[00:00:00] Speaker 02:
Argument is 141820, integrated technology versus Rudolph technology.

[00:00:15] Speaker 03:
Good afternoon, Your Honor.

[00:00:16] Speaker 03:
May it please the Court?

[00:00:18] Speaker 03:
I'd like to address three issues here in this case where fees were awarded after a remand.

[00:00:23] Speaker 03:
Number one, there was an error because the district court on remand

[00:00:26] Speaker 03:
failed to consider the totality of the circumstances as they had dramatically changed post remand.

[00:00:33] Speaker 03:
Before the remand, the court awarded fees based on the belief that three out of four accused products willfully infringe their patent.

[00:00:39] Speaker 03:
After this court's decision... Blue brief, page 28.

[00:00:44] Speaker 04:
You say, in a short decision containing one paragraph of inclusory analysis, the court found that, quote, most close-quote facts supporting the original

[00:00:55] Speaker 04:
the award had, quote, no connection, close quote, to the vacated willfulness finding.

[00:01:02] Speaker 04:
However, I looked at the district court's 2014 order at page 2, which says, in a brief, the record establishes the following, colon, Rudolph hid its infringement for years, provided false discovery responses, filed summary judgment papers even though it knew it

[00:01:24] Speaker 04:
product infringed, argued a never fully explained theory that ITC did not own the underlying patent, and during and after trial played semantic games regarding what its machines did and what functions were important to it and its customers, and then ellipsis.

[00:01:40] Speaker 04:
The striking weakness of Rudolph's position regarding its pre-2007 PRVX machines, as well as the unreasonable manner in which it litigated the case through trial and post-trial motions,

[00:01:54] Speaker 04:
satisfy the Supreme Court standard under 285 for awarding fees.

[00:01:58] Speaker 04:
Did you read the decision?

[00:02:00] Speaker 03:
Of course, Your Honor, and this is all in the one paragraph, but there's no sites to the record here for the vast majority of these.

[00:02:06] Speaker 03:
And as we went through in our brief, for example, the discovery responses, there's no citation to a single discovery response that was in error.

[00:02:13] Speaker 03:
ITC did not cite any discovery response that wasn't true.

[00:02:17] Speaker 03:
We showed in our brief that this issue of the ownership

[00:02:21] Speaker 03:
In fact, it was a legitimate issue because ITC amended their complaint to add a holding company as at least a co-owner, if not the sole owner of the patent, and their vice president testified that holding company was the owner.

[00:02:32] Speaker 03:
That's a key issue on damages because if the holding company owns the patent under the Poly America case, ITC gets no lost profits, and that's the only damages they have.

[00:02:40] Speaker 03:
So we went through those issues to show they weren't supposed to.

[00:02:43] Speaker 03:
Excuse me.

[00:02:43] Speaker 04:
Can a prevailing party never engage in sanctionable litigation misconduct?

[00:02:49] Speaker 03:
I think, Your Honor, under 285 is the issue that we're here if I can answer it in that context.

[00:02:54] Speaker 03:
That says the prevailing party may get attorney's fees in exceptional cases.

[00:02:59] Speaker 03:
So it is only the prevailing party that would get attorney's fees.

[00:03:02] Speaker 02:
But there was a prevailing party here, at least with respect to the initial portion of the case, the summary judgment.

[00:03:07] Speaker 03:
Right, that's right.

[00:03:08] Speaker 03:
ITC is considered the prevailing party for that one product that was decided two years before trial.

[00:03:13] Speaker 03:
And our point is part of the abuse of discretion here by the district court in the legal era was failing to consider how that totality had changed.

[00:03:20] Speaker 03:
The first time around, the court said, you are still infringing even here after trial in 2012.

[00:03:25] Speaker 03:
You never stopped.

[00:03:26] Speaker 03:
Well, on remand, it's clear we actually stopped in 2007 when that original design that had been sold for years before the lawsuit

[00:03:33] Speaker 03:
was changed a few months after the lawsuit.

[00:03:35] Speaker 02:
But it had to do with the improper discovery responses, right?

[00:03:41] Speaker 02:
And that had to do with the summary judgment motion which you lost on, right?

[00:03:45] Speaker 03:
Well, that's what I'm talking about.

[00:03:46] Speaker 03:
There's no citation in any place in the record that even after that pre-07 product, there was a misstatement in any discovery.

[00:03:54] Speaker 03:
They had a deposition of Mr. Subert in 2007.

[00:03:57] Speaker 03:
They don't point to any untruthful answers.

[00:03:59] Speaker 03:
He answered all the questions about that redesign and his

[00:04:01] Speaker 03:
finding of that contact in the first state element that was conceded in some of the judgment.

[00:04:06] Speaker 01:
So that's your interpretation of his testimony, but that's not the interpretation she reached.

[00:04:11] Speaker 01:
She understood his testimony to suggest that he learned at the time he tested the product that they infringed.

[00:04:18] Speaker 01:
She did not interpret the testimony the way you would like me to.

[00:04:22] Speaker 01:
And even if I were inclined to go along with your interpretation, that is a fact finding.

[00:04:28] Speaker 01:
How to interpret a witness's testimony

[00:04:30] Speaker 01:
and I have to give deference to her fact finding.

[00:04:34] Speaker 01:
I mean, what is the standard I'm reviewing her under here?

[00:04:37] Speaker 03:
I think that that's a very fair point, but the key here is under totality of the circumstances, that single question and answer have to be considered in the context.

[00:04:45] Speaker 01:
Well, no, but under the totality of the circumstances, she found this case exceptional because she thinks your witness, the CEO of the company accused of infringement, tested the product,

[00:04:59] Speaker 01:
admitted in his testimony, whether you agree with this interpretation or not, this is her fact finding, admitted in his testimony that he tested the product and found that product infringed the patent.

[00:05:12] Speaker 01:
Then that same company continued to oppose litigation over the issue of infringement.

[00:05:20] Speaker 01:
Now maybe this case only goes up until the 2007 summary judgment, the product that is the subject of the summary judgment.

[00:05:29] Speaker 01:
But certainly it seems to me that you have a very hard case to make that she would be abusing her discretion if she found that portion of your behavior, that portion of the case, not your personal, you understand I don't mean you personally, but that portion of the case exceptional and and warranting fees.

[00:05:49] Speaker 01:
What would your argument be as to why that's not the case?

[00:05:52] Speaker 03:
The question is was the litigation conduct reasonable?

[00:05:55] Speaker 03:
And what happened here is

[00:05:56] Speaker 03:
Rudolph had an expert, an engineering and software expert, look at the court's Merkman construction of the Means Plus Function clause of that software element, which is different from the one Mr. Subert talked about.

[00:06:08] Speaker 03:
And that Merkman decision came out over a year after Mr. Subert checked that out, about a year after his deposition.

[00:06:15] Speaker 03:
He had no benefit of the court's Means Plus Function construction that was disputed.

[00:06:20] Speaker 01:
And then that expert applied that to... But Mr. Subert didn't

[00:06:25] Speaker 01:
talk about in his deposition, the means plus function element, that wasn't what he tested.

[00:06:30] Speaker 01:
He concluded in her factual determination that the company was infringing the product.

[00:06:37] Speaker 01:
And then there were subsequent oppositions.

[00:06:39] Speaker 01:
And in fact, didn't you affirmatively follow your own summary judgment of non-infringement even after he had made that determination?

[00:06:47] Speaker 01:
He's the CEO of the company.

[00:06:49] Speaker 01:
I mean, it's not like, you know,

[00:06:51] Speaker 01:
Joe Schmoe in that garage.

[00:06:54] Speaker 03:
And so, you know, accepting that to be true, though, the question is, was there an objective basis to say that there was a non-infringement under the actual facts regarding the operation of the software of the product, which there's no indication Mr. Subrata evaluated against that means plus function clause.

[00:07:10] Speaker 03:
And I would submit that that was objectively reasonable.

[00:07:13] Speaker 03:
ITC hasn't contested that that in itself would be objectively unreasonable.

[00:07:17] Speaker 01:
Suppose that we

[00:07:18] Speaker 01:
just suppose we don't agree with you and that we conclude that at least with regard to that 2007 period up until that point in time that it was appropriate and legitimate for her to conclude the case was exceptional with regard not to the re-engineered product but the product up until that point in time.

[00:07:39] Speaker 01:
Where are we now?

[00:07:40] Speaker 01:
Why don't you for a minute focus on what we ought to do if that's our conclusion.

[00:07:45] Speaker 03:
Well then we have a whole different error here and that's the failure

[00:07:48] Speaker 03:
to apportion, the failure to recognize that because there's no willfulness that the misconduct needs to be correlated to the fee award.

[00:07:55] Speaker 01:
Well, I would completely agree with your statement of the law and I actually don't think I saw them disagreeing with your statement of the law either in that regard.

[00:08:04] Speaker 01:
The problem is you entered into a stipulation here and when lawyers and parties enter into stipulation and you in fact drafted it and again I don't know if it's you personally but you the party you represent and of course

[00:08:18] Speaker 01:
when interpreting a contract, if it's at all ambiguous, you interpret it against the drafter, right?

[00:08:24] Speaker 01:
Contract, come on, I've got to have a first year in here that could probably quote me some case.

[00:08:29] Speaker 01:
So when there's a contract we interpret it against the drafter, you, your party, drafted the stipulation, and the stipulation says you're not going to contest the amount of $3.2 million

[00:08:43] Speaker 01:
Yes, for all you law students who are wondering whether you'll be employed after this, 3.2 million for the attorney's fees.

[00:08:49] Speaker 01:
That's not the damages in the case.

[00:08:51] Speaker 01:
Those are the attorney's fees.

[00:08:53] Speaker 01:
So you affirmatively stipulated to that because you

[00:08:56] Speaker 01:
Very politely said, you don't want to cause anyone to have to go on to additional litigation.

[00:09:02] Speaker 03:
To go through the itemization.

[00:09:03] Speaker 03:
The context of that was after the court, in view of those willfulness findings later reversed, said, I grant ITC's motion.

[00:09:10] Speaker 03:
They get the entirety of their attorney's fees for the case.

[00:09:13] Speaker 03:
Now we'll turn to how much money that actually is.

[00:09:16] Speaker 03:
In that context, we entered a stipulation on the question pending, which is, what are their total fees?

[00:09:21] Speaker 03:
That letter, construe it any way you'd like against us or for us, but it does say we agree that that is the reasonable, or you're contending that's the amount you paid and we'll accept that.

[00:09:30] Speaker 02:
So what were you saying?

[00:09:31] Speaker 02:
You weren't going to contest something.

[00:09:32] Speaker 02:
Was that on the amount of fee?

[00:09:34] Speaker 02:
That was the entitlement.

[00:09:35] Speaker 02:
Like does this associate spend so much money and deserve this hourly rate?

[00:09:37] Speaker 02:
Right, right.

[00:09:38] Speaker 03:
We're not going to have to go through all the itemization, figure out if it's 2.7 or something else.

[00:09:41] Speaker 03:
But we did preserve in that same letter the right to challenge their entitlement to the fee award.

[00:09:46] Speaker 03:
And that's exactly what we did on the first appeal.

[00:09:49] Speaker 03:
Got that decision reversed, vacated on attorney's fees, excuse me.

[00:09:54] Speaker 03:
And so then it came back.

[00:09:55] Speaker 03:
And now there's no willfulness.

[00:09:56] Speaker 03:
And now this apportionment and their entitlement, the question is a different question now.

[00:10:00] Speaker 03:
What part of those total fees are now relevant to the misconduct apart from

[00:10:05] Speaker 03:
the willfulness finding.

[00:10:06] Speaker 03:
So that's a completely different context.

[00:10:09] Speaker 03:
I would say even today, we don't dispute the totality of their fees.

[00:10:12] Speaker 03:
If they say their client paid them $3.25 million, fine.

[00:10:15] Speaker 03:
We're not trying to shirk that stipulation.

[00:10:18] Speaker 03:
The separate question now is, what portion of those fees are reasonably related to the purported misconduct?

[00:10:24] Speaker 03:
And that stipulation doesn't absolve them from following the case slides you indicated, Your Honor, that they have agreed to.

[00:10:29] Speaker 03:
And the court didn't dispute that either.

[00:10:31] Speaker 01:
But the court found you bound by this stipulation.

[00:10:34] Speaker 03:
That is a clear error, Your Honor.

[00:10:37] Speaker 03:
That we are bound to a stipulation now absent willfulness when that relevant question is now apportionment.

[00:10:41] Speaker 02:
Did you read the argument to the District Court?

[00:10:43] Speaker 02:
Yes.

[00:10:43] Speaker 02:
The District Court, I think, as far as I know, and please correct me if I'm wrong, had one sentence and they're bound by the stipulation.

[00:10:48] Speaker 03:
Right.

[00:10:48] Speaker 03:
The District Court just said we're bound very quickly, Your Honor.

[00:10:50] Speaker 03:
That's right.

[00:10:51] Speaker 03:
But we did present the Rambas case.

[00:10:52] Speaker 03:
We did state in our opposition... No, no, no.

[00:10:55] Speaker 01:
You argued to her that apportionment was appropriate.

[00:10:57] Speaker 01:
But where did you argue to her that we are not bound by the stipulation because of changed circumstances?

[00:11:06] Speaker 03:
I don't think we were really trying to say we're not bound by that amount, Your Honor.

[00:11:09] Speaker 03:
We're saying that the limited scope to that stipulation is to the amount of the total fees.

[00:11:14] Speaker 03:
And this is a separate question now about the apportionment issue.

[00:11:17] Speaker 03:
So that stipulation, whether you consider it to continue to be applicable or not, it simply doesn't answer the question right now.

[00:11:23] Speaker 04:
It's like her argument right now.

[00:11:24] Speaker 04:
You're saying you are bound by the stipulation.

[00:11:27] Speaker 04:
as to the amount.

[00:11:28] Speaker 04:
And then the question is entitlement to what part of that stipulated amount.

[00:11:33] Speaker 03:
Well, we have a separate question, though, because there's no wilfulness of what's the appropriate apportionment of their fees to the misconduct.

[00:11:39] Speaker 03:
That's just not what was stipulated to.

[00:11:41] Speaker 03:
That wasn't the issue at the time.

[00:11:43] Speaker 01:
Suppose your stipulation, which I know it doesn't in this case, but had read, we stipulate that if fees are awarded, 3.2 million is the appropriate amount, full stop.

[00:11:54] Speaker 01:
Suppose that had been your stipulation.

[00:11:57] Speaker 01:
What scenario would we be in now?

[00:12:00] Speaker 01:
Would you be bound by 3.2 million?

[00:12:02] Speaker 01:
Because she has decided these are appropriate, even though she's decided, arguably, they're only appropriate for a portion of the case, not for the whole case.

[00:12:10] Speaker 01:
At what point, you know, what is the language which binds you to no matter what, you're bound?

[00:12:17] Speaker 03:
I think maybe there's some more expensive language, Your Honor.

[00:12:21] Speaker 03:
I'm not sure if I'm totally being responsive.

[00:12:22] Speaker 03:
But I think the key here is that at the time of the stipulation, the court already said, I grant ITC's motion in its entirety because of willfulness.

[00:12:30] Speaker 03:
They get all their fees.

[00:12:31] Speaker 03:
Now the only issue remaining to determine is the amount of those total fees.

[00:12:35] Speaker 03:
That's the situation here.

[00:12:36] Speaker 03:
And I don't think it's fair to penalize the parties for trying to work out an agreement on that rather mundane task of figuring out that itemization.

[00:12:46] Speaker 03:
It's a fair reading that that's the only thing that was stipulated to, that the total amount is that.

[00:12:51] Speaker 03:
Not that if there's no willfulness, and if that's reversed on appeal a year later, we're bound by that as a number despite all that law like Rambas out there.

[00:12:59] Speaker 03:
That simply wasn't the issue at the time.

[00:13:01] Speaker 02:
Why don't we reserve the remainder of your battle and we'll hear from Mr. Ryland.

[00:13:13] Speaker 00:
Good afternoon.

[00:13:13] Speaker 00:
May it please the court, Josh Rylan for ITC.

[00:13:17] Speaker 00:
We obviously believe that Judge Silver should be affirmed.

[00:13:19] Speaker 00:
And I think there are two things that came out in the first discussion here, which are important.

[00:13:25] Speaker 00:
What Rudolph is really trying to do is get this court to re-review the fact-finding of the district court.

[00:13:31] Speaker 00:
Judge Silver is entitled to deference here.

[00:13:33] Speaker 02:
Let's move on to the stipulation, if you don't mind, and my colleagues can go back to this if they wish.

[00:13:38] Speaker 02:
It seems pretty clear to me that, at least tentatively, that what they're agreeing to not contest is the reasonableness of the request for fees.

[00:13:48] Speaker 02:
I think a fair reading of that is, if we're guilty, because we've seen plenty of cases where we say, OK, you're allowed attorney's fees, and then the parties spend another million dollars litigating exactly the amount of hours that were spent and the hourly rate and so forth.

[00:14:04] Speaker 02:
So it seems perfectly reasonable way to construe this is to say, OK,

[00:14:08] Speaker 02:
If they're found libel, and if this case is found exceptional, they're not going to quibble over whether it's 3.2 million or 3.4 million or 2.9 million, but they say this agreement solely relates to the reasonableness of the dollar amount.

[00:14:26] Speaker 02:
and does not in any way limit Rudolph's ability to contest or appeal IPC's entitlement to attorney's fees on appeal or otherwise, as may be appropriate.

[00:14:37] Speaker 02:
That seems to me to be a very, very, very broad reservation of rights.

[00:14:42] Speaker 02:
And certainly the circumstances now are made

[00:14:48] Speaker 02:
significantly different.

[00:14:49] Speaker 02:
You don't contest, for example, that if the stipulation were not in effect, you would be entitled to a far, far, far smaller amount of attorney's fees based on the amount of the case the email prevailed under.

[00:15:01] Speaker 00:
Actually, we would contest that, Your Honor.

[00:15:02] Speaker 00:
And that's where I think the, where we diverge and where we've tried to bring out in the brief and what I'd like to explain is that Judge Silver didn't limit her opinion to one instance of Mr. Subert's conduct with respect to the PRVX machines pre-2007.

[00:15:17] Speaker 00:
Judge Silver

[00:15:18] Speaker 00:
talked about a pattern of misconduct that existed.

[00:15:22] Speaker 00:
While Mr. Schubert's testimony was very important because it sort of let the cat out of the bag on everything, it wasn't one instance.

[00:15:29] Speaker 00:
When he testified at trial in 2011 that there was absolutely, that he tested the machines, that he found infringement, and the whole court heard it, the judge found it a startling admission for multiple reasons.

[00:15:43] Speaker 00:
with respect to that admission, it's not the only time that they, that Rudolph tried to obfuscate what and how their machine worked.

[00:15:51] Speaker 02:
There's a reference there to... But this all had to do with the summary judgment case and the damages that you prevailed on.

[00:15:58] Speaker 02:
The only case, proportion of this case that you prevailed on was the pre-summary judgment.

[00:16:05] Speaker 02:
everything else got reversed on appeal, in other words, you lost.

[00:16:09] Speaker 02:
So all of the willfulness finding was reversed, the finding of infringement post, what is it, 2007, that was all reversed as well.

[00:16:18] Speaker 02:
So the only portion you prevailed on was this window period of time, which I don't know how long it was.

[00:16:24] Speaker 00:
Well, actually, it's not much of a window period.

[00:16:26] Speaker 00:
It's a huge expanse of the case.

[00:16:28] Speaker 02:
It's at least half of the products at issue, if you look at the verdict format, was a... But that's all leading to pre-summary judgment, and I presume the vast portion of the $3.2 billion in attorney's fees

[00:16:39] Speaker 02:
were chalked up in the trial portion of this case rather than the initial summary judgment.

[00:16:44] Speaker 00:
I would say that it's fair that those fees would certainly track the course of the case, but what Judge Silver found wasn't that that was the isolated incident of misconduct.

[00:16:51] Speaker 00:
Litigation misconduct standing alone supports a fee award, and she found a pattern of misconduct from the beginning of the case to the end of the case.

[00:16:59] Speaker 04:
When Mr. Suebert... So your opponent argues that because you're not the prevailing party in that portion of the case, you're not entitled to fees.

[00:17:08] Speaker 04:
Using the language of 285.

[00:17:10] Speaker 04:
What's your response?

[00:17:11] Speaker 00:
I would say that we're still the prevailing party in this case and we've prevailed on a lot of our claims.

[00:17:18] Speaker 00:
And I haven't heard from my opponent that we are not the prevailing party at the district court.

[00:17:22] Speaker 00:
They didn't oppose the fees based on that.

[00:17:24] Speaker 00:
They simply said that we weren't entitled to fees based on Rambas.

[00:17:29] Speaker 00:
in trying to get out of the stipulation that we had.

[00:17:31] Speaker 00:
So I would say that we are entitled to fees as the prevailing party, first of all.

[00:17:35] Speaker 01:
Well, so you're asking us to interpret the term prevailing party to mean if you win on any single little tiny aspect of the case, no matter how insignificant, no matter how early in the process resolved, that you are potentially entitled to all of your fees, even if the case goes on four years beyond that and 99.9% of the fees are racked up in that process.

[00:17:58] Speaker 00:
Absolutely not, Your Honor.

[00:17:59] Speaker 01:
That's not good.

[00:18:00] Speaker 01:
I'm really glad.

[00:18:02] Speaker 01:
That's not the interpretation you're asking.

[00:18:04] Speaker 00:
We are not asking for that.

[00:18:05] Speaker 01:
So what is your interpretation then?

[00:18:06] Speaker 01:
Because you did only prevail on the pre-2007 portion.

[00:18:11] Speaker 00:
Which was the majority of the damages awarded.

[00:18:14] Speaker 00:
Not the majority, I'm sorry.

[00:18:15] Speaker 00:
It was at least half the damages awarded.

[00:18:16] Speaker 01:
Okay, but if that's true, we have no information on that.

[00:18:19] Speaker 01:
You're saying that.

[00:18:20] Speaker 01:
But, you know, all we have in the record is a stipulation about a total amount.

[00:18:24] Speaker 01:
We don't know anything about the underlying amounts.

[00:18:27] Speaker 02:
And so if we believe... Are you saying that the majority of fees were incurred in connection with the summary judgment motion rather than in connection with the whole trial that occurred afterwards?

[00:18:37] Speaker 00:
No, I'm saying that Judge Silver looked at the entire case and was going to award fees and did award fees twice now.

[00:18:44] Speaker 00:
for the entire case because of the litigation misconduct she had to endure.

[00:18:47] Speaker 02:
Here's how I read her opinion.

[00:18:48] Speaker 02:
I find five bases upon which she relied when she continued to hold this case exceptional.

[00:18:55] Speaker 02:
One, hid its infringement for years.

[00:18:58] Speaker 02:
The only infringement here was the pre-summary judgment infringement.

[00:19:01] Speaker 02:
You lost, you got reversed on the trial of infringement post-damage.

[00:19:05] Speaker 02:
So that deals with the earlier stuff.

[00:19:08] Speaker 02:
Provided false discovery responses.

[00:19:10] Speaker 02:
The discovery occurred early on.

[00:19:12] Speaker 02:
Filed summary judgment papers even though it knew its product in fringe.

[00:19:16] Speaker 02:
That all has to do with the prior period of time.

[00:19:20] Speaker 02:
Argued a never explained theory of coverage under IDC.

[00:19:24] Speaker 02:
That's all the summary judgment stuff.

[00:19:26] Speaker 02:
And played semantic games regarding what its machines did, which all has to do with that

[00:19:33] Speaker 02:
earlier period of time.

[00:19:35] Speaker 02:
So it seems to me everything she pointed to has to do with the earlier period of time and all of the so-called litigation misconduct or everything they did had to do with the damages related to that period of time not to the stuff that you lost on ultimately because it was reversed on appeal.

[00:19:54] Speaker 00:
And I understand but I would disagree respectfully Your Honor because for example let's take the last one that you list.

[00:19:59] Speaker 00:
It's the played semantic games.

[00:20:02] Speaker 00:
That is a direct result of what happened in the injunction proceedings in this case.

[00:20:07] Speaker 00:
From the start of this case until the end of this case, Rudolph contended that it didn't do scrub.

[00:20:12] Speaker 00:
Scrub is an element of the claim that was required.

[00:20:14] Speaker 00:
In fact, it was the key element.

[00:20:15] Speaker 00:
Scrub testing, when these pins scrape across when they're being tested, they said they didn't do scrub.

[00:20:21] Speaker 00:
When we got to trial, they had witnesses say, we don't do scrub.

[00:20:25] Speaker 00:
We don't do anything like scrub.

[00:20:27] Speaker 00:
Then when they lost, ultimately, after the jury verdict, they sent out a press release to all their investors through the SEC that says, we're going to remove scrub, which seemed odd in the sense that they removed something that they said they didn't do during the entire course of the trial in the case.

[00:20:42] Speaker 00:
And then when the judge was going to enter an injunction, Rudolph complained and said, whoa, whoa, whoa, we need to have scrub.

[00:20:48] Speaker 00:
So that's an example of this is what we've dealt with the entire case.

[00:20:52] Speaker 01:
Come on now.

[00:20:53] Speaker 01:
That is such an unfair characterization that it really bothers me.

[00:20:57] Speaker 01:
Because when they said, we don't do scrub, we don't do scrub, that's when they're saying they don't infringe.

[00:21:03] Speaker 01:
Now fast forward to the period of injunction.

[00:21:05] Speaker 01:
They've been found to infringe.

[00:21:07] Speaker 01:
So de facto, they've been found to do scrub.

[00:21:10] Speaker 01:
So at this point, they're saying, OK, well, if you're going to call this scrub, then we need time to remove this.

[00:21:15] Speaker 01:
We need time to fix our products.

[00:21:19] Speaker 01:
arguing throughout that that what they did didn't constitute the infringing element only after they were it was found against them did they say okay well then we need time to fix it.

[00:21:30] Speaker 01:
And in fact that was reversed on appeal right?

[00:21:32] Speaker 00:
That was reversed on a prosecution history estoppel argument and what I'm concerned about and this actually ties back to an earlier question you had this is basically allowing an argument that if you win on one issue that all litigation misconduct for the course the case

[00:21:47] Speaker 00:
can be forgiven.

[00:21:48] Speaker 00:
And that's not what 285 stands for, and that's not what the Supreme Court says.

[00:21:51] Speaker 02:
Well, except even under an abusive discretion, so that clearly may influence our findings with regard to the first question.

[00:21:58] Speaker 02:
The only thing the district court said is to justify you're getting 3.2 million in attorney's fees rather than some smaller amount is there's a stipulation out there.

[00:22:08] Speaker 02:
So she didn't say, no, it's because it doesn't matter.

[00:22:12] Speaker 02:
The fee should cover the entire period because there was this extensive litigation was conducted.

[00:22:17] Speaker 02:
seems to me, on its face, she relied exclusively on the fact, by your argument that you're making to us today, that the stipulation is kind of a waiver, and they stipulate it so they have to give us all the fees no matter what, because that's what the stipulation says, right?

[00:22:32] Speaker 00:
Well, actually, Your Honor, Judge Silver does say on page 72 of the JA that she found two bases for the misconduct, both of which she believes met the Supreme Court standard under 285, the first being the weakness in their position

[00:22:47] Speaker 00:
on the PRVX machines pre-2007.

[00:22:50] Speaker 00:
The second being their litigation conduct through trial and through the post trial.

[00:22:56] Speaker 00:
And both of those, she said, justified a fee award under 285.

[00:23:00] Speaker 00:
In addition, she said that either of them standing alone would justify it.

[00:23:02] Speaker 01:
I'm sorry, she said that, but the problem is she didn't articulate anything in terms of me reading her very cursory bases.

[00:23:13] Speaker 01:
my reading of them, they quite frankly all go to the summary judgment and pre-summary judgment conduct.

[00:23:18] Speaker 01:
And even though she does have that sentence that said they continued through trial, she hasn't cited a single thing or articulated a single thing.

[00:23:26] Speaker 01:
And given our view of the law on apportionment, wouldn't the appropriate thing to do in this circumstance be to vacate and remand for her to provide the rationale if she has one?

[00:23:38] Speaker 01:
for fees all the way through the case.

[00:23:41] Speaker 04:
Let me throw in.

[00:23:43] Speaker 04:
You'd agree we don't have in the record information sufficient to apportion at our level.

[00:23:48] Speaker 04:
We'd have to send it back.

[00:23:49] Speaker 00:
Absolutely, Your Honor.

[00:23:50] Speaker 00:
I would agree that we are not sufficiently set up to apportion this case, but we don't believe that it should have been apportioned because we interpret her rulings.

[00:24:00] Speaker 00:
And bear in mind, this is

[00:24:02] Speaker 00:
This is truly one of those cases that the Supreme Court referenced in Highmark where the judge lived with the case.

[00:24:06] Speaker 00:
She's had this thing for almost a decade.

[00:24:09] Speaker 01:
But the regional circuits say quite clearly that in awarding, and so does the Supreme Court, an awarding attorney sees the judge has to articulate her reasons.

[00:24:17] Speaker 01:
And if I interpret the five bases she gave as all going to the pre-2007 product and none of them going to the subsequent trial and everything else, that one errant sentence that says they behaved badly throughout

[00:24:31] Speaker 01:
It doesn't get me there.

[00:24:32] Speaker 01:
It doesn't give me something I can review under any standard, even a very deferential one like abusive discretion.

[00:24:39] Speaker 01:
And let me also point out that even if she can't award attorney fees, for example, to a portion of the case you didn't prevail on, perhaps, there aren't there all kinds of alternative options like 1927, Rule 11, discovery sanctions.

[00:24:58] Speaker 01:
She has at her discretion and disposal a heartland of possible ways in which to increase the number of the attorney fee award if that is really warranted, even if it's not under 285.

[00:25:11] Speaker 01:
Did you bring motions on any of those other bases?

[00:25:13] Speaker 00:
We did not bring motions based on 1927.

[00:25:16] Speaker 00:
Did you bring anything like a 37B2C motion?

[00:25:19] Speaker 00:
We did not, and that's a great question, Your Honor, because that actually appears in the blue brief.

[00:25:24] Speaker 00:
Rudolph was taking ITC to task for not bringing up these discovery issues.

[00:25:28] Speaker 00:
The problem with that argument is that we found out these were discovery issues while we're sitting in a courtroom trying the case six years later.

[00:25:35] Speaker 00:
That becomes a problem.

[00:25:35] Speaker 00:
So no, we did not bring up a Rule 37 violation because Mr. Subert's admission that he actually tested and found infringement, which would have created documents.

[00:25:46] Speaker 01:
First came out at trial.

[00:25:47] Speaker 00:
First came out at trial.

[00:25:48] Speaker 00:
So it was hard for us to go back and redo discovery at that point because we're at the midway point of trial.

[00:25:52] Speaker 04:
I've always wondered about the results of it.

[00:25:56] Speaker 04:
sanctions determination effect when it gets up on appeal because that's reviewed under an entirely different standard.

[00:26:07] Speaker 01:
I must have felt like a very Perry Mason moment.

[00:26:10] Speaker 01:
Right?

[00:26:10] Speaker 01:
When the CEO says, yes, I tested it.

[00:26:14] Speaker 01:
I mean, I don't know that in a patent case I've seen quite so clearly a Perry Mason moment.

[00:26:19] Speaker 00:
There was a bit of that double take.

[00:26:20] Speaker 01:
Young people don't even know who Perry Mason is, by the way.

[00:26:22] Speaker 01:
Hopefully you do.

[00:26:23] Speaker 00:
I do know who.

[00:26:24] Speaker 00:
And it was maybe a Scooby Doo moment.

[00:26:27] Speaker 00:
Our eyes lit up.

[00:26:28] Speaker 01:
You're trying to relate to the young people.

[00:26:29] Speaker 00:
I'm doing my best.

[00:26:32] Speaker 00:
But yes, Your Honor, it was.

[00:26:33] Speaker 00:
And so we believe that within our discretion that Judge Silver looked at the case, has lived with the case, and determined that the full amount of fees was warranted.

[00:26:42] Speaker 00:
In addition, we bound ourselves to the stipulation and didn't go back on remand and say, and I know the law students may like to hear this as well, we could have asked for more.

[00:26:51] Speaker 00:
We could have asked for a lodestar theory.

[00:26:52] Speaker 00:
We're trying to do exactly what you mentioned, which is avoid spending a million dollars litigating legal fees.

[00:26:58] Speaker 00:
And when the judge

[00:27:00] Speaker 00:
saw the stipulation, she, in her determination, agreed that it was binding and awarded fees.

[00:27:06] Speaker 00:
Thank you.

[00:27:11] Speaker 02:
Mr. McDonald, you've got a few minutes left.

[00:27:13] Speaker 03:
Thank you.

[00:27:14] Speaker 03:
With respect to the stipulation issue, I did want to direct your attention to page 18402 at footnote 1.

[00:27:21] Speaker 03:
In the briefing, we did address the stipulation issue and say that that did not preclude apportionment here.

[00:27:26] Speaker 03:
So that was in the briefing.

[00:27:27] Speaker 03:
I think there was a question about that.

[00:27:29] Speaker 03:
Also to clarify, there was some issue about the half of the damages or fees.

[00:27:33] Speaker 03:
I think what Council was saying about half of the dollar damages award related to the pre-07 product.

[00:27:38] Speaker 03:
And the vast majority of those sales were before the lawsuit was brought.

[00:27:40] Speaker 03:
They brought the lawsuit on the sixth anniversary of the patent issuing, which is as long as they could wait to get maximum damages six years back.

[00:27:47] Speaker 03:
And most of those sales were before.

[00:27:48] Speaker 03:
They have nothing to do with the actual incurring of litigation fees in the case.

[00:27:53] Speaker 03:
It really had to do with a few pages in their summary judgment briefing.

[00:27:56] Speaker 03:
They didn't even go through the source code.

[00:27:57] Speaker 03:
Their expert was not able to read source code.

[00:28:00] Speaker 03:
They didn't compare the old device to the new.

[00:28:02] Speaker 03:
There's very little effort that they put into that old product.

[00:28:05] Speaker 03:
They termed in their own briefing and admission by us that we did meet that first state contact limitation.

[00:28:11] Speaker 03:
And based on that, the court granted that summary judgment two years before trial.

[00:28:16] Speaker 03:
The trial was only about products that wound up being not infringing.

[00:28:20] Speaker 03:
It was already decided the pre-07 infringed.

[00:28:22] Speaker 03:
So we had two years' worth of fees going into the trial.

[00:28:25] Speaker 03:
that had to do with those issues, those products that they lost on.

[00:28:29] Speaker 03:
Now that, Your Honor, if I misspoke, I apologize.

[00:28:31] Speaker 03:
I didn't mean to say that that doesn't make ITC the prevailing party in the lawsuit.

[00:28:35] Speaker 03:
I only meant to say that that has a very significant impact on the supportion issue.

[00:28:39] Speaker 01:
But I'd like to know your thoughts on that statutory interpretation issue with regard to prevailing party.

[00:28:45] Speaker 01:
If they are the prevailing party on one product but not with regard to the other, suppose that she did

[00:28:52] Speaker 01:
and I'm not saying I interpret her opinion that way, but suppose that she did demonstrate litigation misconduct throughout trial.

[00:28:59] Speaker 01:
Very detailed litigation misconduct.

[00:29:01] Speaker 01:
Would they be entitled to fees for that because they prevailed on that summary judgment portion of the case?

[00:29:07] Speaker 01:
But they weren't the prevailing party.

[00:29:09] Speaker 01:
So as badly as you behaved, I mean, it seems like she could go after you under 1927.

[00:29:14] Speaker 01:
There are lots of bases upon which she could award fees, but I'm a little nervous

[00:29:18] Speaker 01:
in a patent case where fees are hinged to prevailing party status, when a case so cleanly as this one does divides the case in half between the portion they won in the beginning and the portion they lost in the end, I'm a little nervous to say it's okay for her to award fees all the way through because they won that early part.

[00:29:37] Speaker 03:
Right, and I think those issues that she tried to the extent there's anything here, and I agree with the court, I think all of these were really infected by

[00:29:44] Speaker 03:
her original belief that that change was not sufficient.

[00:29:47] Speaker 01:
No, but I need to know precisely what you think, I know your red light's on, and we'll give you a chance to answer, about the interpretation of prevailing party.

[00:29:53] Speaker 01:
There are lots of cases, Supreme Court and otherwise, this is not the only statute in which those words appear.

[00:29:59] Speaker 01:
Do you think if they prevail on any portion of the case, everything is up for grabs, or is only stuff up for grabs in the portion they prevailed on?

[00:30:07] Speaker 03:
I guess I'll have to look at, in my mind, the statutory language of 285.

[00:30:11] Speaker 03:
In exceptional cases, the prevailing party may, in the court's discretion, get fees, and case law says that has to be apportioned.

[00:30:17] Speaker 03:
So you've got a couple checks on the system there.

[00:30:19] Speaker 03:
One is does that make the whole case exceptional or not?

[00:30:22] Speaker 03:
And if it's one out of five products or one out of four products that was actually found to be infringing early on, I guess you have to ask maybe there was some exceptionality or something about the one product, but does that actually make the whole case exceptional?

[00:30:33] Speaker 03:
I would say not here.

[00:30:34] Speaker 03:
when you look at that context and how much of the case had to do with things other than that original product design, number one.

[00:30:40] Speaker 03:
And number two, you do have that issue that it may award fees, not that it has to.

[00:30:43] Speaker 03:
And you have to take into account the totality of the circumstances, I think, as well, on whether you do award fees and how much of the fees you award.

[00:30:50] Speaker 03:
And certainly it comes into play within the four corners of 285 and your points raised on that.

[00:30:54] Speaker 03:
Let me ask you this.

[00:30:56] Speaker 04:
If we vacate this and send it back down to the court and look at the apportionment, is there anything that prevents the court

[00:31:05] Speaker 04:
looking back and saying, well, we have Rule 11 and we have Section 1927.

[00:31:10] Speaker 04:
I can reconsider it under those standards.

[00:31:13] Speaker 03:
The Council did raise the Court's inherent power, at least, because I know that's in the decision at the footnote on page 72.

[00:31:19] Speaker 03:
I believe they had a full and fair opportunity to raise those issues before, Your Honor.

[00:31:23] Speaker 03:
I think it would be totally inappropriate at this late stage.

[00:31:25] Speaker 03:
They had their chance to seek fees and list the reasons for those fees.

[00:31:29] Speaker 03:
I'm not saying your opposing party.

[00:31:32] Speaker 03:
I'm saying the court on her own motion.

[00:31:36] Speaker 03:
Well, the court's inherent power then.

[00:31:37] Speaker 03:
That's what you're going to when the court in this footnote already indicated that it declines to exercise its inherent power because it does not believe the case is sufficient or does not rise to the level necessary for an award under the court's inherent powers.

[00:31:49] Speaker 03:
Nobody's challenging that finding here.

[00:31:51] Speaker 03:
So I think that would be inappropriate.

[00:31:54] Speaker 02:
Thank you.

[00:31:55] Speaker 02:
We thank both counsel and the cases submitted.