[00:00:00] Speaker 01:
The case is real-time data versus CME Group et al., 14-16-63.

[00:00:12] Speaker 01:
We will hear from Mr. Haas when you are ready.

[00:00:30] Speaker 04:
Thank you, Your Honor.

[00:00:31] Speaker 04:
May it please the court?

[00:00:32] Speaker 04:
This case concerns a 285 attorney's fees ruling that was an abuse of discretion for two different reasons.

[00:00:41] Speaker 04:
First of all, it was an abuse of discretion because the district court

[00:00:45] Speaker 04:
relied and based its ruling on erroneous view of the law.

[00:00:49] Speaker 04:
What was that?

[00:00:50] Speaker 04:
The district court found that it only had to consider whether a refusal to stipulate non-infringement based on a market ruling that showed clearly that there was no infringement.

[00:01:03] Speaker 03:
Suppose I disagree with that premise.

[00:01:06] Speaker 03:
Mm-hmm.

[00:01:06] Speaker 03:
What was the legal rule on which the district court relied to say not an exceptional case?

[00:01:14] Speaker 03:
Put aside the privilege.

[00:01:15] Speaker 04:
okay so i'd point you to we have one page to look at with regard to that that's right that's the one page we have to work with with regard to the district court's ordinance and what the district court said and this is the fourth line down on that page the district court said that our position was that they after getting this markman order that precluded as they said in a previous brief to this court precluded their infringement their infringement contention that

[00:01:43] Speaker 04:
they should have conceded at that point.

[00:01:46] Speaker 04:
And the district court said that they did not do so and ultimately lost on summary judgment does not itself amount to an unreasonable or baseless conduct.

[00:01:56] Speaker 04:
And I would tell Your Honor that the itself that's critical there.

[00:02:01] Speaker 03:
That says it is not always egregious conduct to give up after claim construction.

[00:02:13] Speaker 03:
That's, in fact, a correct proposition.

[00:02:16] Speaker 03:
Not an incorrect proposition.

[00:02:18] Speaker 03:
It depends what the claim construction order says.

[00:02:21] Speaker 03:
That is the district court's only analysis.

[00:02:24] Speaker 04:
But that's a correct proposition of law.

[00:02:27] Speaker 04:
But that's not how the district court used it.

[00:02:31] Speaker 04:
The defendants here said, here are all the reasons why their activities

[00:02:36] Speaker 04:
between the ruling on Markman and the ruling on summary judgment created an unusual case that met the octane fitness standard.

[00:02:45] Speaker 04:
The district court's response to that argument is only in that sentence I just read.

[00:02:49] Speaker 02:
Yes, but read on to what the district court then quoted from the California court.

[00:02:55] Speaker 04:
That's correct.

[00:02:56] Speaker 04:
The district court quoted the connected case from Judge Felzer in California.

[00:03:00] Speaker 04:
And that quote specifically refers to, and this is in the fourth line of that quote, early claim construction.

[00:03:07] Speaker 04:
And then a few lines later says, these claim constructions, referring back to an early claim construction.

[00:03:13] Speaker 02:
Issued separately from other motions do not analyze issues of infringement or validity.

[00:03:20] Speaker 04:
And that's referring to this early claim construction that Judge Felzer was referring back to.

[00:03:25] Speaker 04:
And we pointed out, both to the district court, who did not analyze it at all, and also in our brief here, that this was the exact opposite of an early claim construction.

[00:03:35] Speaker 04:
This claim construction occurred after the source code had been handed over, after the plaintiffs had given what they said in open court for their best and final live or die by infringement contentions.

[00:03:47] Speaker 04:
And those infringement contentions were the ones that the district court found in its Markman order were not consistent with the claim construction.

[00:03:57] Speaker 03:
And then in ruling on summary judgment... Did the district court ever conclude here that although when granting summary judgment of non-infringement, that the

[00:04:07] Speaker 03:
infringement position was not supported, not consistent with the claim construction, that the claim construction that she had adopted was so plain that it was essentially egregious or unreasonable even to think that the infringement contention could survive the claim construction.

[00:04:30] Speaker 03:
I don't think so.

[00:04:31] Speaker 04:
She didn't use those words.

[00:04:32] Speaker 04:
Certainly, if you're a suject, she did not use those words.

[00:04:36] Speaker 03:
So the only legal proposition asserted here is the rejection of the proposition that continuing to summary judgment after a claim construction does not always constitute egregious conduct.

[00:04:53] Speaker 03:
And that's correct.

[00:04:55] Speaker 03:
That's correct.

[00:04:55] Speaker 03:
And I agree with you.

[00:04:56] Speaker 03:
And the court never said that beyond the

[00:05:00] Speaker 03:
insufficiency of the infringement contention made in the three-month period after the claim construction, that that position was egregious, unreasonable, whatever the term is.

[00:05:11] Speaker 03:
The court never considered that.

[00:05:12] Speaker 03:
And that was the error of law.

[00:05:14] Speaker 03:
So where is the abuse of discretion?

[00:05:16] Speaker 04:
The abuse of discretion is in, when presented with the situation,

[00:05:20] Speaker 04:
where there's a Markman ruling that decided the infringement issue, and there are a number of aggravating factors pointed out.

[00:05:28] Speaker 03:
The claim construction did not decide the claim construction in the relevant sense of making it clearly unreasonable to press forward.

[00:05:45] Speaker 03:
The language of the claim construction was, in fact, open-ended.

[00:05:51] Speaker 03:
It did not say, you may not use values in any kind of combination of what's inside the field in order to characterize the field.

[00:05:59] Speaker 03:
It did not say that.

[00:06:01] Speaker 04:
Well, Your Honor, the appellees in this situation actually said the opposite in their briefing to this court previous.

[00:06:08] Speaker 04:
If you'll turn to their brief, which is at A,

[00:06:18] Speaker 04:
Just give me a moment, Your Honor.

[00:06:19] Speaker 04:
That's a little... Okay, so I'm looking at... This is their brief to this court.

[00:06:26] Speaker 02:
Yeah, let's go to this number.

[00:06:33] Speaker 04:
Okay, so this is looking at JA-282.

[00:06:35] Speaker 04:
And this is a third line down from the quotation, they referring to the defendant.

[00:06:43] Speaker 04:
They invited the court, referring to the district court, to construe this term to

[00:06:48] Speaker 04:
with the objective of precluding those arguments.

[00:06:50] Speaker 04:
And the arguments they're referring to are the infringement contention arguments that they had admitted were the best and final live or die line.

[00:06:58] Speaker 04:
And the court accepted that invitation.

[00:07:02] Speaker 04:
In their previous appeal to this court, they told this court the claim construction was wrong because it precluded the infringement arguments.

[00:07:10] Speaker 04:
They understood it precluded the infringement arguments.

[00:07:13] Speaker 04:
It was one of the bases they argued to this court

[00:07:16] Speaker 04:
as to why this court should go against the claim construction.

[00:07:20] Speaker 04:
Now, this court didn't.

[00:07:21] Speaker 04:
This court agreed with the claim construction and agreed with the summary judgment on it.

[00:07:28] Speaker 04:
But further in the summary judgment ruling, the judge also said the only argument they're putting forward is one that was rejected at market.

[00:07:38] Speaker 03:
And I would give you one other piece.

[00:07:39] Speaker 03:
But not in fact by the language of the claim construction adopted at market.

[00:07:44] Speaker 03:
Well, the language in the Markman rule... You can further construe it, which is, I think, what basically happened at summary judgment, where the district court said, I said it has to be character, and we talked before, and what you're doing with using... was it median values or something to define the character?

[00:08:03] Speaker 03:
That's not what I meant.

[00:08:06] Speaker 04:
Well, Your Honor, first of all, I would say that in the Markman ruling, she did clarify that.

[00:08:11] Speaker 04:
She specifically said in the Markman ruling that checking for a particular value did not meet the data type claim construction.

[00:08:18] Speaker 03:
And they came along, correct me if I'm wrong, with an infringement contention that did not check for a particular value.

[00:08:27] Speaker 03:
It used a median.

[00:08:29] Speaker 03:
Is that what they used?

[00:08:30] Speaker 04:
I would disagree, Your Honor.

[00:08:31] Speaker 04:
And I think the court's findings are that the argument they made against summary judgment was the same argument that had been specifically said was outside the claim in the market ruling, which was we have this value.

[00:08:44] Speaker 04:
The way we're going to determine its type is to check if it has a particular value.

[00:08:49] Speaker 04:
Sorry, we have some data.

[00:08:50] Speaker 04:
I've gotten ahead of myself.

[00:08:52] Speaker 04:
We have some data.

[00:08:53] Speaker 04:
And the way we're going to determine its type is to check if it has a particular value.

[00:08:59] Speaker 04:
That was the argument that was in front of her in their best and final infringement contentions during the Markman hearing.

[00:09:04] Speaker 04:
It's the one she said in her Markman order.

[00:09:06] Speaker 03:
What was their contention in the post-claim construction infringement?

[00:09:12] Speaker 03:
I thought that they went back and they said, oh, now I read this claim construction.

[00:09:16] Speaker 03:
And we understood from the colloquy, the discussion leading up to that, that you can't pick a particular value.

[00:09:25] Speaker 03:
We're not going to do that.

[00:09:26] Speaker 03:
We're going to use the standard deviation, the variance, the median.

[00:09:32] Speaker 03:
That is not actually the very specific thing we discussed.

[00:09:38] Speaker 03:
That actually does kind of characterize the type of field.

[00:09:43] Speaker 03:
And we're going to try that.

[00:09:44] Speaker 03:
And maybe she'll tell us, no, I actually had a broader concept in mind about what was excluded by intent, if not by language.

[00:09:53] Speaker 04:
Well, two things, Your Honor.

[00:09:54] Speaker 04:
First of all, specifically with regard to that, they did not amend their infringement contention.

[00:09:58] Speaker 04:
They didn't try to.

[00:09:59] Speaker 04:
They didn't ask for the claim's instruction to be reconsidered.

[00:10:02] Speaker 04:
So there wasn't a specific situation in which they said, we're going to change those best and final live or die by contention.

[00:10:10] Speaker 04:
They did, in response to the summary judgment motion that we filed, and in their own summary judgment motion, which they filed after losing all their claim construction arguments, they filed a summary judgment infringement.

[00:10:20] Speaker 04:
What they did was they argued using the very words of the construction that had been rejected.

[00:10:25] Speaker 04:
Their construction had been, it just needs to be a characteristic of the data.

[00:10:28] Speaker 04:
And we cited for you in our briefs how in the briefing of summary judgment,

[00:10:33] Speaker 04:
They didn't say they were doing it, but there are specific points in their analysis where they rely on the rejected construction.

[00:10:40] Speaker 04:
That is not coming up with a new infringement theory that meets the claim construction they were dealing with.

[00:10:46] Speaker 04:
That's a disguised attempt at reconsideration of the claim construction.

[00:10:50] Speaker 02:
Mr. Hawes, why do you suppose Judge Forrest refused your request for fees?

[00:10:59] Speaker 04:
With the one page I'm working with, Your Honor, I mean, it's hard for me to know for certain.

[00:11:06] Speaker 04:
She did, for example, if you look at her order, and again we've just got the one page, but on 134, she comments each time she talks about the different factors that we put forward.

[00:11:17] Speaker 04:
She doesn't go into detail, but she only says, you know, this itself does not make the case extreme.

[00:11:23] Speaker 02:
This itself, and that's true both with respect to the privilege issue, and I know you got... And then she added it all up, all the itself, and came to the conclusion that, no, I don't think so.

[00:11:38] Speaker 04:
Your Honor, I respectfully disagree that she added it up.

[00:11:41] Speaker 04:
Because if you look at her last line, she says, for these reasons,

[00:11:45] Speaker 04:
She doesn't say, well then I considered it all together to decide if the case as a whole was unusual.

[00:11:51] Speaker 02:
What do you think for these reasons means?

[00:11:54] Speaker 04:
I think it means that she reduced the case in the little pieces and for each piece said, that itself is not enough.

[00:12:01] Speaker 04:
And that's her language, not mine.

[00:12:03] Speaker 04:
She's the one who said, this piece itself is not enough to make the case extreme.

[00:12:08] Speaker 01:
As you know, we review decisions, not opinions.

[00:12:12] Speaker 01:
And she decided this issue post octane.

[00:12:18] Speaker 01:
She used their language.

[00:12:20] Speaker 01:
And we've been told by the Supreme Court that this is a matter of discretion.

[00:12:25] Speaker 01:
And we have, excuse me, we have deference.

[00:12:28] Speaker 01:
It seems that this is a very hard ruling to reverse.

[00:12:35] Speaker 04:
The one thing I would say, Your Honor, is if you look at Highmark, which actually is the discretionary ruling by the Supreme Court,

[00:12:41] Speaker 04:
The Supreme Court specifically said a district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law.

[00:12:51] Speaker 03:
That's a note to... Right, but that's why I started with the question whether she stated any erroneous legal proposition, and it seems to me the only legal proposition she stated is correct.

[00:13:04] Speaker 03:
There is no erroneous legal proposition.

[00:13:07] Speaker 03:
What you can fairly say is that there wasn't an elaboration of the reasoning that went into the ultimate discretionary determination

[00:13:19] Speaker 03:
this just isn't exceptional, not egregious.

[00:13:23] Speaker 03:
And part of that could well have been, now that I look back at my initial claim construction, it didn't quite close the door to the assertion that when you take a set of values inside the field and characterize it by the set of values,

[00:13:41] Speaker 03:
that wasn't clearly foreclosed.

[00:13:43] Speaker 03:
I think, ultimately, it was foreclosed, but not clearly, and so it wasn't unreasonable to take one shot at that.

[00:13:50] Speaker 03:
And similarly, with respect to the privilege thing, she said, this is pretty ordinary behavior.

[00:13:58] Speaker 04:
That's all.

[00:13:58] Speaker 04:
I mean, I don't know what she was thinking, what was behind all this.

[00:14:01] Speaker 04:
We just don't have it.

[00:14:03] Speaker 04:
I do think, Judge Laurie, that we do need to look at the opinion, because otherwise we can't meet the Supreme Court's

[00:14:09] Speaker 04:
I mean, we have to look and see if she says, hey, it can't be appealed.

[00:14:15] Speaker 04:
And she's talking about something that's early claim instruction, which wasn't the situation in the case.

[00:14:20] Speaker 04:
I think you have to look at that and say, she's saying something about a rule of law.

[00:14:24] Speaker 04:
Does it apply in this case?

[00:14:25] Speaker 04:
And if it doesn't, that is basing your decision on erroneous rule of law.

[00:14:31] Speaker 01:
And that's where we're at here.

[00:14:32] Speaker 01:
If time is running out and you want to save some time, we'll give you three minutes of rebuttal.

[00:14:37] Speaker 04:
Thank you, Your Honor.

[00:14:38] Speaker 01:
I appreciate that.

[00:14:39] Speaker 01:
Mr. Cooper.

[00:14:42] Speaker 02:
you have anything to add Mr. Cooper?

[00:14:46] Speaker 00:
I do.

[00:14:48] Speaker 00:
May it please the court.

[00:14:50] Speaker 00:
This case is not rare, exceptional, does not stand out from others in any way under Octane Fitness or otherwise.

[00:14:57] Speaker 00:
On appeal he means arguing that the district court abused her discretion either by not applying the correct legal standard.

[00:15:04] Speaker 03:
I think what you mean is that the district court

[00:15:07] Speaker 03:
was within its discretion to find that this is not such a case.

[00:15:11] Speaker 03:
We might well affirm a contrary ruling, too.

[00:15:15] Speaker 03:
But we don't have a contrary ruling.

[00:15:17] Speaker 00:
Correct, Your Honor.

[00:15:19] Speaker 02:
Abusive discretion is one of the most deferential standards that we have to deal with.

[00:15:27] Speaker 02:
That's the point.

[00:15:28] Speaker 00:
Correct.

[00:15:29] Speaker 00:
The law and the facts here are largely undisputed by the parties, and they're clearly understood by Judge Forrest in her decision.

[00:15:36] Speaker 00:
Now, she cited Octane Fitness, and she's clearly recognized, in quotes, the totality of the circumstances.

[00:15:43] Speaker 00:
And she said that on JA 134.

[00:15:47] Speaker 00:
No, she did cite the Conocca decision from the central district of California.

[00:15:52] Speaker 00:
And that case is sort of similar to our case.

[00:15:56] Speaker 00:
She ultimately, though, found the case does not stand out from others.

[00:16:00] Speaker 00:
But let me talk a little bit about Judge Forrest and why she was uniquely situated to understand this case.

[00:16:06] Speaker 00:
she yourself conducted a full-day markman.

[00:16:10] Speaker 03:
Can you address the point that was made by Mr. Hawes about what you said in your brief on the merits appeal, I think it was JA 282.

[00:16:29] Speaker 03:
Did you say there that the claim construction, the initial claim construction on

[00:16:36] Speaker 03:
altered by further elaboration precluded or even clearly precluded, maybe that's the critical difference, your infringement contention.

[00:16:48] Speaker 00:
Yes.

[00:16:49] Speaker 00:
So let me address that.

[00:16:50] Speaker 00:
And I think the answer is no, we did not take that position.

[00:16:53] Speaker 00:
And let me explain why.

[00:16:56] Speaker 00:
There's a timing issue here.

[00:16:58] Speaker 00:
At the time of the markment and from that time until the summary judgment decision, there was an open question.

[00:17:03] Speaker 00:
And actually, our expert, Dr. Shamos from Carnegie Mellon, provided us infringement information, and we pursued that position.

[00:17:11] Speaker 00:
It was ultimately rejected on summary judgment.

[00:17:13] Speaker 00:
When that appeal came up to this court, it was clear that this court affirmed how the judge had modified her or interpreted her own claim construction ruling at summary judgment.

[00:17:26] Speaker 00:
So yes, after the fact, it was clear that it was read narrowly.

[00:17:31] Speaker 00:
But at the time we received a markment, we were construing it broadly.

[00:17:35] Speaker 00:
So there's nothing inconsistent there.

[00:17:40] Speaker 00:
Judge Forrest was uniquely qualified to preside.

[00:17:42] Speaker 00:
She spent nine hours with us at a markment.

[00:17:45] Speaker 00:
She herself cross-examined our experts, both Dr. Seamus and the defendant's common expert.

[00:17:51] Speaker 00:
There were numerous hearings she presided over.

[00:17:54] Speaker 00:
She actually hand wrote the orders.

[00:17:56] Speaker 00:
As letters came in to her, she hand wrote on them and gave rulings, essentially the same day or the next day.

[00:18:03] Speaker 00:
If you look at JA 2103, that's her order on the privilege log.

[00:18:07] Speaker 00:
She knew very well what was going on.

[00:18:10] Speaker 00:
There was no magistrate judge.

[00:18:11] Speaker 00:
There was no special master.

[00:18:14] Speaker 00:
She decided every issue.

[00:18:16] Speaker 00:
And deciding every issue, she knew very well what was said at those conferences.

[00:18:20] Speaker 00:
They were said to her.

[00:18:22] Speaker 00:
And then if she didn't remember,

[00:18:24] Speaker 00:
CME briefed all these issues to her in the motion for sanctions under 285, 1987, and the court's inherent power.

[00:18:32] Speaker 00:
And she specifically found there was no bad faith here.

[00:18:34] Speaker 00:
And so we're rehashing the same arguments before this court.

[00:18:44] Speaker 00:
Think under the very high level of deference that we have to afford Judge Farris here, there's simply no abuse of discretion.

[00:18:51] Speaker 00:
Now, Simi's not pleased with the decision, and I'll agree with everyone here that it's not a voluminous decision in terms of the volume of words on the page, but it is a 12 to 15 page decision.

[00:19:04] Speaker 00:
She did explain herself, and under the Carroll-Tutch law that's applicable here, we don't review the decision, we review the judgment.

[00:19:15] Speaker 00:
I'm happy to address any questions if you have any.

[00:19:18] Speaker 01:
Thank you, Mr. Cooper.

[00:19:21] Speaker 01:
Thank you, Your Honor.

[00:19:22] Speaker 01:
Mr. Hawes has a little rebuttal time if he needs it.

[00:19:27] Speaker 04:
Three things, Your Honor.

[00:19:28] Speaker 04:
First of all, Conneca is not similar.

[00:19:32] Speaker 04:
We go through that in our brief.

[00:19:34] Speaker 04:
But Judge Felcer gives you claim construction three to four months into the case.

[00:19:39] Speaker 04:
I actually like the procedure, but it's completely different than a claim construction that you get after your best and final infringement contentions, after discovery is closed,

[00:19:48] Speaker 04:
and after the infringement expert has issued a report.

[00:19:52] Speaker 04:
Those are two very different situations.

[00:19:53] Speaker 03:
Did Judge Forrest, in ruling ultimately on the judgment, say that there was something procedurally out of school about the new expert contention after the claim construction, that it was too late or just that it was inconsistent with

[00:20:18] Speaker 03:
as she now understood the claim construction that she had adopted.

[00:20:21] Speaker 04:
In that issue, she was focusing on whether summary judgment of infringement was appropriate.

[00:20:25] Speaker 04:
So I think she did the latter.

[00:20:26] Speaker 04:
She said, here are their contingents.

[00:20:28] Speaker 04:
Here's the claim construction.

[00:20:30] Speaker 04:
Doesn't work.

[00:20:32] Speaker 04:
So Konecka, deciding Konecka really pointed out, since it's the one substance that we have in her analysis, it really points out that the legal rule she was looking at was not appropriate for this case.

[00:20:44] Speaker 04:
Secondly, when counsel characterized

[00:20:48] Speaker 04:
the statement they made in the merits appeal, and that they had a broad view of the claim of instruction at the Markman, but learned it was narrow at the summary judgment, I would ask the court to look at what they said.

[00:21:00] Speaker 04:
Because when they said that we invited them to preclude the infringement arguments, and the court accepted that invitation, what they cite to is the Markman ruling.

[00:21:10] Speaker 04:
This was not a perception that it was narrow at the time of the summary judgment.

[00:21:14] Speaker 04:
This was their perception that it was narrow at the time of the Markman ruling.

[00:21:17] Speaker 04:
That's right on point to that.

[00:21:20] Speaker 02:
As we say here in Washington, I feel your client's pain in this case, and I see what the upset is.

[00:21:32] Speaker 02:
But you should understand from the discussion that we've had that had Judge Forrest rule the other way, and they were up here, they'd have the same problem you do.

[00:21:43] Speaker 02:
which is overcoming a very strong deferential position.

[00:21:49] Speaker 04:
There's a reason I said abusive discretion in my very first sentence up here, because I was well aware of that.

[00:21:55] Speaker 04:
But I'm also aware of Highmark saying, if you rely on an untrue or improper, I can't remember their exact words, rule of law, that necessitates abusive discretion.

[00:22:09] Speaker 04:
That's in their opinion.

[00:22:11] Speaker 04:
Necessitates.

[00:22:12] Speaker 04:
So I think I do have a doorway to say, look, here she is going to connect.

[00:22:16] Speaker 04:
I hear she is saying this because it's from here to here and not looking at any of the circumstances underneath.

[00:22:24] Speaker 04:
And I think we do have to look at the opinions.

[00:22:25] Speaker 04:
We can't fulfill what the Supreme Court tells us to do when there's at least a possibility of abuse of discretion without looking at the opinion.

[00:22:32] Speaker 04:
Otherwise, every opinion written would just, here's the case.

[00:22:37] Speaker 04:
here's the octane i'd find no fees under 285 would be unreviewable thank you Mr. Hawes thank you take case number five