[00:00:04] Speaker 01:
The next argued case is number 15-11-43 LC Eldridge Sales Company against Gerrard Shipyards, Priatarian, and others.

[00:00:15] Speaker 01:
Mr. Elgaier.

[00:00:21] Speaker 04:
Good morning, Your Honors, and may it please the Court.

[00:00:24] Speaker 04:
Eldridge faces a dilemma in this case.

[00:00:27] Speaker 04:
that we've identified, along with other issues.

[00:00:30] Speaker 04:
And that dilemma is if the accused device infringes, as the jury found, is because a Y-duct is a housing.

[00:00:37] Speaker 04:
And if a Y-duct is a housing, the open priority reference invalidates the patent.

[00:00:43] Speaker 04:
Let me begin, though, and focus in on housing just a little more, and the construction of housing by the trial court.

[00:00:51] Speaker 04:
The trial court found that a housing in this case

[00:00:55] Speaker 04:
was a case or enclosure, period.

[00:00:58] Speaker 04:
That was broader than either party that proposed and broader than a standard dictionary definition, even of the term that is a case or enclosure for a machine part.

[00:01:09] Speaker 00:
Why haven't you waived any ability to make the more logical argument you're trying to make here than the one you made below by, because you requested from the district court a construction that had about 14 limitations built into it.

[00:01:22] Speaker 04:
Two reasons, Your Honor.

[00:01:24] Speaker 04:
First of all, as I understand it from studying the law, the sort of price of admission to discussing the court's plain construction with Your Honors is not that we were right in all respects.

[00:01:36] Speaker 04:
And I don't suggest that we weren't right.

[00:01:38] Speaker 04:
But as the case has evolved, it's become clear that there is a simple plain construction

[00:01:43] Speaker 04:
that is at least as right and it would suffice.

[00:01:48] Speaker 04:
That's not the price of admission.

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The question is whether the district court was right or wrong and we suggest they were wrong.

[00:01:54] Speaker 04:
Any more than they get to say that the district court was right and the district court used a different claim construction than they proposed.

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The second thing is this is not a case where that issue was at claim construction and just stopped.

[00:02:08] Speaker 04:
It was at issue throughout the whole case and in fact in response to a motion of limiting they made before the trial, we indicated to the court that at very least we thought the court's claim construction was and should be

[00:02:23] Speaker 04:
that there was a housing for something mechanical.

[00:02:26] Speaker 04:
And you can find our argument in that regard.

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We made the trial court at A13-717.

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And that issue continued throughout the case.

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Also, it continued when our experts' testimony in that regard

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The jury was told to disregard it when he tried to explain why.

[00:02:45] Speaker 00:
So from the district court's perspective, this claim construction thing has to be a moving target.

[00:02:50] Speaker 00:
You proposed one and the court says, no, I don't agree with you.

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And then later you can say, well, how about if we go back and maybe think of a different one?

[00:02:58] Speaker 04:
Your Honor, it can be a moving target.

[00:03:01] Speaker 04:
It was a moving target for us.

[00:03:03] Speaker 04:
When we first had a claim of construction, and they made a motion to eliminate, at one point we said, Your Honor, can we at least say that it has to be a case or enclosure for something mechanical?

[00:03:16] Speaker 04:
And the judge said, no.

[00:03:17] Speaker 04:
We said, well, can we say it has to be a case or enclosure for something?

[00:03:20] Speaker 04:
He said, yes.

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My expert tried to explain it.

[00:03:22] Speaker 04:
He wasn't allowed to explain it.

[00:03:23] Speaker 04:
So I agree that claims of construction is a moving target, but it wasn't a moving target for everyone in this regard, Your Honor.

[00:03:30] Speaker 04:
This isn't a case like Broadcom versus Qualcomm where the first time anyone said a claim had to be construed was after the trial.

[00:03:41] Speaker 04:
This was an issue that was with us through the trial.

[00:03:46] Speaker 04:
If one does look at that construction, the main point I want to make about that and we have made about that is in the brief summary of the invention, there are two and only two aspects of the invention in there.

[00:04:00] Speaker 04:
and they both limit the invention to either an engine exhaust system comprising a housing adapted to surround the terminal portion of the exhaust pipe or utilizing a housing to form an annual region.

[00:04:11] Speaker 04:
That's it.

[00:04:12] Speaker 04:
They suggest in their brief that because there was a

[00:04:18] Speaker 04:
what I'll call a boilerplate statement, that you are not entitled to read the alternative, preferred embodiments into the claims that their invention shouldn't be so limited.

[00:04:30] Speaker 04:
They do not seek to limit the summary of, quote, the invention.

[00:04:35] Speaker 04:
And the law we said in your honors indicates that is in Verizon and Honeywell.

[00:04:39] Speaker 04:
And someone said, this is the invention.

[00:04:41] Speaker 02:
I guess one of the concerns I have with your argument is that the housing, as disclosed in the patent,

[00:04:49] Speaker 02:
is essentially this tubular structure, right?

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And the cube device also has something that is argued over, is the housing is also a tubular structure.

[00:05:03] Speaker 02:
And your arguments

[00:05:06] Speaker 02:
are really more about the specification of the patent describing certain structural positioning and arrangements and locations of that tubular structure vis-a-vis the exhaust pipe and claim

[00:05:23] Speaker 02:
Recite the particular structural relationship between the claimed housing and the claimed exhaust pipe and Yes, it's not exactly the same structural relationship and relative location that's described in the in the preferred environment of the spec but

[00:05:44] Speaker 02:
It feels like you're asking us to read into the noun housing particular structural relationships and relative locations between that noun and a different noun, the exhaust pipe.

[00:05:59] Speaker 04:
Your Honor, I respectfully don't think we're doing that.

[00:06:03] Speaker 04:
What we have in this, and you can see it if you

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look at the accused device, which you'll find in our opening brief on page 12, are simply two exhaust pipes coming together.

[00:06:15] Speaker 04:
One exhaust pipe is ported into another.

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There is no housing in that sense.

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Whereas, if you look at every figure of the patent and their description of the invention, they say there's a housing adapted to surround an exhaust pipe.

[00:06:32] Speaker 04:
in their brief summer.

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So essentially what's happened is the housing's gone and the pipe that brings in the ambient air, the pressurized air, is simply connected directly to the exhaust pipe.

[00:06:44] Speaker 00:
What about the fact that there are actual statements in the written description that talk about the housing being adjacent to the end of the exhaust pipe?

[00:06:54] Speaker 00:
How could that be if it has to surround it?

[00:06:58] Speaker 04:
Your Honor, it talks later in the written description about the exhaust pipe having an extension and the extension of the exhaust pipe sleeve 12 can be considered one and the same.

[00:07:17] Speaker 04:
So if the exhaust pipe and the sleeve are considered one and the same, which

[00:07:22] Speaker 04:
which they can be according to column 4, line 24, then every embodiment in this description makes sense because that's quite being surrounded.

[00:07:35] Speaker 00:
And again, it's described... Where are you in column 4?

[00:07:41] Speaker 00:
Line 17?

[00:07:41] Speaker 04:
No, Your Honor.

[00:07:48] Speaker 04:
Column 4, line 24.

[00:07:52] Speaker 04:
The exhaust pipe may replace the sleeve 12 and or the exhaust pipe may be considered the sleeve 12.

[00:07:59] Speaker 04:
Isn't the sleeve the exhaust pipe?

[00:08:01] Speaker 04:
That's the point.

[00:08:03] Speaker 04:
If you look for example in figure 1, the exhaust pipe sort of stops before, in this figure, stops before 12 and 12 is the extension of the exhaust pipe.

[00:08:14] Speaker 04:
And their point is considered at the exhaust pipe.

[00:08:20] Speaker 04:
Now let me move on.

[00:08:22] Speaker 04:
Well, one other thing, and I really touched on it, no matter what the court's claims are, and I've mentioned this, Judge Chen, a little bit, but there simply is not a housing here.

[00:08:37] Speaker 04:
There are two exhaust pipes coming together.

[00:08:39] Speaker 04:
You have to remove the housing, really, and put the exhaust pipes together to come up with the... I guess the jury concluded that with the accused product, there's

[00:08:49] Speaker 02:
Again I'll just call it a tubular element that is connected to the end of, it believed that the exhaust pipe was cut off at an earlier point in time and that there was an additional tubular element connected to the end of the exhaust pipe to which the ambient air pipe

[00:09:09] Speaker 02:
was connected into, right?

[00:09:12] Speaker 02:
And whether, I don't know what they concluded.

[00:09:14] Speaker 02:
They did conclude that there was... Well, I presume that's what they concluded for infringement purposes.

[00:09:18] Speaker 00:
That there was testimony to that effect, was there not?

[00:09:23] Speaker 04:
There was testimony by Mr. Davis that somewhere where the two parts came together, there was a housing.

[00:09:32] Speaker 04:
I don't recall precisely what he said, and I don't think it was precise.

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Which probably brings me to the next issue,

[00:09:38] Speaker 04:
Which is this.

[00:09:40] Speaker 04:
Assuming, if you'd like, as the jury seemed to have found, that a Y-Duct is in fact a housing, you come to the next problem.

[00:09:49] Speaker 04:
You come to the Copen reference.

[00:09:51] Speaker 04:
And Copen has the same arrangement.

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You can see that by comparing figure 4 on page 10 of our reply brief to the accused device, also on page 10.

[00:10:04] Speaker 04:
The Copen device

[00:10:07] Speaker 04:
anticipates it, claim one, because it has all the same elements, if in fact a wide duct is considered a housing.

[00:10:15] Speaker 02:
Although in Copen the exhaust pipe is this continuous pipe that goes all the way across and the ambient air pipe is entering a portion of the exhaust pipe.

[00:10:31] Speaker 02:
I don't see, I guess what I'm trying to say, I don't see a separate third element

[00:10:37] Speaker 02:
In Copen, what I see is the pipe for the ambient air and I see an exhaust pipe.

[00:10:43] Speaker 02:
I don't see a separate element that we could call housing.

[00:10:49] Speaker 04:
Well, and that, respectfully, your honor, if it's not in Copen, it doesn't appear to be in the accused device.

[00:10:54] Speaker 02:
Well, I guess there was testimony that for the accused device, there was some third element that bolted on the end of the exhaust pipe in which the ambient air pipe enters into.

[00:11:08] Speaker 04:
Well, I guess if the idea is that you had a separate piece that is exactly the same as the exhaust pipe, which Pat already says you extend the exhaust pipe, that was the testimony.

[00:11:19] Speaker 04:
But that is hopefully not what they relied on for an invention, that we extended the exhaust pipe by bolting something on.

[00:11:28] Speaker 04:
That's not the testimony that I remember.

[00:11:32] Speaker 04:
So what we see is that there's the same arrangement.

[00:11:36] Speaker 04:
in Aizen and Copan, and I ask your honors to review that.

[00:11:42] Speaker 04:
In fact, one of the other things they say is that Copan doesn't show something coupled, when in fact, Copan does exactly say that the second pipe is coupled to the output end of the first pipe at a cute angle.

[00:11:57] Speaker 04:
So Copan does teach that.

[00:12:01] Speaker 04:
The other thing that they rely on, and mostly to distinguish the two, COVA, that is, his prior art, and the accused device, is that there is no teaching of V2 greater than V1.

[00:12:17] Speaker 04:
That is, the combined velocity is greater than the exhaust pipe velocity alone.

[00:12:22] Speaker 04:
But respectfully, we've cited the testimony of Dr. Beeman, which is unrebutted in that regard.

[00:12:27] Speaker 00:
uh... the jury that somebody was kind of hard to follow though because it appears that there must have been some kind of uh... demonstrative aid that you'd use with the jury but that's not included as part of the record and so we can't tell what it was he was talking about he explained a conservation of mass results your honor uh... which incidentally is the same sort of logic of the patent office and the appellate

[00:12:56] Speaker 04:
The vision of the Patent Office found these claims invalid over another reference, finding that Eldridge admitted that the combination of pressurized air and exhaust in a fixed area inherently reduces a faster flow velocity.

[00:13:12] Speaker 04:
So, actually the claims that are now asserted stand rejected on appeal at Patent Office using a very similar principle saying that when you have two fluid flows coming together in one pipe, you do have an increased velocity.

[00:13:28] Speaker 04:
I'd like to use the rest of my time for your comments.

[00:13:30] Speaker 01:
Yes, I agree.

[00:13:32] Speaker 01:
Good idea.

[00:13:32] Speaker 01:
Let's hear from Mr. Johnson.

[00:13:34] Speaker 04:
Thank you.

[00:13:34] Speaker 02:
Can we get the status report on the re-exam?

[00:13:40] Speaker 03:
The claims have been remanded to the examiner.

[00:13:44] Speaker 03:
They're being considered now and hearing arguments.

[00:13:46] Speaker 02:
When you say remanded, they stand currently rejected.

[00:13:49] Speaker 03:
And on first office action, rejecting the claims was issued.

[00:13:53] Speaker 03:
The claims were affirmed.

[00:13:56] Speaker 03:
The board heard an appeal from that.

[00:13:58] Speaker 02:
The board entered a new grounds of rejection, rejecting all of the claims, right?

[00:14:03] Speaker 03:
Yes, and sent it back to the examiner.

[00:14:06] Speaker 03:
On multiple grounds, right?

[00:14:07] Speaker 03:
I believe only one ground, Your Honor, but it was sent back to the examiner to consider new evidence into your argument on whether that was a proper rejection.

[00:14:16] Speaker 00:
And it was the ground was having to do with the velocity of the gas, is that right?

[00:14:21] Speaker 03:
It did have to do with velocity of gas.

[00:14:22] Speaker 03:
It involved a different reference, a Nakagami patent that included an airplane propeller that was flying and driving the gas through

[00:14:30] Speaker 03:
the system and so it was a different configuration and a higher velocity was potentially achieved in that reference through that airplane propeller.

[00:14:41] Speaker 00:
But all the claims require is that the outgoing velocity be greater than the incoming velocity, correct?

[00:14:49] Speaker 00:
Not by any proportion.

[00:14:51] Speaker 03:
It just has to be a greater outlet velocity, that is correct.

[00:14:54] Speaker 00:
Okay.

[00:14:55] Speaker 00:
And there was testimony from Dr. Beeman that, in fact, that was necessarily inherent as a matter of physics, correct?

[00:15:02] Speaker 03:
That was his contention.

[00:15:03] Speaker 03:
He admitted it was not expressly disclosed and contended that it was necessarily there.

[00:15:09] Speaker 03:
However, in order to reach that conclusion, he had to look at the drawings in Copland that were not to scale, that included no dimensions, and a specification that included no dimensions.

[00:15:18] Speaker 03:
And he then compared, we gave it his, quote, eyeball look to compare the size of those pipes to then determine that there would be a greater outlet velocity.

[00:15:26] Speaker 03:
And that's improper to this court's precedent, the Nystrom case and the Hall-Pockerson-Halberstadt case, that you cannot look at not to scale drawings without dimensions, compare those relative sizes to arrive at a conclusion achieving in validity.

[00:15:40] Speaker 03:
In addition to that, the jury rejected his argument that it was necessarily present, finding that his basis was not supported.

[00:15:49] Speaker 03:
But I also want to move up to clean construction.

[00:15:53] Speaker 00:
Show me exactly where you believe in the description, anything other than a housing that surrounds the exhaust pipe is disclosed.

[00:16:04] Speaker 03:
I believe Your Honor has addressed it during Mr. Allgaier's portion when we talked about the sleeve.

[00:16:09] Speaker 03:
The sleeve, it does say, can be the exhaust pipe or extend from the exhaust pipe.

[00:16:14] Speaker 03:
But it also says the sleeve may be used, making the sleeve optional.

[00:16:17] Speaker 03:
Therefore, you could have a configuration that the exhaust pipe terminates the housing and there is no extension sleeve that goes into the housing.

[00:16:25] Speaker 03:
That would be one embodiment that would meet that.

[00:16:28] Speaker 00:
What do you mean no extension sleeve that goes into the housing?

[00:16:30] Speaker 00:
So is there any housing at all in that circumstance?

[00:16:34] Speaker 03:
Yes, the housing is still the section of pipe where the gases combine and mix before they are ejected away from the structure.

[00:16:42] Speaker 03:
That's exactly how the specification describes the housing.

[00:16:46] Speaker 03:
It's where the pressurized fresh air and the exhaust gases are combined within the housing and then are ejected away from the roof.

[00:16:53] Speaker 00:
Okay, so does the housing

[00:16:55] Speaker 00:
have to have a separate piece from the exhaust pipe?

[00:16:59] Speaker 03:
Not necessarily.

[00:17:00] Speaker 03:
It could be the way the pipe is constructed.

[00:17:04] Speaker 03:
It could have an exhaust pipe and a housing component where the streams come together.

[00:17:12] Speaker 00:
Okay, so you're saying that the housing component could be one and the same as the exhaust pipe?

[00:17:17] Speaker 03:
It could be.

[00:17:20] Speaker 00:
And that's the section of column four that we were talking about before?

[00:17:25] Speaker 03:
I believe it is there, and I believe it's also in column three, at lines 55 to 57.

[00:17:29] Speaker 03:
It talks about the sweeping potential embodiment.

[00:17:33] Speaker 02:
What about the abstract, which says the housing is adapted to reside adjacent to terminal portion of an exhaust pipe, so that the pressurized air injected into the housing entrains the exhaust gases and disperses them from the housing?

[00:17:46] Speaker 03:
That is described as one aspect of the invention.

[00:17:49] Speaker 03:
Is it not described as the invention as a whole, or that the invention precludes that?

[00:17:53] Speaker 02:
I'm asking this question, I think, in a way that might help you.

[00:17:58] Speaker 02:
you know, the housing is adapted to reside adjacent to the terminal portion of an exhaust pipe.

[00:18:04] Speaker 02:
So maybe this sentence is suggesting that the housing doesn't have to envelop the exhaust pipe or any section of the exhaust pipe.

[00:18:14] Speaker 02:
It merely has to reside adjacent to the terminal portion of it.

[00:18:18] Speaker 02:
I would agree.

[00:18:19] Speaker 03:
Okay.

[00:18:20] Speaker 03:
I apologize.

[00:18:20] Speaker 03:
I thought you were asking... I thought you were... You thought I was trying to drill you.

[00:18:23] Speaker 03:
No, I thought you were addressing Mr. Allgaier's attempt to say that the specification

[00:18:27] Speaker 03:
expressly limit the claim to the preferred embodiment to a disclosed embodiment.

[00:18:32] Speaker 03:
I was addressing that point to say that the specification uses permissive language throughout.

[00:18:37] Speaker 00:
If it uses permissive language throughout and so therefore we're supposed to find that the claim is not limiting, where does the claim teach anything else?

[00:18:49] Speaker 03:
I don't understand what you mean by anything else.

[00:18:50] Speaker 00:
Anything other than an outer housing that envelops either a sleeve or an exhaust pipe.

[00:18:58] Speaker 03:
It teaches it that it could have a sleeve that's optional.

[00:19:01] Speaker 03:
It teaches it, as Judge Chen mentioned, that the housing could be adjacent to the exhaust pipe.

[00:19:06] Speaker 03:
And the purpose of the housing is to allow the combination of the gases.

[00:19:10] Speaker 03:
That's how it's described in the specification.

[00:19:12] Speaker 03:
And that's how it's used in the asserted claims as well.

[00:19:14] Speaker 03:
The asserted claims require that the gases are combined within the housing and then are jetted away from the structure.

[00:19:23] Speaker 00:
I'm having a hard time with the concept that sales that occur prior to the issuance of

[00:19:39] Speaker 00:
would constitute sales that could have been captured, but for the infringement, when the infringement necessarily can't occur until after the patent issues.

[00:19:51] Speaker 03:
I would address that with two points, Your Honor.

[00:19:53] Speaker 03:
First, I think appellants have mischaracterized the sale.

[00:19:56] Speaker 03:
The date they're pointing to was the date Jerome requested bids, but two of the rigs were actually delivered after the patent issued.

[00:20:05] Speaker 03:
The Atwood Condor was about a year and a half after the patent issued, and the West Capitol Firm was two years after the patent issued.

[00:20:12] Speaker 03:
And further, the second point would be that the damages are from the infringement, which has occurred since the patent issued for all of them.

[00:20:22] Speaker 03:
And so for those first two, Jerome's inducement would be what happened when it delivered those rigs after the patent issue.

[00:20:28] Speaker 03:
And for the third one, it's its continuing providing of indemnity to C-drill to allow it to continue using the infringing system.

[00:20:34] Speaker 03:
Under the Hewlett-Packard case, this court held that you can infer intent to cause inducement, intent to cause infringement,

[00:20:41] Speaker 03:
during indemnification if that removes a threat of the patent investigation.

[00:20:44] Speaker 03:
That's what we have here.

[00:20:45] Speaker 03:
In fact, we don't even have to infer it.

[00:20:47] Speaker 03:
Cedrill testified that it was relying on Gerong's indemnity.

[00:20:51] Speaker 02:
That indemnity clause was part of the purchase agreement between Cedrill and Gerong, right?

[00:20:57] Speaker 02:
That is correct.

[00:20:58] Speaker 02:
And that purchase agreement was entered into well before the patent issue.

[00:21:03] Speaker 02:
That is correct.

[00:21:04] Speaker 02:
And it was kind of a generic indemnification clause, right?

[00:21:08] Speaker 02:
I wouldn't say... It didn't say, if this company over here ever gets a patent, then I want to make sure that you indemnify Majorong for any possible infringement action down the road.

[00:21:24] Speaker 02:
It wasn't like that.

[00:21:25] Speaker 03:
It didn't identify Eldritch as the indemnification, that is correct, but it did say it was specific as to patent infringement, it was specific to sales use of the rig.

[00:21:36] Speaker 02:
Right, but there's lots of testimony that these are very standard clauses in these types of construction contracts in this industry.

[00:21:46] Speaker 03:
Right, but what we're looking for, Your Honor, is conduct by Durong after the patent issue that encouraged infringement.

[00:21:51] Speaker 03:
And what we have is Durong telling Cedro, we will indemnify you.

[00:21:55] Speaker 03:
Go ahead and keep using it.

[00:21:56] Speaker 02:
Based on an indemnification clause that was entered into years before the patent issue.

[00:22:02] Speaker 02:
That is correct.

[00:22:03] Speaker 00:
So what if we don't agree with you that that is the kind of indemnification agreement that would support a finding of inducement?

[00:22:13] Speaker 00:
What are you left with with respect to that rig?

[00:22:17] Speaker 03:
We'd also have that Zerong's clear conduct would be when it went to Twin City fans that, hey, you need to indemnify us so that it could continue selling these systems and using these systems.

[00:22:27] Speaker 00:
But that's with respect to other systems.

[00:22:30] Speaker 00:
not the one that was delivered.

[00:22:31] Speaker 03:
No, it's all systems, Your Honor.

[00:22:33] Speaker 03:
And that's a misrepresentation, a misstatement in Appellant's reply brief by what I had to point out.

[00:22:38] Speaker 03:
They claimed in their reply brief that Jerome is not an indemnitor and that there is no evidence of record that Jerome was an indemnitor.

[00:22:44] Speaker 02:
How would Jerome's communications with its parent company, Twin City, be regarded as Jerome

[00:22:53] Speaker 02:
actively inducing Seadrill to commit infringement.

[00:22:58] Speaker 02:
I guess that's where I'm lost.

[00:23:01] Speaker 02:
You would think that proof of inducement would be Geron somehow inducing Seadrill to do something, not Geron talking to its parent company.

[00:23:13] Speaker 03:
It wasn't talking to its parent company, it was talking to the provider of the system.

[00:23:17] Speaker 02:
Oh, I'm sorry.

[00:23:17] Speaker 02:
Well, Twin City and Azen.

[00:23:19] Speaker 02:
Correct.

[00:23:20] Speaker 02:
That's who they were talking to.

[00:23:22] Speaker 02:
Correct.

[00:23:23] Speaker 02:
trying to get, at that point in time, Cdrill to behave in a specific way.

[00:23:29] Speaker 03:
But it was actions by Drong showing that they wanted to continue to sell the systems, continue to have their customers use them in an infringing way when they knew they were infringing.

[00:23:38] Speaker 03:
And so that would be an additional point I would direct the court to.

[00:23:42] Speaker 02:
Is there any case that you're aware of where a patent owner was able to get lost profits from a user of an infringing device?

[00:23:55] Speaker 02:
Yes.

[00:23:55] Speaker 02:
As I understand the lost profits case law, they were all in the context of the patent owner seeking lost profits damages from

[00:24:07] Speaker 02:
a direct competitor, a seller of the accused product, not the ultimate customer and user of the accused product.

[00:24:15] Speaker 03:
Yes, Your Honor.

[00:24:16] Speaker 03:
So the Minco combustion engineering case involved use.

[00:24:21] Speaker 03:
There was a kiln that was patented and the patented kiln was used to create products

[00:24:27] Speaker 03:
and they got a lost products award on those products, the non-patented products that were sold.

[00:24:32] Speaker 03:
So that was a non-sale in which lost profits were awarded.

[00:24:36] Speaker 02:
Was it a direct competitor that the patent owner was suing in that instance?

[00:24:40] Speaker 03:
Yes, Your Honor.

[00:24:40] Speaker 00:
But the case... But that wasn't lost profits as it relates to the sale of the patented item.

[00:24:46] Speaker 03:
That's correct.

[00:24:47] Speaker 03:
It was lost profits as to the non-patented products that were created using the patented system.

[00:24:54] Speaker 00:
By a competitor.

[00:24:55] Speaker 03:
Correct.

[00:24:56] Speaker 00:
So that's different.

[00:24:57] Speaker 00:
Just to ask you if you had any cases where they weren't competitors.

[00:25:02] Speaker 03:
Yes, but he also asked about sales.

[00:25:04] Speaker 03:
Sorry, I was addressing the sales portion.

[00:25:05] Speaker 03:
But as far as the non-competitors, in the Shockley case, this court explained that joint tort users and makers and sellers are all joint tort users against whom the recovery can be had against any of them.

[00:25:17] Speaker 03:
And so that would suggest that you aren't limited to just your competitor.

[00:25:22] Speaker 03:
You can have it against the user of the system as well.

[00:25:25] Speaker 02:
How about when the sale happens before the patent is granted?

[00:25:30] Speaker 02:
Where a purchaser, you know, I think that fits our fact better here.

[00:25:34] Speaker 02:
A purchaser buys a product legitimately at that point in time.

[00:25:40] Speaker 02:
And then possesses the product.

[00:25:43] Speaker 02:
And then at some point down the road, the patent pops up.

[00:25:47] Speaker 02:
And now that product, which prior to that time was not infringing, is now infringing.

[00:25:55] Speaker 02:
Is there a case that's ever said that in that particular instance, that long-standing use that is now infringing, the user now needs to pay lost profit damages to the patent owner?

[00:26:09] Speaker 03:
I'm not familiar with the case that either says you can or cannot have lost profits in that scenario, Your Honor.

[00:26:14] Speaker 03:
Another case I would direct the court to is the Glen Eyre case that said the damages are the same for direct and indirect infringement.

[00:26:21] Speaker 03:
So in that situation, you could have the indirect infringement of the provider of the system and then the user of the system.

[00:26:30] Speaker 03:
that is infringing, even though there's no sale, even though the user is not a direct competitor, and you could have the lost profits be the same against it.

[00:26:38] Speaker 00:
You asked the trial court for an injunction to prohibit the continued use of the rig with the infringing device, correct?

[00:26:47] Speaker 00:
We did, Your Honor.

[00:26:48] Speaker 00:
And after those three rigs, the trial court refused to grant the injunction.

[00:26:51] Speaker 03:
That is correct, Your Honor.

[00:26:53] Speaker 00:
So you don't have an order from the trial court ordering that those

[00:26:58] Speaker 00:
new perfectly functional rigs be retrofitted, correct?

[00:27:02] Speaker 03:
That is correct.

[00:27:02] Speaker 03:
So if we are not entitled to our lost profits on systems, but for the infringement, we would have provided because the contracts required Eldridge NJET or equivalent systems.

[00:27:13] Speaker 03:
The rigs would have to have systems like this included on them.

[00:27:18] Speaker 03:
Jerome admitted that it could not have sold the rigs without these systems.

[00:27:22] Speaker 03:
And the

[00:27:27] Speaker 03:
But for the infringement, we would have made that sale.

[00:27:29] Speaker 03:
There's no other competitor in the marketplace.

[00:27:31] Speaker 00:
But I'm talking about where the sale occurred before the patent ever issued.

[00:27:36] Speaker 03:
Well, it depends on where you're going.

[00:27:37] Speaker 00:
So how do you have but for causation in that circumstance?

[00:27:41] Speaker 00:
Your argument is that, well, we would have gone in and retrofitted it, but they weren't required to retrofit.

[00:27:47] Speaker 03:
But for the infringement, they would have been required.

[00:27:49] Speaker 03:
The reason the court didn't get the injunction is because it found we'd been made whole through the lost product.

[00:27:54] Speaker 00:
When you have a circumstance in which somebody is using a product and that use all of a sudden becomes infringing, there are lots of ways that that can be remedied.

[00:28:06] Speaker 00:
One is you can request the court to order that they not use the product at all.

[00:28:10] Speaker 00:
You can request the court to order that the product be modified.

[00:28:14] Speaker 00:
Or you can ask for

[00:28:16] Speaker 00:
a royalty for continued use of that product.

[00:28:19] Speaker 00:
None of those were remedies that you were awarded, correct?

[00:28:25] Speaker 03:
That's correct.

[00:28:25] Speaker 03:
We were awarded our lost profits, but for the infringement, when those systems came into the United States, they should have had our system on them.

[00:28:33] Speaker 03:
They could have been retrofitted with our systems.

[00:28:35] Speaker 00:
When they came into the United States, the patent hadn't been issued.

[00:28:38] Speaker 03:
For two of the reef, it had been.

[00:28:40] Speaker 00:
Right, but for one of them, it hadn't.

[00:28:42] Speaker 00:
So how could it but for the patent

[00:28:46] Speaker 00:
It has to have been on there if the patent hadn't been issued yet.

[00:28:51] Speaker 03:
The buck for it is the infringement.

[00:28:53] Speaker 03:
When they are using it, it's an infringing use.

[00:28:55] Speaker 03:
And if they are not permitted to do that infringing use, then they have to have our system on it.

[00:29:00] Speaker 03:
There is no other alternative.

[00:29:01] Speaker 03:
The contracts require the system.

[00:29:03] Speaker 03:
They said that they wanted, they had to have the system on them.

[00:29:08] Speaker 03:
I mean, that's the answer is that the infringement is the inquiry, not the sale.

[00:29:12] Speaker 03:
So the infringement occurred after the patent issue.

[00:29:15] Speaker 03:
And but for that infringement, the rigs would have had our system on it via retrofit or through the original construction.

[00:29:20] Speaker 03:
There are no further questions.

[00:29:24] Speaker 03:
This case is just about roughly $600,000 or some odd dollars.

[00:29:30] Speaker 03:
It is for the lost profits on those three rigs.

[00:29:32] Speaker 03:
I believe it's slightly more than that, but I think you were in the ballpark.

[00:29:35] Speaker 00:
Okay.

[00:29:37] Speaker 00:
And the injunction.

[00:29:38] Speaker 03:
and the injunction on additional rates, because there were about a dozen or so rates that included these systems, some of which had not come into the United States, and so the injunction precludes those from coming in and being infringed in when they enter the United States.

[00:29:51] Speaker 01:
Okay.

[00:29:51] Speaker 01:
Thank you, Mr. Johnson.

[00:29:53] Speaker 01:
Mr. Allgaier, you have a couple of minutes.

[00:29:56] Speaker 04:
Thank you, Your Honors.

[00:29:59] Speaker 04:
What I just heard counsel say is that housing could be a section of the pipe.

[00:30:05] Speaker 04:
And I don't see how you square that with the notion that when you have separate elements recited in your patent, you can say, well, actually, we don't need that element.

[00:30:15] Speaker 04:
We can just extend the pipe.

[00:30:17] Speaker 04:
Particularly, and I don't mean to beat this to death, but in their summary of invention, and the reason people write summaries of invention near as I know, is to say the examiner, and therefore the public, look, here's why I should get a pack.

[00:30:29] Speaker 04:
This is a little narrower than you might think, but here are the main aspects of my invention, and that included the housing that was surrounding the exhaust pipe.

[00:30:39] Speaker 04:
It says that, and that is not just a performing body.

[00:30:44] Speaker 04:
In terms of indemnity, I'll make one other point about indemnity.

[00:30:48] Speaker 04:
Under the Uniform Commercial Code, there's an implied warranty of non-infringement, which means in every commercial transaction, unless it's disclaimed, there are going to be damages in the form of indemnity if somebody is found to infringe.

[00:31:01] Speaker 04:
I don't think you can read from that.

[00:31:03] Speaker 04:
some intent to induce infringement any more than you can read some intent to induce infringement from a boilerplate contract that a very powerful shipyard can put in place to suggest that they get indemnified.

[00:31:19] Speaker 04:
And the law just doesn't go that far.

[00:31:22] Speaker 04:
One other thing, Sherong Binh in the case is in the case under only an inducement theory.

[00:31:30] Speaker 04:
Everything they did was in Singapore.

[00:31:33] Speaker 04:
That is a specific intent crime or a specific intent offense.

[00:31:39] Speaker 04:
You would have to find, or someone would have to find, and they would have to prove to the jury that these, and Theron would have known how housing would have been interpreted, why death would become a housing, that these

[00:31:54] Speaker 04:
devices, we're going to the under-continental shelf, even assuming that it is true that the patent laws search that far, or apply that far, and there simply is no evidence of any specific intent like that, that the law would have specific intent or fringe.

[00:32:13] Speaker 04:
Therefore, the law can't be liable at all.

[00:32:17] Speaker 04:
That's the end of the issue for Gerard.

[00:32:19] Speaker 04:
And we're left with, at most, trying to figure out what a reasonable royalty is in this case, which has never been done, because the jury did not find that.

[00:32:30] Speaker 04:
If there are any further questions, I would... Any more questions?

[00:32:34] Speaker 01:
Thank you, Your Honor.

[00:32:34] Speaker 01:
Thank you.

[00:32:35] Speaker 01:
Thank you, Mr. O'Donoghue and Mr. Johnson.

[00:32:36] Speaker 01:
The case is taken under submission.

[00:32:39] Speaker 01:
That concludes the argued cases for this morning.

[00:32:44] Speaker 01:
All right.