[00:00:00] Speaker 05:
Before we begin our regular proceedings for this morning, I'd like to turn to Judge Newman for a motion.

[00:00:06] Speaker 00:
Mr. Hines, will you approach the bench?

[00:00:08] Speaker 00:
I move the admission of Christian B. Hines, who is a member of the Bar and is in good standing with the Highest Court of Illinois.

[00:00:20] Speaker 00:
I have knowledge of his credentials and I am satisfied that he possesses the necessary qualifications.

[00:00:27] Speaker 00:
In fact, more than that, I have watched Mr. Hines in action as clerk in my chambers for a while.

[00:00:37] Speaker 00:
He is nearing the end of his tenure and is about to bring great talent and competence to the real world as he leaves us.

[00:00:49] Speaker 00:
And so it is my pleasure to move the admission of Mr. Hines to the bar.

[00:00:55] Speaker 05:
Well, with the concurrence of Judge Toronto, we enthusiastically grant the motion.

[00:01:03] Speaker 00:
Thank you.

[00:01:04] Speaker 01:
Please approach the clerk.

[00:01:25] Speaker 00:
Welcome to the bar.

[00:01:31] Speaker 05:
First case for argument this morning is 141854 Asternet Technologies versus BAE Systems.

[00:01:40] Speaker 05:
Mr. Mason, whenever you're ready.

[00:01:42] Speaker 07:
Good morning.

[00:01:53] Speaker 07:
I'm Jeffrey Mason of Morbis LLP representing Historic Technologies, Inc.

[00:01:57] Speaker 07:
And I just wanted to start with some of the history here because we started this case three years ago in the Court of Federal Claims downstairs as well as in a district court.

[00:02:08] Speaker 07:
That was three years ago.

[00:02:08] Speaker 07:
And then on May 10, 2012, the Department of Justice appeared in the federal claims case and moved to dismiss that case.

[00:02:17] Speaker 07:
And that was the last that we heard from the Department of Justice until we are up on appeal now.

[00:02:21] Speaker 07:
Their amicus brief was submitted

[00:02:23] Speaker 07:
There were some discussions below.

[00:02:25] Speaker 07:
There was a motion to dismiss that was filed below in the district court case.

[00:02:29] Speaker 07:
And there were some discussions that were had, but we weren't privy to those discussions at all.

[00:02:35] Speaker 07:
The record, A-52, reflects some of those discussions.

[00:02:38] Speaker 07:
That was part of our field brief.

[00:02:41] Speaker 07:
Mr. Feller here did say that during the actual motion to dismiss discussions below, that it would not surprise me.

[00:02:48] Speaker 07:
If the Department of Justice made their views known, if this case proceeds past the Rule 12 stage, it did not actually.

[00:02:53] Speaker 07:
We are here on a Rule 12 motion.

[00:02:57] Speaker 07:
And now in appeal we have learned that the Department of Justice's views, which is that everything that the defendants in this case had done was authorized and consented to by the Department of Justice.

[00:03:06] Speaker 04:
Can I ask you this?

[00:03:09] Speaker 04:
Sure.

[00:03:10] Speaker 04:
Why do we need to get into the authorization question at all since your contention rests on

[00:03:17] Speaker 04:
the contention that the government was actually using the claimed invention, which is enough under 1498 to bring this matter within 1498 and therefore outside.

[00:03:32] Speaker 07:
The original suits, there were two original cases.

[00:03:35] Speaker 07:
One was filed against the United States of America in general, as well as against the private contractors here.

[00:03:42] Speaker 07:
Those suits certainly were 1498.

[00:03:46] Speaker 07:
suits against the government itself because it was a suit against the government.

[00:03:51] Speaker 07:
The second set of suits that we filed in district court were against private companies only.

[00:03:56] Speaker 04:
Can I just ask you one thing, just to be clear, because it might actually turn out to matter either now or later.

[00:04:05] Speaker 04:
By we,

[00:04:06] Speaker 04:
some of these suits were Mr. Haddad, and some of these were the corporation.

[00:04:10] Speaker 04:
And for purposes of Rule 41, that might end up making a very big difference to you.

[00:04:15] Speaker 04:
So you might want to keep them separate.

[00:04:16] Speaker 07:
Absolutely.

[00:04:17] Speaker 07:
So you're right.

[00:04:17] Speaker 07:
The original set of suits was Mr. Haddad proceeding pro se.

[00:04:21] Speaker 07:
I was not involved at that point in those suits.

[00:04:23] Speaker 07:
But they are part of the procedural history, and you're absolutely right.

[00:04:25] Speaker 07:
In terms of the 41 issues, I appeared late in some of those.

[00:04:29] Speaker 04:
Right.

[00:04:30] Speaker 04:
But the current suit is a suit that alleges

[00:04:37] Speaker 04:
indirect infringement in which the direct infringement is a use by TSA, which is the United States.

[00:04:43] Speaker 04:
So this is a suit that alleges a use by the United States.

[00:04:48] Speaker 04:
Doesn't that end the question whether 1498 applies?

[00:04:53] Speaker 07:
We don't think so because we haven't run rule 12 here.

[00:04:55] Speaker 07:
So rule 12, motion to dismiss all reasonable inferences are drawn in our favor.

[00:04:59] Speaker 07:
Part of the briefing that we had below, you're right, the allegations did not state direct infringement.

[00:05:05] Speaker 07:
But if you actually look at the attachments to our complaint,

[00:05:07] Speaker 07:
the length of time under which some of these contracts were performed, we felt that some of the admissions made during the briefing, again, drawing all reasonable inferences in our favor, demonstrated direct infringement by the private companies as well as the DSA itself.

[00:05:20] Speaker 04:
Right, but as I understood it, the direct infringement that you speak of now, never mind whether it was in the complaint, is only the setting up of testing modules

[00:05:35] Speaker 04:
And you don't dispute, as I understand it, that that piece, the setting up of the testing so that the United States could look at it and say, okay, we like this one, we don't like this other one, that that was required by the contract.

[00:05:49] Speaker 04:
Not by, even if the resulting technology once accepted might not have been the only possible technology to comply with the solicitations.

[00:06:00] Speaker 04:
So even that, I don't think you're disputing

[00:06:03] Speaker 04:
would come within the authorization even as interpreted by necessity, just the testing piece.

[00:06:10] Speaker 07:
Well, our allegations actually went to what these contracts were intended to do when they succeeded at some point.

[00:06:15] Speaker 07:
A lot of these contracts, however, were failures.

[00:06:17] Speaker 07:
They were pilot programs that ultimately ended up not being widely deployed.

[00:06:21] Speaker 07:
So our allegations really went to if this technology was widely deployed at airports, what would be happening?

[00:06:27] Speaker 07:
What would be happening is you'd actually have

[00:06:29] Speaker 07:
as you said, the government performing this because that's the handoff.

[00:06:31] Speaker 07:
You develop the technology, you demonstrate it, you do beta tests, you see how it actually works in the field, and then it's widely deployed.

[00:06:39] Speaker 07:
But quite frankly, given the record that we have here, the earliest contracts and the ones that we sued on, the first three contracts that we sued on, were all essentially unsuccessful beta test type things where, again, it's a fairly mixed set of facts where you have the government working very closely with government contractors, but we do feel that the direct infringement there is fairly

[00:06:59] Speaker 07:
mixed between government and private contractor, which is why we feel it's a mixture of by the government, which of course we would have to pursue the court of claims as well as for the government.

[00:07:07] Speaker 05:
These are all systems, this is systems claims, right?

[00:07:10] Speaker 07:
They're methods of making sure that the airport areas are secure.

[00:07:19] Speaker 04:
You just answered a question, these are system claims by saying right and then you call them method claims.

[00:07:24] Speaker 04:
I apologize.

[00:07:25] Speaker 04:
No, no, no.

[00:07:26] Speaker 04:
This is actually, as you know,

[00:07:29] Speaker 04:
an issue that at least is raised in their red brief.

[00:07:33] Speaker 04:
Let's suppose that, as I think a number of our cases say, you can't have a mixed apparatus, including system and method claim, and that sometimes language in claims that sounds like method language will be read as capability language, and then it's a system claim, and sometimes maybe

[00:07:54] Speaker 04:
apparatus language in method claims, but we read a sort of background environment and really a method claim.

[00:08:01] Speaker 04:
I don't know that it matters here, but do you have a view about, you've got to force it into one box or the other.

[00:08:08] Speaker 04:
Which box do you think it's in?

[00:08:10] Speaker 07:
Fair enough.

[00:08:10] Speaker 07:
And a lot of this is sort of interestingly goes to the question of what we do on Rule 12.

[00:08:16] Speaker 07:
Do we do client construction?

[00:08:17] Speaker 07:
Do we do facts?

[00:08:18] Speaker 07:
Do we do markman?

[00:08:19] Speaker 07:
And so I guess a lot of this, a lot of the

[00:08:22] Speaker 07:
I guess the problem we have with the decision below is that all this was done under Rule 12.

[00:08:26] Speaker 07:
All of it.

[00:08:27] Speaker 07:
The claim construction issues that you're raising, the factual issues about infringement.

[00:08:32] Speaker 07:
There was no discovery.

[00:08:33] Speaker 07:
There was nothing.

[00:08:34] Speaker 07:
And frankly, every case... Yeah, but you've got to have a position.

[00:08:37] Speaker 05:
Oh, I do.

[00:08:38] Speaker 05:
So that's all I was asking.

[00:08:41] Speaker 05:
What is your position?

[00:08:42] Speaker 07:
My position is that there are method claims when there's no processing going on, when the machines are off, that there's no processing going on.

[00:08:48] Speaker 07:
So there's no... It's not a system claim.

[00:08:51] Speaker 07:
That's our position.

[00:08:52] Speaker 07:
on climate construction.

[00:08:54] Speaker 05:
Well, you've reserved a large chunk of your time for rebuttal, so do you want to hold on to what you've got left?

[00:08:59] Speaker 07:
Fair enough.

[00:09:01] Speaker 05:
Thank you.

[00:09:05] Speaker 05:
Okay, I guess we're splitting this argument three ways, right?

[00:09:08] Speaker 05:
Yes, Your Honor.

[00:09:09] Speaker 05:
Okay, and Mr. Felder, you are representing?

[00:09:13] Speaker 06:
I'm representing VA Systems Inc., Your Honor.

[00:09:16] Speaker 05:
We're going to run the clock separately for each of you, so you... Thank you, Your Honor.

[00:09:21] Speaker 04:
So why can't BAE Systems be an inducer even if it's not the contracting party, if it essentially induced everybody else, including its own sub, to enter into the contract?

[00:09:33] Speaker 06:
Your Honor, as you pointed out when Mr. Mason was speaking, the only conduct complained of in astronaut's complaint is the government has used my patented invention.

[00:09:43] Speaker 06:
Under those circumstances, 1498 says that

[00:09:47] Speaker 06:
The patentee's remedy is reasonable and entire compensation at the Court of Federal Claims to hold BA Systems Inc.

[00:09:53] Speaker 06:
or any other contractor liable in the district court as well would go beyond the entire compensation provided by Section 1498.

[00:10:05] Speaker 04:
I think we're talking of cross purposes.

[00:10:07] Speaker 04:
Forget about 1498 unless I just misunderstood what you just said.

[00:10:13] Speaker 04:
The first section of your brief is a BAE-specific argument that says, apart from 1498, the district court was correct to dismiss the claim against BAE Systems, Inc., because what did we do?

[00:10:27] Speaker 06:
I apologize, John.

[00:10:28] Speaker 06:
I misunderstood the question.

[00:10:29] Speaker 06:
You're correct.

[00:10:30] Speaker 06:
The first argument raised in the brief is that BAE Systems, Inc.

[00:10:32] Speaker 06:
is the wrong party to this litigation.

[00:10:35] Speaker 04:
Does your 1498 answer the one you just

[00:10:38] Speaker 04:
gave before.

[00:10:38] Speaker 04:
Bear on that.

[00:10:39] Speaker 06:
It does not, Your Honor.

[00:10:41] Speaker 06:
That applies no matter who the contractor is, Your Honor.

[00:10:43] Speaker 04:
The contractor cannot... So why couldn't the parent company be liable for inducing the ultimate downstream government practicing of these claims by entering into a contract with the subsidiary?

[00:10:58] Speaker 06:
In this circumstance, Your Honor, the parent company did not enter into any contract with the subsidiary.

[00:11:03] Speaker 06:
The only contract that attached the VA systems complaint

[00:11:07] Speaker 06:
is with the subsidiary that's two levels down.

[00:11:10] Speaker 06:
There is nothing in the complaint to suggest that the subsidiary was acting as an agent of the parent company.

[00:11:17] Speaker 06:
There's nothing in the complaint to suggest there was any sort of fraud or other untoward behavior going on that would suggest that... Does that particular subsidiary still exist?

[00:11:26] Speaker 06:
It does, Your Honor.

[00:11:28] Speaker 04:
This wasn't a one-time created, essentially,

[00:11:34] Speaker 04:
company or subsidiary created for the purpose of the initial round of the contract?

[00:11:38] Speaker 06:
No, Your Honor.

[00:11:39] Speaker 06:
It still exists as a separate corporate organization.

[00:11:41] Speaker 06:
And if the district court properly concluded, that's perfectly acceptable for corporations to set up related companies for purposes of insulating each other from the other's liability.

[00:11:51] Speaker 06:
There is nothing in the complaint to link the subsidiary that's the party to the TSA contract to BA Systems Inc., which is the...

[00:12:00] Speaker 00:
Very complicated, isn't it, these relationships.

[00:12:03] Speaker 00:
If you set up a subsidiary with no assets, the subsidiary turns out to acquire a certain liability.

[00:12:11] Speaker 00:
There are corporate bail aspects and so on.

[00:12:17] Speaker 00:
Wouldn't you have been better off arguing non-infringement or the wrong court or whatever else?

[00:12:28] Speaker 00:
I'll call it a technicality.

[00:12:29] Speaker 00:
It's certainly very easily remedied.

[00:12:31] Speaker 00:
It wasn't remedied here, but the trial court proposed a remedy.

[00:12:36] Speaker 06:
Your Honor, I think there was a very easy remedy for AstroNet here.

[00:12:39] Speaker 06:
They could have amended the complaint.

[00:12:41] Speaker 06:
In fact, when they proceeded ProSafe three years ago, they did name the contracting party.

[00:12:45] Speaker 06:
The fact of the matter is here on Rule 12, we have to accept what the pleading says.

[00:12:48] Speaker 06:
And what the pleading says is that BA Systems Inc.

[00:12:51] Speaker 06:
had this contract, and the BA Systems Inc.

[00:12:53] Speaker 06:
performed under this contract.

[00:12:55] Speaker 06:
And then you look at the contract on its face,

[00:12:57] Speaker 06:
It's not BAA Systems, Inc.

[00:12:59] Speaker 06:
And there's nothing to link the contracting party back to BAA Systems, Inc.

[00:13:04] Speaker 06:
in the complaint itself.

[00:13:05] Speaker 04:
That's what matters.

[00:13:06] Speaker 04:
Except that the complaint says that BAA Systems, Inc.

[00:13:10] Speaker 04:
induced the ultimate infringement.

[00:13:13] Speaker 04:
That ultimate infringement having come to be by virtue of the contract between the government and the BAA Systems, Inc.'

[00:13:23] Speaker 04:
's sub.

[00:13:25] Speaker 04:
Why is that not a cognizable inducement claim, apparent induced infringement by the contract counterparty with its sub?

[00:13:36] Speaker 06:
It's a bold conclusion in the complaint, Your Honor, that BA Systems Inc.

[00:13:39] Speaker 06:
took those actions.

[00:13:40] Speaker 06:
Those actions rely upon the performance of the contract, that the alleged inducement took place through the performance of the contract.

[00:13:48] Speaker 06:
The contract's not performed by BA Systems Inc.

[00:13:50] Speaker 06:
The contract is not in the name of BA Systems Inc.

[00:13:53] Speaker 06:
The evidence attached to the complaint runs directly contrary to the allegation that BA Systems Inc.

[00:13:58] Speaker 06:
had some role in the performance of the contract.

[00:14:02] Speaker 04:
I'm going to ask you something about a JA site, but the pagination of the JA is so peculiar.

[00:14:12] Speaker 04:
There's a contract with awarded to BA Systems Inc.

[00:14:19] Speaker 04:
at JA 11-13-5-11.

[00:14:23] Speaker 04:
BA Systems Inc.

[00:14:26] Speaker 04:
What is that?

[00:14:26] Speaker 06:
I don't believe that's one of the TSA contracts at issue in this litigation, Your Honor.

[00:14:30] Speaker 06:
I believe that's a different contract.

[00:14:33] Speaker 05:
Why don't we hear from your colleagues?

[00:14:35] Speaker 06:
Thank you, Your Honor.

[00:14:40] Speaker 03:
Mr. Boyle.

[00:14:42] Speaker 03:
Good morning.

[00:14:43] Speaker 03:
Peter Boyle for NCR Government Systems.

[00:14:46] Speaker 03:
May it please the Court, NCR reserved time solely to address

[00:14:51] Speaker 03:
address one issue that is unique to NCR amongst all the other appellees, and that's the two dismissal bar under federal rule of civil procedure 41A1.

[00:14:59] Speaker 04:
You're not arguing on behalf of Morpho.

[00:15:03] Speaker 03:
I am not.

[00:15:05] Speaker 03:
AFSERNET has made no meaningful attempt either in its reply brief or an argument today to address the rule 41 issues raised by NCR in our red brief.

[00:15:19] Speaker 03:
I won't waste the court's time then going into a great deal of argument about the substantive arguments regarding Rule 41.

[00:15:28] Speaker 03:
There is, however, one very straightforward, simple, and dispositive issue with regard to the Rule 41 argument, and that is waiver.

[00:15:37] Speaker 03:
Astrinet is now arguing for the first time on appeal that the very first voluntary dismissal in the case we are calling Astrinet 1

[00:15:47] Speaker 03:
was affected not under notice by Rule 41A1, but by court order.

[00:15:54] Speaker 04:
Can I just ask, is the case you're calling Astronet One, in fact one, a case in which the plaintiff was Mr. Haddad and not Astronet Technologies, Inc.?

[00:16:04] Speaker 04:
Because I think it's important, as we've just heard, to be fairly technical about corporate entities here, isn't it?

[00:16:12] Speaker 03:
That is correct, Your Honor.

[00:16:13] Speaker 03:
So in Astronet One is... Let's call it Haddad.

[00:16:17] Speaker 03:
Haddad, fine.

[00:16:18] Speaker 03:
In the Haddad case, your honor, Mr. Haddad sued, and in identifying himself in the complaint, he identified himself as the sole owner and doing business as AsterNet.

[00:16:30] Speaker 04:
So, in... So, sole owners of corporations are in law ordinarily not equated in law with their solely owned corporation.

[00:16:40] Speaker 04:
Your Honor?

[00:16:40] Speaker 04:
In the absence of the grounds for piercing corporate bail.

[00:16:44] Speaker 03:
This isn't a piercing the corporate bail argument.

[00:16:46] Speaker 03:
It's a privity argument, Your Honor, and we dress this in the lower court.

[00:16:49] Speaker 04:
Rule 41, the provision that you invoke, says the plaintiff, the plaintiff has to bring both suits.

[00:16:58] Speaker 04:
That didn't happen here.

[00:16:59] Speaker 04:
Now you may have an argument about how well it's sort of roughly the same plaintiff, but literally speaking, it's not the same plaintiff.

[00:17:08] Speaker 03:
A couple of points on that, Your Honor.

[00:17:09] Speaker 03:
First of all, Astronect does not challenge the privity argument on appeal.

[00:17:14] Speaker 03:
Second of all, if you look at the Manning case, which is cited in our brief, the Manning case shows that for what do you want purposes, if you're in privity with the party involved in the earlier decisions, that is enough to evoke the two dismissal bar.

[00:17:30] Speaker 04:
On the plaintiff's side, not just the defendant's side?

[00:17:33] Speaker 03:
I think that may have been on the defendant's side, but we did address this in the lower court with plaintiff's cases, but it just never was raised by appellant here.

[00:17:45] Speaker 03:
In any event, Your Honor, the only argument raised on appeal with regards to the Rule 41 issue is that somehow the voluntary dismissal in that first case, the Haddad case, was a court order dismissal under 41-82.

[00:18:03] Speaker 03:
That was never raised before the district court.

[00:18:06] Speaker 03:
The district court judge never had the opportunity in deciding NCR's motion to dismiss, never had the opportunity to consider whether 41A2 was the rule under which that first case was dismissed.

[00:18:22] Speaker 03:
Asterna has waived its right on appeal to make that argument here.

[00:18:27] Speaker 03:
That's clear from this court's decision in the Ladd case, and in the Stouffer case,

[00:18:33] Speaker 03:
which we cite in our red brief.

[00:18:36] Speaker 00:
Let's just assume that we're interested in getting it right, whether or not it was raised.

[00:18:43] Speaker 00:
Do you have a comment on the correctness of where we are now?

[00:18:50] Speaker 03:
Yes, Your Honor.

[00:18:52] Speaker 03:
In the proceedings in Haddad, Mr. Mason arguing on behalf of Mr. Haddad argued that that very first dismissal

[00:19:00] Speaker 03:
was actually affected under Rule 41A1.

[00:19:04] Speaker 03:
They are now changing their story.

[00:19:07] Speaker 03:
It's completely proper to hold Astronet and its owner to the statements it made to the lower court in that case.

[00:19:16] Speaker 03:
It is now retroactively trying to change the procedural context of that case.

[00:19:21] Speaker 03:
So I think in terms of getting this right, the right decision is to find that that very first dismissal was a dismissal under Rule 41A1

[00:19:31] Speaker 03:
not A2, and therefore the two dismissal bar was triggered when Astronect dismissed NCR from the second case, Astronect 2.

[00:19:40] Speaker 04:
Let me ask you a quick question, and if it's outside the record, then just tell me that.

[00:19:46] Speaker 04:
I thought there was some mention of discussions between either, I guess, Mr. Mason, whoever he was representing, and you all.

[00:19:59] Speaker 04:
about how he really needed to separate the 245 action against the different defendants after the AIA provision took effect and you need to have separate suits and so in some sense you on the defense side or some of you on the defense side were encouraging the separation of

[00:20:26] Speaker 04:
the first actual AsterNet suit into two suits.

[00:20:30] Speaker 04:
Can you tell me anything about that?

[00:20:32] Speaker 03:
It is outside the record, Your Honor, but Morpho Trust Council, apparently before NCR's counsel even entered into an appearance or discussed the case with Mr. Mason, did take the position that under the American Invenst Act, the cases had to be separated.

[00:20:49] Speaker 03:
NCR's counsel, actually my partner Russ Corn,

[00:20:52] Speaker 03:
did not talk to Mr. Mason about this issue until after we had already been dismissed from the case in the second.

[00:20:59] Speaker 04:
And by dismissed you mean the filing of the amended complaint?

[00:21:02] Speaker 03:
The filing of the amended which you eliminated.

[00:21:04] Speaker 04:
Which counts as a dismissal.

[00:21:05] Speaker 03:
Yes.

[00:21:07] Speaker 03:
So NCR had no role, NCR's counsel had no role in persuading Mr. Mason and Astronect to break up the cases and precipitating the second dismissal.

[00:21:18] Speaker 05:
Okay.

[00:21:19] Speaker 05:
Time's up.

[00:21:19] Speaker 05:
Thank you.

[00:21:20] Speaker 03:
Thank you.

[00:21:30] Speaker 02:
May I please support Megan Barbera on behalf of the United States?

[00:21:36] Speaker 02:
This case involved a straightforward application of Section 1498A.

[00:21:41] Speaker 02:
Astronet chose to allege indirect infringement against government contractors.

[00:21:46] Speaker 02:
The predicate direct infringement, as Astronet concedes, is infringement by the United States, by the TSA.

[00:21:54] Speaker 02:
When you have alleged infringement by the United States,

[00:21:59] Speaker 02:
1498A on its plain term specifies that the exclusive remedy of the patentee is a case against the United States in the Court of Federal Claims for its entire compensation.

[00:22:11] Speaker 02:
I would also like to dispel the suggestion, and I think Mr. Mason started his argument with this, that there was any surprise about the government's position on the application of 1498A to the allegations here.

[00:22:25] Speaker 02:
The United States moved to dismiss the earlier Court of Federal Claims case because Section 1500 presented a jurisdictional bar there because Mr. Haddad had also brought a case in the District Court that was already pending.

[00:22:43] Speaker 02:
But in our motion to dismiss, we made very clear, and this is at JA Romans 5-13-7,

[00:22:51] Speaker 02:
that the simplest solution, and we said that the simplest solution was for Mr. Haddad to dismiss the Court of Federal Claims case, to dismiss the pending District Court case, and under 1498A to bring a suit against the United States in the Court of Federal Claims.

[00:23:08] Speaker 02:
The government invited him to do that.

[00:23:10] Speaker 02:
Instead of taking our suggestion, he waited a year and a half and refiled against the government contractors in the District Court.

[00:23:19] Speaker 02:
So there was never a question that the United States believed that, given the allegations here, that the TSA's contractors supplying the TSA... In your view, none of this is actually relevant, right?

[00:23:34] Speaker 04:
Because authorization is unimportant under the statute if the allegation is the United States was using the invention.

[00:23:43] Speaker 02:
That is correct.

[00:23:44] Speaker 04:
Can I just switch you to another topic because you have so little time?

[00:23:50] Speaker 04:
Let's assume for the moment that this case is the dismissal on 1498 grounds is upheld and the next day AsterNet files a new 1498 suit in the Court of Federal Claims.

[00:24:05] Speaker 04:
What kind of sort of threshold type defenses are you going to raise?

[00:24:09] Speaker 04:
And the two that I'm most interested in are race judicata type defenses, whether based on Rule 41 or otherwise, and the second

[00:24:19] Speaker 04:
little bit less concerning is statute of limitations.

[00:24:23] Speaker 04:
Can you address those two things?

[00:24:25] Speaker 02:
Your Honor, we haven't fully explored all of the defenses that we would raise in connection with a 1498A suit for this litigation.

[00:24:34] Speaker 02:
However, to address Your Honor's concerns, we would reserve any defenses that we would have to such a suit with respect, for example, to the statute of limitations.

[00:24:46] Speaker 02:
Whether the statute of limitations would have run would depend, of course, on the claims that Asternet alleged against the United States.

[00:24:53] Speaker 02:
In the Court of Federal Claims, Asternet hasn't asked for a transfer to the extent that the court were concerned that there might be a statute of limitations bar.

[00:25:05] Speaker 02:
Perhaps a transfer would be appropriate, again, because there's 1498 applied here.

[00:25:10] Speaker 02:
The district court shouldn't have been, you know, he couldn't proceed in the district court.

[00:25:16] Speaker 02:
we would reserve the remainder of our defenses, substances, and otherwise that would be available to us.

[00:25:22] Speaker 04:
What's your view of the Rule 41 issue?

[00:25:26] Speaker 04:
Because if Rule 41 applies, it says, judgment on the merits.

[00:25:31] Speaker 04:
You treat this as a judgment on the merits.

[00:25:33] Speaker 04:
I assume, at least for present purposes, that what that means is that ordinary res judicata principles will apply.

[00:25:42] Speaker 04:
If the Rule 41

[00:25:44] Speaker 04:
dismissal here, grounded dismissal, I guess, really just against NCR.

[00:25:51] Speaker 04:
This report did not dismiss under Morpho on that ground.

[00:25:57] Speaker 04:
Would you be invoking that as a race judicata basis for dismissing or otherwise rejecting the new 1498 suit insofar as it involved NCR?

[00:26:13] Speaker 02:
The suit, again, the United States is not a party in this suit, but I understand the concern that NCR was a party.

[00:26:22] Speaker 02:
I don't have an answer in terms of whether we would invoke 41.

[00:26:27] Speaker 02:
I can say that the intent of the United States appearing here is not to foreclose Asternaz from having it stay in court, where it sued the wrong party in the wrong court.

[00:26:42] Speaker 02:
It should bring an action against

[00:26:43] Speaker 02:
the United States in the Court of Federal Claims.

[00:26:45] Speaker 02:
Now, to the extent that by virtue of disregarding the United States' earlier advice about the application of 1498A proceeding in this court, to the extent there are, you know, limitations on what ASERNET can now allege, the United States, you know, reserves its right to raise any defenses that may be available.

[00:27:06] Speaker 02:
I can't, however, give your honor a specific answer.

[00:27:09] Speaker 02:
I haven't thought through the implications of the fact that NCR was a party here, and there may be a race judicata argument with respect to NCR.

[00:27:20] Speaker 02:
Again, the United States is not a party here, so I think we would have to... And couldn't have been, right?

[00:27:26] Speaker 02:
That's correct.

[00:27:27] Speaker 02:
Right.

[00:27:28] Speaker 02:
That's correct.

[00:27:29] Speaker 02:
But again, I want to be clear that this is a case of infringement, alleged infringement by the TSA.

[00:27:36] Speaker 02:
to the extent that the court, you know, considered or looked at this case as a question of infringement for the United States.

[00:27:45] Speaker 02:
Again, we do think that there was authorization and consent.

[00:27:49] Speaker 02:
We're confirming by virtue of our appearance here that there was authorization and consent to the actions that are alleged.

[00:27:56] Speaker 02:
And either way, 1498 applies and Asternaut should bring a suit against the United States in the Court of Federal Claims.

[00:28:14] Speaker 07:
Let me take that sort of in reverse order because Morpho has not appeared today and that's actually fairly important because the Department of Justice did say that we had a choice essentially to go to the Court of Claims and we didn't.

[00:28:28] Speaker 07:
Mr. Dodd did proceed originally pro se in both courts but I have a court case here.

[00:28:34] Speaker 07:
This is actually from the Court of Claims.

[00:28:35] Speaker 07:
It's Carrier Court versus the United States.

[00:28:38] Speaker 07:
It's a 1976 decision where in essence there were government contractors who were

[00:28:44] Speaker 07:
contracted to clean up Andrews Air Force Base.

[00:28:46] Speaker 07:
It was a garbage disposal, something, I don't even know what the technology was.

[00:28:49] Speaker 07:
It doesn't really matter too much.

[00:28:51] Speaker 05:
At the end of the day... I did in your brief.

[00:28:52] Speaker 07:
Oh, absolutely.

[00:28:53] Speaker 07:
Yeah.

[00:28:54] Speaker 07:
And so, in essence, they were sued on a patent over, somehow or another, they used a patented either method or device in this cleanup project.

[00:29:06] Speaker 04:
then they tried to collect in the Court of Claims as the government... But just to be clear, that was not a case in which the allegation was that the federal government itself was using the bad invention.

[00:29:17] Speaker 07:
That's correct.

[00:29:17] Speaker 04:
So if that were dispositive here, then the Carrier case just wouldn't be material to... Well, it's more material to the procedural issues that you were asking a little bit about because we couldn't go to the Court of Claims.

[00:29:34] Speaker 07:
That was our problem.

[00:29:35] Speaker 07:
The attachments to the motion to dismiss in the Court of Claims that it had been necessary to the contract.

[00:29:41] Speaker 07:
These particular garbage containers were not necessary to the carrier case contract.

[00:29:45] Speaker 07:
So if we went to the Court of Claims without infringement, we did not feel the infringement was necessary to the contract.

[00:29:51] Speaker 07:
That's our position.

[00:29:52] Speaker 07:
That's what we've alleged.

[00:29:53] Speaker 07:
And in Rule 12, I feel that that's actually what the record reflects.

[00:29:57] Speaker 07:
If we had gone to the Court of Claims, we would have lost.

[00:30:00] Speaker 07:
Justice Kerry Corp.

[00:30:01] Speaker 07:
was thrown out of the Court of Claims on summary judgment by the government.

[00:30:03] Speaker 04:
I guess I don't really understand it.

[00:30:04] Speaker 04:
Your allegation is that TSA, which is part of the United States government, was directly infringing.

[00:30:10] Speaker 07:
Our allegation, as well as all reasonable inferences, is being drawn in our favor.

[00:30:13] Speaker 07:
We also feel that the record below now reflects direct infringement by the private parties as well.

[00:30:20] Speaker 07:
And that's ultimately why we felt we would lose.

[00:30:22] Speaker 07:
If we went to the Court of Claims, again, the Department of Justice accurately reflected that was their advice.

[00:30:27] Speaker 07:
But then they attached the actual contracts.

[00:30:29] Speaker 07:
We did the research.

[00:30:30] Speaker 07:
We found the carrier case.

[00:30:32] Speaker 04:
Mr. Duggan.

[00:30:33] Speaker 04:
Can I just ask this?

[00:30:33] Speaker 04:
There's one question about the BAE issue.

[00:30:38] Speaker 04:
Why did you not amend your, I guess, the 245 case to name the sub?

[00:30:44] Speaker 04:
I mean, that's what I asked about.

[00:30:46] Speaker 04:
Do they still exist?

[00:30:46] Speaker 04:
Maybe it's, you know, a shell corporation.

[00:30:49] Speaker 07:
The correct citation, Mr. Feldman was absolutely correct.

[00:30:51] Speaker 07:
The one contract that you did identify actually is not an issue in this particular suit.

[00:30:56] Speaker 07:
But the attachment that is relevant to this is JA-11, it's Roman number 2, 13, 7-1.

[00:31:03] Speaker 07:
It's an article, which we attach to our complaint that says that BAE Systems Inc.

[00:31:10] Speaker 07:
developed the technology.

[00:31:11] Speaker 07:
So we relied on that.

[00:31:13] Speaker 07:
And on Rule 12, we feel that that's a reasonable inference for us to say that they're directly infringing.

[00:31:17] Speaker 07:
So again, for BAE specifically, that's

[00:31:20] Speaker 07:
why we felt the record in our favor anyway that we didn't sue the wrong sub.

[00:31:24] Speaker 07:
There are other subs.

[00:31:24] Speaker 07:
You're right.

[00:31:25] Speaker 07:
They may be bankrupt.

[00:31:25] Speaker 07:
There may be all kinds of issues.

[00:31:26] Speaker 07:
We just don't know that.

[00:31:27] Speaker 07:
We didn't get past Rule 12.

[00:31:29] Speaker 07:
So at least for BAE, that's part of it.

[00:31:32] Speaker 07:
And for NCR, you're absolutely correct.

[00:31:35] Speaker 07:
I mean, MorphoTrust did raise this objection.

[00:31:37] Speaker 07:
They didn't make a big deal out of it.

[00:31:38] Speaker 07:
But we did dismiss, mainly because there was an objection to all three people being in one or the other one's suit.

[00:31:43] Speaker 07:
So we did actually dismiss.

[00:31:45] Speaker 07:
But we feel that ultimately,

[00:31:46] Speaker 07:
the original Haddad suits that were brought without my help, frankly, were sufficiently convoluted in terms of how the dismissal came about.

[00:31:56] Speaker 07:
Eventually I was involved in that on behalf of Mr. Haddad, that it was by court action.

[00:32:00] Speaker 07:
It was not really done by 41A1, so we do feel that for NCR there's not two dismissals.

[00:32:05] Speaker 07:
Also too, we really do feel like there should be an actual record, an actual trial in this case, because ultimately we did not get beyond even the pleading stage.

[00:32:15] Speaker 07:
case that's actually looked at this, including the Federal Circuit itself, in the Sevenson case, this is in the briefs as well, but 477 after 1361, as well as the next-deck decision that we're relying on, as well as the Morpho Detection Systems case.

[00:32:29] Speaker 07:
All these cases have allowed these types of matters to be litigated, essentially whether or not it's actually necessary to the performance of the contract, as opposed to disposing it on Rule 12.

[00:32:39] Speaker 07:
That, we feel, is not warranted on the record here, and so I think we would like

[00:32:44] Speaker 07:
the court to reverse the remand.

[00:32:46] Speaker 07:
So we can go forward at least to the summary judgment stage, if not trial, because consistently this court, as well as the Court of Claims, that is what they have required in the past, and we would like to move forward with our case.

[00:32:56] Speaker 07:
It's been three years, and we're stuck basically at the beginning of it, and we'd like to move forward.

[00:33:00] Speaker 05:
Thank you very much for your time.