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Case number 15-7100, Encyclopedia Britannica, Inc.

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Appellant, Mr. Dixon Shapiro, LLP.

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Mr. Hostenig for the appellant, Mr. Downs for the appellant.

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I miss her.

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Pardon.

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Go ahead.

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Thank you, Your Honor.

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Joe Hostany, I'm here on behalf of Encyclopedia Britannica, and I have been before the Seventh Circuit as an AUSA and before the Federal Circuit as a Patent Attorney, but never here, so it's an honor to appear before this Court, the Court of Appeals for the District of Columbia.

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May it please the Court,

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Alice, the decision that's discussed so heavily here, was not the law in the 1990s when the events here occurred.

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Dickstein and Shapiro, as the prosecution attorneys for Encyclopedia Britannica, repeatedly praised the inventions, how they were new, how they were useful, how they contributed to an advance

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Um, and made those remarks for your now client.

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That's correct.

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I'm not sure that it's relevant that they issued statements in favor of their client.

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They have they have an obligation under PTO rules duty of candor with the patent office.

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They must not

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misrepresent.

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All lawyers of the duty of gender and all of them are permitted to put things in the light most favorable to their client provided that there can be a good faith.

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I agree.

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But before the patent office, you're a member of a special patent party.

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You have some requirements.

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You must bring forth unfavorable evidence.

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And the time I held somebody had violated and I got reversed by the federal circuit.

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Nobody and the granddaddy patent the 671 the one was filed in 1989 went through something like 10 years of examination re-examination two trips to the Board of Patent Appeals two trips to the District Court for the District of Columbia Nobody ever said this was an abstract idea.

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No examiner.

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No patent law judge No district court judge ever said that this was an abstract idea.

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I can clarify one thing just Obviously there was the

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impact of the alleged malpractice on the Alpine litigation, but at least as I read the complaint,

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I thought you were also arguing that the loss of the impact it had on the patents harmed you and that you would have had patents you could have used for royalties and licensing as well.

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Your damages include all of those different ways that this patent could have been used?

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That is correct, Your Honor.

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Patents could have been licensed not only litigated, but they could have been licensed to others as well, to other companies.

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So when we talk about the case within a case, we need to look at not just the Alpine litigation, but also the patent prosecution itself.

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The case within a case I think deals my understanding is it would deal just with the Alpine litigation but I do think the damage portion of it includes the inability to further because when you have litigated patents that have been found valid that have been found to be infringed they become extremely valuable intellectual property when you go on to the licensing front it's much easier to license them and you typically can get a higher royalty rate than doing so.

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Now at this stage the issue that I think you're alluding to is whether we apply to the case

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time of the alleged malpractice or the law as it stands at the time of litigation, and that's where Alice comes in, right?

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Yes.

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So your first position is that we apply the law as of the time of the alleged malpractice.

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That's correct.

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Your fallback position, I think, would be that even if we consider Alice, that now in light of Enfish,

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It still would be a defense of patentable concept and not an aspect of it.

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Exactly so.

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We have multiple positions.

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Would it be beneficial if you lose on the first one, but win on the second?

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Would it then come to the second, I should say, would it be beneficial for us to vacate and remand this case for further development of the record in light of infidels?

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That's certainly a possible avenue.

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I would simply prefer the result that now is being a post-review or a post-conclusion of review decision is not to be applied retroactively because a judgment had been entered in the Texas litigation.

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I'm not asking you to concede that first point.

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the law for this case we would be making a rule of law that I don't think we've made either way before.

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I think the closest case we cited from a federal appellate court was A.O.

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Smith that said that the conduct of the attorney should be judged at the time of the events that occurred, not by subsequent decisions.

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That's the Seventh Circuit Court.

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That's correct.

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On that, I am not certain.

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I would say you have to use the law as the advocate understood it to be at the time the events occurred, which here is the mid-1990s.

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Act is malpractice, or whether the act was committed that constitutes malpractice.

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But we're to another issue now, as to what it is the approximate cause of.

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That's an element in there too.

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And it's not necessarily going to be given by the same time, lawly.

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I'm only asking to say there isn't any law in any case that decides that.

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I'm not asking you to concede anything.

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I'm not aware of any decision from this court that decides that particular issue.

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I'm not even sure Smith decides the same thing.

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I'm also confused about this case within a case concept, not only the Alice question, but

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How do we know which issues to look at?

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Alpine never raised a 101 defense in its summer judgment motion.

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It did not.

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It abandoned it.

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It chose not to litigate it.

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So why, in a case within a case, do we get to go hunting for any issue, any hypothetical litigant might have raised?

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Or do we look at the actual case that was litigated and would apply Alice or not if it had been raised, if it wasn't raised?

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Do we raise it for them?

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That seems like an extraordinary job.

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I don't think you do because I think Alice

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The way I understand it, either Alice nor Bilski nor Mayo, all of those decisions issued after review of the Texas case was complete, and they should not be applied retroactively, therefore.

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That being the case, I don't think they apply to a trial within a trial determination either.

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Right, but does a trial within a trial look at at least what the issues were?

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we're being litigated in that trial?

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It just seems odd to me that we construct our own hypothetical litigation with every issue that can be conceived of.

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I suppose that, I'm an optimist, I would say that's probably a problem for a district judge to deal with if we prevail on appeal.

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But I do not think you would consider any of those decisions.

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As you're saying that sort of what would happen with the case within the case is something that

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So as you put evidence on, or you would show that they hadn't raised the issue, and what would have happened in the litigation had you not had these patent problems.

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That's all sort of factual stuff that needs to be discussed.

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Yeah, if I understand correctly, if we're back and doing the trial within a trial, our position would be that Alice and the other 2010 imposed decisions cannot be applied.

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Because there's never one on one issue.

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Now this is a malpractice case and you've got to judge the malpractice in light of the law that existed at the time and the advocates understanding.

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I'm asking you not just the law at the time.

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Do we look at the issues that were actually being litigated in the underlying case?

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Yes, you would.

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I assume that in the trial, within a trial, you'd have the question of whether the claims were valid, whether the claims were

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infringed, and you have to show that you had a reasonable probability of prevailing on that in order to win the malpractice action.

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Now, the issue that I'm coming to, and I think you understand what I'm coming to, is even if you establish that the lawyer committed some act which was not meeting professional standards, which would constitute malpractice, it is still essential to your recovery that you show that that caused damage.

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Now, if the patent in question was invalidated under 101, then you haven't lost anything of value, have you?

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I'm not asking you to concede.

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I'm saying if that were the case, if Alice, applying Alice and invalidating the patent under 101, then you haven't lost anything of value, have you?

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No, except that I would say, yeah.

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I would say the standard to be applied was what everybody believed 101 to require.

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Yeah, you're just saying that as of malpractice.

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But if Alice were decided the next day, under Alice, as understood before Enfish, it was at least arguable that the patent was not, the concept was not patentable.

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And that therefore, you hadn't lost anything of value by reason of the acts which otherwise did constitute malpractice.

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If you judge it that way, then yes.

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Although on the damage point, I would say with respect to our breach of fiduciary duty claim, my understanding of the law is that we do not have to prove damage resulting from the breach.

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That's a different case.

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You've got your malpractice and your breach of fiduciary duty.

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We can question you about that one, too, of course, if we're through with the malpractice.

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Can I ask just a more rapid question?

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The Grossman Affidavit.

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How is it inconsistent with your theory before the PTO or what you keep talking about self-serving?

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I was trying to understand get a better sense of Well, I think our complaint says or certainly our argument says that it doomed the patents in the PTO it led to a

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uh, heavy, heavy criticism from the Patent Office on the conduct of Dickstein Shapiro.

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Um, and this is a bit of hindsight, but if I were engaging in corrective measures, uh, after I had said uh-oh to my insurer, I would also have said to my client, here's what's going on,

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there could be malpractice.

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We do not think so.

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We have notified our insurer.

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Here's our recommended corrective course of action.

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What do you think?

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There's no evidence record that they did that.

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And I don't think we have to allege further what Britannica would have done.

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But to my way of thinking, what Britannica would have done would have been to say, look, I would not have blamed the staff.

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That sounds like passing the buck.

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I would not have blamed the PTO.

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That sounds like super passing the buck.

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I would simply have said that we left a page out of an intermediate application and the subsequent application and the prior application both said they were continuations back to the original patent in the 671.

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Once they put that affidavit in there, I think they were dead.

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Okay, someone in the district court said you were

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all of our own in the same direction.

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That's, that you had the same motivations with that.

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Is that a fact question you dispute?

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Yes, I don't believe in the parallel interests argument.

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I really do not, because number one, you know, Dixie and Shapiro says to its insurer, we've got a problem, but it doesn't say anything to its client.

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And with respect to Judge Bates, he concludes that there's a parallel interest here, and I don't think that's sufficient, because that encourages the attorney to remain quiet.

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I do want you to go into that.

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I have the same question.

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It does appear that

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What is the conflict of interest at the PTO appearances?

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It's the Henry case.

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You better talk to your client.

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That's a better make full disclosure.

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The lawyer.

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That's a different question than the one we're asking.

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Well, what is the different conflict of interest between the client in psychology and the law firm?

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Dixon Shapiro.

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Don't they both want the patent?

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They both want the patent saved.

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Dixon Shapiro for its own reasons.

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and its own reasons were to avoid a malpractice claim.

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That's fine.

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But if they got it saved, it was saved for both.

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It would have been a thing.

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And I'm not sure that I see what the conflict of interest is.

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It doesn't make reasoning seem pretty convincing.

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I think they had the obligation to speak up because a lawyer, if nothing else, is an advisor.

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That may be.

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That is a different question.

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I agree with you.

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They both wanted the patent saved.

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But if I'm a doctor and I operate and I take off the wrong leg,

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Do I remain silent with the patient?

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I don't think so.

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I have a parallel interest.

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I want the patient to live.

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I think your patient probably knows it, and I think like all analogies, that was imperfect.

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Perhaps.

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Neither you nor the doctor wants the wrong limb taken off.

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You and your doctor both want the wrong limb taken off.

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Absolutely.

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And we both want the patient to live.

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Yeah, and here both wanted the patent to live.

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The doctor has to speak up.

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But the doctor has to speak up and so did Dixie and Shapiro and that's what the handwritten case says.

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That is the allegation of the complaint.

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Interested.

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Well, I think, girl, all interests incurred.

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That theory encourages silence and encourages a lawyer to say, maybe I shouldn't say anything except to my insurer, but maybe I get off the hook.

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So that still brings you back to the point that you're saying the fiduciary duty is breached by not reporting that you've gone to the insurance company, rather than by what you need to beat the other.

[00:14:53] Speaker 01:
Well, we're not the ethics board here.

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And so what I'm trying to figure out is, I thought when I asked, what we have here is a dismissal on the pleadings.

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Part of which relied on this determination that everybody was rowing in the same direction before the PDL.

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And when I asked you whether you disagreed with that determination as a matter of fact, not a matter of ethics rules, but as a matter of fact,

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that in fact things might have been handled differently had they come forward and said what's going on.

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You said yes, that's a question of disputed fact, but now it sounds like you're just saying it's not good ethics for them.

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Is it a question of disputed fact as to whether things would have transpired the same if they had come forward, or that's not your point?

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No, I apologize.

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My point was that we don't have to go beyond

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the allegations of the complaint, we get the benefit of those allegations and the benefit of the reasonable inferences from them at this stage.

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Right, your allegation of the complaint is that it was, this is why we're going in circles here, the allegation in the complaint was that it was a self-serving filing before the PTO.

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And I think Judge Silverman was asking, was it a self-serving or was it a self-serving and client-serving at the same time?

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I'm sorry, do I have a second?

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I'm so sorry.

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I don't think it was in favor of Encyclopedia Britannica the way it was done.

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because they admitted to so many mistakes and blame so many others that I think they extinguished any chance they had.

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Now maybe 16 Shapiro thought that was the best way to do it, I don't know.

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Seems to me that's past the complaint stage and maybe into the evidence and maybe it's a question of whether we get damage for something beyond a breach of fiduciary duty.

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But I wouldn't have done it that way.

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The only other thing, I think we're way over.

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Penfish is a case in which, as I read it, the Federal Circuit found and concluded that the software in question fit into the exception acknowledged in ALICE for software that improves the performance of the computer.

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Correct, I agree.

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You haven't made the argument that your software does that.

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And that was on the table ever since Alice.

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So I don't see why we need to worry about how Enfish could affect this case.

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You didn't raise this point.

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I think the reason we cited Enfish was, one, because it said we don't even go past the abstract idea stage because the software makes an improvement.

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The claims in this case.

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I don't fault you for alerting us to it.

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Thank you for that.

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The claims, to my way of thinking, there are some arguments that we had to somehow improve hardware.

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And Enfish says you don't have to improve hardware.

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And I thought, to be honest with you, I think our brief does make the argument that the claims represent an improvement in software that isn't.

[00:18:03] Speaker 02:
Enfish adds that functionality languages if it were eligible to what else.

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It improves the use of a database, which is a software construct to my way of thinking.

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I mean, it sits on a hard drive in a computer, yes, but it is a software construct.

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So I apologize if we didn't make that clear enough, but I think that's our view on that.

[00:18:23] Speaker 01:
Well, this goes to another question I had, and that is part of

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Part of the issue under 101 is a determination made by reference to the state of technology at the relevant time.

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And so in determining 101 patentability, we would need to look at the state of technology back then.

[00:18:45] Speaker 01:
We all sit here now and things seem very different because technology moves very fast.

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And so as part of the problem,

[00:18:56] Speaker 01:
As part of the problem, the lack of district court findings on the state of technology, or is that something you disputed about how innovative this was back then as opposed to looking at it now?

[00:19:07] Speaker 01:
Back then, how innovative was it with reference to the state of technology at the time?

[00:19:13] Speaker 03:
When you get to 101, it's amorphous.

[00:19:17] Speaker 03:
When you're under the other patent statutes, you must look at the time of the invention, what was known at the time of the invention, or shortly before.

[00:19:24] Speaker 03:
When you get to 101, that time distinction really doesn't occur as I read the cases.

[00:19:31] Speaker 03:
They simply ask, was this an abstract idea?

[00:19:35] Speaker 03:
Now, though, in both Bilsky, the hedging case, and Alice, the settlement case,

[00:19:41] Speaker 03:
the Supreme Court pointed to a specific treatise, two of them in Alice, that said, well, hedging is well known according to this reference, and intermediated settlement and clearing houses are well known according to these references.

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In other words, they said, we look at this whole claim for what kind of concept it discloses.

[00:20:00] Speaker 03:
And we see the whole claim in this art, which establishes that it was a well-known economic practice.

[00:20:07] Speaker 03:
Well, that has to be prior to the date of the invention.

[00:20:09] Speaker 02:
That has to be contemporaneous as far as the technology involved.

[00:20:14] Speaker 02:
Regardless of what the law is applied as of then.

[00:20:23] Speaker 03:
The problem we had with what happened to the district court is that it's all over the place.

[00:20:30] Speaker 03:
There's a citation to one reference on the web to encyclopedias, and there's comments by the district court about databases that have been known for thousands of years.

[00:20:40] Speaker 03:
You can scan through encyclopedias.

[00:20:42] Speaker 03:
It's nowhere near like the standard used in Alice.

[00:20:45] Speaker 03:
Bilstein nowhere near there's nobody there's nowhere in there where somebody says Here's a reference that shows the whole concept of claims 29 or 30 or 96 or 113 You know when these came out the praise was in one of our one of our briefs Where is it?

[00:21:06] Speaker 03:
This is your own price of your product it was Compton's it was a comment about the

[00:21:13] Speaker 03:
Yeah, it's a GA-2700, and this was in PC Magazine.

[00:21:17] Speaker 03:
It says, Compton's multimedia encyclopedia is the first successful implementation of a product that combines words, pictures, and sound with an easy-to-use search engine.

[00:21:25] Speaker 03:
That's the entry pass into the database.

[00:21:28] Speaker 03:
The product is incredibly adaptive to users' needs.

[00:21:30] Speaker 03:
You can't help but be impressed by Britannica's courage and foresight in launching the product.

[00:21:35] Speaker 03:
You know, think about it at then, not now.

[00:21:39] Speaker 03:
Now, you have your smartphone, you have map programs.

[00:21:41] Speaker 01:
I was going to ask you a simpler question.

[00:21:43] Speaker 01:
If we think about then rather than now, is it a fact question what the state of technology was at the time?

[00:21:48] Speaker 03:
Yes.

[00:21:48] Speaker 04:
Yes.

[00:21:49] Speaker 03:
Yes.

[00:21:49] Speaker 01:
All right.

[00:21:49] Speaker 01:
Here's an additional question.

[00:21:50] Speaker 04:
It seems to me what you were saying a moment ago about state of the art at the time goes to novelty, not abstractness.

[00:21:57] Speaker 03:
Well, I think.

[00:22:04] Speaker 03:
If you look at Bilski and Alice say that it was the state of the art earlier than the patents that showed that this was an abstract idea, so I think you do look at the art at the time.

[00:22:18] Speaker 03:
Whether you're looking, whether you're trying to decide whether it's an abstract idea, I grant you, conceptually, you could have something later in time, I suppose,

[00:22:31] Speaker 03:
I don't know how you do that.

[00:22:33] Speaker 03:
I don't know how you would say this is a known economic or business practice.

[00:22:39] Speaker 03:
This is a known medical practice unless it was known prior to the time.

[00:22:43] Speaker 01:
Well, Alice asked whether it was well-known in the art.

[00:22:45] Speaker 01:
Pardon?

[00:22:45] Speaker 01:
Alice itself talked about whether it was well-known in the art.

[00:22:48] Speaker 01:
Yes.

[00:22:48] Speaker 01:
Thank you.

[00:22:49] Speaker 01:
I think we'll hear from you.

[00:22:50] Speaker 01:
Are you guys okay?

[00:22:51] Speaker 01:
I'm sorry, go ahead.

[00:22:59] Speaker 05:
Morning, Your Honor, Tony Downs for Dick's Beach.

[00:23:03] Speaker 05:
I'm sorry, I have a cough, too.

[00:23:04] Speaker 05:
I've never seen something like that.

[00:23:07] Speaker 05:
Not as we said a long way from it.

[00:23:10] Speaker 05:
It's a good thing I'm this far from you.

[00:23:12] Speaker 05:
Can I just step back for a minute and give a little background overview to this case?

[00:23:16] Speaker 05:
Because I think it's important in light of all the questions that just came in.

[00:23:20] Speaker 05:
So in the Texas case, the Section 101 issue was raised as a defense.

[00:23:25] Speaker 05:
But when the case finally got rolling in front of the district court in Texas, and there was actually two cases that ultimately got consolidated, so it took a while for Texas to decide, the first summary judge of motion, the first motion that came in really before there was a lot of other proceedings, was this motion on which the case was ultimately dismissed, which is that because of

[00:23:47] Speaker 05:
alleged errors in the prosecution of the early patents.

[00:23:51] Speaker 05:
The chain of priority in those patents was cut such that some old Dickstein patents were prior to its own stuff and therefore the whole thing was invalid.

[00:24:02] Speaker 05:
You suggested Judge Miller that the Section 101 defense was abandoned.

[00:24:07] Speaker 05:
It wasn't abandoned.

[00:24:08] Speaker 05:
The judgment was rendered on the other issue

[00:24:11] Speaker 05:
before there was any other proceedings going on in the case.

[00:24:14] Speaker 01:
I thought, how many summary judgments motions do you get in a patent case?

[00:24:18] Speaker 01:
Well, in this case, in Texas, really, it was really early on, right after the... I know, but, I mean, as a lawyer, do you get to try one summary judgment motion, and if it doesn't work, then you come in with another?

[00:24:28] Speaker 05:
Yes, you can, if the court will allow it.

[00:24:30] Speaker 05:
It depends on the court rules.

[00:24:32] Speaker 05:
Nobody ever argued, nobody argued in this case, when the Section 101 issue came up in front of Judge Lambert,

[00:24:40] Speaker 05:
that it was abandoned and it shouldn't be heard.

[00:24:43] Speaker 01:
Just look at it.

[00:24:44] Speaker 01:
There's no 101 issue.

[00:24:45] Speaker 01:
You've got the summary judgment brief.

[00:24:47] Speaker 01:
There's no 101 issue being litigated.

[00:24:49] Speaker 01:
We have to go through the entire Patent Act and say, is there anything we can think of after the fact that lawyers back then might have been able to raise but didn't raise, and on that basis determine that, have they raised it and litigated it?

[00:25:03] Speaker 01:
And then we apply modern law that we also come up with that didn't exist at the time, and mix it all together and say they would have lost.

[00:25:10] Speaker 05:
The case within the case doctrine looks on an objective basis.

[00:25:14] Speaker 05:
Would you have suffered the damages of the loss of that case?

[00:25:19] Speaker 05:
And the loss of the case could have occurred not only on the basis of what it did lose on, but also on the basis of other grounds that were raised but never reached because

[00:25:28] Speaker 05:
The court never got that far.

[00:25:30] Speaker 01:
I'm sorry, raised in a summary judgment motion?

[00:25:33] Speaker 05:
It was raised as a defense in the case.

[00:25:35] Speaker 01:
And the answer is just a long string side of boilerplate defenses.

[00:25:40] Speaker 01:
But then they go through a discovery.

[00:25:43] Speaker 01:
They didn't go through discovery.

[00:25:44] Speaker 01:
Well, they chose to go to summary judgment without discovery.

[00:25:47] Speaker 01:
And I don't know why they wouldn't think that part of the objective inquiry would be that if there was a killer 101 argument, it would have been raised at summary judgment.

[00:25:59] Speaker 01:
I just don't know how we courts are supposed to administer this test where we come up with arguments that were not advanced.

[00:26:07] Speaker 01:
by the attorneys in the in the case that's an issue.

[00:26:10] Speaker 05:
But that's the point.

[00:26:11] Speaker 05:
That's the point of the case within a case doctrine is that you can try other issues in the malpractice case and say you never would have won this case.

[00:26:20] Speaker 05:
You may have lost on this one ground that involved alleged malpractice.

[00:26:23] Speaker 01:
The Supreme Court said that's how it's supposed to work?

[00:26:25] Speaker 05:
It's a question of state law, the case within a case doctrine.

[00:26:29] Speaker 05:
And there was no argument here.

[00:26:31] Speaker 05:
I mean, this is a completely coming out of the blue issue, Your Honor, that was never argued.

[00:26:35] Speaker 05:
It was never raised as a reason why Judge Lamberts shouldn't have entered his Section 101 decision.

[00:26:40] Speaker 05:
The only issue on the Section 101 that was discussed was the law.

[00:26:43] Speaker 01:
Because it all went off on judgment on the pleadings.

[00:26:45] Speaker 01:
Judge Lamberts didn't think that we had to have any inquiries into what would have been raised at the time, given the state of the law at the time.

[00:26:53] Speaker 05:
But they had a chance to oppose the section 101 motion for judgment on pleading, but any argument they could have raised.

[00:27:01] Speaker 05:
They did not raise that argument.

[00:27:03] Speaker 05:
They didn't raise it.

[00:27:05] Speaker 05:
They waived it.

[00:27:06] Speaker 01:
If we're trying to figure out...

[00:27:09] Speaker 02:
let me make sure that i understand the case the case with any case occurred because there was a loss that resulted from the malpractice that's the theory that's correct so then the case with any case is tried as to or hypothetically tried as to what other defenses might have been available that would have rendered the case invalid anyway exactly including this section 101 that it would be in the case with any case raising some defense

[00:27:36] Speaker 02:
other than that which governed the action.

[00:27:39] Speaker 02:
And section 101 is one of those defenses.

[00:27:41] Speaker 02:
Section 101.

[00:27:42] Speaker 01:
Yes.

[00:27:42] Speaker 01:
But then do you ask the question, isn't it a fact question, what would have been raised at that time?

[00:27:49] Speaker 05:
No.

[00:27:49] Speaker 05:
No.

[00:27:50] Speaker 05:
Because you're looking at it objectively, given the defenses that were raised.

[00:27:54] Speaker 05:
And again, this argument was never made.

[00:27:56] Speaker 05:
They never made that.

[00:27:57] Speaker 05:
But you look at what the other defenses were, and if one of those defenses were.

[00:28:01] Speaker 01:
And when we make that objective inquiry, what I'm asking you is that an objective inquiry to what lawyers

[00:28:06] Speaker 01:
back at that time would have raised, given the state of law at that time?

[00:28:10] Speaker 01:
Or is it an objective inquiry into what lawyers today would raise?

[00:28:14] Speaker 05:
Well, in that case, and keep in mind, first of all, that Alice was a Supreme Court decision, which has a history that's like seven years long, extending back into the time.

[00:28:24] Speaker 01:
I'm sorry, I'm not talking about the law the government was saying.

[00:28:28] Speaker 01:
Straightforward question.

[00:28:29] Speaker 01:
Do we ask objectively what lawyers at the time would have raised had this now practice basis for dismissal not arisen, or do we ask what lawyers today would raise?

[00:28:43] Speaker 05:
In either case it doesn't matter because at the time they raised the Section 101 defense.

[00:28:50] Speaker 02:
But what would the judge do as a judge now?

[00:28:54] Speaker 02:
look at what the result would have been of raising that argument at the time before Alice, or do we look at it as of the litigation after Alice?

[00:29:05] Speaker 05:
All right, so with respect to this Section 101 issue, I think the Supreme Court's decision in the Rivers v. Roadway Express case applies here, which is that

[00:29:15] Speaker 05:
Keeping in mind that this notion that there is an exception to patentability for abstract ideas, the Supreme Court itself has said it extends back 150 years.

[00:29:24] Speaker 02:
You're getting way past the question I asked you.

[00:29:27] Speaker 02:
Go back to the question I asked you.

[00:29:29] Speaker 02:
Now if I remember, it had to do with whether the law that would be relevant is the law as of the time of the

[00:29:38] Speaker 02:
committed malpractice or the law as of the time of the litigation over the malpractice.

[00:29:43] Speaker 05:
For purposes of interpreting section 101, which is a federal statute, Rivers v. Roadway, the Supreme Court says, when we announce the interpretation of a federal statute, when it comes up again in another proceeding, including such as this one, you apply the law of the statute, the interpretation of the statute that we have announced, as if it was the law.

[00:30:02] Speaker 01:
I believe the rule of retroactivity is that we apply that to all cases that are open.

[00:30:08] Speaker 01:
We don't apply it to closed cases.

[00:30:11] Speaker 01:
That's the platform system for farm problem.

[00:30:13] Speaker 01:
We don't reopen judgments.

[00:30:15] Speaker 01:
It applies to open cases, not closed cases.

[00:30:17] Speaker 01:
And so the case within a case

[00:30:22] Speaker 05:
Is it open kids?

[00:30:23] Speaker 01:
No, it's not even a real case.

[00:30:25] Speaker 01:
It's not a real case, but it's looking at what would have happened at a time when it's probably a 99.999% probability it would have been closed long before Alice came down.

[00:30:38] Speaker 01:
So the retroactivity argument, I don't think, helps you.

[00:30:41] Speaker 05:
The summary judgment in the Texas case on the other issue was entered in 2009.

[00:30:46] Speaker 05:
So the cases that became Alice were being filed around that same time.

[00:30:51] Speaker 05:
So you can't say that it would not have resulted in the decision analysis itself.

[00:30:57] Speaker 01:
But we can't, I don't know.

[00:30:58] Speaker 01:
That's why this feels like almost factual questions to me.

[00:31:02] Speaker 01:
How long would this litigation have taken?

[00:31:04] Speaker 01:
Would it have been open or closed?

[00:31:06] Speaker 05:
But those aren't factual questions that the courts looked into in the case law on the case within the case.

[00:31:11] Speaker 05:
You look to an objective standard of what would have happened.

[00:31:15] Speaker 01:
But again, you're asking us to say that the governing law is, you're trying to apply the Supreme Court's effectivity rules, but that test itself asks whether it's an open case.

[00:31:27] Speaker 01:
And by the way, you normally have to preserve the claim too.

[00:31:30] Speaker 01:
But you have to preserve the claim and it's an open case.

[00:31:33] Speaker 01:
But when we're dealing with hypothetical ones, which never actually open and never actually close,

[00:31:38] Speaker 05:
So the case law on the case within the case, let's say, look at the state of the case law.

[00:31:43] Speaker 01:
When you're dealing with like the- When you say the case law, I'm sorry, can you tell me which case law you're talking about?

[00:31:47] Speaker 05:
The cases that we cite in our brief, I believe, Your Honor, if there's others, we'd have to- And it's local DC law that you say is the government law.

[00:31:54] Speaker 05:
It might be outside of DC, but the cases we cited included DC law.

[00:31:58] Speaker 05:
But don't we need to know?

[00:32:00] Speaker 01:
Is that the one that should be happening here?

[00:32:01] Speaker 05:
I'll look at the briefs in a minute, Your Honor, but let me try to answer the question.

[00:32:08] Speaker 05:
I forgot.

[00:32:09] Speaker 05:
With respect to the state of mind of an attorney, say, who was accused of committing malpractice during the morning in the midst of a trial, then you look at his state of mind, of course, in light of what the law was at the time, because that's all he could have known at the time.

[00:32:24] Speaker 05:
But with respect to something else like this, you look to objectively what the law is and what the results should be, not what it, quote, would have been applying the law at the time.

[00:32:36] Speaker 05:
And that is the rule of the case within the case.

[00:32:38] Speaker 01:
It just feels like it's a one-way ratchet to me that we protect the lawyers.

[00:32:43] Speaker 01:
We don't expect them.

[00:32:44] Speaker 01:
to know what the law is going to be half a decade down the road in patent law.

[00:32:50] Speaker 01:
But when it comes for client, we say you made the best decision you could at the time.

[00:32:55] Speaker 01:
But then when we're litigating the case within a case,

[00:32:58] Speaker 01:
We don't do that.

[00:32:59] Speaker 01:
We want to limit client recovery and malpractice actions.

[00:33:03] Speaker 01:
We come up with a rule that says, even if your case would have been won at the time the malpractice occurred, the fact that half a decade or a decade later, a different legal scheme applies, you still lose.

[00:33:19] Speaker 04:
So the reason I think- If I may, when you say that, you're saying it in the context of a statute, not common law.

[00:33:28] Speaker 04:
It's a statute here that arguably means whatever it meant all along, even though no one knew it, as opposed to common law where the court's changing the law.

[00:33:39] Speaker 05:
It's a pure question of law here on this section 101 issue.

[00:33:43] Speaker 05:
If it was a subjective question, how do you predict what a jury would have held in the case within the case?

[00:33:49] Speaker 05:
That jury in Texas at that time, how do you can't make that prediction?

[00:33:53] Speaker 05:
And so they don't try to look back into the subjective circumstances of how the case would have actually or likely have come out kind of thing.

[00:34:01] Speaker 05:
especially I think with respect to section 101 where we're dealing with a federal statute on an issue which the Supreme Court has recognized is an issue that you know of abstract ideas are not patentable.

[00:34:12] Speaker 05:
That's been in the Supreme Court doctrine of the patent law for 150 years.

[00:34:16] Speaker 02:
Do you agree with your friend that

[00:34:20] Speaker 02:
Enfish did not work a great change in our understanding of Alice or the teachings of Alice.

[00:34:26] Speaker 05:
I totally agree.

[00:34:27] Speaker 05:
Enfish did not change Alice.

[00:34:29] Speaker 05:
Alice has been now aligned by the philosophy.

[00:34:32] Speaker 02:
The language about the functionality that is in Enfish, is that not different than what was in Earth in addition to what was in Alice?

[00:34:38] Speaker 05:
So what Alice teaches you is that each case you look at the specific language of the claim and what it is the claim is about.

[00:34:54] Speaker 02:
Alice was looking at software, Enfish was looking at software, Enfish adds to the discussion about the functionality of the computer.

[00:35:04] Speaker 02:
Is that something that is new in our understanding of Alice?

[00:35:09] Speaker 02:
I'm not asking if it's consistent or inconsistent with the Supreme Court, that might be harder.

[00:35:13] Speaker 02:
Is it a bit new in relation to what we understand from that?

[00:35:18] Speaker 05:
No.

[00:35:18] Speaker 05:
Alice said, in the two-step process, one is you look to see whether it's an abstract idea, and two, you look to see whether or not it adds something new to the functioning of the computer or whether it is just using a computer to perform well-known steps.

[00:35:38] Speaker 02:
And we submit that what you understand in FISH to say

[00:35:42] Speaker 02:
either parallel to within or in addition to Alice.

[00:35:45] Speaker 02:
What do you understand, the Enfish to stay beyond those two steps?

[00:35:48] Speaker 05:
All Enfish says is that that particular claim in Enfish falls on the side of patentability because it adds to the technology of the computer.

[00:36:01] Speaker 05:
And it's a very different kind of claim.

[00:36:03] Speaker 02:
Is that a new step added onto the two steps of Alice or a new, I guess, exception to the two steps of Alice?

[00:36:09] Speaker 02:
No, if it improves the functionality of the computer, then it is patentable and not an aspect.

[00:36:18] Speaker 05:
No, it's not a new step.

[00:36:19] Speaker 05:
It falls within the framework of Alice.

[00:36:22] Speaker 02:
But in Encyclopedia, in this case, you would see no point in any remand for reconsideration in light of Enfield.

[00:36:39] Speaker 02:
Well, not for... You can tell me if you have any answer.

[00:36:42] Speaker 05:
I know, I might tell the think for a second.

[00:36:45] Speaker 05:
Enfish doesn't change the law of Alice.

[00:36:48] Speaker 05:
Alice is the law.

[00:36:49] Speaker 04:
Do you understand the question is, do you want a remand?

[00:36:51] Speaker 04:
Do I want a remand?

[00:36:53] Speaker 05:
Well, we think that Judge Lambert's got it dead on correct.

[00:36:58] Speaker 05:
The claims of these patents are very different from Enfish.

[00:37:03] Speaker 05:
And I realize you don't typically deal with patents, but we have now a body of federal circuit law after Alice, which has looked at 15 or 16 different kinds of cases.

[00:37:16] Speaker 05:
Only two, and Fish and one other case, have said that the claims that they were considering on appeal have survived.

[00:37:23] Speaker 05:
on our patentable.

[00:37:25] Speaker 05:
And Nfish is somewhat unique and in fact I think it actually helps us because it shows kind of how detailed and how specific your computer improvement has to be in order to survive the Alice account.

[00:37:39] Speaker 01:
If you look at... Does that improvement have to be with respect to existing technology at the time?

[00:37:44] Speaker 05:
The issue with respect to session one is not the same as whether or not it's novel or anticipated.

[00:37:51] Speaker 01:
I'm not asking novel, I'm asking does it have an inventive concept.

[00:37:53] Speaker 01:
Under ALICE, they said they did look at the state of prior art at the time.

[00:37:58] Speaker 01:
When they look at functionality and then FISH, are they comparing this new functionality to the state of technology at the time?

[00:38:08] Speaker 05:
So in Enfish, the court had already concluded that the patent was not invalid for obvious or novelty issues.

[00:38:16] Speaker 05:
So that was never an issue or not, because it was found already to be new.

[00:38:21] Speaker 05:
And that's not so much an issue here, either.

[00:38:24] Speaker 05:
Because we're not arguing that.

[00:38:25] Speaker 01:
I guess I'm going to go back to the question one more time, when you're just looking at functionality.

[00:38:30] Speaker 01:
Yeah.

[00:38:30] Speaker 01:
Do you, even under 101, compare that into making the 101 decision to the state of the art at the time?

[00:38:38] Speaker 05:
So, in the section 101 decision, when you're making the decision about whether something is abstract or not, you look at whether it is, for example,

[00:38:49] Speaker 05:
performing a series of steps or a method or something that was known in the time.

[00:38:56] Speaker 05:
And I can explain to you exactly why, in the case of these encyclopedia Britannica claims, those functions that are being performed are an abstract idea that were known in the time.

[00:39:07] Speaker 01:
Is that a fact question, whether it was known at the time?

[00:39:11] Speaker 05:
No, and I can explain it's not.

[00:39:13] Speaker 05:
And in fact, in Alice, those footnotes and things were not found as a matter of fact, where the judge, they were kind of, as I understand it, they were added in through the briefing where people said, well, here's an example of this or that.

[00:39:26] Speaker 01:
So in this case, if I could just... So it's a question of law, what the seat of technology was at the time of the...

[00:39:35] Speaker 01:
Encyclopedia Britannica.

[00:39:37] Speaker 05:
So for example, just for example, would you need to have a finding of fact to establish that there were automobiles in 1950?

[00:39:47] Speaker 05:
No, you wouldn't.

[00:39:48] Speaker 05:
That's something that you can take into account as a matter of public record.

[00:39:50] Speaker 05:
And I think that's the way the evidence came in, in Alice with respect to the business practices, or in Bilsky with respect to the business practices.

[00:39:57] Speaker 01:
Well, I guess I'm assuming a patent issued here which has a presumption of validity.

[00:40:01] Speaker 01:
And you're supposed to have clear and convincing evidence of invalidity.

[00:40:05] Speaker 01:
And so I'm assuming that there was some showing the patent office itself, before issuing the patents would have required some showing of Inventive Concept, both under 101, not just novelty, but under 101.

[00:40:20] Speaker 05:
No, the patent office did not review for section one specifically.

[00:40:25] Speaker 05:
It did review for novelty.

[00:40:26] Speaker 05:
And yes, there are many references cited showing that before the particular filing date, there wasn't something exactly like this.

[00:40:34] Speaker 05:
But that's a different inquiry than an ALICE, which is looking at whether you're taking an abstract idea of something that actually was, in this case, reading a map, for example.

[00:40:46] Speaker 05:
Maps have been around.

[00:40:47] Speaker 05:
I mean, you don't need to fact-finding to know that maps have been around for a long time.

[00:40:50] Speaker 05:
Encyclopedias have been around for a long time, reference books, tables of contents in encyclopedias have been around, indexes, cross-referencing of articles, all those are things that... Whether this improved the functionality at the time.

[00:41:05] Speaker 05:
So those things were all done in books and in maps, right?

[00:41:09] Speaker 05:
All the things that they claim here were done in books and maps.

[00:41:13] Speaker 05:
except now they're doing it on a computer.

[00:41:15] Speaker 05:
And what Alice says is when you take those kind of functions that were done before and you just do them on a generic computer, that's not enough to not make it an abstract idea.

[00:41:28] Speaker 05:
You can't just computerize, using a generic computer or software, something that was done before and say, hey, I've got an invention, and say you get the invention because now it's on a computer.

[00:41:40] Speaker 05:
That's what Ellis says.

[00:41:41] Speaker 05:
That's exactly what Judge Lambert found here.

[00:41:45] Speaker 01:
All right, thank you very much.

[00:41:47] Speaker 05:
Can I just briefly address the fiduciary duty question?

[00:41:51] Speaker 05:
Sure, just one minute quickly.

[00:41:53] Speaker 05:
All right, so with respect to the fiduciary duty, the record in their own complaint shows that

[00:42:01] Speaker 05:
at britannica knew all the facts of the alleged malpractice they knowingly sponsored dikstein to submit all these petitions including the affidavit to the patent office they had separate counsel baker bots there was no they were all working together

[00:42:18] Speaker 05:
Dickstein fell out.

[00:42:19] Speaker 01:
First of all, where is it in the pleadings that it was sponsored and that they were all working together?

[00:42:26] Speaker 05:
So they attached to their complaint the judgment of the district court talking about Dickstein, I mean, Encyclopedia Britannica filing things.

[00:42:34] Speaker 05:
There are briefs of record where Britannica's own brief saying, we filed in the petition in the patent office.

[00:42:40] Speaker 05:
They quote from the Dickstein declaration.

[00:42:43] Speaker 05:
We cite all that in the record in our brief.

[00:42:45] Speaker 05:
They were all rowing the same boat to get the patents allowed.

[00:42:48] Speaker 05:
Dickstein fell on its sword by, you know, taking a blow and going to the patent office.

[00:42:53] Speaker 05:
And even our own allegations admit that Dickstein essentially admits negligence in its declaration.

[00:42:59] Speaker 05:
There was no conflict of interest.

[00:43:01] Speaker 05:
They were all pulling together for the same thing.

[00:43:03] Speaker 05:
And that's why Judge Bates ruled that there wasn't any breach of fiduciary duty.

[00:43:10] Speaker 01:
All right.

[00:43:14] Speaker 01:
Thank you.

[00:43:14] Speaker 01:
Thank you.

[00:43:14] Speaker 01:
OK.

[00:43:14] Speaker 01:
Mr. Haas, do you have any time left?

[00:43:16] Speaker 01:
I'll just give you two minutes quickly.

[00:43:17] Speaker 03:
Thank you, Your Honor.

[00:43:22] Speaker 03:
On the procedural context, this case was limited to a first phase, which identified four claims for the trial within a trial.

[00:43:32] Speaker 03:
And the only invalidity ground that was going to be considered was Section 112 of the patent statute.

[00:43:37] Speaker 03:
Everything else was reserved to a second stage.

[00:43:41] Speaker 03:
Judge Bates found that there was no notice given by recitation of Section 101 in the complaint when he was dealing with the statute of limitations issue.

[00:43:49] Speaker 03:
We got the decision about 101 while we were still in the first phase when we should never have gotten it.

[00:43:56] Speaker 03:
That should have been part of the second phase, or there should have been some reorganization of what was going on.

[00:44:02] Speaker 03:
It was a bit of a surprise, to put it mildly.

[00:44:05] Speaker 03:
As to the trial within a trial.

[00:44:07] Speaker 02:
I'm not sure I understand what you did.

[00:44:12] Speaker 01:
For example.

[00:44:12] Speaker 01:
There were two phases in the district court before.

[00:44:14] Speaker 03:
Yeah, two phases in the district court.

[00:44:16] Speaker 03:
And we were in the first phase, which excluded 101.

[00:44:19] Speaker 03:
Yeah.

[00:44:20] Speaker 03:
And we identified some claims.

[00:44:21] Speaker 01:
Hang on one second.

[00:44:23] Speaker 01:
Are you talking two phases in the DC district court litigation or Texas litigation?

[00:44:27] Speaker 03:
The DC.

[00:44:28] Speaker 03:
The DC litigation.

[00:44:29] Speaker 03:
Sorry.

[00:44:30] Speaker 03:
Thank you.

[00:44:31] Speaker 03:
Go ahead.

[00:44:31] Speaker 03:
Yeah, one phase identified four claims for the trial within a trial, and then Dick Steen Shapiro was claimed to criticize us on appeal for trying to argue with respect to all of the claims.

[00:44:42] Speaker 03:
Well, what did we have that we were dealing with in the district court was a limitation that we think was unfairly employed by Dick Steen Shapiro.

[00:44:51] Speaker 03:
Second, on the trial within a trial,

[00:44:55] Speaker 03:
I think, yes, in a trial within a trial, a 101 defense could be raised, but it must be based on the law, as was understood at the time by the advocate because it's a malpractice case.

[00:45:08] Speaker 03:
And if you use some subsequent law,

[00:45:11] Speaker 03:
then you're making malpractice impossible to prove, and you're giving them the retroactive benefit of a post-judgment decision, which they're not entitled to have.

[00:45:20] Speaker 03:
If we were in that trial within a trial, we would come up with and say, here's the art at the time, here's how we are an improvement in functionality of a computer.

[00:45:29] Speaker 03:
And MFISH is a bit different, because what it says is,

[00:45:34] Speaker 03:
On the first step, it's not an abstract idea if it improves the functioning of the computer before it gets to the second step.

[00:45:41] Speaker 02:
That actually is not in and out.

[00:45:44] Speaker 03:
Correct.

[00:45:44] Speaker 03:
Yeah, I think you're correct on that score.

[00:45:47] Speaker 03:
So we would use, if 101 came up at the time, we would use evidence of what the art was at the time.

[00:45:52] Speaker 03:
Under 101 and 102 and 103,

[00:45:55] Speaker 03:
Well, certainly under 102 and 103.

[00:45:57] Speaker 03:
Under 102, if an invention's old, you've got to have one reference, a piece of evidence that shows everything in the claim.

[00:46:02] Speaker 03:
Under 103, you have to have a combination that a person of skill and the art would make that shows everything in the claim.

[00:46:09] Speaker 03:
Lawyers' arguments do not suffice.

[00:46:12] Speaker 01:
Just one, to clarify one thing.

[00:46:13] Speaker 01:
When you briefed judgment on the Pleiadians in this case, was the 101 issue raised there?

[00:46:20] Speaker 01:
I thought you said that was going to be this, I'm confused now by this.

[00:46:23] Speaker 03:
Yes, yes, yes, because if I understand your honor correctly, yes, they made the, Dixie and Shapiro's council made the motion for summary judgment based on 101.

[00:46:31] Speaker 03:
We briefed that.

[00:46:32] Speaker 01:
Judgment on the pleadings, not summary judgment.

[00:46:35] Speaker 03:
I'm sorry, in this case.

[00:46:37] Speaker 03:
On the pleadings, I believe.

[00:46:38] Speaker 03:
That's very different.

[00:46:39] Speaker 03:
I believe we did.

[00:46:41] Speaker 03:
I was not the trial lawyer, so I apologize if I'm not able to satisfy you on that score.

[00:46:47] Speaker 03:
At any rate, we request a remand.

[00:46:51] Speaker 03:
What happened here to Encyclopedia Botanica really was not right.

[00:46:55] Speaker 03:
It deserves to stay in court, and we ought to go back and flesh out the record.

[00:46:58] Speaker 00:
Thank you very much.

[00:46:59] Speaker 03:
Thank you very much.