[00:00:08] Speaker 04:
The last case for argument is 141174, Gay-Mar Industries vs. Cincinnati Sub-Zero Products.

[00:00:49] Speaker 04:
Mr. Berger, whenever you're ready.

[00:00:51] Speaker 02:
May it please the court?

[00:00:53] Speaker 02:
Before we discuss the district court's errors, I need to identify and address an error in Cincinnati Sub-Zero's blue brief.

[00:01:02] Speaker 02:
On page 33, the quote after the site to the NITWAVE case says, vacating and remanding lower court decision denying attorney's fees award under copyright statute because it was unclear whether the district court had employed

[00:01:18] Speaker 02:
employed the Fogarty even-handed standard.

[00:01:21] Speaker 04:
That word denied... I'm a little behind you.

[00:01:25] Speaker 04:
You're looking at blue brief 33?

[00:01:27] Speaker 02:
Page 33.

[00:01:28] Speaker 02:
Okay.

[00:01:28] Speaker 02:
Sorry, Your Honor.

[00:01:32] Speaker 02:
The word should be regarding lower court decision regarding attorney's fees award.

[00:01:39] Speaker 02:
I recognized this mistake last night.

[00:01:41] Speaker 02:
I'm bringing it to this court's attention.

[00:01:43] Speaker 02:
I take responsibility for it.

[00:01:45] Speaker 02:
I apologize to the court and I apologize to counsel here.

[00:01:52] Speaker 02:
CSE's reexamination delivered a knockout punch to all the asserted claims in this case.

[00:01:58] Speaker 02:
This case is exceptional because Gaymar already knew about the fatal prior arc when it filed this lawsuit and because Gaymar continued to pursue a preliminary injunction even as its case became unwinnable.

[00:02:11] Speaker 02:
Under Highmark, all aspects of a district court's Section 285 determination are subject to an abusive discretion standard.

[00:02:19] Speaker 02:
Nonetheless, Highmark also states that a district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence.

[00:02:33] Speaker 02:
In this case, the district court did both.

[00:02:36] Speaker 02:
This court should reverse and remand with instructions to the district court.

[00:02:40] Speaker 01:
So what did the district court do wrong?

[00:02:42] Speaker 02:
The district court found and decided the case almost entirely based on CSE's conduct.

[00:02:50] Speaker 01:
Well, the district court did say that the claims were not objectively baseless, right?

[00:02:57] Speaker 02:
The district court, in applying the prior Brooks furniture standard, said that the CSE's failure to file a summary judgment motion

[00:03:07] Speaker 02:
led to the conclusion that CSC could not establish objective baselessness under the clear and convincing evidence standard.

[00:03:15] Speaker 02:
So here we have the reference to a procedure that did not occur, that is summary judgment.

[00:03:23] Speaker 02:
Even under the prior Brooks furniture standard, the objective baselessness was determined based on the case that was actually litigated.

[00:03:32] Speaker 02:
Now we're not saying unequivocally that there is never a situation where failure to file a summary judgment motion would have any effect, but here

[00:03:42] Speaker 02:
There was never a case management order.

[00:03:45] Speaker 02:
There was never a general discovery.

[00:03:47] Speaker 02:
There was never a markman hearing.

[00:03:50] Speaker 02:
Cincinnati Sub-Zero's reexamination request was filed within 10 days of that first initial hearing.

[00:03:55] Speaker 02:
There's no faster way that this case could have been adjudicated other than via reexamination.

[00:04:01] Speaker 02:
So this is not even an argument that GAMAR made.

[00:04:05] Speaker 02:
So this is an argument that's tied

[00:04:08] Speaker 02:
to a procedure that did not occur, it's tied to a standard which does not exist anymore now that... Does the district court also rely on the representations you had made with respect to the law regarding preliminary injunctions?

[00:04:24] Speaker 02:
Yes, Your Honor.

[00:04:25] Speaker 02:
The district court, as I said, based its decision primarily on CSE's conduct and it cited four examples.

[00:04:33] Speaker 02:
Three and four relate to purported misrepresentations to the court, and one and two relate to purported shifting legal theories.

[00:04:42] Speaker 02:
At CSE position, all of those examples are based on underlying errors.

[00:04:48] Speaker 02:
Relative to the misrepresentations to the court, that conclusion is based on the district court's view that the patentee, in this case, Gaymar, had no obligation to address validity

[00:05:01] Speaker 02:
in its preliminary injunction brief.

[00:05:03] Speaker 04:
And is it your view that our law requires that when you file for a preliminary injunction, you have to establish at the patent a salad in order to get that?

[00:05:12] Speaker 02:
No, Your Honor, not that you have to establish validity.

[00:05:15] Speaker 02:
We understand that the Gonzales case from the Supreme Court says that the burdens at the preliminary injunction stage track those at the, the burdens at trial track, excuse me,

[00:05:29] Speaker 02:
The burdens of the preliminary injunction stage track those at trial.

[00:05:32] Speaker 02:
We understand that.

[00:05:34] Speaker 02:
But here, there's no addressing of the issue of validity at all.

[00:05:38] Speaker 02:
When we say address, we didn't say anticipate and refute the specific detail.

[00:05:43] Speaker 04:
Well, what did you want them to do?

[00:05:45] Speaker 02:
Well, we gave an example.

[00:05:46] Speaker 04:
They cite their patent.

[00:05:47] Speaker 04:
Their patent is presumed valid, is it not?

[00:05:49] Speaker 04:
And the burden is not on them, but I knew it approved in validity.

[00:05:52] Speaker 04:
So what were they required to do?

[00:05:56] Speaker 02:
They should have at least done what Apple did in its case against Samsung, and that was identify the issue.

[00:06:01] Speaker 04:
Because with respect to- I don't understand what- Go ahead.

[00:06:04] Speaker 04:
What if I identify the issuing?

[00:06:05] Speaker 02:
To say that we believe we will be able to withstand any validity issues that come up.

[00:06:12] Speaker 03:
That one sentence you think would be adequate to cover whatever their burden is?

[00:06:17] Speaker 03:
That would be... I think it's my problem with your position, as I understand it, which is there are dozens of different ways to attack the validity or patentability of a patent.

[00:06:28] Speaker 03:
Are you saying that the patentee, in a limited injunction setting, has to say,

[00:06:34] Speaker 03:
This patent, we believe this patent is valid against any imaginable validity challenges such as 101, 102, 103, 112, 1, 112, 2, and so forth.

[00:06:46] Speaker 03:
Is that what you are expecting?

[00:06:48] Speaker 02:
That's not what we're expecting.

[00:06:49] Speaker 03:
What's wrong?

[00:06:51] Speaker 03:
with doing what it seems like most of our cases have suggested is the appropriate task, which is to say, here's our theory.

[00:07:00] Speaker 03:
And if they have a validity problem, they'll let us know.

[00:07:03] Speaker 03:
And then we'll respond to the particular claims of invalidity that they raised.

[00:07:07] Speaker 02:
What's wrong in this case, Your Honor, is because they not only omitted any reference to validity with respect to the first element, that of likelihood of success on the merits,

[00:07:17] Speaker 02:
But they also omitted it with respect to the second element.

[00:07:21] Speaker 03:
Let's just go back to the question of whether you are actually saying that a patent D has an obligation, preliminary injunction setting, to say right at the outset, in the preliminary injunction motion itself, our patent is valid against all, we believe, against all possible challenges, including the following.

[00:07:44] Speaker 03:
including but not limited to the following.

[00:07:46] Speaker 03:
That's not what you're, you don't really want to make that argument, do you?

[00:07:49] Speaker 02:
I'm not arguing, I'm not saying that they have to anticipate and refute or identify section 101, section 102.

[00:07:56] Speaker 03:
Or do they just have to have a sentence saying, we believe our patent is valid?

[00:08:00] Speaker 02:
That would at least inform the court that the issue is coming and when you get to the... How do they know that the issue is coming?

[00:08:04] Speaker 03:
They don't know that validity is going to be challenged.

[00:08:06] Speaker 03:
Well in this case there was a letter that told them that validity would be challenged.

[00:08:10] Speaker 03:
Letters say many things, but

[00:08:11] Speaker 03:
I'm not understanding what exactly it is you're suggesting that is the important step that the patentee has to take in a preliminary injunction.

[00:08:21] Speaker 03:
Is it just the one sentence saying we believe the patent is valid?

[00:08:25] Speaker 02:
Well, at least with respect to what Apple did is something that would have changed the scenario here, but with respect to the second.

[00:08:33] Speaker 04:
Can you answer?

[00:08:34] Speaker 04:
I don't know what you're referring to in Apple, but unless you're citing the case that we have, you are required to do that.

[00:08:41] Speaker 04:
I don't know what difference it makes what Apple has.

[00:08:43] Speaker 02:
Apple cited the line from Titan Tire that says that the first element of a primary injunction requires a patentee to establish a clear showing of validity and infringement.

[00:08:56] Speaker 02:
Or at least it borrows from the language of Nutrition 21.

[00:09:00] Speaker 02:
But the issue really comes into play when you get to the second element.

[00:09:03] Speaker 02:
GAMAR has asserted entitlement to a presumption of irreparable harm based on

[00:09:09] Speaker 02:
infringement of a valid patent.

[00:09:12] Speaker 02:
That's what the Pfizer case says.

[00:09:14] Speaker 02:
That's what Nutrition 21 says.

[00:09:16] Speaker 02:
They left out the word validity.

[00:09:18] Speaker 02:
So if a party is asserting entitlement to a presumption of validity, the party ought to identify the elements that are required for that presumption.

[00:09:26] Speaker 01:
I'm having difficulty following this whole discussion.

[00:09:29] Speaker 01:
The question is not what the law is.

[00:09:31] Speaker 01:
The question is whether the district court made an error in saying that you made a misrepresentation.

[00:09:37] Speaker 01:
What exactly is it that you've said to the district court that the district court found to be so problematic?

[00:09:45] Speaker 01:
What is the exact language?

[00:09:47] Speaker 02:
CSE said that they were obligated to address validity and CSE cited Nutrition 21 for that proposition.

[00:09:53] Speaker 02:
CSE Nutrition 21, this court, reversed the granting of a preliminary injunction

[00:09:59] Speaker 02:
because of the absence of findings of fact, but in reversal said that the district court had misplaced the verdict.

[00:10:07] Speaker 01:
What strikes me is that whether what you said was correct or not, which is what

[00:10:12] Speaker 01:
we've been discussing for the last few minutes isn't the issue.

[00:10:16] Speaker 01:
The question is whether it was a misrepresentation to the district court.

[00:10:20] Speaker 01:
I mean, I would have thought that your position about what you were saying in the district court was pretty clear.

[00:10:27] Speaker 01:
It may not have been correct, but the question is whether that was sanctionable or a misrepresentation to the district court.

[00:10:33] Speaker 01:
I mean, you can argue, you can

[00:10:36] Speaker 01:
stand there and argue about what their burden was, but that doesn't seem to be the issue.

[00:10:41] Speaker 01:
The issue is whether you said something that was a misrepresentation.

[00:10:46] Speaker 02:
There's two aspects of this, two areas of law.

[00:10:49] Speaker 02:
From our perspective, Nutrition 21 required them to at least address it.

[00:10:53] Speaker 02:
But secondly, it's not misconduct to assert that position.

[00:10:57] Speaker 02:
CSE had a reasonable belief and cited case law and cited examples for the basis of its reasonable belief.

[00:11:04] Speaker 02:
It had no notice from the court that the court considered that to be a misrepresentation or misconduct.

[00:11:11] Speaker 02:
It never had a chance to brief it.

[00:11:13] Speaker 02:
And we don't know what standard the court applied in asserting that it was a misrepresentation.

[00:11:20] Speaker 02:
So we're not aware of a case where the specific

[00:11:24] Speaker 02:
argument occurred as to what should have come right out of the attorney case.

[00:11:27] Speaker 01:
I thought you would come here prepared to say we said these things and they weren't misrepresentations.

[00:11:32] Speaker 01:
You seem to want to re-argue the question of what the patentee's burden was on invalidity.

[00:11:37] Speaker 01:
That's not the issue here.

[00:11:39] Speaker 01:
The issue is, did the district court use its discretion and find that you made misrepresentations?

[00:11:45] Speaker 01:
Not this one, but the others as well.

[00:11:47] Speaker 01:
That's the issue.

[00:11:50] Speaker 02:
We agree with that, Your Honor.

[00:11:51] Speaker 02:
We did not have

[00:11:52] Speaker 02:
an opportunity to address that issue with respect to the district court before the finding of the ruling on the section 285.

[00:12:02] Speaker 03:
It struck me in looking at the way the district court framed its order that

[00:12:08] Speaker 03:
The district court made two separate determinations.

[00:12:11] Speaker 03:
One, that this is not an exceptional case.

[00:12:14] Speaker 03:
And second, that this is not an appropriate case for attorney's fees, even if I were to determine that it was an exceptional case.

[00:12:21] Speaker 03:
That seems to be what the court is saying.

[00:12:23] Speaker 03:
You'd agree with that, I think.

[00:12:24] Speaker 02:
That's right, Your Honor.

[00:12:25] Speaker 03:
But now, in the first part of that, the exceptional case determination, the district court did not lean heavily on the problem of your purported litigation misconduct.

[00:12:37] Speaker 03:
That appears mainly, I guess it's on page 826, in the second

[00:12:42] Speaker 03:
of the analysis.

[00:12:44] Speaker 03:
There is a reference I think at A14 down towards the bottom of if anyone has demonstrated lack of candor on this point at TSC and a reference to the discussion of the burden on preliminary injunction.

[00:12:58] Speaker 03:
But most of the first

[00:13:01] Speaker 03:
portion of the case seemed that it was addressed to other issues, including the strength or weakness of the case on which the judge found against you.

[00:13:11] Speaker 03:
So it strikes me that the issue of the misconduct with respect to the various points that are pointed out on page 26 doesn't even really arise unless we conclude that the judge was wrong about exceptional case determination.

[00:13:28] Speaker 03:
Is that a fair statement?

[00:13:30] Speaker 02:
Yes, your honor, but what happens with the second report is the judge decided them in reverse order, that is, decided I would not award.

[00:13:37] Speaker 01:
And the second report on page A36, he specifically relies on the unclean hands as a basis for the exceptional case determination.

[00:13:46] Speaker 02:
Right.

[00:13:46] Speaker 02:
The reference to unclean hands in the second report is the first use of that term by the court.

[00:13:50] Speaker 01:
I understand, but he's referring to the misrepresentations there when he uses that to make the exceptional case determination.

[00:13:59] Speaker 01:
That's right, Your Honor, but he never, never assessed... The first time around he didn't seem to relate the two so much, but the second time around, the final order, he relates the two, right?

[00:14:09] Speaker 01:
Your Honor, but he never assessed the substantive strength of the case or the position... I think he did, but the question is whether he also took into account, incorrectly, some misrepresentations which don't rise to the level of misrepresentations.

[00:14:27] Speaker 02:
The issue from CSE's perspective is the weight, the undue weight, accorded to CSE's conduct compared to the litigation misconduct of Gamehart, which was proved by clear and convincing evidence.

[00:14:39] Speaker 02:
Section 285 serves as a deterrent to prevent the bringing of unwarranted cases.

[00:14:47] Speaker 02:
Oxhain lowered that standard so that it could serve the deterrent purpose.

[00:14:54] Speaker 02:
uh... by by making the standard more flexible here we have a situation where the standard is so flexible there's nothing to keep a district court from picking out pieces of conduct deciding that that negates the exceptional

[00:15:07] Speaker 02:
nature of the case and using it for both determinations.

[00:15:11] Speaker 01:
What's going on with the district court saying if you engage in litigation misconduct, I'm going to take that into account in the totality of the circumstances in determining whether this is an exceptional case.

[00:15:22] Speaker 01:
There's nothing wrong with that under octane, right?

[00:15:26] Speaker 02:
We don't disagree that the court can consider that, but it's a matter of how much weight it should be given.

[00:15:31] Speaker 01:
I would have thought you would say it's a matter of whether it happens.

[00:15:34] Speaker 02:
Well, the court asked for the comment that... I see that I'm well into my rebuttal time.

[00:15:49] Speaker 02:
Your Honor,

[00:15:54] Speaker 02:
It's CSC's view that it defended itself in this case against an aggressive patentee.

[00:16:01] Speaker 02:
And it did its best, and it negated this patent as quickly and as efficiently as it could.

[00:16:07] Speaker 02:
The court and the parties benefited from that.

[00:16:12] Speaker 02:
It later found out that Gaymar had withheld the fatal prior reference during discovery.

[00:16:19] Speaker 02:
The effects of that were never addressed in the court case.

[00:16:23] Speaker 02:
It was only in the fee motion that these issues of misconduct, purported misconduct, came up.

[00:16:30] Speaker 02:
And so the court is entitled to weigh all the conduct.

[00:16:33] Speaker 02:
Yes, it's part of the totality of the circumstances.

[00:16:36] Speaker 02:
But Octane says that courts should exercise equitable discretion in accordance with the considerations we have identified.

[00:16:43] Speaker 02:
OK.

[00:16:44] Speaker 04:
I think we have an argument on that, Greg.

[00:16:46] Speaker 04:
Why don't we, will we spend two minutes of rebuttal?

[00:16:51] Speaker 00:
Good morning may it please the court.

[00:16:53] Speaker 00:
Gamer Industries asked this court to affirm the district court's decision below.

[00:16:57] Speaker 01:
It strikes me in looking at the district court's description of litigation misconduct that is exceptionally thin.

[00:17:05] Speaker 01:
And this can be a problem sometimes in district courts.

[00:17:10] Speaker 01:
I don't read the record here showing that they made misrepresentations.

[00:17:16] Speaker 01:
And if I were to conclude that, wouldn't I have to send this case back for the exceptional case determination to be made again, given the district court's heavy reliance on what it called unclean hands?

[00:17:31] Speaker 01:
You understand my question?

[00:17:32] Speaker 01:
Let's assume that I find the district court abuses discretion in finding that there were misrepresentations here.

[00:17:39] Speaker 01:
If that were the result, wouldn't we have to remand to have the exceptional case determination revisited?

[00:17:46] Speaker 00:
I don't believe so, Your Honor.

[00:17:47] Speaker 00:
And the reason I don't believe so is because I agree with you that other than Cincinnati sub-zeros misrepresentation, litigation misconduct record is very thin.

[00:17:57] Speaker 00:
There's one instance cited by the court that actually the court did not determine, but gay marital conduct.

[00:18:04] Speaker 00:
It would be our position that the record could remain exactly as it is and could be affirmed as is.

[00:18:11] Speaker 00:
I know Cincinnati Sub-Zero disagrees with the position that misrepresentations were made.

[00:18:17] Speaker 00:
We obviously disagree with that.

[00:18:18] Speaker 01:
Well, but you're not answering my question.

[00:18:20] Speaker 01:
Try to answer my question.

[00:18:21] Speaker 01:
Let's assume that we were to conclude the district review's discretion in finding misrepresentations.

[00:18:28] Speaker 01:
Would we have to remand to revisit the exceptional case determination?

[00:18:33] Speaker 00:
Assuming that you found there was an abuse of discretion, which I don't agree with, yes, you would.

[00:18:40] Speaker 04:
You would.

[00:18:40] Speaker 04:
So why should we not go there?

[00:18:42] Speaker 00:
Well, the reason you shouldn't go there is multifaceted.

[00:18:51] Speaker 00:
We believe there were in fact misrepresentations by Cincinnati Sub-Zero.

[00:18:56] Speaker 00:
Cincinnati Sub-Zero claims today here in this court that it had no notice that it was being accused of possibly misrepresenting the state of the case law and preliminary injunctions, and that's simply not true.

[00:19:07] Speaker 00:
That issue was presented over and over and over again at the district court.

[00:19:13] Speaker 00:
Cincinnati Sub-Zero had absolute knowledge that GAMAR disagreed with its interpretation of the burden on a preliminary injunction.

[00:19:22] Speaker 01:
That was only one of three things that he found were misrepresentations, right?

[00:19:28] Speaker 04:
Yes.

[00:19:30] Speaker 01:
The first thing, we need to identify our own expert in the technology.

[00:19:34] Speaker 01:
They said at the beginning and then they said later on,

[00:19:37] Speaker 01:
We maintain the position at the outset that we don't need someone skilled in the art.

[00:19:44] Speaker 01:
I mean, is that a misrepresentation really?

[00:19:49] Speaker 00:
I believe so, yes.

[00:19:51] Speaker 00:
Why?

[00:19:51] Speaker 00:
Well, because Cincinnati Sub-Zero was giving the court the impression that there would be a full blown validity battle in front of it.

[00:19:59] Speaker 00:
At the same time, it represented that it was going to take this matter to the Patent and Trademark Office, which it did.

[00:20:07] Speaker 00:
Gamer presented expert testimony.

[00:20:12] Speaker 00:
both on its affirmative preliminary injunction papers and on its reply.

[00:20:17] Speaker 00:
At no time, despite saying that it was going to obtain an expert, did Cincinnati Sub-Zero ever do so?

[00:20:23] Speaker 00:
And it's a point of... Wait a second.

[00:20:25] Speaker 01:
They said that the technology is generally understandable, does not require an expert with technical skill in the art.

[00:20:32] Speaker 01:
How is that inconsistent with the statement that they said earlier, we need to identify an expert in the technology?

[00:20:39] Speaker 01:
even if they thought it was irrelevant, they might feel that they needed to identify an expert.

[00:20:44] Speaker 01:
What's the misrepresentation?

[00:20:47] Speaker 00:
I believe it's a pattern of conflicting positions before the district court.

[00:20:51] Speaker 00:
How is it a conflicting position?

[00:20:53] Speaker 01:
They say an expert isn't needed, but we need to identify an expert just in case it is needed.

[00:20:59] Speaker 01:
How's that inconsistency?

[00:21:04] Speaker 00:
Well, I believe it's

[00:21:06] Speaker 00:
giving the court the impression that on the one hand we need an expert, on the other hand we don't, and leaving the court in a position to wait and see what's going to happen.

[00:21:15] Speaker 01:
The standard that you're advocating would result in a misrepresentation in probably three quarters of the oral arguments that are made before us.

[00:21:27] Speaker 01:
Fair enough.

[00:21:31] Speaker 00:
Well, to continue to respond to your inquiry,

[00:21:36] Speaker 00:
Judge Dyke, the Kilworth Declaration was another instance in which the court had found that Cincinnati Sub-Zero had made misrepresentations to the court.

[00:21:50] Speaker 00:
The motion to strike Mr. Kilworth's declaration was granted in part that is not on appeal before this court.

[00:21:58] Speaker 00:
Cincinnati Sub-Zero has not contested the propriety of the striking of the Kilworth Declaration below.

[00:22:08] Speaker 00:
here on Appeal.

[00:22:11] Speaker 01:
Cincinnati Sub-Zero says that... Yeah, but all that happened in the second one is that he argued that it would have been obvious to a person of skill in the art to minimize patient discomfort by doing this.

[00:22:26] Speaker 01:
And then, you know, later on, he's not someone who's skilled in the art.

[00:22:33] Speaker 01:
I mean, sometimes people make arguments even though they don't have the personal basis for making the argument.

[00:22:40] Speaker 01:
I don't understand how that's a misrepresentation.

[00:22:43] Speaker 00:
Well, it's a misrepresentation, Your Honor, because obviousness requires a person who has skill in the arts.

[00:22:53] Speaker 01:
Sure, so maybe you discount the guy's statement.

[00:22:56] Speaker 01:
But that doesn't mean he's not, by making the statement, he's not representing that he's skilled in the arts.

[00:23:04] Speaker 00:
Well, in some ways, yes, and I'll explain why.

[00:23:06] Speaker 00:
Mr. Kilworth's declaration on preliminary injunction was challenged by a motion to strike.

[00:23:13] Speaker 00:
So Cincinnati Sub-Zero was on notice that Gamer was contesting the propriety of Mr. Kilworth's declaration and was also contesting that he was skilled in the arts.

[00:23:25] Speaker 00:
Fast forward a couple of years later when the motion for fees comes up after the PTO action is complete, after preliminary injunction is denied, after Cincinnati Sub-Zero moves to reinstate the case, and Cincinnati Sub-Zero does the same exact thing, even while being on notice of frankly very clear case law that does not permit Mr. Kilworth to make these representations to the court.

[00:23:52] Speaker 01:
Did the court really misunderstand what the position was?

[00:23:56] Speaker 01:
He was arguing that there was a need to address invalidity, either by relying on presumption or saying something about it.

[00:24:09] Speaker 01:
I mean, is that completely incorrect?

[00:24:14] Speaker 01:
You may be able to rely on the presumption, but so what?

[00:24:19] Speaker 00:
Right.

[00:24:20] Speaker 00:
I don't know whether the court really misunderstood, but I don't think that's the standard.

[00:24:26] Speaker 00:
I think the standard is whether you proffer something that you know is not in keeping with the case law and is not proper under what the requirements are.

[00:24:37] Speaker 00:
And as I already stated, Cincinnati Sub-Zero was on notice of what the requirements were because Gay-Mar had already challenged Mr. Kilworth.

[00:24:50] Speaker 00:
I do want to address a few points that Mr. Berger made during his argument.

[00:24:58] Speaker 00:
He said there was no faster way to adjudicate this case than taking this patent and to re-examine.

[00:25:05] Speaker 00:
And the record bears out what actually, it was not contested that at that time re-examination before the PTO took 42 months, on average.

[00:25:14] Speaker 00:
Somewhere longer, somewhere shorter, but that was the average.

[00:25:18] Speaker 00:
Mr. Berger tells this court that they were trying to be quick and efficient about adjudicating the court action as quickly as possible.

[00:25:27] Speaker 00:
Yet, Cincinnati Sub-Zero filed for reexamination and waited three months to move to stay.

[00:25:33] Speaker 00:
And during that three-month period, most of the discovery in this case occurred.

[00:25:39] Speaker 00:
This case's timeline was compacted into a five-month period that basically ended in November of 2008.

[00:25:47] Speaker 00:
and then there was a long period where nothing happened.

[00:25:51] Speaker 00:
It's not as though, you know, there's this impression, I think, that Cincinnati subdural wants to give this court, and certainly wanted to give the court below, that GAMAR, after the preliminary injunction briefing was complete, was continuing to aggressively pursue its preliminary injunction.

[00:26:07] Speaker 00:
And that's simply not the case.

[00:26:08] Speaker 00:
The parties were at the PTO.

[00:26:11] Speaker 00:
That's where they proceeded.

[00:26:12] Speaker 00:
No further discovery occurred in the court below.

[00:26:17] Speaker 00:
expense or resources that were allocated to the district court, the party simply waited for the court's decision.

[00:26:24] Speaker 00:
And that came in November 2009, so it was almost over a year until that decision issued.

[00:26:33] Speaker 00:
So there was no rabid pursuit of the continuation of this case.

[00:26:38] Speaker 00:
Nothing else happened.

[00:26:40] Speaker 00:
And similarly,

[00:26:43] Speaker 00:
There was another period of dormancy where the parties basically waited for determinations either from the PTO or from the court.

[00:26:51] Speaker 00:
So there is this false impression, I believe, that Gamer continued with fervor and blindly to pursue its rights under the patent.

[00:27:03] Speaker 00:
And that's simply not the case.

[00:27:04] Speaker 00:
And the rule that Cincinnati Sub-Zero wants this court to adopt is you lose at the PTO, your case is exceptional.

[00:27:12] Speaker 00:
No case law that supports that.

[00:27:14] Speaker 00:
It actually defies logic, because every time a patent is invalidated, parties would be racing into court to seek an award of fees.

[00:27:22] Speaker 03:
return if I could to the issue that I was discussing with your opposing counsel.

[00:27:31] Speaker 03:
The relationship between the two orders in this case, the first order and the reconsideration of the first order, does appear to rely principally for the exceptional case determination on the

[00:27:44] Speaker 03:
court's conclusion that the case was relatively close.

[00:27:48] Speaker 03:
A couple of other factors to discuss.

[00:27:50] Speaker 03:
On reconsideration, the court talks about clean hands.

[00:27:56] Speaker 03:
How do you read, do you understand that to be the court taking a different tack in the second order from the tack taking in the first?

[00:28:09] Speaker 03:
Or what do you think the relationship is between the two orders?

[00:28:12] Speaker 00:
Well, I think Your Honor correctly identifies that the court did a relatively detailed analysis on the merits of Gamer's position in the first report.

[00:28:21] Speaker 03:
Now of course that was

[00:28:23] Speaker 03:
at least punitively under the pre-Piemark octane standard, Brooks furniture and so forth.

[00:28:34] Speaker 03:
When the court came back, the court talked briefly, but did talk in the context of exceptional case about the clean hands.

[00:28:45] Speaker 03:
What do you think is the relationship between the two orders?

[00:28:48] Speaker 00:
I think the two orders are companion.

[00:28:51] Speaker 00:
I think the two orders

[00:28:53] Speaker 00:
form the fulsome decision of the court.

[00:28:56] Speaker 00:
I don't think Cincinnati Sub-Zero necessarily disputes that since the appeal refers to the first report and the second report and they're treated almost as one because of course what the court was doing in the second decision was going back after Octane Fitness had issued to think of any other further considerations that might be warranted that weren't considered in the first report.

[00:29:20] Speaker 00:
because the intervening change in the law between the first report and the second report warranted further consideration.

[00:29:26] Speaker 03:
Let me put the question this way to you.

[00:29:28] Speaker 03:
Suppose we were to conclude that the court was wrong in finding that there were unclean hands on the part of CSZ.

[00:29:40] Speaker 03:
Wouldn't that be sufficient to require that this case be sent back?

[00:29:46] Speaker 03:
Because that was

[00:29:48] Speaker 03:
emphasized, at least to some extent, in the second order, although it was not in the first.

[00:29:55] Speaker 01:
No.

[00:29:57] Speaker 01:
You said the opposite in response to a question of mine 20 minutes ago.

[00:30:01] Speaker 01:
You could get yourself into trouble, but please just report with that kind of shit.

[00:30:07] Speaker 00:
Fair enough, Your Honor.

[00:30:09] Speaker 00:
What Judge Bryson's question focused on is the relationship between the first and second report.

[00:30:16] Speaker 00:
And the first report, I think, as you've recognized, Your Honor, putatively applied the Brooks furniture standard.

[00:30:22] Speaker 00:
In reality, what it applied was a more flexible and holistic approach, even pre-octane fitness.

[00:30:30] Speaker 00:
So the considerations that the court had in the first report were actually octane fitness considerations.

[00:30:37] Speaker 03:
Of course, I suppose the court could simply have said, I already applied Octane and the second order and stopped there.

[00:30:46] Speaker 03:
But instead, it seemed as if the court felt obliged to say more and did, in fact, say more.

[00:30:56] Speaker 03:
Where I'm trying to go with this, is there an argument

[00:30:59] Speaker 03:
Are you making the argument that regardless of what was said in the second order, the first order is sufficient, standing on its own, to justify an infirmance in this case.

[00:31:10] Speaker 03:
And even if there is error in the second order with respect to the clean hands issue, the first order should be sufficient to justify an infirmance.

[00:31:19] Speaker 03:
I do believe so.

[00:31:20] Speaker 01:
How can that be?

[00:31:22] Speaker 01:
In the second order, he suddenly is faced with octane.

[00:31:28] Speaker 01:
The objective reasonableness isn't sufficient to dismiss the claim for attorney's fees and the court goes on and says, well, the significant thing here in the fatality of the circumstances is unclean hands.

[00:31:42] Speaker 01:
And so that was obviously a significant factor in the decision not to find an exceptional case, right?

[00:31:50] Speaker 00:
It was a factor, absolutely.

[00:31:52] Speaker 01:
So how is it that we don't have to remand if we find that he shouldn't have relied on that factor?

[00:31:59] Speaker 00:
Because I believe the other factors standing alone would sustain the court's decision because the record does not warrant any other finding.

[00:32:06] Speaker 01:
Yeah, but the Supreme Court itself in octane said if there's an error of law or a fact, a fairly erroneous fact in the decision,

[00:32:16] Speaker 01:
that we have the obligation to look at it and set it aside and require it to be reevaluated.

[00:32:21] Speaker 01:
That doesn't mean you lose if we remand it.

[00:32:24] Speaker 01:
I understand that.

[00:32:26] Speaker 01:
But how can we, when you place such heavy reliance on the unclean hands under the octane standard, how can we avoid remanding?

[00:32:34] Speaker 00:
I appreciate the court's consideration of that fact.

[00:32:38] Speaker 04:
Do you think the reason we could avoid remanding is that they request the order for reconsideration before they reach the last portion, which I think was what we were focusing on, was that it does not have clean hands sufficient to render an exceptional case.

[00:32:54] Speaker 04:
In the preceding section,

[00:32:56] Speaker 04:
Am I right or wrong?

[00:32:57] Speaker 04:
On page A35, the first thing they do in A seems to be that even accepting this is an exceptional case, attorney's fees are not mandatory.

[00:33:11] Speaker 04:
And it goes through some discussion of octane or whatever, and then it says, therefore, irrespective of whether this is an exceptional case, CSC was not entitled to an award of attorney's fees.

[00:33:23] Speaker 04:
Are we free to rest on that, even if there's error or some need to remand with respect to its analysis, whether or not it meets the opt-in standard?

[00:33:35] Speaker 00:
I believe you could rely on that, Your Honor.

[00:33:38] Speaker 00:
The reason why I believe so, both the first and the second reports contain that analysis, that in any event, even if this were an exceptional case, an award of fees would not be warranted.

[00:33:52] Speaker 00:
Go ahead.

[00:33:52] Speaker 00:
It's okay.

[00:33:52] Speaker 00:
Thank you.

[00:33:54] Speaker 03:
Here's, I don't know how important this unclean hands or litigation misconduct issue was to the court, but the court does seem in the second order to mention it in connection with both prongs, right?

[00:34:07] Speaker 03:
I mean, I think on page 835, there's a reference to about line six of the opinion to I detailed numerous

[00:34:17] Speaker 03:
instances of litigation misconduct and concluded and so forth.

[00:34:23] Speaker 03:
That may not be driving the conclusion and that may be an issue that we have to resolve, but it does seem at least that that determination is not totally immunized from challenge based on the absence of a reference to the unclean hands issue.

[00:34:41] Speaker 03:
Right?

[00:34:42] Speaker 00:
Well, it's not totally immunized.

[00:34:46] Speaker 00:
I agree with you.

[00:34:47] Speaker 00:
I do think that remand would be unnecessary.

[00:34:50] Speaker 00:
And I believe it would be unnecessary, frankly, under a decision that recently issued from this court, which is an affirmance of a very similar case without opinion, real-time, which came down from this court a couple of weeks ago, that involved very similar circumstances of claims of discovery, defalcations, and claims of improper privilege assertions, and claims of misrepresentation back and forth.

[00:35:19] Speaker 00:
the district court said that was simply not enough to warrant an exceptional case award, and this court agreed.

[00:35:25] Speaker 00:
So I think it actually would be consistent to rely on the finding of no fee award in order to simply affirm, because there was a specific finding of no fee award.

[00:35:40] Speaker 01:
Yeah, but wasn't that particularly in the first opinion and in the second opinion as well, also based on misrepresentation?

[00:35:53] Speaker 00:
Yes.

[00:35:57] Speaker 00:
Yes.

[00:35:59] Speaker 00:
I see my time is well up.

[00:36:01] Speaker 00:
Thank you.

[00:36:09] Speaker 04:
Try to keep things a little even.

[00:36:12] Speaker 04:
We'll increase your rebuttal time for four minutes if you need it.

[00:36:17] Speaker 02:
Opposing counsel stated that CSE had been on notice of these alleged misrepresentations.

[00:36:25] Speaker 02:
My statement was notice from the court.

[00:36:29] Speaker 02:
Gaymar made all sorts of allegations of misrepresentation.

[00:36:33] Speaker 02:
So our point was prior to that denial of attorney's fees motion, CSE was not on notice from the court.

[00:36:40] Speaker 02:
Relative to the supplemental declaration from Mr. Kilworth, it's very clear that that was submitted because of this court's Therasense decision changing the law relative to inequitable conduct and because there were four new references which were part of the inequitable conduct claim that CSC submitted.

[00:36:59] Speaker 02:
When CSC submitted its second amended complaint,

[00:37:02] Speaker 02:
It's spelled out with detail, as required under exogen, as to each of those six separate references.

[00:37:10] Speaker 02:
And that's what Mr. Kilworth was opining on.

[00:37:15] Speaker 02:
Now, the district court never identified the scope of Mr. Kilworth's testimony and indicated that he was unable to testify at an office practice and procedure.

[00:37:29] Speaker 02:
The court also never considered this court's decision in Ohio Willowwood, which states that but for materiality is decided from the perspective of the examiner.

[00:37:41] Speaker 02:
Mr. Kilworth has testified in numerous cases.

[00:37:44] Speaker 02:
He's an expert in examination, PTO examination, and that's why he was proffered.

[00:37:53] Speaker 02:
And if you look specifically at paragraph 25, which is the paragraph cited

[00:37:59] Speaker 02:
for this example of misconduct.

[00:38:03] Speaker 02:
Mr. Kilworth paraphrases what the examiner said during the re-exam and then he restates it using, he applies it to the real world relative to the MT2 manual and its description of automatic and manual operation of the prior device.

[00:38:20] Speaker 02:
This is exactly the type of declaration that was found to his base

[00:38:26] Speaker 02:
that was the basis for the inequitable finding as the Palms Declaration in the worldwide case.

[00:38:33] Speaker 03:
Do you view the second order of the court as being supplemental to the first or as displacing it?

[00:38:48] Speaker 03:
I see it as being supplemental, part of the same process, because the court... So we should take the two orders together when we look at the questions of exceptional case and attorney space.

[00:39:01] Speaker 02:
I believe that's correct, Your Honor, because the second report refers back multiple times.

[00:39:06] Speaker 02:
For instance, look at the closeness of the case in both the first and second.

[00:39:10] Speaker 02:
The only thing cited is the failure to file summary judgment motion, which from our perspective after octane is not an acceptable factor to be considered.

[00:39:22] Speaker 02:
It violates the principles of the Patent Act.

[00:39:25] Speaker 02:
Just as the Fogarty cases, the line of Fogarty cases in copyright realm have identified factors or guidelines for the court's exercise of equitable discretion,

[00:39:37] Speaker 02:
There are things that court should consider and things that should be accorded more weight.

[00:39:42] Speaker 02:
In the Second Circuit, for instance, the objective unreasonableness of the losing party's case is accorded substantial weight.

[00:39:50] Speaker 02:
We made this argument to the district court.

[00:39:54] Speaker 02:
Under the Lanham Act, you mean?

[00:39:55] Speaker 02:
No, under the Copyright Act.

[00:39:56] Speaker 02:
The Fogarty line of cases has been applied in the Second Circuit, and in fact,

[00:40:02] Speaker 02:
the Western District of New York has applied this principle.

[00:40:05] Speaker 02:
In order to assure compliance with the Copyright Act, they accord substantial weight to the objective unreasonableness of the losing party's case.

[00:40:15] Speaker 02:
Our view is that Octane grafted that entire body of law onto, not from a binding perspective, but from a persuasive perspective, into the patent field.

[00:40:26] Speaker 02:
And in the copyright cases, when courts don't

[00:40:29] Speaker 02:
follow the Fogarty factors or consider those guidelines, those cases are remanded.

[00:40:35] Speaker 02:
And one final comment is it is CFE's position that it did not engage in this conduct.

[00:40:40] Speaker 02:
It did not make misrepresentations to the court.

[00:40:43] Speaker 04:
Thank you.