[00:00:00] Speaker 00:
It is an appeal from the District Court, Eastern District of Wisconsin.

[00:00:06] Speaker 00:
Case number 141762, Mr. Sokol.

[00:00:18] Speaker 00:
You want to reserve three minutes for rebuttal?

[00:00:21] Speaker 02:
Yes, Your Honor.

[00:00:26] Speaker 00:
Wait one second until your opposing counsel gets settled.

[00:00:54] Speaker 02:
Okay.

[00:00:54] Speaker 02:
You may begin.

[00:00:55] Speaker 02:
Good morning, your honors.

[00:00:56] Speaker 02:
My name is Jeffrey Sokol.

[00:00:58] Speaker 02:
I represent Nordac Inc, the plaintiff appellant.

[00:01:01] Speaker 02:
This case pertains to a single US patent, a design patent.

[00:01:06] Speaker 02:
As this honorable court knows, two US statutes govern damages for design patent cases, 35 USC 284 and 289.

[00:01:18] Speaker 02:
The latter pertains to explicitly design patents and allows the

[00:01:23] Speaker 02:
patentee to recover the defendant's profits.

[00:01:26] Speaker 02:
Nordach's appeal deals with the district court's rule 59 decision, limiting two patent damages to 284 reasonable royalties and forgoing a proper determination of damages under 289.

[00:01:40] Speaker 00:
These jury instructions were pretty consuming, but I don't see you having objected to them.

[00:01:48] Speaker 00:
Why didn't you object to the jury instructions?

[00:01:50] Speaker 02:
We didn't object to the 289 jury instruction because it specifically states that systems profits was to be determined by gross revenues.

[00:02:01] Speaker 02:
We have no problem with that at all.

[00:02:03] Speaker 02:
With respect to the jury instruction, the burden of proof jury instruction, I believe it reads correctly.

[00:02:11] Speaker 02:
The judge is misinterpreting it to basically read out section 289 and he's saying that the

[00:02:20] Speaker 02:
Because the burden approved jury instruction says that it's our burden to prove 284 and 289 or 289, we don't have the right to seek damages under 289, which we clearly did.

[00:02:35] Speaker 00:
That's the either or problem that I had with the jury instructions.

[00:02:37] Speaker 00:
Isn't it more appropriate to say that you're entitled to 289 damages if the jury doesn't find that there are any 289 damages than the fallback?

[00:02:47] Speaker 00:
It's a reasonable royalty.

[00:02:49] Speaker 00:
Isn't that the way the jury instructions should have been crafted?

[00:02:52] Speaker 00:
And you never asked for that.

[00:02:55] Speaker 02:
Your honor, I don't believe that there is a... I mean, to me, it's clear that the instructions are saying that the burden of proof instruction is stating that you can prove 284 or 289, which we did.

[00:03:10] Speaker 02:
We proved both of them.

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And the 289 jury instruction clearly requires a gross revenue.

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method for determining systems profits.

[00:03:22] Speaker 02:
That's indisputable.

[00:03:24] Speaker 02:
And it also clearly states that we're seeking 289 damages.

[00:03:30] Speaker 00:
But you're not entitled to both 289.

[00:03:32] Speaker 02:
Absolutely not, Your Honor.

[00:03:33] Speaker 02:
This court's decision in Catalina Lighting clearly states we're not entitled to both.

[00:03:38] Speaker 02:
But we are entitled to a determination of both.

[00:03:41] Speaker 02:
And then one would be selected, not both.

[00:03:47] Speaker 00:
Okay, go ahead.

[00:03:52] Speaker 02:
So this case is more specifically pertains to who gets to keep the profits that systems acquired from its sale of 1,450 hydraulic dock levelers found to infringe Nordox design patent.

[00:04:07] Speaker 02:
These 1,450 infringing sales are not in dispute.

[00:04:13] Speaker 02:
There's also no dispute that systems profits on these infringing levelers was over $630,000.

[00:04:21] Speaker 02:
Both systems and Nordox experts testified and submitted reports showing that systems profits were over $630,000.

[00:04:28] Speaker 02:
And yet against all the evidence and against all logic and reason, the jury came back with a determination that systems profits were zero.

[00:04:41] Speaker 02:
The district court's rule 59 decision fails to correct this.

[00:04:46] Speaker 02:
Instead, the district court confusingly cites the systems experts cost savings method, method for use to determine reasonable royalties to improperly determine that 289 damages are zero.

[00:05:01] Speaker 00:
Did you challenge that methodology either through Daubert or by objection at trial?

[00:05:08] Speaker 02:
What method?

[00:05:10] Speaker 02:
The cost savings method?

[00:05:11] Speaker 02:
Yes.

[00:05:11] Speaker 02:
The cost savings method is relevant for determining reasonable royalties under 284.

[00:05:16] Speaker 02:
The cost savings method is not relevant for determining systems profits under 289.

[00:05:23] Speaker 00:
Okay, so did you ask for a limiting instruction to that effect?

[00:05:27] Speaker 02:
Your Honor, we believe that the cost savings method is irrelevant for 289.

[00:05:34] Speaker 02:
And the more important focus should be on why the district court judge allowed the systems juries to find that systems profits were zero when the jury instructions clearly require a gross revenue methodology.

[00:05:52] Speaker 02:
And testimony was given by systems experts to the gross revenue method.

[00:06:00] Speaker 02:
And systems provided a jury instruction.

[00:06:03] Speaker 02:
which was adopted by the court that mandated a gross revenue methodology.

[00:06:08] Speaker 00:
Okay.

[00:06:08] Speaker 00:
So your answer is no, you didn't ask for a limiting instruction so that the jury would not be confused between the, between the two different methodologies.

[00:06:20] Speaker 02:
There was no object, limiting objection, your honor.

[00:06:24] Speaker 01:
Okay.

[00:06:25] Speaker 01:
Is it fair to say that the jury found that system profits here on the doc levelers was zero?

[00:06:32] Speaker 01:
Because the way I read the verdict form, it looked like what the jury had done was concluded that it was going to use reasonable royalties under 284 and decided to award 46 grand and rather than awarding systems profits or your lost profits.

[00:06:53] Speaker 02:
Well, it's the jury verdict clearly, I mean, question one of the jury verdict clearly requires

[00:07:02] Speaker 02:
a determination of infringement based on the LHP and LHG levelers.

[00:07:07] Speaker 02:
And the jury clearly found that it was the levelers themselves that were infringing.

[00:07:14] Speaker 02:
And question four of the jury instruction, which systems did not object to, clearly requires a determination of system's profits.

[00:07:22] Speaker 02:
And the jury clearly indicated that those profits are zero.

[00:07:25] Speaker 01:
Right, but if you look at the first sentence,

[00:07:29] Speaker 01:
Number four, it says for the amount of money in question two, please indicate the amount, if any, for each of the following categories.

[00:07:36] Speaker 01:
And so, you know, a reasonable reading of the verdict form is that the jury chose its damages award based on a reasonable royalty calculation under 284, rather than using a defendant's total profits theory under 289.

[00:07:56] Speaker 02:
There's absolutely no evidence to support a finding of zero profits for systems.

[00:08:02] Speaker 02:
It's the evidence, all the evidence is that the profits are 630,000.

[00:08:08] Speaker 02:
And it is, the jury was empowered to make a determination of those profits, asked to determine them.

[00:08:20] Speaker 02:
The 289 jury instruction clearly requires that.

[00:08:26] Speaker 01:
I guess your point is, as a matter of law, the jury needed to use whichever was the higher damages theory with the largest damage award.

[00:08:39] Speaker 01:
And because, in your view, systems total profits is far larger than any reasonable royalty theory, then therefore, as a matter of law, the judge needed to grant you damages under the defendant's

[00:08:56] Speaker 01:
total profits.

[00:08:57] Speaker 02:
Is that your theory?

[00:09:00] Speaker 02:
Our theory is that the 289 jury instruction clearly states, in this case, Nordox seeks systems profits.

[00:09:07] Speaker 02:
And if you find infringement and do not find the 754 design patent invalid, you are to award Nordox systems total profits attributable to the infringement.

[00:09:18] Speaker 02:
That is the instruction that the jury received.

[00:09:20] Speaker 00:
Was there testimony at trial about the 630?

[00:09:24] Speaker 02:
Absolutely.

[00:09:26] Speaker 00:
Where?

[00:09:26] Speaker 00:
Can you point me to it?

[00:09:28] Speaker 02:
Sure.

[00:09:34] Speaker 02:
If Your Honor has Nordach's reply brief, it would be found on page 19, our response brief.

[00:09:42] Speaker 02:
But more specifically, I would direct the court's attention to system's own expert's testimony at trial relevant to gross profits.

[00:09:52] Speaker 02:
And that's found on A6685 of the appendix

[00:09:56] Speaker 02:
And here we see that the title of the screen is system sales and profits accused dock levelers.

[00:10:04] Speaker 02:
They have sales or gross revenues of 13 million, over 13 million for both the hydraulic and mechanical levelers.

[00:10:13] Speaker 02:
There's evidence here that they sold 1,457 levelers.

[00:10:17] Speaker 02:
This is undisputed testimony by their own expert.

[00:10:21] Speaker 02:
They also show that they have operating profits of over or of about 2 million.

[00:10:26] Speaker 00:
Right, but his number then didn't come out to 630.

[00:10:29] Speaker 00:
I thought it came out to something in the 400 range.

[00:10:31] Speaker 00:
Isn't that right?

[00:10:33] Speaker 02:
Yes, it is, Your Honor.

[00:10:34] Speaker 02:
The operating profit on an individual leveler is $433 per leveler.

[00:10:40] Speaker 02:
And if you simply multiply 1457 by 433, that gives you over $630,000 in profits.

[00:10:52] Speaker 02:
It's simple math.

[00:10:53] Speaker 02:
And they also, which was in evidence at trial that the jury had available to it, is that the system's own expert earlier on gave a rebuttal report which clearly acknowledged that at that time they had sold 622 infringing dock levelers and clearly indicates that at that time those levelers produced profits of $270,000.

[00:11:15] Speaker 02:
Again, this is information that the jury had available to it.

[00:11:22] Speaker 02:
Our expert

[00:11:23] Speaker 02:
argued for a higher number.

[00:11:26] Speaker 02:
And the difference between those two has to do with SG&A.

[00:11:30] Speaker 02:
So they're both experts are in agreement basically on the profits except for the SG&A portion of it.

[00:11:39] Speaker 00:
Systems Council made an argument in closing about the scope of the article of manufacture that you say was inconsistent with the law.

[00:11:50] Speaker 00:
Did you object to that argument at closing?

[00:11:53] Speaker 02:
Your honor, I did not object to closing out of professional courtesy, but also because it's just not relevant.

[00:12:00] Speaker 02:
Cost savings methods are relevant for 284, which can be limited to a portion of the infringing product.

[00:12:11] Speaker 02:
They're clearly inappropriate, though, when you're determining 289 damages because 289 damages, as this court knows from its recent decisions,

[00:12:20] Speaker 02:
are not apportionable because Congress said so.

[00:12:24] Speaker 02:
And so applying a reasonable royalty cost savings method to a 289 determination is just irrelevant, particularly when the jury instructions clearly require a 289 finding based on gross profits and system's own expert testified to gross profits through

[00:12:49] Speaker 02:
through reports and testimony.

[00:12:53] Speaker 00:
I assume we're doing both arguments here together, both issues together, the way you all have divided up the time.

[00:12:59] Speaker 00:
So let me ask you about the issue on cross appeal.

[00:13:03] Speaker 00:
What evidence was there in the record to support the jury's conclusion of infringement with respect to the six and a half foot leveler?

[00:13:10] Speaker 02:
Of infringement?

[00:13:12] Speaker 02:
Yes.

[00:13:14] Speaker 02:
There was evidence, there were screens put up which are

[00:13:19] Speaker 02:
show the patent, the views of the patent, and show the product of systems.

[00:13:26] Speaker 00:
Did you show the six and a half foot product?

[00:13:29] Speaker 02:
That was not shown.

[00:13:30] Speaker 02:
That was not shown.

[00:13:31] Speaker 02:
There was no evidence submitted with respect to the six and a half foot number, correct?

[00:13:36] Speaker 02:
I believe there was evidence.

[00:13:37] Speaker 02:
And the evidence, it's pretty good evidence actually.

[00:13:41] Speaker 02:
There's evidence that all the levelers are manufactured on welding skids.

[00:13:46] Speaker 02:
The skids are set up so that the middle six foot section is going to be identical, whether it's a six foot, six and a half foot or seven foot leveler.

[00:13:55] Speaker 02:
So you had the jury, they saw pictures and compared evidence for the six.

[00:14:01] Speaker 02:
They compared it for the seven.

[00:14:03] Speaker 02:
The only difference is a matter of three inches on each end of those levelers.

[00:14:10] Speaker 02:
And the jury is allowed, as this court knows, to infer

[00:14:13] Speaker 01:
from the evidence, make reasonable... Is there evidence that that's how Systems manufactures its levelers?

[00:14:19] Speaker 01:
Yes, they testified that they were... I thought I saw testimony about that's how other manufacturers manufacture their levelers, but there wasn't anything specific about this is also how Systems goes about its manufacturing using the same, whatever you call it,

[00:14:38] Speaker 02:
I believe the briefs cover that issue, Your Honor, and I believe there is evidence that they are made on welding skids, and it's standard practice in the industry.

[00:14:47] Speaker 02:
Mr. Gleason had worked at a number of organizations where he had developed those, and that's the way they're done in all of us.

[00:14:54] Speaker 01:
To be more specific, there wasn't any testimony about systems specifically using this particular unitary manufacturing skid.

[00:15:06] Speaker 01:
It was more about how

[00:15:08] Speaker 01:
in the industry as a whole, based on anecdotal evidence of how other manufacturers did it, that therefore the inference must be that systems likewise does it that way.

[00:15:19] Speaker 01:
Is that fair accounting of the testimony?

[00:15:27] Speaker 02:
I believe there was testimony, and I believe it's in the briefs, and I'll rely on what the briefs say, Your Honor, but I believe there was testimony that they did manufacture their

[00:15:38] Speaker 02:
their fact levelers on SCIDs, and the briefs would cover that issue.

[00:15:44] Speaker 02:
If it's not there in the briefs, then there was no evidence.

[00:15:46] Speaker 02:
If it is there... All right.

[00:15:48] Speaker 02:
All right.

[00:15:52] Speaker 00:
Okay.

[00:15:53] Speaker 00:
Well, you're... I'm sorry.

[00:15:53] Speaker 00:
You're into your rebuttal.

[00:15:54] Speaker 00:
We'll restore your three minutes of rebuttal and we'll give an extra two minutes to the other side if it's needed.

[00:16:04] Speaker 00:
Mr. Mann?

[00:16:05] Speaker 04:
Good morning, your honor.

[00:16:06] Speaker 04:
May it please the court.

[00:16:07] Speaker 04:
I'm Philip Mann on behalf of the Eppley Systems Inc.

[00:16:10] Speaker 04:
With me at council table is Mike Pilgrim, systems president.

[00:16:13] Speaker 04:
Your honor, the district court in denying the post-trial motions said, the motions are denied because the jury reasonably relied, in reaching its verdict, the jury reasonably relied on the evidence presented at trial.

[00:16:27] Speaker 04:
And really, that's all that needs to be said in this case.

[00:16:29] Speaker 00:
Well, how could any reasonable juror say that there were zero profits?

[00:16:33] Speaker 04:
Because of the interpretation of the claim, of the instructions.

[00:16:37] Speaker 04:
The instructions quite clearly told the jury, you can award a reasonable royalty, you can award lost profits, or you can award a systems profit.

[00:16:47] Speaker 00:
So you're saying that the jury instructions were legally wrong.

[00:16:51] Speaker 04:
No, I'm not saying the jury instructions were legally wrong.

[00:16:53] Speaker 04:
I'm saying the jury instructions are what they are.

[00:16:55] Speaker 00:
It's an absolute entitlement to 289 damages if they exist.

[00:17:00] Speaker 04:
Well, that was not what the jury instruction said.

[00:17:02] Speaker 00:
And as the court correctly pointed out... Your friend on the other side just read the 289 jury instruction.

[00:17:08] Speaker 00:
The 289 jury instruction said that if you find 289 damages, you must award them.

[00:17:15] Speaker 04:
If you find them, that's a key point, if you find them.

[00:17:19] Speaker 00:
Now, we do not... Are you telling me there was zero evidence at trial, that at trial, the evidence supported a zero

[00:17:28] Speaker 00:
profits for systems.

[00:17:30] Speaker 04:
If the jury does not believe the experts, is the jury free to discount the testimony of every expert?

[00:17:36] Speaker 00:
Both experts.

[00:17:37] Speaker 00:
So you're saying the jury should sit there and say both experts talked about different numbers of profits and the jury's free to say, okay, well he says it's 500,000 and he says it's a million

[00:17:50] Speaker 00:
I think it's zero.

[00:17:51] Speaker 00:
And you think the jury could reach that conclusion if there was substantial evidence to support that conclusion?

[00:17:55] Speaker 04:
If there's substantial evidence.

[00:17:57] Speaker 04:
Now that is the key question.

[00:17:59] Speaker 00:
Right.

[00:17:59] Speaker 00:
So what's the substantial evidence to support a zero profit determinant?

[00:18:02] Speaker 04:
Because what we're saying is Dr. Smith, who testified on behalf of NORDAC, was not believable at all.

[00:18:08] Speaker 04:
We filed successful Daubert motions to exclude much of his testimony.

[00:18:12] Speaker 04:
He embarrassed himself at trial, was admonished by the judge.

[00:18:15] Speaker 04:
He did not make any sense.

[00:18:17] Speaker 04:
The jury is free to totally discount Dr. Smith's testimony, and I think at this point, nor Doc is not even relying on Dr. Smith's testimony.

[00:18:24] Speaker 04:
Was there any dispute whether or not there was lost profits?

[00:18:27] Speaker 04:
Our expert did dispute that.

[00:18:30] Speaker 04:
Our expert said that the profits on the article of manufacture that is actually covered by the design patent, our expert said that those profits are less than $15 per unit.

[00:18:39] Speaker 03:
So there was a dispute as to the amount, but that's not what I asked.

[00:18:43] Speaker 03:
I asked whether there was a dispute

[00:18:45] Speaker 03:
as to whether there was any lost profits.

[00:18:49] Speaker 04:
Well, I assume you mean systems profits, Your Honor, not lost profits, not Nordac's lost profits.

[00:18:55] Speaker 04:
There was a lost profits theory involved here.

[00:18:58] Speaker 04:
Right.

[00:18:58] Speaker 04:
We're talking about systems profits.

[00:19:00] Speaker 00:
Systems profits.

[00:19:00] Speaker 04:
That's what I assume so.

[00:19:02] Speaker 04:
It's not our burden of proof on that issue.

[00:19:07] Speaker 00:
There has to be testimony, evidence in the record from which the jury's conclusion can be supported.

[00:19:15] Speaker 00:
You just told us that even with the legally erroneous description of law and profits that your expert used, he still had a number.

[00:19:24] Speaker 00:
Yes, he did.

[00:19:26] Speaker 00:
And you're saying that there's still substantial evidence in the record for a zero.

[00:19:30] Speaker 04:
All I can say, Your Honor, is the jury is free to say, I don't believe that expert on that point.

[00:19:36] Speaker 04:
And if I can explain how this could happen, we have to remember here, Nordak is saying in his briefs, Nordak is saying that our expert, Mr. Biro,

[00:19:45] Speaker 04:
was a nutcase, didn't know what he was talking about.

[00:19:47] Speaker 04:
He applied the wrong methodology.

[00:19:48] Speaker 00:
He certainly applied the wrong methodology.

[00:19:51] Speaker 00:
He told the jury that at the legal matter, that they could look at an article of manufacture, which under the law, they can't.

[00:19:59] Speaker 00:
I mean, the law is very clear on design patents.

[00:20:01] Speaker 00:
You can't just pick out pieces of the design and say, that's all it is.

[00:20:06] Speaker 00:
For 289, you look at the entire article, the entire product.

[00:20:10] Speaker 04:
No, he looked at the entire article of manufacture on which the design is applied.

[00:20:14] Speaker 04:
We had a factual dispute on that.

[00:20:16] Speaker 04:
Noradoc is saying that is the entire doc leveler.

[00:20:18] Speaker 04:
Our position is no.

[00:20:20] Speaker 04:
If you look at what Patton actually said.

[00:20:21] Speaker 04:
That's a legal issue.

[00:20:22] Speaker 04:
It's not an expert issue.

[00:20:24] Speaker 04:
Well, he said he concluded, well, that's how he calculated his damages.

[00:20:29] Speaker 04:
Now, the thing is during cross-examination, as Noradoc has the ability to do, if they think that our expert is incompetent,

[00:20:37] Speaker 04:
and is applying the wrong standards or is reaching unreliable conclusions, that's the purpose of cross-examination, to get up there and demonstrate that this supposed expert does not know what he's doing.

[00:20:47] Speaker 04:
But that didn't happen here, or if the attempt was made, that didn't happen here.

[00:20:51] Speaker 04:
The jury is free to rely on what they heard.

[00:20:55] Speaker 04:
And the point I keep making is, if what they hear doesn't make sense, if the jury looks at what the experts are saying and says,

[00:21:03] Speaker 04:
I have no idea what's going on here.

[00:21:05] Speaker 04:
They are free to conclude... Did they hear evidence that lost profits were zero?

[00:21:12] Speaker 03:
Our evidence on lost profits... Did the jury hear evidence that lost profits were zero?

[00:21:18] Speaker 04:
I don't believe that the jury heard the word zero.

[00:21:21] Speaker 04:
What the jury heard was that Mr. Bureau say, I'm calculating reasonable royalties.

[00:21:27] Speaker 04:
On the basis of reasonable royalties, I conclude that a reasonable royalty here is $15 per unit.

[00:21:33] Speaker 04:
He then said, looking at the system's profits, my conclusion is system's profits is less than $15 per unit.

[00:21:41] Speaker 00:
So therefore, I did not calculate it precisely.

[00:21:44] Speaker 00:
If the jury heard testimony that system's lost profits were x from the plaintiff and y from the defendant, and the jury came back and said, $1 million in lost profits, would you still be standing here and saying the jury's free to reject both sides' testimony?

[00:22:03] Speaker 04:
Well, if the testimony was incredible, yes.

[00:22:08] Speaker 00:
And they were allowed to just pick a number.

[00:22:12] Speaker 04:
Oh, I'm sorry.

[00:22:13] Speaker 04:
Let me back up.

[00:22:14] Speaker 04:
Your hypothetical is the number exceeds the number presented by either of you.

[00:22:21] Speaker 04:
No, that's different, Your Honor.

[00:22:21] Speaker 04:
I would say no.

[00:22:22] Speaker 00:
That's different than picking a number that is lower than presented by either side?

[00:22:25] Speaker 04:
Yes, because it's a failure of proof.

[00:22:27] Speaker 04:
If I come in there, if I try to prove that it's X,

[00:22:31] Speaker 04:
and somebody else comes in and tries to prove that it's why, and the jury says, I can't understand either of these things, so I can't make a determination, all I can conclude is neither side proved any damages.

[00:22:42] Speaker 04:
So based on the evidence I hear, which is evidence I cannot accept because I don't trust it, the jury can say there's a failure of proof.

[00:22:49] Speaker 00:
But that's not what the jury said.

[00:22:50] Speaker 00:
The jury had a form and filled in the numbers zero.

[00:22:53] Speaker 04:
Exactly.

[00:22:54] Speaker 04:
And I think the court correctly concluded what happened here.

[00:22:56] Speaker 04:
What the jury correctly concluded, there are three questions that were asked.

[00:22:59] Speaker 04:
One is, what is a reasonable royalty?

[00:23:02] Speaker 00:
But that shouldn't have been the first question, should it?

[00:23:05] Speaker 00:
The first question should be, under 289, are there system lost profits that have been proven?

[00:23:11] Speaker 04:
Rule 51, Your Honor.

[00:23:13] Speaker 04:
If there's a problem with the jury instructions, it was up to Noradoc to file a timely objection and tell the judge, judge, you're doing this wrong.

[00:23:21] Speaker 04:
That failed here.

[00:23:22] Speaker 04:
We can't keep going back.

[00:23:24] Speaker 04:
That's the purpose of having the discussion of the jury instructions.

[00:23:27] Speaker 04:
We spent a couple hours with the judge,

[00:23:28] Speaker 04:
Going over the jury instructions, the purpose of that discussion.

[00:23:31] Speaker 01:
But there's a jury instruction that says, jury, if you find infringement and that the patent is not invalid, then jury, you are to award systems total profits on the infringing product.

[00:23:44] Speaker 04:
And the jury also had an instruction saying that if you award reasonable royalties, you are not to award systems profits.

[00:23:51] Speaker 00:
No, it said you're not to award Nordox lost profits.

[00:23:55] Speaker 00:
It didn't say you're not to award systems profits.

[00:23:59] Speaker 00:
That's not, the jury instructions were horribly confusing, but it did not say that.

[00:24:06] Speaker 00:
It said that if Nordach has proved lost profits, I'm sorry, it talked about the system's profits and said, if they've proven that, they're entitled to it.

[00:24:17] Speaker 00:
And then it talked about 284, where you talk about Nordach's lost profits and reasonable royalty.

[00:24:23] Speaker 00:
And it's that instance where the jury was told they could pick.

[00:24:27] Speaker 00:
They were never told they could pick between systems profits under 289 and a reasonable royalty under 284.

[00:24:34] Speaker 04:
But I believe if you read further down that instruction, there's something going from memory here.

[00:24:38] Speaker 04:
And obviously this is written down.

[00:24:39] Speaker 04:
It says what it says.

[00:24:40] Speaker 04:
But I believe at the end of that instruction, it says something to the effect that you are not supposed to make two awards.

[00:24:47] Speaker 04:
And that would exclude an award of systems profits.

[00:24:50] Speaker 04:
I'm admittedly going from memory here, Your Honor.

[00:24:52] Speaker 01:
Doesn't Catalina Lighting say that

[00:24:55] Speaker 01:
Juries should pick the damage award that's higher between the 284 and 289 calculation?

[00:25:02] Speaker 01:
It does, but the point here is... And the evidence that Nordoc is pointing to is that your own expert acknowledged that the system's profit on the infringing doc levelers, when you add it all up, far, far exceeds 46K.

[00:25:22] Speaker 04:
Again, all I can say, Your Honor, is Nordach has a burden of proof on this, and even if we present an expert that says the number is this, the jury is free to say if they don't believe that expert, the jury can say there's been no proof on this particular factual issue.

[00:25:39] Speaker 01:
But the point is that your expert conceded this, acknowledged this, that there were profits made on every single infringing leveler, and that, you know, and then when you

[00:25:52] Speaker 01:
multiply that to the number of infringing levelers, you get a number in the hundreds of thousands.

[00:25:58] Speaker 01:
Well, what happened here, again, is there were three.

[00:26:01] Speaker 01:
And so therefore, the judge in denying the Rule 59 motion was relying on this testimony from your expert that under a cost savings theory, the system's profits would be something less than $15 per unit.

[00:26:21] Speaker 01:
And that's an apportionment theory to the doc leveler.

[00:26:25] Speaker 01:
And we just said in Apple versus Samsung, are you familiar with that?

[00:26:29] Speaker 01:
I am familiar with that case, Your Honor.

[00:26:30] Speaker 01:
That you don't do apportionment approach to 289 damages.

[00:26:35] Speaker 04:
There are two different apportionments here.

[00:26:38] Speaker 04:
There's one you try to attempt to apportion how much of the profit is attributable to the design.

[00:26:43] Speaker 04:
What we are saying here is there's a factual dispute as what is the article of manufacture?

[00:26:48] Speaker 04:
We are saying the article of manufacture is that

[00:26:51] Speaker 04:
that hinge plate and the lip plate and the hinge, which is what the literal language of the pant says.

[00:26:56] Speaker 00:
But again, our case law is very clear that you don't parse the article of manufacture based solely on an aspect of the design.

[00:27:04] Speaker 00:
That our case is over and over and over.

[00:27:06] Speaker 00:
In other words, if you've got a design of the top of a tennis shoe, it's the whole shoe is the article of manufacture.

[00:27:12] Speaker 00:
You don't parse the article of manufacture that way as a matter of law.

[00:27:17] Speaker 04:
Well, again, when we get down to the question that we raised in our brief, and I believe this also came up coincidentally in the recent Apple Samsung case, is what happens if it's a hubcap on a car?

[00:27:28] Speaker 04:
I believe in that case, what if it's a tail light attached to a car?

[00:27:32] Speaker 04:
Does that apply to the entire automobile?

[00:27:35] Speaker 01:
Another example we have is... Would you say this lip plate is attached to the rest of the dock lever?

[00:27:42] Speaker 01:
It is attached.

[00:27:43] Speaker 01:
It's welded.

[00:27:44] Speaker 01:
No, it's welded.

[00:27:46] Speaker 04:
together.

[00:27:46] Speaker 04:
It gets down to, I mean, welds can be cut.

[00:27:48] Speaker 04:
It becomes down to at what point does something become detachable, at what point doesn't it?

[00:27:53] Speaker 01:
I mean, glue.

[00:27:54] Speaker 01:
So you're saying that your lip hinge plate is detachable?

[00:27:59] Speaker 01:
What I'm saying is that's what our expert testified to.

[00:28:02] Speaker 01:
He testified that your lip lug hinge

[00:28:06] Speaker 01:
plate is detachable?

[00:28:07] Speaker 04:
He didn't testify that it's detachable.

[00:28:09] Speaker 04:
He said that is the article of manufacture.

[00:28:11] Speaker 00:
But that's a legal conclusion.

[00:28:12] Speaker 00:
You didn't ask for a jury instruction.

[00:28:14] Speaker 00:
You didn't ask for the judge to define the article of manufacture.

[00:28:16] Speaker 00:
You had an expert who is not a lawyer, not the judge, tell the jury what the article of manufacture was.

[00:28:22] Speaker 00:
That's not a factual dispute.

[00:28:23] Speaker 00:
That's a legal dispute.

[00:28:25] Speaker 04:
And why should he believe when he testified what the profits are?

[00:28:28] Speaker 04:
I'm not saying that to be flippant, Your Honor, but that is the fundamental problem that we have here, is Nordach is saying on the one hand,

[00:28:36] Speaker 04:
Your expert's not an expert.

[00:28:37] Speaker 04:
He cannot be believed.

[00:28:38] Speaker 04:
His conclusions are erroneous.

[00:28:40] Speaker 04:
However, on this one point here, that one he got right.

[00:28:43] Speaker 04:
The others he got all wrong.

[00:28:44] Speaker 04:
But this one he got right.

[00:28:46] Speaker 04:
And that's why we have juries, is to resolve those types of things.

[00:28:49] Speaker 03:
On your cross appeal, you're challenging the judgment of validity.

[00:28:52] Speaker 03:
But it seems to me that you didn't preserve that issue.

[00:28:55] Speaker 04:
Well, Your Honor, what I would rather address on that one would be the six and a half foot doc leveler.

[00:29:02] Speaker 04:
On the validity, I believe we did.

[00:29:04] Speaker 04:
As we pointed out in our papers, we made oral objections at all stages of the trial.

[00:29:10] Speaker 04:
We renewed our JMOL at the conclusion of the case, including after the verdict was read.

[00:29:17] Speaker 04:
We did not do that in writing.

[00:29:18] Speaker 04:
We believe under Seventh Circuit law.

[00:29:21] Speaker 03:
But the renewal was just a reference to whatever motions we passed before.

[00:29:26] Speaker 03:
We hereby renew those.

[00:29:29] Speaker 03:
You think that's sufficient under Rule 7?

[00:29:31] Speaker 03:
Rule 50B?

[00:29:32] Speaker 04:
I believe in the circumstances of this case, it was, Your Honor, because this was the subject the judge had already heard.

[00:29:38] Speaker 04:
At this point, the judge, Judge Rand, had already heard these issues at least three times and possibly more.

[00:29:44] Speaker 03:
When I look at what was actually said, did you argue the case below?

[00:29:52] Speaker 03:
I did.

[00:29:53] Speaker 03:
Mr. Mann, you didn't even know what they were.

[00:29:55] Speaker 03:
The court says, I indicated the court's going to enter judgment

[00:30:01] Speaker 03:
And this is the discussion that you had on the JMOs.

[00:30:07] Speaker 03:
The court said, as I indicated, the court's going to enter judgment based on any post-trial motions.

[00:30:13] Speaker 03:
It says, any post-trial motions to be made at this juncture, you respond, well, I guess at this point, Judge, just as a routine matter, whatever motions we made during the trial, JMO and so forth, we would renew those motions to the extent that they are necessary.

[00:30:31] Speaker 03:
I don't see anything specific in that request, anything that would help guide the court as to what arguments are presumed.

[00:30:40] Speaker 03:
There's nothing specific, nothing particular about those.

[00:30:44] Speaker 03:
And then it goes on and you say anything else and your response is, everything we made, we renewed.

[00:30:51] Speaker 03:
I'm not sure what that is, but just for the record, whatever we said before, so you weren't even sure as to

[00:31:00] Speaker 03:
what arguments she made.

[00:31:03] Speaker 03:
And when I balanced that against the applicable law, it just does not seem to me that you preserved these issues.

[00:31:09] Speaker 04:
Well, Your Honor, at this point, there was a little bit of levity between us and the court.

[00:31:15] Speaker 04:
I believe the court himself said after I said that, I'm not sure what my rulings were on those either, but whatever they are, I'm ruling the same way.

[00:31:23] Speaker 04:
I think we're reading a little bit too much into this.

[00:31:25] Speaker 00:
That's not really what the rule contemplates.

[00:31:26] Speaker 00:
I mean, the rule even talks about filing a post-trial motion.

[00:31:30] Speaker 00:
I mean, aren't you supposed to really preserve these issues?

[00:31:33] Speaker 00:
How does the court even know what it is that you're objecting to or what it is you think there has been insufficient evidence as it relates to without saying what it is?

[00:31:44] Speaker 04:
Again, Your Honor, at this point, as I mentioned, we've already been through this several

[00:31:49] Speaker 04:
if not hours, certainly tens of minutes of argument on exactly these points.

[00:31:54] Speaker 00:
The judge was very conscientious, heard us out on our arguments, why we thought that the... Tens of minutes of... I mean, your first argument was in paragraph, the one that you're now saying you incorporated.

[00:32:06] Speaker 00:
The first, Jamal, was really just a paragraph.

[00:32:09] Speaker 04:
No, I believe it was more than that.

[00:32:12] Speaker 04:
We talked extensively about why this was functional.

[00:32:17] Speaker 04:
Again, I think we're taking time away from I think what is more important issue on this thing is the six and a half foot leveler also.

[00:32:26] Speaker 04:
As I say, we put in our brief, I believe the Seventh Circuit law says that the motion does not need to be in writing.

[00:32:34] Speaker 04:
Obviously, the court decides whether I'm correct or not on that.

[00:32:37] Speaker 04:
But that's what we're relying on is the Seventh Circuit law that says that although the better practice is put it in writing, it need not be in writing.

[00:32:45] Speaker 04:
But either way, it needs to be specific.

[00:32:46] Speaker 03:
even if it's moral, you have to state a basis or a grounds for your renewal.

[00:32:54] Speaker 04:
Oh, we did do that.

[00:32:55] Speaker 04:
I'm certain that is in the record because we talked extensively about the testimony we heard from Mr. Gleason where he outlined on drawing of his own path.

[00:33:04] Speaker 03:
So if we don't find that in the record, then you're saying it's okay

[00:33:08] Speaker 03:
that we're perfectly OK to find that you did not preserve this for appeal.

[00:33:14] Speaker 04:
I don't think it's up to me to say what's OK.

[00:33:16] Speaker 04:
I mean, the court will do what it does.

[00:33:18] Speaker 04:
I believe it's in the record, Your Honor.

[00:33:19] Speaker 04:
If I'm mistaken, then I'm mistaken.

[00:33:21] Speaker 04:
But that's not my call.

[00:33:22] Speaker 01:
You're talking about your 50A oral motion, not your 50B oral motion.

[00:33:26] Speaker 01:
The 50B oral motion doesn't go into any detail.

[00:33:29] Speaker 01:
Is that fair to say?

[00:33:30] Speaker 04:
I would say so, yeah.

[00:33:32] Speaker 04:
Again, it was the same motion.

[00:33:33] Speaker 04:
We did one at the close of the plaintiff's case.

[00:33:36] Speaker 04:
We did one at the close of our case.

[00:33:38] Speaker 04:
And we did one after the jury verdict was read.

[00:33:42] Speaker 04:
Substance of all those motions did not change.

[00:33:44] Speaker 04:
It was basically, substance of our motion was what was presented during the plaintiff's case in chief.

[00:33:51] Speaker 04:
And we relied again, as I said, on the testimony of Mr. Gleason, where he himself identifies all elements of the alleged design as being functional.

[00:34:03] Speaker 00:
OK, you're over your time.

[00:34:05] Speaker 04:
OK, thank you, Your Honor.

[00:34:06] Speaker 00:
Thank you.

[00:34:17] Speaker 02:
Your honors, I would like to point out one thing that I think the court may already be aware of, but I just want to make sure of it.

[00:34:25] Speaker 02:
And that is that if you turn to page 12 of Nordach's response brief, it clearly shows a picture of systems leveler.

[00:34:33] Speaker 02:
And it clearly shows that the predominant portion or the front end design is predominantly displayed in those brochures.

[00:34:42] Speaker 02:
There also was evidence at trial that they were welded.

[00:34:46] Speaker 02:
It's an integral part of the product.

[00:34:49] Speaker 02:
It's necessary to perform the intended function of the machine.

[00:34:52] Speaker 02:
Without it, it won't.

[00:34:55] Speaker 02:
It was sold as a complete unit by systems.

[00:35:00] Speaker 02:
The levelers were not sold without the front end.

[00:35:04] Speaker 02:
And the evidence is that the front end was not sold separately.

[00:35:11] Speaker 02:
Customers, in fact, did look to

[00:35:14] Speaker 02:
the front end design when they were purchasing the decisions.

[00:35:17] Speaker 02:
There's evidence to that at trial.

[00:35:20] Speaker 02:
And as this court is aware, the Congress has stated it is the design that sells the article.

[00:35:33] Speaker 02:
With respect to the district court's jury instruction,

[00:35:40] Speaker 02:
Improper interpretation of the jury instruction, I would just add that that improperly creates a legal fiction that no determination of 289 damages is necessary and that if it's adopted and thus guts Congress's intent for enacting 289, it also avoids the undisputed fact that question four of the jury instruction clearly asked the jury to determine systems profits.

[00:36:13] Speaker 02:
The confusion, I believe, that was prevalent with the district court was generated by the arguments that systems made to the district court that were squarely rejected by this court in the recent Apple decision that the article of manufacture is not the appropriate focus.

[00:36:33] Speaker 02:
It's the entire profit.

[00:36:38] Speaker 02:
We believe that systems cost savings method

[00:36:42] Speaker 02:
is not relevant to 289 damages because it's contrary to established law, well established law, speculative in nature, and negates Congress's intent for enacting 289.

[00:36:55] Speaker 02:
With respect to the invalidity arguments that were discussed, Nordach would simply renew its briefing on the waiver and forfeiture arguments.

[00:37:11] Speaker 02:
With respect to the six and a half foot levelers, after thinking about it, your honor, I don't know that there was any testimony by systems with respect to the machines being made on a fixture, but they do talk about them being welded.

[00:37:27] Speaker 02:
And there was no evidence by systems refuting our testimony, which was entered earlier, that they're all made on fixtures.

[00:37:37] Speaker 02:
Systems never submitted any evidence saying that's just not true.

[00:37:41] Speaker 02:
We don't do that.

[00:37:42] Speaker 02:
Is that a standard practice?

[00:37:45] Speaker 02:
It's my understanding from the record that that would be a standard practice in the industry And from the trial record If there's no further questions your honor Okay, the case will be submitted