[00:00:17] Speaker 00:
Good morning.

[00:00:17] Speaker 00:
We have five cases on argument today.

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We've got four cases on oral argument, and one case has been submitted on the briefs.

[00:00:30] Speaker 00:
So let's start with the first case, High Point SARL versus T-Mobile, 15-12-35.

[00:00:39] Speaker 00:
Mr. Black?

[00:00:40] Speaker 02:
Thank you, Your Honor.

[00:00:46] Speaker 02:
May it please the court.

[00:00:48] Speaker 02:
The district court erroneously concluded that three of T-Mobile's suppliers held licenses to the patents in suit and then misapplied this court's decision in Keurig by failing to perform a claim-by-claim exhaustion analysis.

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T-Mobile makes a claim of exhaustion in this case, not license.

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So it's important to understand what the relationship was between the particular suppliers at issue and T-Mobile at the relevant time.

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I'd like to begin with discussing the district court's analysis of exhaustion in relation to sales made by NSN US to T-Mobile.

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Prior to 2007, T-Mobile was buying Nokia products from Nokia, from Nokia's telecommunications business.

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In 2007, Nokia and Siemens entered into a joint venture.

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They formed a Dutch joint venture.

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The Nokia business was contributed to the joint venture, and the Siemens business was contributed to the joint venture.

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Siemens had previously entered into an agreement with AT&T that covered the patents in suit and granted limited rights under a divestment rider.

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The divestment rider had three crucial elements.

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The license can be extended to the divested business only, not a third-party business.

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The license is limited in time, applying only while the future divested business is operated as a separately identifiable business.

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And the license is limited in product scope.

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only to the extent applicable to products and services sold by the future divested business.

[00:02:15] Speaker 00:
Counsel, we have a number of issues, very distinct issues, related to the license that you're now referring to.

[00:02:25] Speaker 00:
Maybe it'll help if we have you give arguments as to some of the specific issues, such as the of kinds construction, whether that is too broad or not.

[00:02:37] Speaker 02:
Certainly, Your Honor.

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There are three elements separately identifiable.

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the purchase has to be from the divested business and the kinds of products.

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So with respect to the kinds of products, the record is uncontested that prior to the joint venture, T-Mobile was buying Nokia products, Nokia design products from Nokia's US affiliate.

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It's also uncontested that after the joint venture, T-Mobile continued to buy the exact same products from Nokia that is from the Nokia divested business

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not from the Siemens divested business.

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The license only goes to the Siemens divested business.

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It also only goes to the Siemens divested business for so long as the Siemens business is separately identifiable.

[00:03:17] Speaker 02:
That's a common provision in these sorts of agreements designed to prevent the expansion of the license upon a divestiture.

[00:03:25] Speaker 02:
When a business is divested, the licensee may well want for the business that's using the patents to continue to be able to use it, but the licensor would not want the divested business to be

[00:03:36] Speaker 02:
purchased and then expanded license to occur so that an entirely new business that's not paid any royalties could gain a license for free.

[00:03:46] Speaker 03:
Now, I saw you argue that in the brief, but I didn't see you point to anything to support that argument, that contention.

[00:03:54] Speaker 03:
I guess what I'm trying to figure out is what does separately identifiable mean and why was the district court's conclusion of what it meant

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unreasonable.

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At the minimum... How do we know what separately identifiable means?

[00:04:10] Speaker 03:
You say it means what you say it means, but how do I know that?

[00:04:15] Speaker 02:
Well, if you look at the structure of the divestment rider, it was entered into at a time when AT&T was splitting into three separate companies.

[00:04:23] Speaker 02:
And the companies got together and they had a special rider to deal with divestment.

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And what is the problem that would likely have been in the minds of people worrying about the expansion of patent rights to divested businesses?

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The concern is

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How do you make sure that things are done fairly, that the divested business, say a division which is doing something, can continue to operate for some time, but that that doesn't expand unfairly to swap, to cover an entire new company which hasn't paid a license right.

[00:04:53] Speaker 02:
If our contention on this is at least plausible, then we win, because this was at summary judgment, and the district court made a conclusion as a matter of law that our construction was wrong.

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And at the minimum, our construction is a reasonable one.

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So what would you want?

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Would you want it to go back to the district court to do some kind of discovery as to what was some extrinsic evidence as to the meaning of separately identifiable?

[00:05:20] Speaker 02:
I think that there was none submitted and that separately identifiable, if there are two alternatives, the alternatives would be one, that it just means separately identifiable from the entity which

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divested the business, which would mean it's a nullity.

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There's no reason to write that kind of provision, because the divested business, by definition, has been divested and separated from the original entity.

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So a contract should not be construed in a way which gives no effect or meaning or which doesn't make commercial sense.

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They took a lot of care and drafted it.

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But you're saying that it, separately identifiable, somehow necessarily means it can't be a joint venture.

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And how do I know that?

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It could be a joint venture.

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The problem was not the joint venture.

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The problem was when they combined the Nokia business with the Siemens business, and also they faded out the Siemens business.

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The contract clearly says that only the divested business is licensed.

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The divested business was only the Siemens division originally.

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According to the evidence, they phased that out.

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The other problem is there's no evidence that any part of the Siemens divested business was ever acquired by the NSN United States company, which actually made the sales here.

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Siemens was very big in Europe, not in the United States.

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So they have to show that they bought from a divested business.

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They have to show that the products were ones that were being sold at the time.

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And as soon as the business is no longer separately identifiable, the license lapses.

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None of those things were shown below, certainly not at the level required to grant summary judgment.

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I'm going to move on to Erickson, unless you have any further questions.

[00:07:01] Speaker 02:
OK.

[00:07:03] Speaker 02:
With respect to Erickson, we have two different issues.

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First, so I'm sorry, just back to separately identifiable.

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You say the correct understanding is what?

[00:07:19] Speaker 02:
Separately identifiable from the acquirer's business.

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And what normally happened, look at the Rembrandt case, for instance.

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In Rembrandt, what happened?

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is there was a modem business.

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And the modem business was spun off.

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It was a business within a larger company.

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It was spun off into a separate company.

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And then that company, I believe, went public.

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So in that situation, you've got a separately identifiable business, the modem business.

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The problem would come if that business was purchased by somebody gigantic, say somebody like Lucent or General Motors or IBM.

[00:07:56] Speaker 02:
They would get a free license.

[00:07:57] Speaker 02:
They can't if they combine the telecommunications businesses together, and that wouldn't be fair.

[00:08:03] Speaker 00:
What are the characteristics in corporate form?

[00:08:06] Speaker 00:
What are the corporate form characteristics that you would have us look at in order to determine whether a particular entity is separately identifiable or not?

[00:08:14] Speaker 02:
Thank you, Your Honor.

[00:08:15] Speaker 02:
That's a great question.

[00:08:16] Speaker 02:
And the reason is there's been a lot of confusion in the briefing about whether or not we're taking the position that a joint venture

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is somehow excluded.

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That's not the position.

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They could have formed a joint venture, contributed to Siemens telecom business.

[00:08:28] Speaker 00:
But oftentimes a joint venture, for example, may have overlapping board of directors, or you may have

[00:08:35] Speaker 00:
corporate officers that are lent from one entity to the joint venture.

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And the name itself may reflect the names of the two entities that are joining together for a particular purpose.

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That's what I'm looking at.

[00:08:48] Speaker 00:
Right.

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And that's actually what we have here.

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It's Nokia Siemens Networks is what NSN stands for.

[00:08:53] Speaker 02:
And what happened, though, if they had done a joint venture where they contributed this business and maybe they contributed, and then maybe Nokia contributed a different business, a cell phone business, not base stations and the things at issue in this case,

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Maybe there wouldn't be a problem if the joint venture was the contribution of the Siemens business on the one hand and the Nokia money, for instance, and that they therefore went forward in the world together.

[00:09:16] Speaker 02:
Maybe there wouldn't be a problem.

[00:09:17] Speaker 02:
But once you mix two businesses together that have the same business, you have a problem and you have an extension of the patent rights.

[00:09:24] Speaker 02:
And that's what was negotiated for here.

[00:09:26] Speaker 02:
This is a limited right, but the license only goes, the key point is not really the joint venture.

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is that the license goes only to the divested business.

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The divested business, by the way, is a defined term in the 2009.

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And are you saying that that's a genuine issue that should have been decided by a jury in this case?

[00:09:47] Speaker 02:
I think, actually, it certainly can't grant summary judgment on this record, because the evidence is the Siemens business was shut down.

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And the evidence is that T-Mobile did not buy any products from the Siemens business.

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So the summary judgment motion should have been denied.

[00:10:02] Speaker 02:
We didn't file a cross motion on it.

[00:10:04] Speaker 02:
So that's not before you, but certainly.

[00:10:06] Speaker 03:
So you want separately identifiable to mean that whatever the divested business is or turns into, the license doesn't encompass practices that are coming from other companies?

[00:10:23] Speaker 02:
That's what separately identifiable?

[00:10:24] Speaker 02:
If there are two businesses that are combined and they're in the same business line, the Siemens business has to be arranged separately identifiable.

[00:10:32] Speaker 02:
You have to be able to point to something in the new company.

[00:10:35] Speaker 02:
If General Motors, which doesn't have wireless infrastructure business, bought this business, and it remained separately identifiable to the market as something which people could buy products from, fine.

[00:10:48] Speaker 02:
But once you put the two together, you mix the product lines.

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Or in this case, they actually dropped the Siemens business

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And that resulted in that there was no divested business anymore at all, let alone a licensed business.

[00:11:00] Speaker 00:
OK.

[00:11:00] Speaker 00:
You better go to the Erickson issue, because we're running out of time.

[00:11:04] Speaker 02:
Yes, Your Honor.

[00:11:05] Speaker 02:
The exhaustion defense fails with respect to Erickson for two critical reasons.

[00:11:09] Speaker 02:
First of all, the right granite here was supposedly a sublicense.

[00:11:14] Speaker 02:
But a sublicense can only can rise no further than the license.

[00:11:18] Speaker 02:
And in the agreement, the license expired when the patents expired.

[00:11:21] Speaker 02:
at the end of 2011.

[00:11:22] Speaker 00:
So here's the problem I'm having with the argument you're making.

[00:11:27] Speaker 00:
These are sophisticated entities.

[00:11:31] Speaker 00:
They're big players.

[00:11:34] Speaker 00:
And they wrote an agreement, but yet the agreement

[00:11:38] Speaker 00:
permits this retroactive civil licenses to be extended.

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I mean, there's nothing in the agreement that prohibits that.

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Now, I understand that the PAN has expired.

[00:11:46] Speaker 00:
And maybe your argument is that the underlying authority has, you know, expired with that.

[00:11:52] Speaker 00:
But apparently, the parties chose to negotiate and to extend this right to retroactively extend a license.

[00:12:04] Speaker 00:
beyond the life of the patent.

[00:12:06] Speaker 02:
Well, it's a little bit like an option, Your Honor.

[00:12:08] Speaker 02:
It has a time period on it.

[00:12:11] Speaker 02:
They had a right to grant a sublicense, but if you want to call it a sublicense, as they did, they have to extend it during the period when the license is active.

[00:12:18] Speaker 02:
The problem here is it doesn't make any sense to apply retroactive exhaustion, which is a new doctrine.

[00:12:23] Speaker 00:
That may be true in most cases, but here's a specific provision that permits a retroactive application that's open-ended.

[00:12:32] Speaker 00:
At least it appears to me to be the case.

[00:12:35] Speaker 02:
I understand what you're saying.

[00:12:36] Speaker 02:
This agreement should be construed within its words.

[00:12:39] Speaker 02:
There really is no such thing as a retroactive sublicense under Ethicon and under the courts.

[00:12:47] Speaker 00:
But there is in this license.

[00:12:48] Speaker 02:
Well, I know, but the question is, there's two things, two issues, and I'm going to get to the second one because I think that's the dominant one.

[00:12:54] Speaker 02:
One is, can they grant a sublicense under the strict words of this agreement when the license is lax?

[00:12:59] Speaker 02:
The answer is no.

[00:13:00] Speaker 02:
Your Honor says they're sophisticated people.

[00:13:01] Speaker 02:
I don't think they contemplated this.

[00:13:03] Speaker 02:
I don't think everybody ever thought that one of the parties would let the license expire, and then litigation would ensue, and 10 years later, they'd try to... Why not?

[00:13:11] Speaker 00:
I mean, if you have a party that's granting another one this open-ended right to, for example, a blanket extension to all subsidiaries, you know, and then there's this retroactive provision as well,

[00:13:28] Speaker 00:
Why didn't the parties put a date on that and say, OK, gee, maybe we better not permit this to happen beyond the life of the pen?

[00:13:36] Speaker 02:
Well, it's not in the agreement.

[00:13:37] Speaker 02:
They didn't have the authority to grant it.

[00:13:39] Speaker 02:
It's like an option that needs to be construed strictly.

[00:13:42] Speaker 02:
But I want to move to the other question, which is, even assuming they had a right to do this, what is the effect?

[00:13:48] Speaker 02:
There's no license to T-Mobile.

[00:13:49] Speaker 02:
Their claim is exhaustion.

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And they want to make a claim that this court extend the exhaustion doctrine to retroactive exhaustion.

[00:13:56] Speaker 02:
Exhaustion was designed to deal with a specific problem.

[00:13:59] Speaker 02:
You had patent holders who were selling a product and then trying to control the downstream issues relating to the product and trying to get a royalty twice and extend the patent monopoly.

[00:14:12] Speaker 02:
Did that happen here?

[00:14:13] Speaker 02:
No.

[00:14:13] Speaker 02:
What happened?

[00:14:15] Speaker 02:
Products were sold to T-Mobile.

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They installed them in their network.

[00:14:18] Speaker 02:
Infringement occurred.

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A matured claim occurred at that point, which has a separate character from permission and a license.

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And then the patent expired.

[00:14:28] Speaker 02:
There was no abuse of the patent monopoly by the patent holder.

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There was no extension of the patent monopoly unfairly.

[00:14:34] Speaker 02:
And what they're asking you to do is to create for them a doctrine which would help them out of the problem they have because they didn't grant the license early, which would have wide-ranging effects.

[00:14:43] Speaker 03:
What's the purpose of a retroactive license?

[00:14:48] Speaker 03:
Protect the licensee, sub-licensee from liability for past activities?

[00:14:53] Speaker 02:
I think that's probably the intent.

[00:14:55] Speaker 02:
In Ethicon and standing cases, the court has said we're not necessarily going to give that effect.

[00:15:01] Speaker 02:
I would point out one important thing, though, with respect to this particular sub-license and its dispositive, if Your Honor thinks it's some sort of release, which is that this sub-license was a license between LME and Erickson Inc.

[00:15:14] Speaker 02:
Even if it has some effect for Ericsson Inc., it doesn't have any effect for T-Mobile unless you go further and adopt the concept of retroactive exhaustion, which I suggest is not consistent with the exhaustion doctrine, which is very much focused on the character of the infringing sale and whether the patent holder is abused or not.

[00:15:32] Speaker 02:
All right.

[00:15:33] Speaker 00:
We used up your time.

[00:15:35] Speaker 00:
I'm going to restore your three minutes, OK?

[00:15:37] Speaker 00:
Thank you, Your Honor.

[00:15:38] Speaker 00:
Due to the questions that we had.

[00:15:41] Speaker 00:
Mr. Bansali?

[00:15:42] Speaker 01:
Thank you, Your Honor.

[00:15:43] Speaker 00:
Did I pronounce that correctly, sir?

[00:15:44] Speaker 01:
Very well.

[00:15:45] Speaker 01:
Thank you, Your Honor.

[00:15:47] Speaker 00:
And you have 15 minutes.

[00:15:49] Speaker 00:
I'll give you a little extra time if you want, but if you need it only, OK?

[00:15:54] Speaker 01:
May it please the court, Assim Bansali of Keckor and Van Nest LLP for T-Mobile USA.

[00:16:00] Speaker 01:
I'd like to start where you left off, Judge Raina, which is that these are big players, as you called them.

[00:16:07] Speaker 01:
And that observation actually applies

[00:16:11] Speaker 01:
to all of the licenses we're dealing with.

[00:16:14] Speaker 01:
AT&T and Lucent, when they licensed these patents in the 80s and 90s, received fair compensation in the form of the freedom to operate free of patent risk from their major competitors, Siemens, Erickson, and Alcatel, and also received substantial monetary compensation.

[00:16:38] Speaker 01:
Once the district court

[00:16:40] Speaker 01:
interpreted the licenses to enforce those promises that Lucent and AT&T made against the current holder of their patents, the district court engaged in the straightforward application of the exhaustion doctrine in order to find High Point's claims exhausted.

[00:16:59] Speaker 00:
Why don't you address the separately identifiable limitation?

[00:17:03] Speaker 01:
Yes, Your Honor.

[00:17:05] Speaker 01:
That limitation was written into

[00:17:09] Speaker 01:
the divestment rider, which was drafted by AT&T.

[00:17:13] Speaker 01:
If you look at the rider, it's on AT&T letterhead.

[00:17:17] Speaker 01:
And it says exactly what it says.

[00:17:21] Speaker 01:
It says that the business has to be separately identifiable.

[00:17:25] Speaker 03:
Separately identifiable from who?

[00:17:27] Speaker 03:
Separately identifiable from what?

[00:17:30] Speaker 01:
From any other business.

[00:17:31] Speaker 01:
And AT&T

[00:17:34] Speaker 01:
in the parent license, in the 1988 parent license.

[00:17:37] Speaker 00:
So let's say you have a joint venture and you're going to apply this separately identifiable.

[00:17:42] Speaker 00:
You say from any business.

[00:17:44] Speaker 00:
So you seem to argue that the fact that it's divested is sufficient.

[00:17:51] Speaker 01:
The fact that it's divested and you can look at the divested business and say, this is a freestanding, separately identifiable business.

[00:18:00] Speaker 00:
Assume the divested business now assumes

[00:18:04] Speaker 00:
an acronym or a name that's built out of both entities in a joint venture.

[00:18:10] Speaker 00:
Is that separately identifiable?

[00:18:12] Speaker 01:
That's certainly one characteristic of it being separately identifiable.

[00:18:16] Speaker 01:
And in this case, Your Honor, actually your hypothetical existed here because it was Nokia Siemens Networks.

[00:18:22] Speaker 01:
And so one could look at Nokia Siemens Networks and say that it was the identifiable business, separately identifiable business,

[00:18:32] Speaker 01:
that came from the divested Siemens business.

[00:18:35] Speaker 00:
Doesn't that name give rise to question that maybe they're not separate?

[00:18:41] Speaker 00:
The fact that the entities retain the name that perhaps there's a controlling interest by one entity, overlapping board of directors?

[00:18:53] Speaker 01:
Well, certainly the name suggests that it's a joint venture.

[00:18:58] Speaker 01:
I think as Mr. Black conceded here and that High Point concedes in their reply brief, there's no prohibition on a joint venture.

[00:19:08] Speaker 01:
What you have to look at is, is this joint venture separately identifiable?

[00:19:12] Speaker 01:
And we at page 21 in our opposition brief... I still don't understand what separately identifiable means.

[00:19:19] Speaker 03:
What if Nokia had bought this divested business?

[00:19:24] Speaker 03:
Would that be separately identifiable?

[00:19:27] Speaker 01:
I think you would have to look at the characteristics of the business in the arrangement as it existed.

[00:19:35] Speaker 03:
As I understood the district court's opinion, the answer would be yes.

[00:19:39] Speaker 03:
Because whatever that is, Nokia's purchase of that divested business, it would be separately identifiable from Siemens.

[00:19:48] Speaker 03:
And that's how I understand how the district court understood separately identifiable.

[00:19:55] Speaker 03:
arguably makes the term separately identifiable redundant in light of the fact the contractor already says divested business.

[00:20:04] Speaker 01:
So let me respond to that with two points.

[00:20:05] Speaker 01:
I think first, with respect to the district court's opinion, I think one has to read that in the overall context, which is that we explained in our papers in the district court that NSN was operated separately and independently from both Nokia and Siemens.

[00:20:25] Speaker 01:
And you could identify it separately and independently.

[00:20:28] Speaker 03:
And the evidence... Where does that take us, though?

[00:20:31] Speaker 03:
The fact that NSN operates independently of Nokia.

[00:20:36] Speaker 03:
I mean, what does that matter?

[00:20:38] Speaker 01:
Well, what it relates to is that ultimately AT&T, if they wanted to put additional restrictions into separately identifiable, they were a sophisticated party who had the ability to write that in.

[00:20:51] Speaker 01:
And in fact, in the parent license, the 1988 Siemens license,

[00:20:55] Speaker 01:
They have specific terms, for example, on the ownership that's required of a subsidiary in order for it to be licensed.

[00:21:04] Speaker 01:
And the divestment writer actually incorporates, for example, the time period term of the parent license.

[00:21:10] Speaker 01:
So if, for example, AT&T wanted the divestment writer not to apply if the divested business became a subsidiary of another company, they could have written that into the license.

[00:21:23] Speaker 01:
They chose not to do that.

[00:21:24] Speaker 01:
The district court simply applied the plain language to interpret it as requiring only separation from any other business.

[00:21:33] Speaker 01:
Now, I recognize that in the district court's opinion, the light judge, Irena, is focused only on separation from Siemens.

[00:21:41] Speaker 01:
But the record is undisputed that NSN was also separate from Nokia.

[00:21:47] Speaker 01:
And page 21 of our brief, we cite all the evidence that was undisputed about that separation.

[00:21:53] Speaker 00:
But your argument is separate because it was divested.

[00:21:56] Speaker 01:
That it was separate, yes.

[00:21:58] Speaker 01:
That it was divested actually both from Siemens and that to the extent the Nokia business was part of NSN, that was also separate from Nokia.

[00:22:08] Speaker 00:
Can you envision a divestiture, a joint venture

[00:22:13] Speaker 00:
where you really don't have a separate, distinct corporate entity?

[00:22:20] Speaker 01:
Sure.

[00:22:20] Speaker 01:
I mean, hypothetically, two companies could have a joint venture where they combine their business efforts and the company doesn't operate independently.

[00:22:29] Speaker 01:
It's just two divisions of businesses operate together.

[00:22:33] Speaker 00:
So if the court looks at this and simply says, we have a divestiture, that's enough,

[00:22:39] Speaker 00:
Isn't there more to that?

[00:22:42] Speaker 00:
I mean, don't we have a genuine issue of fact as to whether there's actually an identifiable distinct entity?

[00:22:51] Speaker 01:
Your Honor, hypothetically, there could be a genuine issue of material fact.

[00:22:57] Speaker 01:
On the record in this case, all of the facts regarding the operation of NSN were undisputed.

[00:23:05] Speaker 01:
and that it operated independently of both of the companies that contributed their businesses to it.

[00:23:13] Speaker 03:
I'm still lost.

[00:23:15] Speaker 03:
Are you saying if Nokia?

[00:23:18] Speaker 03:
I don't understand what your answer is if the fact pattern was if Nokia had bought this divested business from Siemens, or if whoever AT&T's largest archenemy competitor is that ended up buying this

[00:23:34] Speaker 03:
divested business from Siemens.

[00:23:37] Speaker 03:
On one hand, you know, one could argue, yeah, that's separately identifiable, that concern that is now selling all kinds of licensed equipment.

[00:23:48] Speaker 03:
Would that fit within your definition of separately identifiable?

[00:23:52] Speaker 01:
Not if it is rolled up into the parent business such that

[00:23:59] Speaker 01:
The purchase, the divestiture from Siemens is merely an artifice to obtain license rights.

[00:24:05] Speaker 01:
That's not the situation we have here, because we have a bona fide business transaction that created a separate independent entity.

[00:24:14] Speaker 03:
How do we know we have a bona fide transaction that created some break away from Nokia?

[00:24:24] Speaker 01:
The record establishes

[00:24:26] Speaker 01:
that NSN was operated independently, that it was created as a joint venture of these two businesses.

[00:24:34] Speaker 01:
It had its own board of directors.

[00:24:36] Speaker 03:
But most of them are from Nokia, right?

[00:24:38] Speaker 01:
Well, actually, it had directors from both Nokia and from Siemens.

[00:24:43] Speaker 03:
But the majority were from where?

[00:24:46] Speaker 01:
I believe the majority was from Nokia.

[00:24:49] Speaker 01:
But there's no evidence that, and again, the record evidence here that the judge ruled on was undisputed,

[00:24:56] Speaker 01:
NSN did not somehow have fealty to Nokia, and it wasn't carrying out a Nokia business agenda.

[00:25:03] Speaker 01:
It was operating as an independent entity.

[00:25:06] Speaker 01:
High Point never developed or offered any evidence and the summary judgment record to dispute the independent operation of Nokia.

[00:25:15] Speaker 00:
Was there argument below as to the independent operation of the joint venture?

[00:25:21] Speaker 01:
Yes, Your Honor, absolutely there was.

[00:25:23] Speaker 01:
It was set out in our summary judgment papers.

[00:25:25] Speaker 01:
And again, at page 21 of our brief in this court, we cite that evidence.

[00:25:31] Speaker 01:
And it's notable that neither in their opening brief nor in their reply brief does High Point offer any evidence that Nokia engaged in any kind of control that would have affected the operation of NSN.

[00:25:47] Speaker 00:
Did High Point make those arguments before the district court?

[00:25:51] Speaker 01:
The High Point argued before the district court only that separately identifiable could not cover the Nokia products.

[00:26:01] Speaker 01:
And there's an important issue there, because under the Rembrandt case, interpreting the exact kind of divestment rider from AT&T, this court previously held that the category of products covered by this divestment rider is broad.

[00:26:20] Speaker 01:
and is not limited to a particular product line that existed at a particular time.

[00:26:26] Speaker 00:
And correct me if I'm wrong, but it seemed to me that High Point was arguing below that we did not have a separately identifiable business solely on the basis of products, not corporate form.

[00:26:38] Speaker 01:
Your Honor, I would agree with that.

[00:26:40] Speaker 01:
And then after seeing the Rembrandt case, High Point has sort of shifted its argument and tried to

[00:26:48] Speaker 01:
to sort of wedge that product limitation that they want into the separate identifiability issue.

[00:26:55] Speaker 01:
But this court in Rembrandt, interpreting the exact same kind of divestment rider, treated those as different issues.

[00:27:02] Speaker 01:
And on the product issue, Rembrandt is very clear that it's a broad license that's not limited to a particular kind of product, so that if

[00:27:12] Speaker 01:
Siemens had divested the business, not into a joint venture, but into just a Siemens divested business.

[00:27:19] Speaker 01:
And then they had acquired the Nokia product line.

[00:27:22] Speaker 01:
We wouldn't be here.

[00:27:23] Speaker 01:
And so what High Point is really doing is essentially sort of a form over substance argument that says, well, because this is a joint venture, now we can get around Rembrandt and limit the products that the joint venture is licensed to sell.

[00:27:38] Speaker 01:
And that's just not appropriate, because this court really treated those as two separate limitations in Rembrandt.

[00:27:47] Speaker 03:
What do you think the purpose was of this writer?

[00:27:50] Speaker 03:
I mean, the other side is saying the purpose of this writer was to make sure that the licensing rights were maintained within the scope of whatever Siemens had previously been doing, but now it's going to be occurring in the divested business.

[00:28:07] Speaker 03:
to ensure that other competitors that are unlicensed weren't going to be able to somehow enjoy the benefits of the license.

[00:28:17] Speaker 03:
Is that a fair understanding of the rider?

[00:28:19] Speaker 01:
Your Honor, I would say that that's sort of, I think, a gloss.

[00:28:25] Speaker 03:
What else would it mean besides that?

[00:28:27] Speaker 01:
I think the primary purpose of the rider, as reflected in the rider itself, is in order for what ultimately became loosened

[00:28:35] Speaker 01:
and the other AT&T spinoffs to get the benefit of the cross licenses that AT&T had with its competitors in the industry so that they could be spun off and operate free from patent risk just as AT&T did.

[00:28:50] Speaker 01:
So I think it has to be viewed in that context, which is actually in order to obtain operating freedom for AT&T's businesses rather than to limit their operating freedom.

[00:29:02] Speaker 01:
So with that context, I think the purpose of the separate identifiability rider is in order to prevent somebody from using a divestiture and acquisition as an artifice to obtain license rights.

[00:29:16] Speaker 01:
It's not in order to govern what future form AT&T spinoff businesses and their licensing counterparts spinoff businesses would take.

[00:29:27] Speaker 01:
There's no suggestion of that in the license agreement.

[00:29:30] Speaker 03:
Is it true what the other side says that the joint venture ended up selling predominantly the Nokia-based line?

[00:29:39] Speaker 01:
So they sold in China, they sold the Siemens line.

[00:29:43] Speaker 01:
In other markets, including the US, they consolidated the product lines.

[00:29:49] Speaker 01:
And actually, after the joint venture was formed, the products became backwards compatible.

[00:29:56] Speaker 01:
quote unquote, to the Siemens product line.

[00:29:59] Speaker 01:
In other words, it was a joint NSN product line.

[00:30:02] Speaker 01:
And admittedly, it used the model names of, in many instances, the Nokia products.

[00:30:07] Speaker 01:
But those were compatible with the Siemens products.

[00:30:11] Speaker 01:
And they had a joint R&D.

[00:30:13] Speaker 01:
I mean, the R&D came from both companies.

[00:30:16] Speaker 01:
And again, all those record facts are cited at page 21 of our brief.

[00:30:20] Speaker 01:
Can you address the Erickson license, please?

[00:30:22] Speaker 01:
Yes, Your Honor.

[00:30:23] Speaker 01:
With respect to the Erickson license,

[00:30:25] Speaker 01:
Again, I think your honor hit the issue, which is that these were sophisticated parties, and they intentionally included this right to retroactively sub-license so that you didn't have to necessarily execute the license prior to a subsidiary's practicing the patent.

[00:30:47] Speaker 01:
You could come back and execute it later.

[00:30:49] Speaker 01:
Now, Mr. Black has suggested that, well, even if they had intended that,

[00:30:53] Speaker 01:
the license should not run past the expiration of the patents.

[00:30:58] Speaker 01:
But of course, the right to sue for damages, as the court is well aware, runs for six years after the expiration of a patent.

[00:31:07] Speaker 01:
And so the need for a retroactive sublicense would continue during that six years.

[00:31:13] Speaker 01:
I think Judge Chen very recently recognized in the Caranos case that a license's validity

[00:31:22] Speaker 01:
should not turn on the fortuity of whether it's executed immediately prior to a patent's expiration or immediately after a patent's expiration.

[00:31:36] Speaker 01:
Now, in Kerenos, the court was dealing with an exclusive license.

[00:31:42] Speaker 01:
But a non-exclusive sublicense, actually, the same reasoning applies to that kind of sublicense and, in fact, arguably, is stronger there.

[00:31:53] Speaker 01:
that here we have a contract.

[00:31:55] Speaker 01:
The parties clearly anticipated that in the future, one of, again, Lucent or L.M.

[00:32:01] Speaker 01:
Erickson, this is a reciprocal provision that applies both ways, one of their subsidiaries may need a retroactive license.

[00:32:09] Speaker 01:
That's what we have here.

[00:32:11] Speaker 00:
It seems to me that it's pushing a little bit too far to say that the parties foresaw a situation where

[00:32:20] Speaker 00:
subsidiaries are sued for infringement, and then there's a retroactive application of a license to those subsidiaries in order to cover them.

[00:32:30] Speaker 01:
Well, Your Honor, I would say two things.

[00:32:33] Speaker 01:
First, one thing to be clear.

[00:32:34] Speaker 01:
From the beginning, Lucent gave up its rights to these patents vis-a-vis any Erickson subsidiaries.

[00:32:43] Speaker 01:
This isn't a situation where Lucent had to provide consent or they had to be given notice.

[00:32:49] Speaker 01:
Lucent authorized L.M.

[00:32:51] Speaker 01:
Erickson and its subsidiaries to practice these patents without any restriction and gave L.M.

[00:32:59] Speaker 01:
Erickson the sole right to sublicense.

[00:33:03] Speaker 01:
And so this is akin to the Tessera case, where a license was granted.

[00:33:09] Speaker 01:
And there, there was actually an express condition that the license was conditioned on the payment of royalties.

[00:33:15] Speaker 01:
But the court said it didn't matter.

[00:33:17] Speaker 01:
You granted an authorization.

[00:33:19] Speaker 01:
to practice the patents.

[00:33:21] Speaker 01:
And therefore, this other condition that had to be satisfied is a contract issue.

[00:33:25] Speaker 01:
It doesn't limit the authorization that was granted to practice the patents.

[00:33:30] Speaker 01:
We have the same thing here.

[00:33:31] Speaker 01:
Lucent gave up its rights.

[00:33:33] Speaker 01:
There's no dispute about that.

[00:33:34] Speaker 01:
The only question is whether L.M.

[00:33:37] Speaker 01:
Erickson perfected the requirements to exercise those rights.

[00:33:43] Speaker 01:
We think under the contract they did that.

[00:33:46] Speaker 01:
They had the right to do that retroactively.

[00:33:48] Speaker 01:
But even if they didn't, Lucent had given up its rights.

[00:33:52] Speaker 03:
And therefore, there's- Do you have anything additional to say about the retroactive exhaustion argument by the other side?

[00:33:59] Speaker 03:
Or is it the same essential principle?

[00:34:01] Speaker 01:
It's the same.

[00:34:02] Speaker 01:
It's the Tessera principle that once you've authorized, Your Honor, that that triggers exhaustion.

[00:34:10] Speaker 00:
OK.

[00:34:10] Speaker 00:
You've got about 13 seconds left.

[00:34:12] Speaker 00:
Do you want to sum up?

[00:34:13] Speaker 01:
Yes, Your Honor, I would like something.

[00:34:15] Speaker 01:
The last thing I would say is that this was a very well-considered situation.

[00:34:20] Speaker 01:
It wasn't, as High Point has suggested, a casual decision by the district court.

[00:34:24] Speaker 01:
There's 7,700 pages of record.

[00:34:27] Speaker 01:
There was a two-hour summary judgment argument that ran about 100 pages.

[00:34:31] Speaker 01:
It's at the end of the joint appendix.

[00:34:34] Speaker 01:
So this was not something that the district court just did on an unconsidered record.

[00:34:38] Speaker 01:
This was after two years of litigation.

[00:34:40] Speaker 01:
and extensive briefing and argument.

[00:34:43] Speaker 01:
OK.

[00:34:43] Speaker 01:
Thank you very much.

[00:34:45] Speaker 00:
Mr. Black, we have three minutes.

[00:34:47] Speaker 02:
Thank you, Your Honor.

[00:34:48] Speaker 02:
First of all, there's been an assertion made, which I find rather surprising, that we didn't argue the separately identifiable point below.

[00:34:56] Speaker 02:
I would point to the district court's opinion at page 24, where he notes that he takes the divestment clause and says point A, only while the future divested business operates the separately identifiable business, and B,

[00:35:08] Speaker 02:
only to the extent applicable to products and services.

[00:35:11] Speaker 02:
He writes, High Point argues that the sub-license was not authorized because neither conditions A and B were satisfied.

[00:35:18] Speaker 00:
Did you make specific arguments as to corporate forum and whether the corporate forum could be a characteristic of a separate identifiable business?

[00:35:29] Speaker 02:
Not sure I understand.

[00:35:31] Speaker 00:
What we argued was that... You seem to have argued that

[00:35:34] Speaker 00:
separately identifiable was determined by the products that are being sold.

[00:35:39] Speaker 02:
I think what we argued, and I maintain the position, is that you need to look at what actually happened with respect to the businesses.

[00:35:46] Speaker 02:
There's a business and another business and you combine them.

[00:35:48] Speaker 02:
In a joint venture, you're likely going to end up with a situation where they are combined.

[00:35:52] Speaker 02:
They caricatured our argument as being that, well, there's a joint venture exception.

[00:35:56] Speaker 02:
That's not what we're saying.

[00:35:58] Speaker 02:
What we're saying, though, is when they combine the businesses, they combine the boards,

[00:36:02] Speaker 02:
And a lot of this evidence is in the record, including in the appendix on appeal, A62, 32, 33, et cetera, the statement of facts.

[00:36:10] Speaker 02:
We established what happened with the business, how they were combined, how there was a new board of directors, that board of directors was controlled by Nokia, how the Siemens business was then discontinued, how everything was controlled by this new and combined business.

[00:36:22] Speaker 02:
So we did make all those arguments, Your Honor.

[00:36:26] Speaker 02:
Wait, you're saying the joint venture was controlled by Nokia?

[00:36:29] Speaker 02:
It was, yes.

[00:36:31] Speaker 02:
The board was split, but Nokia had majority control and their financials were consolidated up to Nokia.

[00:36:39] Speaker 02:
Nokia OY or whatever the... And you're saying you argued that on that basis you did not have a separate identifiable... Yes, we did because they had been contributed to a business and combined with the Nokia business in this... Specifically their carrier business.

[00:36:58] Speaker 02:
Yes.

[00:36:59] Speaker 02:
Right?

[00:36:59] Speaker 03:
If it was any other business, you wouldn't care.

[00:37:03] Speaker 02:
I think we might not have the problem, because then to the market, the business would be separately identifiable to the people who are selling it.

[00:37:09] Speaker 02:
That's who it matters to.

[00:37:10] Speaker 02:
It's not unlimited.

[00:37:12] Speaker 02:
I think a fair construction would be that say all Nokia contributed was $100 million of capital and the Siemens business, then maybe we certainly wouldn't be here today.

[00:37:23] Speaker 03:
If we were to say that

[00:37:25] Speaker 03:
This contract revision was ambiguous, and it needs to go back for further development of the record.

[00:37:32] Speaker 03:
What could really be uncovered, discovered, gleaned from extrinsic evidence to help understand separately identifiable?

[00:37:42] Speaker 02:
As far as the understanding of separately identifiable, I'm not sure that there's much more that could be found.

[00:37:49] Speaker 02:
I don't know.

[00:37:51] Speaker 02:
With respect to the facts, we have a pretty

[00:37:54] Speaker 02:
extensive record this was the main issue for us on nsn and and we have a long record in the in the uh... they require statements of facts and response statement of facts and all the evidence and a lot of it's here even in the appendix okay we we have your argument you're out of time and thank you for the argument