[00:00:00] Speaker 06: Case two zero one four dash one five six four, electum versus gap. [00:00:34] Speaker 06: Thank you, Your Honor. [00:00:36] Speaker 03: Good morning. [00:00:36] Speaker 03: May it please the court. [00:00:39] Speaker 03: The patents in this suit are invalid for two reasons. [00:00:42] Speaker 03: One, 35 USC 102G, and the second, 35 USC 101. [00:00:48] Speaker 03: I will address anticipation first. [00:00:51] Speaker 03: At trial, it was deduced that the key piece of prior art in this case, what is known as the Kmart system, contains all of the references or all of the teachings of the claims in suit. [00:01:03] Speaker 03: This was agreed to by both experts. [00:01:06] Speaker 03: It was also adduced to trial that the critical date for this teaching was May of 1997, roughly two months before the filing of the patents in suit. [00:01:16] Speaker 03: Therefore, for these patents in suit to remain valid, the inventor must move his conception date or his reduction to practice date back behind May of 1997. [00:01:27] Speaker 03: That effort was undertaken at trial. [00:01:31] Speaker 03: The inventor, through his attorney, provided nearly 20 shards of evidence cobbled together to try to move those dates back. [00:01:41] Speaker 03: Yet every one of those pieces of evidence was taken separately. [00:01:45] Speaker 05: You missed one step. [00:01:46] Speaker 05: I'm sorry, sir. [00:01:47] Speaker 05: When you're moving, I mean, it looked to me like this, you're talking about the way the case was tried on this issue, about whether or not there was prior invention by Dorff. [00:01:55] Speaker 05: And the step that I think you missed was you talked about Kmart [00:02:00] Speaker 05: Kmart has a May 1997 date, and it's conceded that Kmart has all the limitations and the assertive claims. [00:02:08] Speaker 05: But in order to be an anticipatory reference, it has to be enabled, right? [00:02:13] Speaker 03: Correct, Your Honor. [00:02:14] Speaker 05: And what was the evidence of enablement? [00:02:16] Speaker 03: The enablement was the actual testing that's also put in the blue brief, Your Honor. [00:02:20] Speaker 03: We see that there was testimony first at trial by Mr. Mike Hastie, the engineer from Stored Value who worked on the system. [00:02:27] Speaker 03: He also talked about the activity undertaken [00:02:29] Speaker 03: at an actual Kmart store. [00:02:31] Speaker 03: They developed the construct and then he talked about the first effort to put this in place at Kmart up in a store in Michigan. [00:02:38] Speaker 05: My understanding was that testing was challenged by your adversary as being insufficient to show enablement because it was an experimental use. [00:02:53] Speaker 03: That's a misplaced view by our adversary, Your Honor, based on the court's jurisprudence. [00:02:58] Speaker 05: Am I right that that was the counter to your presentation of the testing in the store at Kmart was that the adversary said, no, that's irrelevant because that doesn't show a reduction to practice because it was not embedded? [00:03:20] Speaker 03: That is their position, Your Honor. [00:03:21] Speaker 03: Of course, that position is inconsistent with this court's jurisprudence and Atlanta attachment, which specifically identifies that for something to be enabled like this, it must work for its intended purpose, which was in fact demonstrated at the actual Kmart store using actual Kmart registers and point of sale devices using an actual Kmart gift card. [00:03:41] Speaker 03: with actual Kmart computers and a network. [00:03:43] Speaker 06: How do you know it used an actual Kmart gift card? [00:03:46] Speaker 06: Nobody from Kmart testified at all about the May 97 runs, the pilot runs. [00:03:53] Speaker 06: So how do you know it used a gift card? [00:03:55] Speaker 06: The only person you had is somebody from SBS who testified on what they saw on their end. [00:04:01] Speaker 02: And while you're answering that, also point of sale devices. [00:04:05] Speaker 03: I'm sorry, point of sale. [00:04:06] Speaker 02: Also point of sale devices. [00:04:08] Speaker 02: You said actual [00:04:10] Speaker 02: Kmart point of sale devices, and I'd like to know where that is too. [00:04:15] Speaker 03: Sure, Your Honors. [00:04:16] Speaker 03: You're correct that there was no testimony, Your Honor, from anybody at Kmart. [00:04:19] Speaker 03: The testimony was given by the engineer who put the system together for Kmart and worked in a Kmart store. [00:04:25] Speaker 06: Are you talking about, what was his name? [00:04:27] Speaker 03: Mr. Hasty, Your Honor. [00:04:29] Speaker 06: Mr. Hasty, but he admitted that he wasn't even employed by SBS at the time of May 9th. [00:04:34] Speaker 06: Am I misremembering [00:04:36] Speaker 06: I'm talking about the SBA, oh, Mr. Willis is who I was thinking of. [00:04:39] Speaker 06: Mr. Willis? [00:04:40] Speaker 03: Correct, Your Honor. [00:04:41] Speaker 03: Okay, I'm sorry. [00:04:41] Speaker 06: You're talking about somebody else? [00:04:43] Speaker 03: That's correct. [00:04:43] Speaker 03: Mr. Mike Casey was the engineer responsible for putting this together for Kmart. [00:04:47] Speaker 03: It responds to a Kmart RFP or a particular set of activities defined and delimited for Kmart. [00:04:54] Speaker 03: Kmart was one of the earliest users of gift cards. [00:04:57] Speaker 03: Kmart system is generally consistent. [00:04:59] Speaker 06: He testified though, where did he testify or present evidence that in May of 97, [00:05:05] Speaker 06: actual cards were used and swiped. [00:05:08] Speaker 03: He actually swiped, his testimony is that he swiped a card was swiped in a Kmart store that ran through the point-of-sale devices. [00:05:15] Speaker 06: That's August of 97, isn't it? [00:05:17] Speaker 06: I think you're mixing your dates. [00:05:19] Speaker 06: I mean, show me where in the record. [00:05:21] Speaker 06: It was May. [00:05:22] Speaker 06: He says it was May of 97. [00:05:23] Speaker 03: May of 97, Your Honor. [00:05:25] Speaker 03: May of 97 is when this activity took place in an actual Kmart store. [00:05:29] Speaker 05: Welles or Casey? [00:05:31] Speaker 05: Who's the person giving the testimony? [00:05:34] Speaker 05: Mr. Michael Hasty, your honor. [00:05:35] Speaker 02: And where is that in the record? [00:05:38] Speaker 02: Give me a site. [00:05:40] Speaker 02: Okay. [00:05:42] Speaker 06: I couldn't find that. [00:05:44] Speaker 02: Nor could I, and I'd like to see it. [00:05:46] Speaker 02: Absolutely. [00:05:47] Speaker 03: Your honor would give me a moment. [00:05:49] Speaker 03: Sure. [00:05:49] Speaker 05: Thank you, sir. [00:05:50] Speaker 05: Mr. Willis has to find out who is Mr. Willis. [00:05:52] Speaker 03: Mr. Willis is a business development person inside of stored value. [00:05:57] Speaker 03: He works in the sales side. [00:05:59] Speaker 03: and was involved in post-sales activity. [00:06:02] Speaker 05: He was asked whether he knew that the SVS system actually processed Kmart gift cards using point of sale activation. [00:06:11] Speaker 05: He said yes. [00:06:12] Speaker 05: That's an A1236. [00:06:14] Speaker 03: He had testimony on that as well. [00:06:16] Speaker 03: I thought Judge Moore's question was, was he employed at the time, but was Mr. Hasty that was employed at the time? [00:06:23] Speaker 06: No, I want to know who could give testimony that would provide substantial evidence that a gift card was used. [00:06:27] Speaker 06: I don't know about you, Mr. Fish, but I actually have my credit card numbers all memorized. [00:06:31] Speaker 06: And every once in a while, I forget to take them. [00:06:33] Speaker 06: And every one of these POS devices, including these, the record shows, allows you to type in, for example, the number of your credit card. [00:06:40] Speaker 06: And then it gets transmitted to a place like SDS or whatever else. [00:06:45] Speaker 06: You don't have to swipe the card. [00:06:47] Speaker 06: You could use the keypad to key in the number as an alternative. [00:06:50] Speaker 06: Or you could even run software if all you're doing is testing the backend receipt of information and processing of it. [00:06:57] Speaker 06: And so when I was looking at Mr. Willis' testimony, I was concerned because he's only an SBS employee. [00:07:03] Speaker 06: He only sees the back end. [00:07:05] Speaker 06: He never went into a Kmart store. [00:07:07] Speaker 06: He wasn't even employed in May of 97 by these organizations. [00:07:11] Speaker 06: And he says later on in the testimony, after what Mr. Clevenger referred to, he says, well, I don't know. [00:07:17] Speaker 06: I wasn't there, yada, yada, yada. [00:07:20] Speaker 06: So I'm kind of wondering. [00:07:23] Speaker 06: where precisely is proof. [00:07:24] Speaker 06: You started your argument. [00:07:25] Speaker 06: You opened my brain to think about this, because you said there's testimony that in May of 97, they used a card, they used a POS device, et cetera, et cetera. [00:07:36] Speaker 06: So I mean, it's a big record. [00:07:38] Speaker 06: It might well be in here. [00:07:39] Speaker 06: I just helped. [00:07:40] Speaker 03: It is a big record, Your Honor. [00:07:41] Speaker 03: Just had it to be my colleague. [00:07:42] Speaker 03: There's a citation in the appendix A, 1267. [00:07:46] Speaker 05: 1267. [00:07:51] Speaker 03: This is the testimony of Mr. Hasty. [00:07:58] Speaker 06: Who again is Mr. Hasty? [00:08:01] Speaker 05: Again, Your Honor, Mr. Hasty is the... 1267? [00:08:04] Speaker 06: No, we don't have that. [00:08:05] Speaker 06: We don't have that. [00:08:06] Speaker 06: You didn't give us that in the JA. [00:08:08] Speaker 06: You gave us 1260, 1290. [00:08:09] Speaker 05: Is it 1267? [00:08:13] Speaker 03: Correct, Your Honor. [00:08:13] Speaker 05: I've got that in my notes. [00:08:14] Speaker 05: Read it. [00:08:15] Speaker 05: We don't have that in our... It's not in the appendix. [00:08:20] Speaker 03: I believe there was a supplemental filing made when it was... Oh, I have the supplemental appendix. [00:08:25] Speaker 06: Is it in there? [00:08:27] Speaker 06: Yep, it's in here. [00:08:28] Speaker 06: One, two, six, seven. [00:08:28] Speaker 06: If you don't have yours, you can share mine. [00:08:33] Speaker 00: All right, I got it. [00:08:35] Speaker 00: What's Mr. Hayes been saying? [00:08:56] Speaker 05: Well, when you pile it in, where does it say anything about point sale devices and cards? [00:09:04] Speaker 05: 1267, we're looking at it. [00:09:06] Speaker 03: 1269, Your Honor, the testimony of Mr. Hasty continues. [00:09:18] Speaker 03: Question, Mr. Hasty, what type of gift card transactions are shown here on this page? [00:09:22] Speaker 03: There's redemptions, point of sale activations indicating a point of sale device. [00:09:31] Speaker 03: Under that last column to the right under the code, the four is redemptions and the seven is POS, point of sale activations. [00:09:37] Speaker 03: Hang on a second. [00:09:39] Speaker 03: What's he referring to? [00:09:41] Speaker 06: He's referring to those pilot charts that look like a little table with all the information. [00:09:45] Speaker 06: Yes, your honor. [00:09:46] Speaker 05: That transaction record. [00:09:48] Speaker 05: Was that at 851 in the record? [00:09:53] Speaker 05: These are the May dates. [00:09:54] Speaker 03: Yes, Your Honor. [00:09:55] Speaker 03: Let me reach for those as well. [00:10:04] Speaker 05: Those are the May dates. [00:10:05] Speaker 05: And the May dates show, with the same card, 4889 being the last four digits. [00:10:14] Speaker 05: One, two, three, four, five, six transactions. [00:10:18] Speaker 05: That's correct, Your Honor. [00:10:19] Speaker 06: Same card. [00:10:23] Speaker 05: And one of them, there's 20 seconds apart. [00:10:29] Speaker 05: The other one, there's enough time to have typed it in. [00:10:31] Speaker 05: There's probably enough time, 20 seconds, to type it in. [00:10:34] Speaker 03: Correct, Your Honor. [00:10:35] Speaker 05: So what the panel is asking is whether or not there is evidence in the record that is such that a jury would have had to believe it that the point of sale devices and the cards were used in May at Kmart. [00:10:52] Speaker 03: Well, two pieces to that, Your Honor. [00:10:53] Speaker 03: The first is Mr. Hasty's testimony, as we've just discussed. [00:10:56] Speaker 03: The second is that both experts agree. [00:10:58] Speaker 06: You admit that he doesn't say anything about cards. [00:11:01] Speaker 06: He says point of sale activation. [00:11:03] Speaker 03: And point of sale devices, Your Honor. [00:11:06] Speaker 05: The law is that the reference has to be enabled, not that the invention has to be reduced to practice. [00:11:14] Speaker 05: Correct. [00:11:15] Speaker 05: And reduced and enabled means such that a person of ordinary skill in the art could make and use the invention, right? [00:11:22] Speaker 05: I suppose your argument would be that what we have here by way of testimony shows that one of ordinary skill in the art would have known how to run a card through a point of sale machine. [00:11:34] Speaker 03: At minimum, Your Honor. [00:11:36] Speaker 03: At minimum. [00:11:36] Speaker 03: I would again contend that the Atlanta Act Attachments case makes this abundantly clear that it works for its intended purpose, and we can see that here through these transaction records. [00:11:47] Speaker 03: As I've indicated, there's no dispute between the experts that all of the elements of the Pads and Suit are taught in this Kmart system, which would then imply all of these different pieces that we've been talking about. [00:11:58] Speaker 02: So the bottom of 1267, he talks about the gift. [00:12:02] Speaker 02: The clerks know what they're doing with the gift cards and then he talks about how he does it. [00:12:06] Speaker 02: So that's where you get your gift cards in. [00:12:09] Speaker 03: Correct, Your Honor. [00:12:11] Speaker 03: And this point then materializes what evidence [00:12:14] Speaker 03: Do the patent holders have to swear behind this reference? [00:12:17] Speaker 03: And the answer is none. [00:12:19] Speaker 03: None of these 20 pieces of evidence they have identify two key components of the patent claims. [00:12:25] Speaker 03: The first key component that it does not describe [00:12:28] Speaker 03: is the transmission of an activation amount. [00:12:30] Speaker 03: That's not found anywhere in any of the 20 references. [00:12:33] Speaker 05: Let's back up just with the point of sale device and the swiping of the card, for example. [00:12:38] Speaker 05: I didn't see anything in the record that suggested that that particular issue was a bone of contention between the parties as to whether or not the Kmart system was enabled or ready for its intended purpose. [00:12:52] Speaker 05: When I looked at your J-Mall motions, [00:12:55] Speaker 05: where you're finding a j-mall upset, you know, what you want to do and what they want to do is fighting over whether or not there was prior invention by Mr. Dorff. [00:13:05] Speaker 05: What I mean was, did the jury hear testimony from both sides as to whether or not at Kmart they were actually using physical cards and using a point of sale device? [00:13:18] Speaker 03: The jury heard testimony of two types, Your Honor. [00:13:20] Speaker 03: The first type was from Mr. Hasty, as we've talked about. [00:13:23] Speaker 03: Also, well, I'll just say two types. [00:13:25] Speaker 03: One from fact witnesses, the SBS witnesses, Mr. Hasty and Mr. Wills. [00:13:28] Speaker 03: They also heard testimony from the expert witness, Mr. Reef, who again agreed, who agrees with the plaintiff's expert that the teachings of the Kmart system are sufficient to meet every element of the claimed invention. [00:13:47] Speaker 03: We have those transaction records which demonstrate that the system at minimum was conceived, certainly enabled, certainly reduced to practice, because it was operating in the store at that moment in time. [00:13:59] Speaker 03: Those eight transaction records teach that. [00:14:02] Speaker 05: Well, as the presiding judge pointed out, the transactions that I pointed you to on page A851, the six transactions using the same card, could have been someone that was entering the card numbers manually [00:14:16] Speaker 05: instead of swiping a car. [00:14:18] Speaker 03: Your honor, I see that my time is dwindling to a very small number. [00:14:22] Speaker 03: May I address one other remaining issue before my time expires? [00:14:26] Speaker 03: Sure, go ahead, Mr. Fish. [00:14:27] Speaker 03: Thank you very much. [00:14:28] Speaker 03: I would like to address 35 USC 101. [00:14:30] Speaker 03: As this court knows, Mr. Dorff's patents have been before this panel multiple times before. [00:14:35] Speaker 03: Wrong choice. [00:14:37] Speaker 03: I'm sorry? [00:14:38] Speaker 06: Wrong choice. [00:14:39] Speaker 06: On my part to let you go ahead. [00:14:41] Speaker 06: It's a dumb argument. [00:14:42] Speaker 06: You have so waived this. [00:14:44] Speaker 06: Bob Mayer told you years ago, raise it. [00:14:46] Speaker 06: Did you raise it at that point? [00:14:47] Speaker 06: Nope, didn't raise it at that point. [00:14:49] Speaker 06: You raised it until now. [00:14:51] Speaker 06: What stopped you from doing it all along? [00:14:55] Speaker 03: The Dynatech case, Your Honor, you don't believe has significance here? [00:14:58] Speaker 03: There are five different factors that allow this, but I don't believe that it's been waived at all. [00:15:03] Speaker 03: And very, very pointedly, Your Honor, when this decision was made in the IDT case, that set the law of this court that the lower court had to follow. [00:15:12] Speaker 03: And that law was that this patent, 608 in particular, passed the muster for subject matter, appropriate subject matter. [00:15:21] Speaker 03: I'm simply asking the court to revisit that in light of the Alice decision. [00:15:25] Speaker 03: That's what I'm asking this court to do. [00:15:28] Speaker 03: We were bound by that, Your Honor. [00:15:30] Speaker 03: The district court wasn't going to independently rule after this court had approached this issue in the IDT case. [00:15:37] Speaker 06: You didn't ask him to, so you didn't preserve the issue, right? [00:15:41] Speaker 06: You knew Alice was in place, been in place for so many years. [00:15:44] Speaker 06: You didn't ask him to. [00:15:46] Speaker 06: You didn't preserve it, yet you knew the issue was up for grabs. [00:15:49] Speaker 03: Your Honor, then I point this court to the Dynatech case. [00:15:52] Speaker 06: Well, we just don't do this as a matter of law on appeal. [00:15:59] Speaker 03: All right, Your Honor. [00:16:00] Speaker 03: I will reserve the brief time I have. [00:16:02] Speaker 03: All right. [00:16:02] Speaker 06: Don't worry. [00:16:03] Speaker 06: I'll restore your rebuttal time. [00:16:04] Speaker 06: We asked you a million questions on the record and everything else. [00:16:06] Speaker 06: So you get all your rebuttal time back. [00:16:09] Speaker 06: That's fine. [00:16:09] Speaker 06: Let's hear from, is it Mr. Segrist? [00:16:12] Speaker 04: Yes, Your Honor. [00:16:13] Speaker 03: Okay. [00:16:14] Speaker 03: Thank you, Your Honor. [00:16:26] Speaker 04: Good morning, your honor. [00:16:27] Speaker 04: Philip Stigrist representing the Appalee election. [00:16:30] Speaker 02: Mr. Stigrist, I saw you sitting down there shaking your head, which you shouldn't do. [00:16:37] Speaker 02: Do you disagree? [00:16:39] Speaker 02: Do you dispute that those six transactions occurred on 9 May? [00:16:45] Speaker 04: Something happened on 9 May, but I disagree that the jury was compelling. [00:16:50] Speaker 02: Let me then ask you. [00:16:52] Speaker 02: Do you dispute that those, because I think you're going to answer it another way. [00:16:56] Speaker 02: Transactions included both point of sale gift card activities and purchase transactions. [00:17:04] Speaker 04: I don't know what all they included. [00:17:06] Speaker 04: What I disagree with is that the jury was compelled to find that those transactions from a report dated in August showed irrevocably that there had been a reduction to practice in May. [00:17:22] Speaker 04: And Judge Clevenger, you asked earlier, they weren't talking about enablement here, not a reduction to practice. [00:17:28] Speaker 04: This is a one on two G question. [00:17:30] Speaker 04: We're talking about a reduction to practice. [00:17:32] Speaker 04: They have to show an actual reduction to practice. [00:17:35] Speaker 04: And all I've got are these six transactions that are showing up in a report in August, which is after the filing date of the patent. [00:17:42] Speaker 06: Well, but they're dated May. [00:17:44] Speaker 06: I mean, the transactions were run in May. [00:17:45] Speaker 06: Nobody disputes that. [00:17:47] Speaker 06: You didn't dispute that they were run in May. [00:17:48] Speaker 04: Something happened in May. [00:17:50] Speaker 04: Some sort of testing happened in May. [00:17:52] Speaker 04: They were still testing their system in May, in June, in July. [00:17:56] Speaker 05: It was experimental? [00:17:57] Speaker 05: Yes. [00:17:58] Speaker 05: And that's your main thrust of your argument is it was experimental, not real. [00:18:05] Speaker 04: I don't know about not real, but it was definitely such that the jury could have concluded from the testimony that they were given that Kmart was still testing this to see if it would work. [00:18:16] Speaker 04: And they tested it for several months. [00:18:18] Speaker 06: What is the evidence they were testing it to see if it would work as opposed to as the testimony actually that Mr. Fish pointed to quite adeptly, given this record, that they were testing it to make sure the Kmart clerk knew how to work the system? [00:18:37] Speaker 06: That's the testimony of the record at 1267, which he pointed us right to. [00:18:42] Speaker 06: What is the testimony that they were testing it [00:18:45] Speaker 06: to determine whether it was workable as opposed to testing it to teach their employees how to use it? [00:18:53] Speaker 04: Because this is not training in all of the source. [00:18:57] Speaker 04: This is a test in a few pilot stores. [00:18:59] Speaker 04: It can't be training all of the clerks. [00:19:02] Speaker 06: They're training these particular clerks to use it. [00:19:05] Speaker 06: That's the testimony. [00:19:05] Speaker 04: So what he says is that you don't roll it out. [00:19:09] Speaker 04: You don't roll out a new gift card system before you've actually run a few [00:19:13] Speaker 04: test transactions are actually piloted in your stores. [00:19:16] Speaker 02: Pilot it in the stores. [00:19:18] Speaker 02: Right. [00:19:19] Speaker 02: Piloting is having a lead store. [00:19:24] Speaker 02: Is that not correct? [00:19:25] Speaker 04: Not necessarily the way he was using the term because he says he doesn't know if there were ever any gift cards, if there were ever any customers. [00:19:33] Speaker 04: He says he doesn't know if it was done. [00:19:36] Speaker 04: He agreed that it was internal testing and his testimony on that [00:19:42] Speaker 04: is shortly after this, but unfortunately it's in a different volume because it's not in the supplement. [00:19:48] Speaker 04: It's in A1305, which is volume two of the Joint Appendix. [00:19:56] Speaker 06: I didn't see you argue anywhere to us or otherwise that the Kmart system in May of 97 didn't have all of the components. [00:20:06] Speaker 06: In fact, I kind of quite frankly thought that you accepted [00:20:10] Speaker 06: that it did, that there was no dispute between the system as used in May of 97 and the system as rolled out and used in August of 97. [00:20:20] Speaker 06: I thought I understood your argument to be, however, the May 97 use was nonetheless experimental, but did you argue somewhere that there were elements of the May 97 system as [00:20:32] Speaker 06: the elements of the claim that were not present in the May 97 test? [00:20:36] Speaker 04: No, Your Honor. [00:20:37] Speaker 04: We're not arguing that. [00:20:38] Speaker 04: I am saying that we don't know. [00:20:39] Speaker 06: I want to make sure I understand the scope of the argument. [00:20:41] Speaker 04: Right. [00:20:41] Speaker 04: I am saying we don't know what all was in the May 97 test. [00:20:44] Speaker 06: Actually, I think that most of your own testimony seems to indicate that everyone assumes that it's the identical system in May of 97 and August of 97. [00:20:56] Speaker 06: And I don't see you argue anywhere to the jury, nor do I see any testimony indicating that might not have been. [00:21:02] Speaker 06: I don't think that could be a basis for the jury to conclude in your favor. [00:21:06] Speaker 06: It wasn't argued to them, and I don't see any testimony that supports that idea. [00:21:10] Speaker 04: I'm going to refer you to A 1302 in the record in volume 2. [00:21:15] Speaker 06: Volumes, which one? [00:21:17] Speaker 04: This is volume 2. [00:21:21] Speaker 06: 1302? [00:21:23] Speaker 06: Yes, Your Honor. [00:21:26] Speaker 06: And whose testimony is that? [00:21:28] Speaker 04: This is the same witness's testimony. [00:21:31] Speaker 04: This is right after the part that was missed. [00:21:33] Speaker 05: This is Willis? [00:21:34] Speaker 05: Willis? [00:21:36] Speaker 04: Hasty, I believe. [00:21:38] Speaker 05: I think this is Willis. [00:21:41] Speaker 05: Yes, this is Willis. [00:21:44] Speaker 05: This is Hasty. [00:21:44] Speaker 02: 1302, Hasty. [00:21:46] Speaker 02: 1302, Your Honor. [00:21:51] Speaker 04: Yes, Mr. Hasty. [00:21:53] Speaker 04: Page 1299 says, Good afternoon, Mr. Hasty. [00:21:55] Speaker 05: They were pilot transactions. [00:22:00] Speaker 05: They were used to prove out the system. [00:22:02] Speaker 04: Yes. [00:22:03] Speaker 04: That's where he's saying these are done to see if it would work. [00:22:05] Speaker 04: They're used to prove out the system. [00:22:07] Speaker 04: Are these net sales to customers? [00:22:09] Speaker 04: Well, I don't know if they are or not. [00:22:12] Speaker 04: It could have been employees. [00:22:13] Speaker 04: He just doesn't know. [00:22:14] Speaker 04: Over on page 1304. [00:22:17] Speaker 05: Right, but he's not saying that they aren't using cards or using a point of sale device. [00:22:22] Speaker 04: He's not saying that they aren't, but it's their burden to prove by clear and convincing evidence. [00:22:28] Speaker 04: that there was an actual reduction to practice, and they weren't just testing it still, in May of 97. [00:22:34] Speaker 04: A jury listening to this, listening to this witness say, well, I'm not sure it could have been. [00:22:38] Speaker 04: Over on page 1305, asked about internal testing, he said, yes, it's internal testing. [00:22:44] Speaker 05: Can I ask a question? [00:22:45] Speaker 05: Yes, Your Honor. [00:22:46] Speaker 05: What we are reviewing, I believe, the district court judge denial of gaps came up on anticipation. [00:22:54] Speaker 05: Are we constrained by the shape [00:22:58] Speaker 05: of the JMAW argument that was made to the district court. [00:23:04] Speaker 05: I got the JMAW motions and I read them. [00:23:07] Speaker 05: I saw what the motion was and I saw the basis for their motion. [00:23:12] Speaker 05: Their basis, their motion essentially was that your client couldn't prove prior invention that he could corroborate nor could he show diligence, pardon me, prior conception and diligence. [00:23:23] Speaker 05: That was their reason for saying why the [00:23:27] Speaker 05: They weren't there. [00:23:28] Speaker 05: They started off by saying, it's conceded that Kmart anticipates. [00:23:34] Speaker 05: So they were assuming that there was a sufficient reduction of practice. [00:23:40] Speaker 05: Your response doesn't take issue with their primary issue. [00:23:45] Speaker 05: Your defense of the jury verdict in your J-Mall motion deals only with your inventor's prior invention. [00:23:54] Speaker 04: Your Honor, Paul has agreed is that the Kmart system has all the elements. [00:23:57] Speaker 05: I was trying to get as a matter of procedure, if I'm reviewing the denial of the JMAW, do I simply look at what you all said was the reason for sustaining the jury verdict yes or no at that point in time, or do I go back and look at the whole jury trial? [00:24:12] Speaker 04: Your Honor, I believe you're not constrained to the argument that was made in response. [00:24:16] Speaker 04: I think if the jury verdict can be supported by any finding, then the jury verdict was correct. [00:24:22] Speaker 04: And if we didn't make an argument that supported the jury verdict, but it's still there, then [00:24:27] Speaker 04: the jury verdict should be affirmed. [00:24:28] Speaker 04: That's an additional basis. [00:24:31] Speaker 04: Maybe it was argued a little, maybe it wasn't. [00:24:32] Speaker 04: But that's an additional basis for affirming the jury verdict. [00:24:35] Speaker 02: Well, let's say you made an active concession in the argument. [00:24:40] Speaker 04: That is... Let's not say that. [00:24:42] Speaker 02: I don't think that we did. [00:24:43] Speaker 02: Oh, speaking hypothetically. [00:24:47] Speaker 02: If your opposing counsel said, we assume [00:24:54] Speaker 02: that they accept that it was reduced to practice. [00:24:58] Speaker 02: And you said, yes, we agree with that. [00:25:04] Speaker 02: But we disagree on this. [00:25:07] Speaker 02: We wouldn't be able to look at it, would we? [00:25:10] Speaker 04: Hypothetically, that didn't happen. [00:25:12] Speaker 04: But hypothetically, if there were something amounting to a stipulation about reduction to practice, then I think it would be problematic for us to argue on appeal that there wasn't a reduction to practice. [00:25:22] Speaker 04: That didn't happen. [00:25:23] Speaker 04: during cross-examination of Mr. Acey? [00:25:26] Speaker 02: You know, but you're saying anything that supports the jury verdict is fair game. [00:25:29] Speaker 02: Because there wasn't such a stipulation. [00:25:33] Speaker 02: So it's clear that anything that supports the jury verdict isn't quite fair game. [00:25:38] Speaker 04: Hypothetically, in a different case, if there were stipulations, then yes, Your Honor, there might be something that could be taken off the table. [00:25:44] Speaker 04: But here, there was cross-examination about the nature of the testing that was done. [00:25:49] Speaker 04: And he was asked, now isn't this just internal testing? [00:25:52] Speaker 04: You don't know that these are [00:25:53] Speaker 04: customers. [00:25:53] Speaker 04: You didn't do any actual transactions. [00:25:55] Speaker 04: All of that is in the cross-examination. [00:25:57] Speaker 04: All of that is challenging the reduction to practice. [00:26:00] Speaker 04: The court, in ruling on the JMOL motion, said that one basis on which the jury could have found in favor of Alexaam is that SVS did not reduce the Kmart system to practice before the Alexaam system was reduced to practice. [00:26:18] Speaker 04: So that's a sufficient basis. [00:26:20] Speaker 04: That's something the jury could have found on this record. [00:26:23] Speaker 04: that they did not get a reduction to practice before Alexam did. [00:26:27] Speaker 04: And if the jury could have found that on this record, it must be presumed that they did find that on this record. [00:26:38] Speaker 04: Let's see, I'm down to about 10 seconds on my presentation. [00:26:41] Speaker 06: You're actually over by 10 seconds. [00:26:43] Speaker 04: Oh, just very briefly, our cross appeal is on infringement. [00:26:47] Speaker 04: Infringement was tried to a separate jury. [00:26:50] Speaker 04: Our argument on that later in the brief is that there are no [00:26:53] Speaker 04: issues that the jury needed to resolve about the way the system worked. [00:26:56] Speaker 04: It's just a question of whether the claims cover it. [00:27:00] Speaker 06: Okay. [00:27:01] Speaker 06: Thank you, Mr. Seagrass. [00:27:02] Speaker 06: Thank you, Your Honor. [00:27:03] Speaker 06: Mr. Fish, we'll give you four minutes for the model time. [00:27:15] Speaker 03: Thank you, Your Honors. [00:27:15] Speaker 03: If I may turn us to A1302, please. [00:27:22] Speaker 06: Is that in the supplemental or the regular one? [00:27:24] Speaker 05: That's in the regular. [00:27:26] Speaker 05: That should be in the business, Your Honor. [00:27:28] Speaker 06: All right, well. [00:27:28] Speaker 05: We're pilot transactions, I said. [00:27:31] Speaker 03: Mr. Hasty's testimony here. [00:27:33] Speaker 06: 1302. [00:27:35] Speaker 06: All right, got it. [00:27:38] Speaker 03: Those were not sales of Kmart gift cards to consumers, line 19, please. [00:27:42] Speaker 03: Were they? [00:27:42] Speaker 03: I don't know if they were or not. [00:27:44] Speaker 03: They were people in the stores buying them. [00:27:47] Speaker 03: It could have been employees. [00:27:49] Speaker 03: It could have been somebody who asked for them. [00:27:52] Speaker 03: I don't think they were telling people about it, but I think if somebody asked to use it, they would give it to them. [00:28:02] Speaker 03: The it or the cards. [00:28:03] Speaker 02: And the buying is the key. [00:28:06] Speaker 03: That's part of it, that there's somebody in there. [00:28:08] Speaker 03: This has really been glossed over by continuing to define these early, quote, tests as tests. [00:28:15] Speaker 03: their pilot programs in a deployment as Mr. Hasty testifies. [00:28:19] Speaker 06: So he claims this is a 102G. [00:28:22] Speaker 06: Why isn't this a 102B? [00:28:26] Speaker 06: Is it not a year before maybe? [00:28:29] Speaker 06: That's why. [00:28:29] Speaker 06: I don't know. [00:28:30] Speaker 06: Why isn't this a 102A public use? [00:28:31] Speaker 06: What is the nature of it? [00:28:32] Speaker 06: Because Judge Clevenger began here. [00:28:34] Speaker 06: Are we talking about enablement? [00:28:35] Speaker 06: Are we talking about reduction of practice? [00:28:37] Speaker 06: And your opponent said, no, this is purely 102G who invented it first. [00:28:42] Speaker 03: It's the prior use, Your Honor. [00:28:44] Speaker 03: It's the independent prior use in advance. [00:28:46] Speaker 03: And they need to move this date back. [00:28:47] Speaker 03: That's why it's the 102G. [00:28:49] Speaker 03: And that's why the fight has been, historically, as Judge Clevenger identified, it's really been about, can they move the date back? [00:28:55] Speaker 06: And so your argument in response to him would be, they're not experimenting. [00:28:59] Speaker 06: They're selling them. [00:29:00] Speaker 03: Well, indeed, it's talked about a pilot program. [00:29:04] Speaker 03: And Mr. Hasty's testimony here continues to say, [00:29:07] Speaker 03: Kmart is not going to roll out something like this to all of its stores until it can be figured out. [00:29:12] Speaker 03: We're thinking about gift cards in today's model. [00:29:14] Speaker 03: It's generally regarded that Kmart was the second company in the United States to have gift cards as we know them. [00:29:20] Speaker 03: The first was mobile oil. [00:29:21] Speaker 03: This was a brand new concept in its day. [00:29:24] Speaker 03: And so as we overlay our thinking about these ideas onto them, we're presupposing this knowledge that we all have today about how they operate and that they operate efficiently. [00:29:37] Speaker 03: The fact of the matter is that it takes a lot of activity to make sure these work. [00:29:42] Speaker 03: And that's what's being tested. [00:29:43] Speaker 03: And I don't blame Kmart. [00:29:44] Speaker 03: I don't think any of us would for being commercially wise to run a pilot program. [00:29:49] Speaker 03: Mr. Hasty testifies specifically to this issue. [00:29:52] Speaker 03: This effort to continue to cloud this is something other than a pilot program, something as remote as testing in a laboratory, which this is not. [00:29:59] Speaker 03: This is in a store with real terminals. [00:30:03] Speaker 02: And with real money, which is important. [00:30:06] Speaker 03: So we have this as Mr. Hasty's testimony. [00:30:09] Speaker 03: The testimony continues, but his testimony becomes key to this issue, obviously. [00:30:15] Speaker 03: With this understood, none of the pieces of data, none of the evidence that's produced by Mr. Dorff teaches two of the key elements in the claims in suit. [00:30:27] Speaker 03: Those two key elements that aren't taught by any of these 20 pieces, in part or in whole, are the idea of transmitting an activation amount. [00:30:35] Speaker 03: That's a requirement of every claim of both patents. [00:30:38] Speaker 03: It's not in there anywhere. [00:30:41] Speaker 03: And the 608 patent places an additional requirement on the claim language, and that is that the POS terminals, the point of sale terminals, be unmodified, unchanged. [00:30:53] Speaker 03: And that's significant because the goal here of the patents was to be able to take advantage of unmodified terminals. [00:31:00] Speaker 03: There's nothing in any of these 20 pieces of information taken as whole or in part or an individual piece that teaches or suggests anything about unmodified point of sale terminals. [00:31:12] Speaker 03: The absence of those pieces do not permit Mr. Dorff to swear behind this reference. [00:31:19] Speaker 03: The Coleman jurisprudence of this court teaches us that. [00:31:22] Speaker 03: A case from 1995 cited over 30 times by this court and 125 times in total. [00:31:28] Speaker 03: That is bedrock principle here. [00:31:30] Speaker 03: He's got to have every element. [00:31:32] Speaker 03: He doesn't. [00:31:33] Speaker 03: Therefore, Your Honors, he can't swear behind this date. [00:31:36] Speaker 03: As we've established, the Kmart system predates the patents in suit. [00:31:42] Speaker 03: And as a result, the patents in suit are invalid. [00:31:47] Speaker 03: My time has 30. [00:31:50] Speaker 06: No, you're over. [00:31:51] Speaker 03: Over. [00:31:51] Speaker 03: Oh, that's correct, Your Honor. [00:31:52] Speaker 03: Thank you for the indulgence. [00:31:55] Speaker 06: Yep. [00:31:56] Speaker 06: Since he didn't address infringement, I don't think that there is any opportunity for rebuttal on the cross appeal. [00:32:03] Speaker 03: That was my sense, though, Your Honor. [00:32:05] Speaker 03: If necessary, I will identify to the court that the jury verdict is supported by substantial evidence. [00:32:12] Speaker 06: OK, now that you've addressed it, would you like to respond to whether it's supported by substantial evidence or not? [00:32:17] Speaker 00: Yes, Your Honor. [00:32:25] Speaker 04: Your Honor, it's not supported by substantial evidence because there's no dispute about the way the system operates. [00:32:32] Speaker 04: The question then is whether there's anything that's not met. [00:32:35] Speaker 04: And we laid out in detail in the briefs why it's not met. [00:32:39] Speaker 04: And I just want to summarize those elements, why the evidence was inadequate. [00:32:45] Speaker 04: The first thing that they suggested, well, maybe it doesn't have the activation that's required. [00:32:52] Speaker 04: Claims say that activation means crediting an amount to the car. [00:32:55] Speaker 04: There's some other activity called activation about flipping a switch. [00:32:59] Speaker 04: Maybe it doesn't do that, but that's not what's in the claims. [00:33:02] Speaker 04: And it's undisputed that it does what's in the claims about activation. [00:33:06] Speaker 04: Next one was a bank processing hub computer. [00:33:09] Speaker 04: It's undisputed that it has this machine. [00:33:12] Speaker 04: The question was whether it's maintained by a bank. [00:33:14] Speaker 04: The way that arose is that originally, defendants argued, oh, a bank processing hub computer has to be located physically within a bank. [00:33:22] Speaker 04: The court said, no, it just has to [00:33:24] Speaker 04: get the information from a bank to allow transactions to be distributed over a banking network. [00:33:31] Speaker 04: So that's the type of maintenance that has to happen. [00:33:33] Speaker 04: It's undisputed that the computers here, the gap used, get the information from banks to allow everything to be routed over a banking network. [00:33:43] Speaker 04: Next issue with the banking network itself, they said that because somewhere there's a dedicated connection from the bank processing hub computer back to SVS, [00:33:52] Speaker 04: That takes it outside the claims, but it doesn't. [00:33:55] Speaker 04: Banking networks include dedicated processing, dedicated connections. [00:34:01] Speaker 04: There's nothing in the claim that excludes a dedicated connection. [00:34:04] Speaker 04: An example in the patent list, a dedicated connection. [00:34:07] Speaker 04: And it's undisputed that other parts of the banking network, between the point of sale device and the bank processing of computer, that these transactions flow over that part of the banking network. [00:34:18] Speaker 04: The last issue raised was one of control and the fact that [00:34:22] Speaker 04: There is SBS that owns the computers on the back end. [00:34:26] Speaker 04: But that's a red herring because it's undisputed that GAP uses those computers at SBS. [00:34:31] Speaker 04: It is the GAP employees who initiate the transactions. [00:34:34] Speaker 04: SBS is contractionally obligated to do what it does on those transactions. [00:34:39] Speaker 04: And what SBS is contractionally obligated to do meets every limitation of the claims. [00:34:45] Speaker 04: So that's why there's not substantial evidence of support infringement. [00:34:47] Speaker 06: OK, case is taken under submission. [00:34:49] Speaker 06: I thank both counsel for their argument. [00:34:52] Speaker 04: Thank you, Your Honor. [00:34:54] Speaker 01: All rise. [00:34:59] Speaker 01: The honorable court is adjourned until tomorrow morning at 10 o'clock AM.