deceptive act

[00:17:22] Speaker 00:
can't pass go, can't collect $200 if you're just exercising your rights.

[00:17:27] Speaker 00:
But T-Mobile also said this, a district court does not abuse its discretion, and that's the standard here, abuse of discretion by denying leave to amend when there's already been amendments before.

[00:17:39] Speaker 00:
And here, this was not their first bite at the apple, although that's kind of the suggestion in the briefs.

[00:17:44] Speaker 00:
This was their third, and they're saying it was an abuse of discretion to not get a fourth bite at the apple.

[00:17:49] Speaker 03:
So what do you say to your friend's argument that we have to read will be used to check to mean used to only check or used to check only and that that has to modify the rights given in the contract to Microsoft.

[00:18:09] Speaker 03:
That the only way to harmonize those is to read the word only in it.

[00:18:13] Speaker 03:
That's not what Microsoft did.

[00:18:15] Speaker 03:
that the perpetual license that the contract is granting can only be a perpetual license if Microsoft is Fulfilling the terms of the contract which they aren't because the word only should be in the contract and they didn't approach this only a few things first It would actually and that would not be minor surgery.

[00:18:37] Speaker 00:
It would be pretty extensive surgery It wouldn't just be adding only to that portion of the sow

[00:18:42] Speaker 00:
But it would create a conflict between the SOW, which is a statement of work, and the MSSA, which states that Microsoft, if it's supplier IP taking their argument, Microsoft could combine it with, and this is the quote, any software, any firmware, hardware and or service.

[00:19:03] Speaker 00:
deliverable language states that hold waves all moral rights and ownership rights in the IP.

[00:19:10] Speaker 00:
So the MSSA allows Microsoft to do anything with the data, and that makes sense.

[00:19:14] Speaker 00:
We don't need to be tech experts for this to know that once you incorporate data into software, whether it's in Edge, which is the Microsoft browser, or in LinkedIn,

[00:19:26] Speaker 00:
you've scrambled that egg and there's no way to remove the yolk and put it back into the egg.

[00:19:31] Speaker 00:
And that's why you negotiate these industry standard terms.

[00:19:34] Speaker 00:
And so to read only into that would be pretty significant surgery on the MSSA.

[00:19:40] Speaker 00:
But if you look at that section three in the SOW, this is what I think is the, with respect to the other side, I think it's a little bit of a sleight of hand.

[00:19:48] Speaker 00:
Section three is a search term provision.

[00:19:51] Speaker 00:
If you look at that,

[00:19:52] Speaker 00:
It's about providing these search terms that you're gonna pull credentials for Microsoft, Hotmail, Xbox, et cetera.

[00:19:59] Speaker 00:
And then section four is the delivery schedule.

[00:20:03] Speaker 00:
We're just paying for data.

[00:20:05] Speaker 00:
We're not paying for specific uses of the data or we're not paying per use.

[00:20:09] Speaker 00:
If you look at the delivery schedule, it says you're gonna deliver data on a month by month basis.

[00:20:15] Speaker 00:
And then the payment schedule, section five, we're just paying for the data.

[00:20:20] Speaker 00:
We're not paying per use.

[00:20:22] Speaker 00:
We're not paying, hey, if we add LinkedIn, we're going to have to pay if we start using it on LinkedIn or on GitHub.

[00:20:28] Speaker 00:
There's none of that.

[00:20:29] Speaker 00:
We have a fully paid-up use, and it's full and final payment in section five.

[00:20:34] Speaker 00:
But here's where their argument really falls apart.

[00:20:37] Speaker 00:
Section seven, if you just go one more, actually same page, ER 208, which is additional obligations.

[00:20:44] Speaker 00:
Now here's where we couldn't, because I believe it was Judge Bennett who asked, maybe it was Judge Hawkins, well why didn't you just put that into the contract?

[00:20:53] Speaker 00:
Let me give Judge Bennett credit.

[00:20:56] Speaker 00:
Why didn't you just put it into the contract?

[00:20:58] Speaker 00:
Because they're arguing, folks, this is material.

[00:21:01] Speaker 00:
Folks, this is existential.

[00:21:03] Speaker 00:
We need it.

[00:21:03] Speaker 04:
It's a big deal.

[00:21:04] Speaker 00:
It's a big deal.

[00:21:05] Speaker 00:
It's a deal breaker.

[00:21:07] Speaker 00:
A deal breaker they didn't put in the deal.

[00:21:09] Speaker 00:
But then you had a section of additional obligations, and guess what?

[00:21:12] Speaker 00:
The additional obligations only restricts Hald's use of the data and our data.

[00:21:18] Speaker 00:
Here was your opportunity.

[00:21:19] Speaker 00:
So the parties knew how to restrict use of the data, and they didn't take the opportunity to restrict Microsoft's use of the data.

[00:21:27] Speaker 00:
And so we get to this extrinsic evidence notion, and Washington courts, in two

[00:21:33] Speaker 00:
critical Supreme Court decisions, it was Berg, I believe that's a 95 decision, and Wilkinson, a 2014 decision, expressly reject the use of extrinsic evidence to modify or add to a contract.

[00:21:47] Speaker 00:
Expressly reject, and this course has done it time and time again.

[00:21:51] Speaker 00:
There's no way you could add the words they want to add and not do rather severe surgery on the MSSA and create a conflict.

[00:22:01] Speaker 00:
And under 12G, the MSSA controls.

[00:22:05] Speaker 00:
So here you have two really big obstacles.

[00:22:08] Speaker 00:
There's no deceptive act if you're simply standing on your rights.

[00:22:12] Speaker 00:
And in Judge Graber's line of questioning, this isn't a public interest.

[00:22:16] Speaker 00:
And here's why.

[00:22:19] Speaker 00:
overarching question, and this is right out of Hangman Ridge, the overarching question in Hangman Ridge was, does this have a threat to deceive a substantial portion of the public with the exact same injury?

[00:22:34] Speaker 00:
And notably in Hangman Ridge, by the way, that court found no deceptive act.

[00:22:38] Speaker 00:
and no public interest.

[00:22:39] Speaker 00:
People sometimes forget that, but the court in Hagman Ridge rejected both in that case.

[00:22:44] Speaker 00:
And here, there's no identical injury.

[00:22:46] Speaker 00:
Now, my friend cites Druth, which was a Western District of Washington case, could not be any more different.

[00:22:53] Speaker 00:
I'll admit I'm a little biased.

[00:22:54] Speaker 00:
I litigated that case, but Druth is very different.

[00:22:57] Speaker 00:
In Druth, Druth's a very bad decision for them.

[00:23:00] Speaker 00:
In Druth, the court rejected extrinsic evidence.

[00:23:03] Speaker 00:
In Druth, the court rejected the contract claim.

[00:23:05] Speaker 00:
In Druth, the court rejected the good faith and fair dealing claim.

[00:23:09] Speaker 00:
Druth was a payment dispute.

[00:23:11] Speaker 00:
In that milestone schedule, we're providing you data, Microsoft to build something, and Druth's claim was, you didn't pay us milestones six through 10.

[00:23:21] Speaker 00:
And it was a dispute, did you finish the work?

[00:23:24] Speaker 00:
And Druth said, give us back our data, because you didn't pay us enough money.

[00:23:28] Speaker 00:
And the courts read the contract and said, at most you have a damages claim.

[00:23:36] Speaker 00:
But the irrevocable license is just that.

[00:23:38] Speaker 00:
It's irrevocable.

[00:23:39] Speaker 00:
The court claim was actually trade secrets.

[00:23:42] Speaker 00:
There can't be a misappropriation claim if they're allowed to use the data.

[00:23:47] Speaker 00:
And really, there were these elaborate allegations about aggressive project management and threats of nonpayment.

[00:23:54] Speaker 00:
And on that, and although we disagree with the court's decision, it was the elaborate allegations of threats of nonpayment and project management that the court said maybe that's a deceptive act.

[00:24:06] Speaker 00:
It had nothing to do with this case.

[00:24:08] Speaker 00:
There's no allegations of

[00:24:09] Speaker 00:
any of that.

[00:24:10] Speaker 00:
This is not a payment case or a misappropriation case.

[00:24:13] Speaker 00:
And so the panel has no more questions.

[00:24:17] Speaker 00:
I'm happy to cede the rest of my time.

[00:24:20] Speaker 03:
All right.

[00:24:21] Speaker 03:
Thank you, counsel.

[00:24:22] Speaker 03:
And you have some time left.

[00:24:28] Speaker 01:
Is it like cribbage where I can take the rest of his time too?

[00:24:35] Speaker 01:
We are not asking to add words to the contract.

[00:24:36] Speaker 01:
We are asking to construe the contract for its meaning.

[00:24:39] Speaker 01:
And to construe the contract for its meaning, what does the word will mean?

[00:24:43] Speaker 01:
What does Section 3B mean?

[00:24:46] Speaker 01:
Washington courts require that the courts look at extrinsic evidence that may help inform that meaning.

[00:24:50] Speaker 02:
Counsel, the other question I didn't ask you earlier, in the Statement of Work Section 3, it's a description of your services, that's what the title says, and it describes, 3B is a description of what you are supposed to do,

[00:25:11] Speaker 02:
So, why would we read that in general?

[00:25:16] Speaker 02:
Why would we read a description of your job to include limitations on Microsoft?

[00:25:24] Speaker 01:
Well, again, I think the extrinsic evidence helps show why this is a bilateral clause that explains what we're doing and what the quid pro quo is.

[00:25:33] Speaker 01:
We will provide the information to you for you to use for this particular purpose, and you will use it for this particular purpose.

[00:25:40] Speaker 01:
And so it's captioned services, that is true, but then this is, as was discussed in the briefing, a carefully negotiated clause between our client and Microsoft that explains what both parties' obligations are.

[00:25:57] Speaker 04:
Council, can I ask a practical question?

[00:26:01] Speaker 04:
Of course.

[00:26:04] Speaker 04:
My understanding of the generalities in this case are is that your client developed an expertise to identify compromised passwords that were out there in the dark web, if you will.

[00:26:21] Speaker 04:
and contracted with Microsoft.

[00:26:26] Speaker 04:
What did your client expect Microsoft to do with that information?

[00:26:32] Speaker 01:
Our client has indeed developed an expertise and has developed a very large database of compromised information that has gotten out.

[00:26:42] Speaker 01:
And that database, our client licenses to a variety of people so that they can use it to check

[00:26:49] Speaker 01:
their clients.

[00:26:50] Speaker 01:
So for example, when somebody logs into Hotmail and it uses a Hotmail address, that's a Microsoft service.

[00:27:00] Speaker 01:
When they log into Hotmail, Microsoft could alert them that your name and password is apparently on the dark web, and you might want to consider changing that.

[00:27:08] Speaker 01:
But that's very different from Microsoft providing a web browser, kind of like Google Chrome,

[00:27:14] Speaker 01:
in this case, they provide a web browser called Microsoft Edge.

[00:27:18] Speaker 01:
And if you go into, if you use Microsoft Edge as your web browser, and you go onto Bank of America to check your bank account, and you go in within the Microsoft Edge platform, you go to bankofamerica.com, and you type in your name and password there.

[00:27:33] Speaker 01:
Microsoft is

[00:27:34] Speaker 01:
is taking this database and building it into Microsoft Edge so that everybody that uses Microsoft Edge gets the benefit of that with respect to their Bank of America.

[00:27:47] Speaker 01:
This isn't their Edge password.

[00:27:50] Speaker 01:
They're using Edge as a software tool.

[00:27:55] Speaker 01:
Now they're getting, Microsoft is telling them that your account information is compromised when you logged into Bank of America.

[00:28:02] Speaker 01:
That's not checking against Microsoft's own services.

[00:28:05] Speaker 02:
That's checking against Bank of America's.

[00:28:07] Speaker 02:
Isn't it still protecting Microsoft's clients who otherwise might not want to use Microsoft Edge?

[00:28:13] Speaker 01:
Well, it is protecting Microsoft's clients, but the language says compromise account credential data will be used to check against Microsoft's own services, brands, and domains.

[00:28:25] Speaker 02:
Well, Edge is a brand or a service, is it not?

[00:28:29] Speaker 01:
But they're checking Bank of America.

[00:28:32] Speaker 01:
And Bank of America is not one of Microsoft's own services, brands, or domains.

[00:28:37] Speaker 01:
In other words, Edge is just serving as a portal to get into the internet at that point.

[00:28:42] Speaker 01:
And Microsoft is building into that portal the ability to check against other

[00:28:47] Speaker 01:
brands, services, and domains out there.

[00:28:51] Speaker 01:
And that is taking away our clients' ability to sell our services to Bank of America so that Bank of America can let its clients know that its information has been compromised.

[00:29:00] Speaker 01:
And so there's a big difference between Microsoft using it for its own services, products, and domains, Hotmail, LinkedIn, etc., and using it

[00:29:11] Speaker 01:
in a software portal that lets you go into the Internet and using that for other parties' products and domains.