[00:00:00] Speaker 04:
This Court, the District Court, and the parties all agree that as a result of the re-examination of the 048 patent, Cardpool has the right to assert the re-examined claims against any other infringer.

[00:00:28] Speaker 04:
The issue presented here

[00:00:30] Speaker 04:
is whether the district court can extinguish Carpool's right to enforce the re-examine claims against Plastic Juggle without ever evaluating what impact, if any, the court's previous invalidity opinion has on the re-examine claims.

[00:00:48] Speaker 04:
Today, Carpool is not seeking to vacate the opinion in validating the original claim.

[00:00:55] Speaker 04:
All we seek is to vacate the dismissal of the matter with prejudice

[00:00:59] Speaker 04:
in order to preserve our right to assert the re-examine claims against Plastic Jungle now and in the future.

[00:01:07] Speaker 04:
Should Plastic Jungle or an acquirer of Plastic Jungle decide to re-enter the gift card exchange market?

[00:01:14] Speaker 04:
The district court here abused its discretion by applying the wrong law for at least two reasons.

[00:01:21] Speaker 04:
The first of which is... Let me ask you a question.

[00:01:24] Speaker 03:
On page 17 of the red brief, Plastic Jungle says,

[00:01:28] Speaker 03:
Cardpool's voluntary amendments and claim cancellations provided in its application for reexamination May 30, 2013 were made more than six months before Cardpool stated during the oral argument here that the original claims were valid under Section 101 without any amendments.

[00:01:52] Speaker 03:
How do you explain the discrepancy between your request for reexamination

[00:01:56] Speaker 03:
after the district court invalidated the patent under 101 and your representation to this court in the last panel about the original claims?

[00:02:08] Speaker 04:
Well, certainly it was the belief before with respect to the last panel, where the case was, was that in fact it survived 101.

[00:02:17] Speaker 04:
Clearly, this court disagreed.

[00:02:20] Speaker 04:
Absolutely disagreed.

[00:02:22] Speaker 04:
And during the intervening time,

[00:02:26] Speaker 04:
The request for re-examination was filed.

[00:02:30] Speaker 04:
The art that was provided by Plastic Jungle was submitted to the Patent Office.

[00:02:34] Speaker 04:
Amendments were made in response to the prior art.

[00:02:40] Speaker 04:
Those amendments were actually very significant and certainly took into account issues with respect to 101.

[00:02:49] Speaker 04:
What came out of that was a re-examination certificate.

[00:02:53] Speaker 04:
Now the patent has once again a presumption of validity.

[00:02:56] Speaker 04:
during the time that the case was still pending before this court the re-examination certificate issued and under both Baxter and as well as what this panel did previously was to remand it to the district court to figure out what to do with the re-examined claims and what effect if any that the re-examined claims actually had on

[00:03:21] Speaker 04:
or to actually reverse that, which is to look at his previous opinion and to see if that had any effect on the re-examine claims.

[00:03:29] Speaker 04:
And what I submit to Your Honor is that the district court didn't do that.

[00:03:34] Speaker 04:
The district court refused basically to look at the re-examine claim.

[00:03:38] Speaker 05:
Well, it refused because you're arguing a change in circumstances and the court should vacate its prior order, correct?

[00:03:45] Speaker 04:
Well, his prior order was not vacated.

[00:03:47] Speaker 05:
The dismissal.

[00:03:49] Speaker 04:
Right, and all we're focused on here is the dismissal with prejudice.

[00:03:54] Speaker 04:
We're not questioning his previous order, and his previous order applies to the previous question.

[00:03:59] Speaker 05:
Let me go back.

[00:04:01] Speaker 05:
Your motion is based on changed circumstances.

[00:04:06] Speaker 05:
That's correct.

[00:04:07] Speaker 05:
And you caused those circumstances to change.

[00:04:10] Speaker 05:
You were the agent of the changed circumstances.

[00:04:13] Speaker 04:
That is correct as well.

[00:04:16] Speaker 04:
That is correct as well.

[00:04:17] Speaker 04:
And that, but in fact,

[00:04:18] Speaker 04:
There is not a, and all of the cases that the district court does cite are all about where changed circumstances created a mootness with respect to the entire cause of action.

[00:04:30] Speaker 04:
And the changed circumstances here actually preserved the cause of action.

[00:04:34] Speaker 05:
Is your concern that the dismissal of prejudice or you're seeking a dismissal without prejudice?

[00:04:40] Speaker 04:
Well, our concern is with the dismissal with prejudice.

[00:04:43] Speaker 04:
And actually before the district court, the parties jointly

[00:04:47] Speaker 04:
stipulated to dismiss the case without prejudice because it was a belief of both Cardful as well as Plastic Jungle at the time that we had rights with respect to our new claims, our new re-examined claims.

[00:05:03] Speaker 04:
It was a stipulation to dismiss the case now without prejudice, subject to obviously the ability in the future to reassert the new re-examined claims against

[00:05:14] Speaker 04:
plastic jungles should that issue come up.

[00:05:18] Speaker 04:
And what we're trying to do here is be able to preserve that right.

[00:05:23] Speaker 04:
And an issue from the district court's perspective was the district court looked at it and said, well, it's very interesting.

[00:05:29] Speaker 04:
And that was his word.

[00:05:30] Speaker 04:
It was interesting what the patent office did.

[00:05:35] Speaker 04:
But it can't impact what an Article III judge says.

[00:05:41] Speaker 04:
And he specifically says,

[00:05:43] Speaker 04:
He actually cites Judge Newman's dissent in Baxter as the basis for what he was doing and basically said that a district court assertion that, quote, a district court judgment takes precedence over a PTO examiner's determination.

[00:06:00] Speaker 04:
That's from A43 of his opinion.

[00:06:03] Speaker 04:
His point seems to be that I'm not going to accept Baxter.

[00:06:10] Speaker 04:
I'm not going to accept what this court actually told

[00:06:13] Speaker 04:
the district court to do.

[00:06:15] Speaker 04:
And I'm just going to simply say, I've ruled with respect to this patent and my ruling applied and the case should be dismissed with prejudice.

[00:06:24] Speaker 03:
And all of the cases that- Oh no, he says the case was dismissed with prejudice.

[00:06:28] Speaker 03:
That's correct, Your Honor.

[00:06:30] Speaker 03:
And the- So it's a different standard at that point.

[00:06:33] Speaker 03:
It's setting it aside.

[00:06:35] Speaker 03:
That is correct, Your Honor.

[00:06:37] Speaker 04:
And once again, under Baxter, you know, the

[00:06:42] Speaker 04:
Even though there was a final judgment, it was on appeal.

[00:06:45] Speaker 04:
And this court recognized that there was a mootness with respect to his or previous order, which is why instead of having a Rule 36, as I believe, affirmance of what he did, this court vacated what it did and remanded it back to the district court to figure out what to do with the re-examine claims.

[00:07:07] Speaker 07:
If we can simplify, what is your position?

[00:07:11] Speaker 07:
as to the relationship between a final judgment in the courts and an ensuing contrary re-examination result.

[00:07:23] Speaker 07:
Is it that the agency result, because it's an expert agency, controls the future viability of the patent?

[00:07:38] Speaker 04:
The short answer is yes, Your Honor.

[00:07:40] Speaker 04:
Yes, the agency action here has to be recognized and I believe that's taught by Baxter.

[00:07:46] Speaker 04:
But we're not here making a judgment actually with respect to whether or not the district court got it right or wrong with respect to the 101 issues with respect to the old original claims.

[00:07:58] Speaker 04:
We're not here to question that and we're not here to thank you.

[00:08:01] Speaker 07:
What are you questioning?

[00:08:03] Speaker 04:
Just that the cause of action, our entire cause of action got dismissed with prejudice.

[00:08:09] Speaker 04:
And in fact, we have a patent with new re-examined claims that we believe, even if the judge would actually consider them with respect to 101 issues, are going to survive 101.

[00:08:22] Speaker 04:
And so in the first instance, we're looking just for the case not to be dismissed with prejudice.

[00:08:31] Speaker 04:
And a second step was that the parties had already stipulated down below

[00:08:36] Speaker 04:
that due to changed circumstances, this answer is not by card pool but by plastic jungle in terms of what its future is, in terms of its apparent decision now not to engage in the infringing conduct no longer, that the case should be dismissed without prejudice.

[00:08:53] Speaker 07:
Was the district court asked to stay that action so that you could proceed with the re-examination?

[00:09:01] Speaker 04:
No.

[00:09:01] Speaker 04:
This action?

[00:09:02] Speaker 04:
No, because the re-examination wasn't filed until after

[00:09:05] Speaker 04:
the final judgment was entered by the district court.

[00:09:11] Speaker 04:
So we were in the appeals process when the re-examination request was filed.

[00:09:15] Speaker 05:
And this court said, we're going to send it back down and let's see what's going to happen with the re-examination process.

[00:09:22] Speaker 04:
Well, this court said, this court actually, the re-examination certificate issued or the notice of allowance issued between the time this court ruled affirming what the district court did and the time

[00:09:35] Speaker 04:
when our motion for reconsideration, or panel re-hearing, excuse me, was filed.

[00:09:42] Speaker 04:
And in response to our motion for panel re-hearing, the court then said, oh, we got a re-examination certificate now.

[00:09:51] Speaker 04:
This basically, under the law, it basically moots the appeal.

[00:09:56] Speaker 04:
The appeal is now basically dismissed.

[00:09:59] Speaker 04:
And specifically, it says to the district court, the district court needs to figure out what

[00:10:04] Speaker 04:
you know, should be done with respect to the re-examine claims.

[00:10:08] Speaker 04:
And so, whether it be this case or in the Parts River case, where it's actually a very set of similar circumstances, where the federal circuit here, the court, actually went through and said to the district court after re-examination, same deal.

[00:10:25] Speaker 04:
The district court needs to look at the claims.

[00:10:27] Speaker 04:
And in Parts River, the district court actually did look at the claims and made a determination that the claims were in fact

[00:10:34] Speaker 04:
very similar.

[00:10:36] Speaker 04:
And as a result of that, the summary judgment there, which was, I believe, with respect to on sale bar, was one of the reasons why the district court, you know, didn't dismiss the action, kept the action dismissed with prejudice.

[00:10:50] Speaker 04:
And here, all we're asking to do is to be able to preserve our cause of action.

[00:10:55] Speaker 04:
And so we're asking to vacate just simply the dismissal with prejudice because we have re-examined claims

[00:11:03] Speaker 04:
And those claims issued at this court was already recognized prior to a funded... I have another question.

[00:11:08] Speaker 07:
During the examination, was the prior judicial opinion placed in the record?

[00:11:15] Speaker 07:
In the patent office record?

[00:11:18] Speaker 04:
Yes, it was.

[00:11:19] Speaker 02:
Yes, it was, Your Honor.

[00:11:20] Speaker 07:
And what was the response?

[00:11:22] Speaker 07:
Do you remember?

[00:11:24] Speaker 02:
In re-examinations, they don't specifically consider Rule 101.

[00:11:29] Speaker 02:
It was focused on the prior art.

[00:11:31] Speaker 07:
So it was a different issue?

[00:11:33] Speaker 02:
Correct.

[00:11:35] Speaker 07:
Okay.

[00:11:37] Speaker 01:
And to make that clear, they couldn't in the next part of every exam consider one more?

[00:11:45] Speaker 04:
I don't disagree with any of the statements by any of the other counsels.

[00:11:48] Speaker 07:
Okay.

[00:11:49] Speaker 07:
All right.

[00:11:49] Speaker 07:
So we will save you rebuttal time.

[00:11:52] Speaker 04:
All right.

[00:11:52] Speaker 04:
Thank you very much, Your Honor.

[00:12:04] Speaker 07:
Thank you.

[00:12:06] Speaker 01:
May it please the court.

[00:12:08] Speaker 01:
Cardpool saying that the district court didn't look at the claims to see if they subsequently differed.

[00:12:15] Speaker 01:
Cardpool didn't ask the district court or show the district court that the circumstances had actually changed.

[00:12:23] Speaker 01:
As we were just talking about at the end there, 101 was not something that could be considered by the patent office when it was going through an ex parte re-exam.

[00:12:32] Speaker 01:
So once the amended claims, there's amended and new claims, and the amended claims are what's at issue, because those were the claims that were being asserted against Plastic Jungle before.

[00:12:40] Speaker 01:
Those amended claims were never reviewed by any Article III court or the PTO for 101 purposes, even though the prior amended claims, or before they were amended, this court and two members of this panel had found per curiam that these claims were invalid under 101.

[00:13:00] Speaker 01:
Now what's very telling is page 20 of their opening brief, where Cardpool says, it seeks vacuator of the dismissal with prejudice, not the underlying patentability decision.

[00:13:11] Speaker 01:
What Cardpool needed to do if it wanted to be able to dismiss this case without prejudice, it needed to rewind both of those.

[00:13:22] Speaker 01:
It needed to rewind both the dismissal with prejudice and the unpatentability order.

[00:13:28] Speaker 01:
When this court remanded,

[00:13:30] Speaker 01:
and said, look at what actions, if any, are appropriate.

[00:13:36] Speaker 01:
And this court found that Cardpool was the one that changed the circumstances of the case.

[00:13:41] Speaker 01:
That put us right squarely within the Dilley versus Gunn case, which is a ninth circuit case that says, when you change the circumstances, you don't automatically vacate the judgment.

[00:13:54] Speaker 01:
And what you do is you look at the consequences and attendant hardships of dismissal or refusal of dismiss,

[00:14:00] Speaker 01:
and the competing values of judgment.

[00:14:03] Speaker 03:
Let me ask you one question.

[00:14:06] Speaker 03:
Is your client out of this line of work?

[00:14:08] Speaker 01:
It is.

[00:14:09] Speaker 01:
It sold the assets to another company, which sold it to another company.

[00:14:16] Speaker 01:
But this goes to the issue that Judge Alsop was worried about.

[00:14:20] Speaker 01:
At A107, we showed that they're out there wielding this patent against others.

[00:14:26] Speaker 01:
And Judge Alsop said, I'm not rewinding

[00:14:28] Speaker 01:
my 101 order unless you show me that these claims are substantively different.

[00:14:34] Speaker 01:
I will do it under those circumstances if they are, in fact, but they didn't ask for that.

[00:14:39] Speaker 01:
And because they didn't ask for that, they're trying to tiptoe around 101 review by the district court.

[00:14:45] Speaker 01:
I think the district court would have been more than willing to review them under 101 had they asked.

[00:14:51] Speaker 01:
And the district court was quite clear that says, yes, this is interesting that you amended the claim, but you're not asking me to rewind

[00:14:59] Speaker 01:
You're asking me to review on the judgment, but not the invalidity finding.

[00:15:03] Speaker 01:
And it would have been error for the district court to review those claims and find that they were unpatentable if, in fact, they were.

[00:15:13] Speaker 01:
They make a big deal of change of circumstances, but they were unwilling to show the district court that the circumstances had truly changed because they're amended claims.

[00:15:23] Speaker 01:
And just because you amended them did not make them valid under 101.

[00:15:28] Speaker 01:
Because you could add all kinds of superfluous parts.

[00:15:31] Speaker 01:
You could add a watermelon to the claim.

[00:15:33] Speaker 01:
That doesn't mean that the watermelon makes it patentable under 101.

[00:15:36] Speaker 01:
You could add a generic piece to a computer.

[00:15:38] Speaker 01:
It doesn't make it valid under 101.

[00:15:40] Speaker 01:
So it would have been error had the district court, one, been asked to review them substantively.

[00:15:46] Speaker 01:
He wasn't asked to because they were very clear.

[00:15:49] Speaker 01:
We're not asking for you to rewind your unpatentability order.

[00:15:54] Speaker 01:
Um, if he was asked and then he made an improper determination of 101.

[00:15:59] Speaker 01:
If he had looked at 101, which he was entitled to do based on that Dilley case, you don't just dismiss automatically based on change circumstances.

[00:16:08] Speaker 01:
And he, the district court looked at the competing values of the finality of that judgment.

[00:16:12] Speaker 01:
He even said the public has the right to know after these unamended claims were found invalid under 101, whether these amended claims, which no court

[00:16:21] Speaker 01:
no agency had reviewed under 101 were actually valid.

[00:16:24] Speaker 01:
So what is the public to do with these claims?

[00:16:28] Speaker 01:
And I would submit that the reason that Cardpool did not want review of 101 and did not make a substantive showing of why these claims had changed was so that they could go wield this patent against others as they did without ever having 101 review.

[00:16:46] Speaker 01:
In any patent that's filed,

[00:16:49] Speaker 01:
and goes through the process, 101 is a consideration.

[00:16:53] Speaker 01:
These amended claims are the only exception to that because they went through the ex parte re-exam process where 101 wasn't and couldn't be considered.

[00:17:03] Speaker 01:
They are an anomaly in that regard.

[00:17:05] Speaker 01:
These amended claims have never been considered by anyone under 101, be it the patent office or the district court or this court.

[00:17:16] Speaker 01:
So without

[00:17:17] Speaker 01:
a determination at some point that these amended claims were patentable under 101, it was within the district court's discretion applying the 60B rule in light of this court's finding that the card pool caused the change circumstances to look at the equities of whether to dismiss or not.

[00:17:37] Speaker 01:
And the equities that court found within its discretion clearly tip in favor of entering judgment again absent a finding or a request

[00:17:46] Speaker 01:
to look at the claims.

[00:17:48] Speaker 01:
The district court didn't refuse to look at the claims.

[00:17:52] Speaker 01:
Cardpool didn't ask for the invalidity order, which is on the same number of claims, albeit amended, same exact number of claims.

[00:18:00] Speaker 01:
They didn't make a showing or ask him to rewind that order.

[00:18:02] Speaker 01:
And without that, the district court didn't err, didn't abuse its discretion, and properly shut down Cardpool's attempt to tiptoe around 101 review so it could wield the patent against others.

[00:18:16] Speaker 01:
And unless the panel has any questions, we'll submit.

[00:18:21] Speaker 06:
Any questions?

[00:18:23] Speaker 06:
No.

[00:18:23] Speaker 06:
Any questions?

[00:18:24] Speaker 06:
Okay.

[00:18:24] Speaker 06:
Thank you, Your Honor.

[00:18:27] Speaker 04:
Thank you.

[00:18:29] Speaker 04:
I'd like to address the statement that I must have heard a number of times that Cardpool actually didn't ask the court to do anything here.

[00:18:38] Speaker 04:
And this is A33, and this was the request to vacate supplemental submission of the plaintiff.

[00:18:45] Speaker 04:
states in part, but if the court is inclined to apply its prior invalidity decision to the amended re-examined claims in justification of not vacating its dismissal, such a determination must not be done in a cursory manner, but with a full opportunity of the parties to provide briefing and argument.

[00:19:08] Speaker 04:
The same reasoning and approach applies to whether equitable intervening rights should apply.

[00:19:14] Speaker 04:
And in fact,

[00:19:15] Speaker 04:
attached to that brief, that Exhibit A, which is found on A336 through A39, is in fact the re-examination certificate identifying all of the re-examined claims.

[00:19:30] Speaker 04:
And so if the distinction that counsel has made is that simply that carpool didn't request relief here, we certainly did request that relief.

[00:19:40] Speaker 04:
But before the judge could even make a

[00:19:44] Speaker 04:
substantive determination as to the application of his old order with respect to the new claims, he had to basically reopen the case.

[00:19:54] Speaker 04:
This was the first step.

[00:19:55] Speaker 04:
The first step was to reopen the case.

[00:19:58] Speaker 04:
Coupled with reopening the case then was also this stipulation amongst the parties at the time, and I still believe that stipulation would still hold at this point, that once the case got reopened, the case would then be

[00:20:12] Speaker 04:
as voluntarily basically dismissed per stipulation of the parties and be dismissed without prejudice.

[00:20:21] Speaker 04:
Ultimately, in terms of what's going on here, it certainly sounds like it's been sold and sold and maybe sold again.

[00:20:28] Speaker 04:
The fear from Plastic Jungle's perspective is we don't want whoever eventually owns Plastic Jungle, I mean what Carpool wants is whoever eventually owns Plastic Jungle to not have a get out of jail free card.

[00:20:42] Speaker 04:
a patent, a re-examined patent that the claims are presumed valid.

[00:20:47] Speaker 04:
This particular opinion that the judge issued and which we're not questioning at all and not asking to vacate only applies to the claims, the old claims.

[00:20:58] Speaker 04:
And those old claims are now extinct.

[00:21:00] Speaker 04:
They don't exist anymore.

[00:21:02] Speaker 04:
And the question now, ultimately what the court didn't do and didn't follow the direction of this court was

[00:21:09] Speaker 04:
whether or not that opinion applies to the claim.

[00:21:12] Speaker 03:
If they're distinct, and they don't exist anymore, can't you file a new cause of action against a new infringer?

[00:21:20] Speaker 04:
We can file against any other infringer, absolutely.

[00:21:22] Speaker 04:
But the problem here is that if indeed it's here dismissed with prejudice, then we are unable under arrest your Dakota to be able to assert infringement of the new claims separately and apart against plastic jungle.

[00:21:39] Speaker 03:
you say these are new claims?

[00:21:44] Speaker 04:
They are new claims and I believe under the Senju Pharmaceutical case that if indeed if there's a second case and those are based on re-examined claims and there is a first case based upon the non-re-examined claims and their final judgment is entered and it becomes unappealable then under that law we are unable by arrest, judicata to

[00:22:07] Speaker 04:
assert the re-examine claims against the same defendant.

[00:22:14] Speaker 06:
Any other questions?

[00:22:14] Speaker 06:
No.

[00:22:17] Speaker 07:
Thank you.

[00:22:17] Speaker 07:
Thank you both.

[00:22:18] Speaker 07:
The case is taken under submission.

[00:22:20] Speaker 07:
That concludes the argued schedule for this morning.

[00:22:25] Speaker 00:
All rise.

[00:22:26] Speaker 00:
The honorable court is adjourned until tomorrow morning at ten o'clock a.m.