[00:00:00] Speaker 01:
4-1572, alarm publishing versus ITC.

[00:00:53] Speaker 01:
Mr. Brann.

[00:01:01] Speaker 02:
May it please the court, Peter Brann for DeLorme.

[00:01:10] Speaker 02:
The court should reverse the ITC's decision on multiple grounds.

[00:01:14] Speaker 02:
DeLorme did not violate a consent order by importing non-infringing parts to manufacture its in-reach devices in Maine.

[00:01:22] Speaker 02:
where the imported parts did not induce anyone to do anything, much less infringe the invalid claims of the 380 patent.

[00:01:30] Speaker 02:
We start with the language of the consent order.

[00:01:34] Speaker 02:
Importing non-infringing plastics, primarily a belt clip, did not infringe the consent order that banned importation of infringing components.

[00:01:43] Speaker 02:
That which was infringed, allegedly infringing, was not imported.

[00:01:47] Speaker 02:
That which was imported did not infringe.

[00:01:50] Speaker 02:
Delorme, furthermore, did not and could not violate the consent order by infringing invalid claims.

[00:01:58] Speaker 01:
Furthermore, the mandatory... Well, why don't you start on that last point?

[00:02:03] Speaker 01:
because at the time the enforcement proceeding began, the claims had not been adjudicated to be invalid.

[00:02:10] Speaker 01:
Is that correct?

[00:02:11] Speaker 02:
That is correct.

[00:02:12] Speaker 02:
We had a pending motion for a summary judgment of invalidity in the district court, which we're going to talk about in a few minutes.

[00:02:20] Speaker 01:
So the ITC was considering an enforcement proceeding

[00:02:26] Speaker 01:
pursuant to the consent order for claims that had not been adjudicated to be invalid.

[00:02:32] Speaker 02:
As of that time.

[00:02:33] Speaker 02:
We think that the result of this case is controlled by the E plus decision.

[00:02:38] Speaker 02:
from this court where the fact that you have a subsequent development, that is the invalidation of a patent, will trump in the context of a non-final decision.

[00:02:49] Speaker 02:
Obviously the ITC decision is not final.

[00:02:51] Speaker 03:
Why don't you go back to the ITC and try to amend the consent order in view of the trial court decision?

[00:02:59] Speaker 02:
Well, we did not think that it was necessary either under the consent order or under the rules of the court.

[00:03:05] Speaker 03:
The advocacy regulations provide for that type of procedure, correct?

[00:03:10] Speaker 02:
But it certainly could not be exclusive.

[00:03:13] Speaker 02:
That is, we expected and we certainly anticipated that under the consent order, which said that it would not apply to any claim that was determined

[00:03:22] Speaker 02:
to be invalid, provided the decision is final.

[00:03:25] Speaker 03:
I understand your argument, but wouldn't the appropriate forum be the ITC to go back and say, we have a consent order.

[00:03:32] Speaker 03:
It contains this particular language.

[00:03:34] Speaker 03:
We think there's been an intervening event that invokes that language, and therefore ask the ITC to amend the consent order.

[00:03:42] Speaker 02:
Well, as judged from the fact that on their position on appeal is, we don't know what position we're going to take.

[00:03:47] Speaker 02:
We know under the E-plus decision

[00:03:49] Speaker 02:
that if this court determines that this patent is invalid, you cannot infringe an invalid claim.

[00:03:56] Speaker 02:
And therefore, this court is a pure legal matter to determine that.

[00:03:59] Speaker 00:
We don't really know that.

[00:04:00] Speaker 00:
And in particular, at least, I don't know that after about 17 readings of the Supreme Court's colonial decision.

[00:04:08] Speaker 00:
We do know that you can't violate 1337 without infringing a valid patent because 1337 says that.

[00:04:17] Speaker 00:
So I don't think you need to get into a, at least to my mind, quite interesting question of where the language about infringing, whether you can infringe invalid patents, stands in the judicial world after coming.

[00:04:31] Speaker 02:
Well, the thing is that this is a legal determination and it is a pure legal issue that is presented to this court.

[00:04:38] Speaker 02:
It's the same way that this court vacated the civil contempt ruling in the E plus case.

[00:04:45] Speaker 01:
I guess the one problem I have with that is this isn't a civil contempt.

[00:04:50] Speaker 01:
proceeding.

[00:04:51] Speaker 01:
This is a civil fine pursuant to statute, and even though it does carry the word civil in front of it, what our case in E-Plus explained was civil contempt would be vacated, but criminal contempt would not.

[00:05:08] Speaker 01:
And what the Supreme Court said in United Mine Workers, the 1947 case which our E-Plus decision was premised

[00:05:16] Speaker 01:
is that the reason for that is because civil contempt is entirely compensatory and remedial and that the other side shouldn't benefit with a big reward when in fact you had done nothing wrong.

[00:05:28] Speaker 01:
And what they said with criminal contempt is it's punitive and it's all about you don't have the right to violate the court order.

[00:05:35] Speaker 01:
And that if it's punitive because you don't have the right to violate the court order, it should remain in place.

[00:05:42] Speaker 01:
So tell me which of those two scenarios the civil fine articulated in the statute falls into, because one of them doesn't get vacated.

[00:05:52] Speaker 01:
Namely, if it was meant to be punitive, it doesn't.

[00:05:54] Speaker 01:
One of them does get vacated.

[00:05:56] Speaker 01:
Namely, if it was meant to be compensatory and a windfall would be received, it does.

[00:06:00] Speaker 02:
This is a civil case, number one.

[00:06:03] Speaker 02:
It's not criminal.

[00:06:04] Speaker 02:
It's a civil penalty.

[00:06:06] Speaker 02:
And so it's an even stronger case, in our judgment, than the E+, because it's not in contempt.

[00:06:11] Speaker 02:
is that the allegation there is that we were violating this consent order by importing these non-infringing components, but it has to infringe.

[00:06:23] Speaker 02:
There has to be infringement.

[00:06:24] Speaker 02:
And so that without that necessary building block, there can be no civil penalty.

[00:06:30] Speaker 01:
But I don't think it has to infringe.

[00:06:32] Speaker 01:
Let's assume, let's just assume for purposes of our discussion, that

[00:06:39] Speaker 01:
I am okay with the entire six million dollar judgment that I don't agree with you on your arguments about a due students, but just assume that.

[00:06:47] Speaker 01:
I want to focus on finality.

[00:06:49] Speaker 01:
That's what I'm trying to focus on.

[00:06:50] Speaker 01:
I'm trying to assume away a lot of your arguments, which believe me, I understand them, so don't think I don't.

[00:06:56] Speaker 01:
I understand them.

[00:06:57] Speaker 01:
I'm trying to assume those away and I'm trying to get to the point where I'm trying to figure out

[00:07:02] Speaker 01:
if they were right to fine you six million dollars and there wasn't a problem with that, all the other stuff.

[00:07:08] Speaker 01:
If they were right to fine you six million dollars, does that fine disappear by virtue of a later invalidation in the district court of the claim upon which, the patent claim?

[00:07:21] Speaker 02:
Absolutely, and we submitted that for a number of reasons.

[00:07:25] Speaker 02:
First, coming back to Como, the majority of the dissent said you cannot infringe

[00:07:30] Speaker 02:
an invalid patent.

[00:07:31] Speaker 01:
Well, this isn't about infringement.

[00:07:32] Speaker 01:
This is about you violating the consent order.

[00:07:35] Speaker 02:
But the consent order says that we will not import this, this, and this, that, in French.

[00:07:40] Speaker 02:
And if you strip away patent infringement, there's nothing left.

[00:07:45] Speaker 00:
Let me just say, my problem with that argument about

[00:07:50] Speaker 00:
about the coverage of this paragraph of the consent order on the assumption that there had never been a judicial invalidation is that it cannot be the case that validity is going to be litigated in enforcing this provision when you're accused of violating the provision because you gave up validity in the ITC.

[00:08:19] Speaker 02:
We gave up litigating validity in the IPC.

[00:08:24] Speaker 02:
But with regard to the consent order, the language of the consent order says that it will apply until invalidation or unenforceability.

[00:08:33] Speaker 00:
That's a different argument from the argument that I think you keep making about how there's no infringement.

[00:08:38] Speaker 02:
That is a slightly slippery step.

[00:08:41] Speaker 02:
I agree that that's a separate step.

[00:08:42] Speaker 00:
So it seems to me that the consent order language, both this paragraph and the later language, is about as close to perfectly ambiguous about the prospective versus retrospective effect

[00:08:54] Speaker 00:
as language can be, that is, the effect of an invalidity judgment in another proceeding.

[00:09:01] Speaker 00:
And it's perfectly clearly contemplated that you can go to a court and get an invalidity judgment, but it seems to me just as clear that it's not clear about what the effect of that is going to be, whether it's going forward or retrospective.

[00:09:15] Speaker 00:
So how do we figure out what the best reading of this consent order is?

[00:09:21] Speaker 02:
Let me just tick off a few possibilities, which I think the IPC proceeding is not final.

[00:09:27] Speaker 02:
Once the district court thing is final, that should trump.

[00:09:30] Speaker 02:
That is, you know, under that E plus decision.

[00:09:32] Speaker 02:
Furthermore, the jurisdiction of the ITC is limited to unfair acts, which have to involve importation of something.

[00:09:43] Speaker 02:
That infringed a patent.

[00:09:45] Speaker 00:
So I thought that that was an interesting argument in your letter that says the only reason they get to apply penalties at all to consent orders is that they persuaded this court in the San Juan

[00:09:59] Speaker 00:
case that consent orders were to be treated just like cease and desist orders under 1337

[00:10:06] Speaker 00:
which is for civil penalties for violating 1337F1, which in turn incorporates 1337A, which then incorporates the infringe of a valid patent.

[00:10:18] Speaker 00:
And so, and then you couple that, I think you also make this argument, with the regulation that says the consent order is basically always supposed to be the same consent order.

[00:10:29] Speaker 00:
Correct.

[00:10:31] Speaker 00:
Absolutely.

[00:10:32] Speaker 00:
The ITC has not commented on that multi-step proposal.

[00:10:38] Speaker 02:
They were asked to take a position and obviously chose to duck it to say just send it back to us.

[00:10:43] Speaker 02:
We don't think that's necessary and indeed the consent order itself, just to add a further gloss to the point I was making a moment ago, which is in paragraph four of the consent order it says it shall not apply with respect to any claim of any intellectual property right to

[00:10:57] Speaker 02:
that has expired or been found or adjudicated invalid.

[00:11:01] Speaker 02:
The consent order by its own terms does not and should not apply.

[00:11:05] Speaker 01:
That doesn't make sense.

[00:11:06] Speaker 01:
It says final and non-reviewable.

[00:11:08] Speaker 01:
It's not even non-reviewable after we're done with it.

[00:11:10] Speaker 01:
Even if we agreed with you on invalidity, it's still reviewable.

[00:11:13] Speaker 01:
They could appeal to the Supreme Court.

[00:11:15] Speaker 01:
So this paragraph that you keep citing doesn't actually apply even as of right now as we sit here.

[00:11:21] Speaker 01:
Well, except that.

[00:11:22] Speaker 01:
Because it continues to be reviewable.

[00:11:24] Speaker 02:
Well, it certainly, it certainly, they certainly could try and take it up to the Supremes, but it's not, and so it, that's, which is, security does not apply, doesn't mean retroactively or prospectively.

[00:11:34] Speaker 03:
It doesn't define that, does it?

[00:11:36] Speaker 02:
Well, that's the only way to really understand it, because consider, Judge Rainier, the alternative, which is, well, it will only, the invalidation will only matter

[00:11:49] Speaker 02:
once it actually occurs.

[00:11:50] Speaker 02:
And so you can't do anything until it's invalidated somewhere.

[00:11:55] Speaker 02:
And as we know from the other case, the district court's jurisdiction is being challenged.

[00:12:00] Speaker 02:
So what the message is to Delore, once they sign this consent order, which is, oh, well, you can be tagged even if it's invalid, ultimately found to be invalid.

[00:12:08] Speaker 03:
That's because you're giving that type of judgment retroactive effect.

[00:12:13] Speaker 02:
No, the thing is, my point I was going to make is that you would... And I don't think E plus stood for that.

[00:12:19] Speaker 03:
You keep citing E plus.

[00:12:20] Speaker 03:
I don't think it stood for the fact that a district court judgment has retroactive effect.

[00:12:26] Speaker 02:
It's that it's still pending and therefore, you know, that was a contempt thing, which is a good deal more serious in that, one of the strengths, the point, just so I don't lose this point here that I wanted to make, which is

[00:12:39] Speaker 02:
There is nothing that Delorme could do other than just put itself out of business under the theory of that, well, you can just go ahead and be charged for this thing, but it doesn't matter if somewhere down the line the patent is invalid.

[00:12:53] Speaker 02:
What the message would be is, oh, well, you should go and invalidate the patent and then start your business again.

[00:12:59] Speaker 02:
Because otherwise, under this theory that you've signed a contract, and it's supposed to be interpreted according to the plain language of the contract,

[00:13:06] Speaker 02:
and it was one that we proposed, the thought that we would propose something that says

[00:13:11] Speaker 02:
It would still be valid.

[00:13:12] Speaker 02:
It would still apply to us, even if the patent is invalid and applied to us.

[00:13:18] Speaker 03:
Maybe it doesn't apply to you going forward.

[00:13:21] Speaker 03:
If you put the company out of business.

[00:13:23] Speaker 03:
No, I'm answering my question.

[00:13:25] Speaker 03:
Maybe it doesn't apply to you going forward.

[00:13:28] Speaker 03:
But these infringing acts or rather the violations of the consent order had occurred prior to the district court decision.

[00:13:38] Speaker 02:
the actions of selling these products did occur before the district court decision but that decision and the result of that coming from the ITC was not known until the ITC ruled but more importantly until we get through to the end of this appeal.

[00:13:55] Speaker 02:
If the answer at the end of the day is it's unclear whether or not that invalidating this patent means that we really don't have

[00:14:04] Speaker 02:
We can't be sure whether or not that that kills this this story all the other then we should come back Then we come back to the rest of my art because I think then it makes it doesn't make any you are eating up your rebuttal time Which I will say the rest of them.

[00:14:19] Speaker 02:
I'll take that as a hint.

[00:14:20] Speaker 01:
Very good.

[00:14:21] Speaker 01:
Thank you hear from Council for ITC Tell me I say your name.

[00:14:28] Speaker 04:
I'm sure done.

[00:14:29] Speaker 01:
It's your time.

[00:14:30] Speaker 01:
Yeah.

[00:14:30] Speaker 01:
Okay.

[00:14:30] Speaker 01:
Mr. Jordan, please proceed

[00:14:33] Speaker 04:
Sorry, good morning, Mayor Police and Court.

[00:14:35] Speaker 04:
I think I'll go ahead with your assumption about, you know, assuming, you know, not prejudging the next appeal, assuming affirmance and everything.

[00:14:44] Speaker 04:
I think the Court should focus on pretty much the common ground we have with the appellants here.

[00:14:50] Speaker 04:
I think we both agree that the contract language of the consent order should control here, and also that looking at, prospectively, that there could be no further violation if there's

[00:15:01] Speaker 04:
affirmance of the invalidity judgment and it goes to non-reviewable stage.

[00:15:06] Speaker 03:
And also that certainly this invalidity judgment... Do you consider the ITC consent order a contract or is it more similar to and has the effect of a judicial decree?

[00:15:20] Speaker 04:
Well certainly it's a contract based on its terms.

[00:15:22] Speaker 04:
I think the decree

[00:15:24] Speaker 04:
It's different from a decree or an injunction.

[00:15:26] Speaker 04:
I'm going to go there with the E+, that usually with a decree there's been some adjudication of significant issues, i.e.

[00:15:32] Speaker 04:
infringement or invalidity.

[00:15:34] Speaker 04:
There has been no adjudication here as expressed terms.

[00:15:38] Speaker 04:
I think it's paragraph 6 that is for settlement purposes only.

[00:15:41] Speaker 04:
And again, this case is not really equivalent to E+.

[00:15:47] Speaker 04:
paragraph 2 by its expressed terms.

[00:15:49] Speaker 04:
In E+, it requires a non-final injunction, a junction that could be challenged.

[00:15:53] Speaker 04:
This consent order could not be challenged in that way.

[00:15:55] Speaker 01:
It's a final issue.

[00:15:56] Speaker 01:
I guess one of the issues also I had with the application of E+, which I was hoping maybe you would explore with me, is what is, and I've spent a bit of time on this statute

[00:16:11] Speaker 01:
$100,000 per day penalty possibility.

[00:16:15] Speaker 01:
It used to be $10,000 a day.

[00:16:17] Speaker 01:
I'm sure you know that.

[00:16:18] Speaker 01:
It didn't used to be $100,000.

[00:16:19] Speaker 01:
And you didn't know.

[00:16:21] Speaker 01:
OK, that's fine.

[00:16:23] Speaker 01:
But I went through the legislative history of it as well, which I'm guessing if you didn't know it used to be $10,000, you also probably aren't prepared to talk to me about.

[00:16:30] Speaker 01:
And it just seems everything about that fine is meant to be a punitive sanction for violating the consent order.

[00:16:40] Speaker 01:
That's what I gather from the legislative history.

[00:16:42] Speaker 01:
That's what I gather from the language of the statute itself and the ITC regulations.

[00:16:47] Speaker 01:
And I was hoping maybe you'd tell me what the ITC's position is on what is the underlying purpose of that statutory section and its implementation.

[00:16:57] Speaker 01:
Is it remedial or is it punitive and why?

[00:17:02] Speaker 04:
Well, I think certainly going towards past violations.

[00:17:06] Speaker 04:
Occurring for the consent order, I can't really speak affirmably as to what the commission would decide on what the review of the penalty is.

[00:17:14] Speaker 04:
It's tied up in validity.

[00:17:15] Speaker 04:
But again, there's been two cases, Nine Star and San Juan, that have approved the six factors that we go through, determining violations of our consent orders, the cease and desist orders.

[00:17:25] Speaker 04:
We go through the good or bad phase.

[00:17:26] Speaker 04:
We go through the benefit to the law in this case.

[00:17:29] Speaker 04:
We go through the ability to pay by the law, the injury,

[00:17:33] Speaker 04:
to the patentee.

[00:17:34] Speaker 01:
None of the, okay, so let me try and help you.

[00:17:36] Speaker 01:
None of those seem to be taking into account the need to compensate the patentee, for example, right?

[00:17:42] Speaker 01:
None of those factors.

[00:17:43] Speaker 04:
Well, we look at the injury to the complainant, yes.

[00:17:45] Speaker 04:
We do look at that.

[00:17:46] Speaker 01:
Oh yes, but he doesn't get the money.

[00:17:48] Speaker 01:
The government keeps the fine.

[00:17:49] Speaker 01:
True.

[00:17:49] Speaker 01:
Right, so this isn't compensatory.

[00:17:51] Speaker 01:
This civil fine at issue is not a compensatory fine, correct?

[00:17:58] Speaker 04:
Look, I really can't put labels on

[00:18:00] Speaker 04:
What kind of fine this is?

[00:18:01] Speaker 01:
Is it meant to compensate somebody?

[00:18:04] Speaker 04:
Again, we look at these six factors, but I wouldn't want to put labels on it.

[00:18:07] Speaker 01:
Well, you see, we have to, though, because we've got to decide whether E plus applies.

[00:18:11] Speaker 01:
And E plus stands for the proposition that if it is a compensatory or remedial award, then it can be vacated.

[00:18:23] Speaker 01:
If it is punitive in nature, it should be affirmed.

[00:18:27] Speaker 01:
even though the patent is later invalidated.

[00:18:30] Speaker 01:
That's the difference between civil and criminal contempt according to the Supreme Court.

[00:18:34] Speaker 01:
So what I have now is a civil fine pursuant to a statute, right?

[00:18:38] Speaker 01:
So even though it has the word civil in it, I'm not sure that label means it has to be vacated like Mr. Brand is arguing.

[00:18:46] Speaker 01:
I think I'm supposed to look at the underlying nature of that fine and ascertain whether it was meant to be the type of thing

[00:18:55] Speaker 01:
that ought to be vacated based on a subsequent case or whether it ought to be affirmed, you know, the glory of the ITC's order needs to be followed, darn it, and we're going to punish those who don't.

[00:19:07] Speaker 01:
So I'm trying to understand what is the nature of the civil fine at issue so I can figure out which bucket it goes in, because if it goes in the civil contempt bucket, it goes away.

[00:19:17] Speaker 01:
I understand your dilemma.

[00:19:21] Speaker 04:
Again, I would answer two reasons.

[00:19:24] Speaker 04:
One, again, we strongly disagree that E plus is really relevant to this issue.

[00:19:30] Speaker 04:
Why?

[00:19:31] Speaker 04:
special situation with a multi-step process of the injunction had to be non-final.

[00:19:35] Speaker 04:
And then once you can vacate the injunction, then you can look at civil contempt penalties.

[00:19:39] Speaker 04:
Here we don't have, the consent order is not equivalent to an injunction.

[00:19:42] Speaker 04:
There's been no admission or finding of wrongdoing.

[00:19:45] Speaker 04:
Again, by its expressed terms, it's for settlement purposes only.

[00:19:48] Speaker 04:
And by its expressed terms, its final is issued.

[00:19:51] Speaker 04:
There is no challenge to the consent order itself.

[00:19:53] Speaker 04:
That cannot be challenged, as agreed to by the appellant here.

[00:19:57] Speaker 04:
So that's different from, that's two different reasons why it's different from E+.

[00:20:01] Speaker 04:
And again, secondly, I think all this discussion about what happens, whether it's civil contempt, whether it's compensation, whether it's punitive, I think it goes toward the scenario of it's kind of, I guess, heads we both win, tails we both win.

[00:20:15] Speaker 04:
This should go back to the commission under statutes, APA, under

[00:20:22] Speaker 04:
case law, SKF, other cases going towards it has to be exhaustion administrative remedies and also towards again the terms exactly of the consent order.

[00:20:33] Speaker 01:
But based on what you're saying why wouldn't we just affirm your six million dollar judgment?

[00:20:36] Speaker 01:
Why are you even asking us to vacate and remand?

[00:20:39] Speaker 01:
What

[00:20:39] Speaker 01:
What reason is there?

[00:20:41] Speaker 01:
They have not asked for modification of the underlying consent order.

[00:20:44] Speaker 01:
They filed no motion and they've asked for no modification in this court, nor before the ITC.

[00:20:49] Speaker 01:
So why in the world aren't you standing there arguing a firm?

[00:20:52] Speaker 01:
The $6 million, they violated a consent order.

[00:20:56] Speaker 01:
it was final they can't challenge it why are you are going to be the key to remand but we're not going to stand in the court's way if they want to if you want to affirm this but why you obviously don't think I should you didn't argue to me to affirm it you argued to me that you thought I should vacate and remand it and I'm trying to understand why what is it that you think needs to be reconsidered by the ITC right as we said in our brief there's issues that have I think we both agree there's issues that have been triggered by the symbolinity judgment and again assuming it's

[00:21:24] Speaker 04:
It goes towards non-reviewable status.

[00:21:28] Speaker 04:
There are certain issues that need to be first considered properly by the ITC with input from all relevant parties, Delorme, Briar Tech, and Commission Investigative Attorney to go towards what does paragraph one exactly mean, what does paragraph four exactly mean.

[00:21:41] Speaker 03:
You're not saying that our only recourse here is to vacate and remand.

[00:21:47] Speaker 03:
That's not your only recourse.

[00:21:50] Speaker 03:
So what issue is it that you think we should look at at the ITC?

[00:21:55] Speaker 04:
Sorry, what should we look at?

[00:21:57] Speaker 03:
What issues are you talking about that you should send the case back so that the ITC can review?

[00:22:05] Speaker 04:
Certainly, if the court has a question about whether they can affirm in the face of the invalidity, again, if it's assumed to be found filing a ballot, there are issues here, again, with paragraphs one,

[00:22:17] Speaker 04:
language of until the invalidation that has to be given some meaning.

[00:22:21] Speaker 04:
Again, paragraph four, whether it looks respectively or not.

[00:22:24] Speaker 04:
And again, paragraph five, as well, about the challenge and inability.

[00:22:26] Speaker 04:
Would that apply here as well?

[00:22:28] Speaker 03:
I agree with what you're saying, that those issues perhaps belong back at the IPC, but there's a greater overarching issue here, isn't there?

[00:22:39] Speaker 03:
I mean, just whether this is subject to review at all.

[00:22:45] Speaker 03:
we have a consent order.

[00:22:48] Speaker 03:
What is it about the district court judgment that invalidates that consent order?

[00:22:54] Speaker 04:
Again, you're asking for a final determination of the commission.

[00:22:57] Speaker 04:
I really can't give you that without, again, following the administrative process with review.

[00:23:02] Speaker 00:
Can you talk a little bit about the

[00:23:08] Speaker 00:
chain of statutory steps that I asked your opposite number about.

[00:23:16] Speaker 00:
Namely, the only reason that you get to apply the civil penalty provision 1337 F2 to this kind of order, a consent order, is that we held that you're urging in the San Juan case that the consent order should be treated as if

[00:23:36] Speaker 00:
for these purposes it's a cease and desist order or other order under 1337, F1.

[00:23:43] Speaker 00:
And F1 implicitly by reference to A requires that there be infringement of a valid patent.

[00:23:56] Speaker 00:
And therefore you cannot apply a penalty to something other than infringement of a valid patent

[00:24:06] Speaker 00:
And this consent order, whose language leaves much to be desired to determine on its own within its four corners what it means, should be interpreted to implement the background statutory authority under which this is all taking place.

[00:24:25] Speaker 00:
Why is that not?

[00:24:26] Speaker 00:
What's wrong with that chain of reasoning to say this consent order cannot be enforced through a penalty once the patent is invalidated?

[00:24:37] Speaker 04:
Yeah, I believe the appellant means conflating different issues together.

[00:24:41] Speaker 04:
Again, certainly from the case of San Juan and Nine Star, you can treat a consent order as a cease and desist order in terms of this is a commission order issued and we can issue civil penalties for your violation of it.

[00:24:55] Speaker 04:
However, the similarity is basically in there as Section 337, obviously, is a statute that goes towards prospective relief.

[00:25:03] Speaker 04:
And of course, when a patent is found invalid, you can no longer have any prospective relief.

[00:25:08] Speaker 04:
So then we would vacate an exclusion order in that case.

[00:25:11] Speaker 04:
However, based on this recent case law of UPI, decided by this court,

[00:25:16] Speaker 04:
where you mentioned civically, Kyocera, a violation of Section 337 case, does not prohibit the commission from enforcing the consent order in accordance with its terms.

[00:25:26] Speaker 04:
So we have to go to the terms of the consent order here.

[00:25:29] Speaker 04:
So that's outside of the Section 337 box.

[00:25:33] Speaker 04:
We have to go to the consent order terms.

[00:25:34] Speaker 04:
That's what's controlled here.

[00:25:35] Speaker 04:
I think that's agreement with the appellant to some extent.

[00:25:40] Speaker 00:
The premise of all of this is that we can't tell the answer from the consent order terms.

[00:25:46] Speaker 00:
So we are looking for ways to figure out what the answer should be because we can't figure it out from the terms.

[00:25:54] Speaker 00:
It doesn't do any good to refer to the terms if, by assumption now, the terms are ambiguous on this.

[00:26:01] Speaker 04:
I understand.

[00:26:02] Speaker 04:
I think that's even more reason to go back to the Commission.

[00:26:04] Speaker 04:
To do what?

[00:26:05] Speaker 04:
Right, to have the proper first jurisdiction for deciding... What questions will the Commission address?

[00:26:11] Speaker 00:
Right.

[00:26:11] Speaker 00:
And it can't only be entertaining a motion to modify.

[00:26:15] Speaker 00:
That can't be the end of the matter.

[00:26:18] Speaker 00:
The first question is whether the enforcement unmodified of this consent order through the civil penalty must fall without regard to modification of the consent order.

[00:26:31] Speaker 00:
That's a separate question for modification.

[00:26:33] Speaker 04:
Again, you're asking a question that just arose on appeal and I can't give you the Commission answer.

[00:26:38] Speaker 04:
The Commission acts in response to briefing from the parties and then comes to a final determination in accordance with the APA and our rules.

[00:26:48] Speaker 04:
I can just say, again, if the Court has a question about it, that's even more argument to go back to the Commission for the proper first consideration with all relevant parties there, with all the briefing and arguments.

[00:26:58] Speaker 04:
We come to a final, appealable determination.

[00:27:01] Speaker 04:
The appellate can come back here.

[00:27:02] Speaker 04:
they don't like that first determination.

[00:27:06] Speaker 03:
Your opponent seems to rely quite a bit on E plus to make his arguments.

[00:27:13] Speaker 03:
Do you think E plus is distinguishable in this case?

[00:27:17] Speaker 04:
Yeah, certainly.

[00:27:17] Speaker 04:
As I mentioned before, E plus relies on this two-step process of first there's an injunction

[00:27:25] Speaker 04:
reviewable, not final, and then you can get to the underlying contempt penalty.

[00:27:29] Speaker 04:
Here we don't have an injunction.

[00:27:31] Speaker 04:
We have no admission, no finding of wrongdoing.

[00:27:34] Speaker 04:
Again, it's pursuant to paragraph 6.

[00:27:36] Speaker 04:
It's just for settlement purposes only, this consent order.

[00:27:38] Speaker 04:
So we don't have no sense of admission of wrongdoing or finding wrongdoing.

[00:27:44] Speaker 04:
And also, by paragraph two, it's final as issued a consent order.

[00:27:47] Speaker 04:
There's no challenge to a consent order.

[00:27:49] Speaker 03:
There's a difference in EPOS that, in that case, we were dealing with the district court judgment.

[00:27:57] Speaker 03:
And, excuse me, in EPOS, we were dealing with the PTO decision, whereas here we're dealing with the district court judgment.

[00:28:04] Speaker 04:
Right.

[00:28:04] Speaker 04:
That's also a difference.

[00:28:06] Speaker 04:
But again, I think it goes more towards the core of A, the consent order is not equivalent to an injunction or consent decree.

[00:28:14] Speaker 04:
And B, these cases cited by Appellant are all original action cases.

[00:28:19] Speaker 04:
These aren't consent order cases.

[00:28:20] Speaker 04:
I think we are the ones who cite relevant consent order cases that the court can look at, Ham Street or Flexfoot or Shell Oil, that might give the court more guidance on what to do.

[00:28:30] Speaker 01:
Is in contract interpretation a question of law?

[00:28:36] Speaker 04:
Well, it's both a question of fact and law.

[00:28:38] Speaker 01:
What is the fact?

[00:28:39] Speaker 04:
I mean the terms of the consent order.

[00:28:42] Speaker 01:
How to construe terms of consent order you believe is a question of fact?

[00:28:45] Speaker 04:
No, no, I'm saying you go towards the fact of what does the language say and then you also go to the... I don't understand that answer.

[00:28:52] Speaker 01:
Is interpretation of language of a consent order a question of law or a question of fact?

[00:28:56] Speaker 01:
Yes, it is a question of law.

[00:28:58] Speaker 01:
So if interpreting the consent order is a question of law,

[00:29:02] Speaker 01:
and we have a consent order that speaks about what shall happen in the event of future invalidation, though it may not speak clearly, it does speak to it.

[00:29:14] Speaker 01:
What would be the point of sending it back to the ITC?

[00:29:17] Speaker 01:
Do we need the ITC's interpretation of statutes before we're allowed to interpret them?

[00:29:22] Speaker 04:
Again, I think all these questions make it a perfect scenario to go back to the Commission.

[00:29:26] Speaker 04:
There's been a triggering of unusual circumstances here, obviously.

[00:29:30] Speaker 01:
Unusual circumstances that were anticipated by the consent order.

[00:29:34] Speaker 01:
It speaks to what ought to happen in the case of invalidation of patents, does it not?

[00:29:40] Speaker 04:
Right, but it's a further unusual circumstance that this all occurred on appeal.

[00:29:44] Speaker 04:
This did not occur before the commission, so the proper

[00:29:48] Speaker 04:
course would be if there's serious questions that have arisen during the course of the appeal, again, following APA, following the case law upon the terms of the consent order.

[00:29:57] Speaker 04:
And again, as we pointed in our briefing, we do have prior history of modification also includes modification of both the consent order and associated civil penalties, perhaps, again, depending on

[00:30:08] Speaker 04:
the arguments that are made and how the commission finally determines.

[00:30:11] Speaker 01:
What is your position, since this is a question of law, and the ITC draft of the consent order, what is the ITC position on what shall happen if a patent, which is the subject of the consent order, is invalidated?

[00:30:30] Speaker 04:
Again, we can all agree it has no perspective impact.

[00:30:33] Speaker 01:
Okay, so you agree it has no perspective impact.

[00:30:35] Speaker 01:
Correct.

[00:30:35] Speaker 01:
And so what is your position on what the terms of the consent order mean with regard to retrospective impacts?

[00:30:42] Speaker 04:
Again, it's a decision that the commission has to make.

[00:30:44] Speaker 01:
Didn't the commission make it?

[00:30:45] Speaker 01:
I mean, they wrote the consent order.

[00:30:46] Speaker 01:
The consent order says, among other things, that it shall be upon in a force and prevent importation, yada, yada, yada, of the 380 patent after April 1, 2013 until the expiration, invalidation, or unenforceability of the 380 patent.

[00:31:04] Speaker 01:
So it actually says this consent order applies after April 1st and until a patent is invalidated.

[00:31:12] Speaker 01:
So isn't your position that the consent order applies at least until the patent is invalidated?

[00:31:19] Speaker 04:
Yeah, we do think that is an issue.

[00:31:22] Speaker 04:
That's why we can't.

[00:31:23] Speaker 01:
Is it an issue or that yes, the consent order applies until the patent is invalidated?

[00:31:28] Speaker 04:
Again, that's what the language appears to read.

[00:31:30] Speaker 04:
Again, I can't give you a final determination of the mission without going through the process, but I think that is enough.

[00:31:36] Speaker 01:
What process?

[00:31:36] Speaker 01:
I'm reading the language of the consent order.

[00:31:39] Speaker 01:
What process do they need to go?

[00:31:41] Speaker 01:
I don't understand why you're so hamstrung.

[00:31:44] Speaker 01:
You're here defending an ITC consent order drafted by the ITC, and you're not allowed to tell me that it means what it says when I read it?

[00:31:51] Speaker 04:
Again, the commission has a process.

[00:31:52] Speaker 04:
We go through a briefing process and we get to a final determination.

[00:31:56] Speaker 04:
Again, this is an unusual circumstance where this came up on appeal.

[00:31:59] Speaker 04:
The appellant did not come back to us, again, as they agreed to under paragraph seven.

[00:32:04] Speaker 00:
Has a scenario like this arisen before in the commission?

[00:32:10] Speaker 00:
This doesn't strike me as that unusual.

[00:32:13] Speaker 00:
That is, a consent order where validity is not being litigated anymore.

[00:32:19] Speaker 00:
There's an agreement.

[00:32:20] Speaker 00:
We won't do certain things.

[00:32:22] Speaker 00:
Validity, as I guess the regulations quite clearly contemplate, can be litigated elsewhere.

[00:32:29] Speaker 00:
So sometimes it is litigated elsewhere.

[00:32:32] Speaker 00:
Is there a history within the commission of whether the commission views what must be reasonably standard language as either wiping out the past, what would otherwise be violations, or merely terminating the obligation to follow the terms of the order from that day forward?

[00:33:01] Speaker 04:
Again, we gave it a close scenario in our briefing regarding the UPI case that cites to investigation number 698, the DC DC controllers case.

[00:33:12] Speaker 00:
And remind me what happened in that one.

[00:33:14] Speaker 04:
Well again, it's not an exact scenario.

[00:33:16] Speaker 04:
Language is different.

[00:33:17] Speaker 04:
It didn't have this until the expiration and validation or unenforceability language.

[00:33:21] Speaker 04:
Also it happened before the commission, not after the commission decision while it was on appeal.

[00:33:27] Speaker 04:
In that case, I'm bound a little bit by privilege, but I can just tell you that

[00:33:31] Speaker 04:
In response to the respondents making us aware of a final PTO cancellation of the claims, we vacated the portions of the initial determination with respect to that patent as moved.

[00:33:43] Speaker 01:
Can you correct me on something factual?

[00:33:46] Speaker 01:
I said out loud that you all drafted this.

[00:33:49] Speaker 01:
That's not true, right?

[00:33:50] Speaker 01:
Isn't it true that DeLorme drafted the consent order as entirety?

[00:33:54] Speaker 04:
That's correct.

[00:33:55] Speaker 04:
They proposed and drafted the consent order.

[00:33:57] Speaker 00:
And then, I'm sorry, but then it was modified.

[00:33:59] Speaker 00:
You didn't accept their initial proposal, right?

[00:34:02] Speaker 04:
Right.

[00:34:03] Speaker 04:
That was going towards the language of

[00:34:05] Speaker 04:
They had admitted language of system components thereof.

[00:34:08] Speaker 00:
Everything else was unchanged, is that right?

[00:34:12] Speaker 04:
I think, yeah, approximately.

[00:34:13] Speaker 04:
I think there might have been some will nots, the shall nots changed.

[00:34:16] Speaker 01:
I guess I'm just wondering to what extent this is or is not standard language that would be adopted by the ITC in consent order circumstances or

[00:34:26] Speaker 01:
Do you have any sense of whether or not this language is sort of consistent in general with the language that usually gets employed in these things?

[00:34:34] Speaker 04:
You're talking about the language of paragraph one?

[00:34:35] Speaker 01:
I don't know.

[00:34:36] Speaker 01:
Paragraph one or paragraph four?

[00:34:38] Speaker 01:
Yes.

[00:34:40] Speaker 01:
How about paragraph one?

[00:34:42] Speaker 04:
Again, there's some differences.

[00:34:45] Speaker 04:
In the past, this has been drafted without this until language, which again, is the reason why it should be remanded for this first impression.

[00:34:51] Speaker 01:
Drafted without the which language?

[00:34:53] Speaker 04:
The until, the language after.

[00:34:56] Speaker 00:
So maybe one of the principles that if this goes back to the Commission, the Commission might need to think about is the traditional principle of contract law that says all other things being equal construed against the drafter.

[00:35:14] Speaker 00:
Now it may be that

[00:35:16] Speaker 00:
DeLorme proposed the thing, but DeLorme had essentially no choice about what to put in it because the regulation says, right, consent orders may do nothing more than the following enumerated 11 things.

[00:35:31] Speaker 04:
And you're reading the old rules or the new rules?

[00:35:33] Speaker 04:
This was drafted before the new rules took effect.

[00:35:36] Speaker 00:
And was there no regulation at that point about what had to be in it?

[00:35:41] Speaker 04:
At that time there was no civic regulations regarding the content of the consent order, just some portions of the consent order stipulation.

[00:35:48] Speaker 04:
There was no civic rules regarding the content of the consent order.

[00:35:51] Speaker 04:
There was no null and void language.

[00:35:53] Speaker 04:
particularly as they point out in their brief.

[00:35:55] Speaker 00:
But was there an enumeration, right?

[00:36:02] Speaker 00:
This

[00:36:06] Speaker 00:
C4, B4, B4, looks like.

[00:36:10] Speaker 00:
C4.

[00:36:10] Speaker 00:
It says, contents of consent order of the commission will not issue consent orders with terms beyond those provided for in this section and will not issue consent orders that are inconsistent with this section.

[00:36:20] Speaker 00:
Consent order shall contain, and now there are... That's all new language.

[00:36:24] Speaker 04:
All new language.

[00:36:26] Speaker 04:
All new language from the newly promulgated rules after the date.

[00:36:29] Speaker 00:
And just to be clear, I don't go back and discover that the language has changed, but in substance it's about 98% the same.

[00:36:40] Speaker 00:
Was there a provision like this about the content of consent order before this regulation?

[00:36:46] Speaker 04:
Well, there was a provision regarding the content of the consent order stipulation.

[00:36:52] Speaker 04:
There's a motion for consent order stipulation, which is

[00:36:56] Speaker 04:
a granted subsequently and then a consent order is issued.

[00:36:59] Speaker 04:
So it's motioned by consent order stipulation.

[00:37:02] Speaker 01:
But there was nothing that articulated specific provisions that can or cannot be included in the consent order, correct?

[00:37:07] Speaker 04:
Correct.

[00:37:08] Speaker 04:
That's all new language promulgated from rules after April 5th.

[00:37:12] Speaker 01:
Okay, thank you.

[00:37:13] Speaker 01:
Mr. Brand, two minutes of rebuttal.

[00:37:18] Speaker 02:
Thank you, Your Honor.

[00:37:22] Speaker 02:
To go to the last point first, it's where these things always go, right?

[00:37:26] Speaker 02:
Dolorum did submit the consent order.

[00:37:29] Speaker 02:
It was based, however, on the rules.

[00:37:31] Speaker 02:
And we do differ.

[00:37:33] Speaker 02:
And we cite both the old rules and the new rules, and we'll leave to the court in its judgment afterwards the extent to which they dictated exactly what we put into it.

[00:37:43] Speaker 02:
But the rules themselves make it clear that you aren't going to interpret this thing beyond the jurisdiction of the ITC itself.

[00:37:53] Speaker 02:
There's no need to send this back to the ITC to decide a pure issue of law.

[00:37:58] Speaker 02:
This is a contract.

[00:37:59] Speaker 02:
It should be interpreted de novo, which was conceded in the briefing.

[00:38:03] Speaker 02:
And it should be construed as it was written, not as they might wish it had been.

[00:38:08] Speaker 02:
And this one, the consent order couldn't exceed the mandate under Section 337, as Judge Serrano and the colloquy with both counsels.

[00:38:17] Speaker 00:
But the problem I'm having with that is I'm thinking

[00:38:23] Speaker 00:
You can never have a consent order that waives a challenge to validity without then litigating the validity issue in the enforcement.

[00:38:32] Speaker 00:
Because under 1337A, the patent provision, they can't actually

[00:38:38] Speaker 00:
issue a non-consent order without finding infringement of a valid patent.

[00:38:48] Speaker 00:
It can't be that every enforcement proceeding of a consent order that gives up on validity has to litigate validity.

[00:38:55] Speaker 02:
But it's not litigating validity.

[00:38:57] Speaker 02:
If it happens, it's simply enforcing the terms that say, and they say, you have to show infringement of a patent.

[00:39:05] Speaker 02:
And you go back and you go, what's our infringement?

[00:39:07] Speaker 02:
The answer to this one, which comes out of the district court, which is final, when we get to a final decision there, which is a much better case.

[00:39:14] Speaker 03:
But with respect to the ITC, didn't you give up the right to pursue the issue of validity?

[00:39:20] Speaker 02:
only in front of any proceeding to enforce the consent order that is in any administrative or just judicial proceeding to enforce it.

[00:39:30] Speaker 02:
It wasn't that you couldn't do it elsewhere and indeed this court has made clear that you can have parallel proceedings.

[00:39:36] Speaker 01:
But the ITC did do an infringement determination in the enforcement proceeding and they concluded that you infringed and they awarded six million dollars of civil penalties.

[00:39:47] Speaker 02:
And setting aside

[00:39:49] Speaker 02:
Because obviously we have 60 page briefs that talks about why they're wrong on about 10 different grounds.

[00:39:55] Speaker 02:
But they did so under the premise that it has to be infringed above the valid patent.

[00:40:03] Speaker 02:
And that determination

[00:40:04] Speaker 02:
was still open because this case is still open as we sit here today.

[00:40:09] Speaker 02:
And once you have a final judicial determination that the patent is invalid, that means there's no way under either reading of the majority or the dissent in common that you can infringe that patent.

[00:40:23] Speaker 02:
That patent goes poof, and there is nothing left to happen in that regard.

[00:40:29] Speaker 01:
Well, I think we need to bring this to close, Mr. Brand.

[00:40:32] Speaker 01:
Thank you very much.

[00:40:33] Speaker 01:
Let's move on to the next