[00:00:05] Speaker 03: The next case for argument is 131462 Ridex versus Ford Motor Company. [00:00:45] Speaker 03: You want to tell me how to pronounce your name, Mr. Stamoulis? [00:00:49] Speaker 03: It's Stamadio Stamoulis, Your Honor. [00:00:51] Speaker 05: Good morning, Your Honors. [00:00:52] Speaker 04: Doesn't get more brief than that. [00:00:56] Speaker 05: I go by Stam. [00:00:58] Speaker 05: Stam Stamoulis, Your Honor, on behalf of [00:01:00] Speaker 05: Rydex Limited may please the Court. [00:01:04] Speaker 05: Your Honours, this appeal presents an important question that this Court has not yet squarely addressed, and that is whether the presumption of validity codified in 35 USC 282 applies to a validity challenge based on 35 USC 305. [00:01:23] Speaker 05: The district court below combined this court's holdings in CREO and Quad Environmental to conclude that the clear and convincing evidence standard does not apply. [00:01:34] Speaker 02: Where does the district court say that? [00:01:39] Speaker 05: Your Honor, if you would go to the appendix [00:01:44] Speaker 05: The opinion that deals with invalidating claims 39 and 40, it only takes two and a half pages. [00:01:53] Speaker 05: It starts on A-18 and it goes until A-21. [00:01:58] Speaker 02: Yes, I'm there. [00:01:59] Speaker 02: So where did he say the clear and convincing evidence standard doesn't apply to read, stem, and claim? [00:02:05] Speaker 02: Well, Your Honor, on A-19... We've got a case here about attorneys making improper representations to the court about statements of law or fact. [00:02:15] Speaker 02: And you're going to tell me that this district court judge held that the clear and convincing evidence standard doesn't apply to re-examine claims. [00:02:22] Speaker 02: So please show me precisely where it does not, where he says that. [00:02:27] Speaker 05: Yes, Your Honor. [00:02:32] Speaker 05: It is not, and let me be clear for the court, the district court does not precisely reject explicitly the application of the clear and convincing standards. [00:02:45] Speaker 05: She does it implicitly. [00:02:46] Speaker 05: Where? [00:02:47] Speaker 05: If you look on A-19, the district court summarizes the plaintiff's argument [00:02:54] Speaker 05: in three parts, A, B, and C. Part C being that plaintiffs argue that the defendants have not shown by clear and convincing evidence the dependent claims 39 and 40 are invalid. [00:03:08] Speaker 05: And then if you go to page 21, well on page 20 the court [00:03:17] Speaker 05: begins her analysis of part A of the claim differentiation argument. [00:03:24] Speaker 05: And that ends on the first paragraph of page 21. [00:03:28] Speaker 05: And then the court disposes of B and C in the following paragraph and then concludes in the third paragraph that the claims are invalid. [00:03:40] Speaker 05: And so the court acknowledges that the clear and convincing argument was raised on page A19 and then disposes of the argument in one paragraph on page A21. [00:03:55] Speaker 05: And again... Where? [00:03:57] Speaker 05: Where does she dispose of it? [00:03:59] Speaker 05: Well, I can read the paragraph, it's only one sentence. [00:04:03] Speaker 05: Equally unavailing are plaintiff's arguments that the PTO looked and allowed at the amended claims, therefore the court should defer to the PTO's determination. [00:04:12] Speaker 05: The Federal Circuit has made clear that while courts may take cognizance of and benefits from the proceedings before the patent examiner, [00:04:18] Speaker 05: The question of claimed scope is ultimately one for the court to decide without deference to the ruling of the patent examiner. [00:04:25] Speaker 02: So these two sentences, one of which is a direct quote from our case, is the quote inaccurate or miscited. [00:04:31] Speaker 05: I'm sorry, I didn't hear you. [00:04:32] Speaker 02: One of the two sentences that you just read us [00:04:34] Speaker 02: is a direct quote from our case. [00:04:37] Speaker 02: Is the quote inaccurate or miscited or somehow otherwise wrong? [00:04:42] Speaker 02: No, Your Honor. [00:04:43] Speaker 02: So she made a statement of law in the form of a direct quotation from one of our cases. [00:04:48] Speaker 02: And you're saying I should interpret this statement of law from our case as rejecting the idea that an issued patent has a clear and convincing evidentiary burden that attaches to it. [00:04:59] Speaker 02: Is that your argument to this court? [00:05:02] Speaker 05: Essentially, yes, Your Honor. [00:05:04] Speaker 05: This is the only way that she disposes of the argument. [00:05:11] Speaker 05: More importantly, when claims 39 and 40 were put before the patent examiner, the applicant cited to a specific portion of the specification to support the issuance of claims 39 and 40. [00:05:32] Speaker 05: That portion of the specification, which was repeated in the briefs, begins at column three, line 40, and ends at column three, line 51, is an embodiment that would have supported these claims 39 and 40. [00:05:49] Speaker 05: In this two-page analysis, two and a half page analysis, [00:05:54] Speaker 05: The district court does not even consider that embodiment in determining whether or not claims 39 and 40 were improperly brought in. [00:06:06] Speaker 05: Had the court applied a clear and convincing evidence standard, the burden would have been on the defendants, the appellees, to rebut that portion of the specification that the plaintiff had pointed to. [00:06:24] Speaker 05: The court would have held by clear and convincing evidence that it had been rebutted and that these other portions of the spec overruled it. [00:06:31] Speaker 04: Wait, you're pointing to, you said column 3, lines 40 through 51? [00:06:37] Speaker 04: Yes, Your Honor. [00:06:41] Speaker 04: And what about that do you believe supports claims 39 and 40? [00:06:49] Speaker 05: The entire exam, and if Your Honor would like I could read it into the record, but it's fairly short. [00:06:56] Speaker 05: To summarize, it's essentially [00:07:00] Speaker 05: an embodiment where the operator of the vehicle swipes the RFID card and the vehicle is permitted to start and drive away. [00:07:13] Speaker 05: That embodiment does not include a reference to an external fuel source. [00:07:18] Speaker 02: It does not include a reference to a commercial exchange where money is... One of the critical questions for you is does it contain support for the notion that the fuel line could be the fuel container as claimed? [00:07:36] Speaker 02: I don't see anything in this paragraph that even mentions a fuel line or anything else. [00:07:42] Speaker 02: Where's the support in this spec for the idea that a fuel line is a fuel container? [00:07:54] Speaker 05: the patent examiner. [00:07:55] Speaker 02: But wouldn't you agree that because I read every single citation to the record that the prosecuting attorney referenced as providing support for all of the claims in re-exam and I couldn't find any [00:08:08] Speaker 02: that suggested a fuel line is a fuel container. [00:08:12] Speaker 02: Am I missing one? [00:08:13] Speaker 02: Because you pointed me to one section. [00:08:15] Speaker 02: And while this may go to your commercial non-commercial transaction argument, I don't see how it supports a fuel line being a fuel container. [00:08:24] Speaker 05: You're correct, Your Honor. [00:08:25] Speaker 05: It's not explicit. [00:08:27] Speaker 05: The argument of the plaintiff appellant has always been that it was implicit. [00:08:32] Speaker 05: but that this implicit reference in the specification was clarified by the addition of claims 39 and 40. [00:08:42] Speaker 05: And that is what put the public on notice as to exactly what was being claimed in this specification. [00:08:53] Speaker 04: validity is only before us as a defense at this point, right? [00:08:57] Speaker 04: All the counterclaims were dismissed? [00:08:59] Speaker 04: Yes, Your Honor. [00:09:00] Speaker 04: All right. [00:09:01] Speaker 04: So why is validity even relevant for us to consider if you can't prove infringement, which means you have to win on all three claim constructions? [00:09:15] Speaker 05: Well, I think everything depends on [00:09:22] Speaker 05: honestly, the validity of claims 39 and 40. [00:09:27] Speaker 05: If claims 39 and 40 are found to be proper narrowing claims, then we went on infringement because those claims would directly read on the accused products. [00:09:41] Speaker 04: It may sound a bit circular, but it really turns... It's very circular, because if they are valid, it still doesn't mean that reservoir would be the same as a fuel... that a fuel line can constitute a reservoir. [00:09:58] Speaker 05: Yes, Your Honor. [00:09:59] Speaker 05: But if they're valid, then container cannot be limited. [00:10:08] Speaker 05: It's improper to have limited container to an outside fuel source. [00:10:14] Speaker 05: So, I mean, it really, one hinges on the other. [00:10:23] Speaker 04: You have to win on all three claim constructions, right? [00:10:26] Speaker 04: Yes. [00:10:26] Speaker 04: Not just that one. [00:10:27] Speaker 04: Not just that one. [00:10:28] Speaker 04: So why don't you address the other two claim constructions. [00:10:33] Speaker 05: Judge Moran, I don't know if I finished answering your prior question. [00:10:38] Speaker 05: You did. [00:10:39] Speaker 05: Don't worry. [00:10:40] Speaker 05: I understand you. [00:10:41] Speaker 05: Okay, thank you, Your Honor. [00:10:43] Speaker 05: So the constructions are the one that is outside fuel source and the fuel lines being the container. [00:10:52] Speaker 05: The second is a fluid delivery system. [00:10:57] Speaker 05: And again, claims 39 and 40 show that everything is contained within one vehicle. [00:11:05] Speaker 05: There's no outside source for delivering the fuel to the vehicle. [00:11:09] Speaker 05: It's all contained in one system. [00:11:12] Speaker 05: And that's what the prosecuting attorney presented in column three, lines 40 to 51. [00:11:20] Speaker 05: And the final term is this commercial transaction term. [00:11:23] Speaker 05: transaction term, which the court determined to be a commercial exchange. [00:11:27] Speaker 05: And again, our position has been that a transaction is just merely an event. [00:11:40] Speaker 05: And so that's our position with regard to those three terms. [00:12:00] Speaker 05: And am I into my rebuttal time? [00:12:03] Speaker 03: You are into your rebuttal time. [00:12:04] Speaker 03: I'd like to pause and say one. [00:12:07] Speaker 03: Yes, thank you. [00:12:07] Speaker 03: Let's run away here from the other side. [00:12:13] Speaker 03: Mr. Corella? [00:12:18] Speaker 01: May I please the court? [00:12:19] Speaker 01: Dominic Corella for defendants. [00:12:21] Speaker 01: Defendants no likely ask for sanctions. [00:12:25] Speaker 01: in this case or any other type of case? [00:12:27] Speaker 02: Well, defendants generally do likely ask for sanctions in my experience. [00:12:30] Speaker 01: Well, in this case, defendants don't likely ask for sanctions. [00:12:34] Speaker 01: We waited, in fact, with respect to Rule 38, certain of the defendants waited until all the briefing was in to see whether it was appropriate to move for sanctions. [00:12:43] Speaker 01: And I think it's clear that it is. [00:12:46] Speaker 01: I think that the claim construction arguments advanced by plaintiffs have been frivolous from the outside of this case. [00:12:51] Speaker 02: But that doesn't make sense. [00:12:53] Speaker 02: Their claim construction arguments from the beginning were plain meaning, right? [00:12:56] Speaker 02: Isn't that what they said? [00:12:57] Speaker 01: Their claim construction arguments are plain meaning. [00:12:59] Speaker 02: How can you say plain meaning is true? [00:13:00] Speaker 02: It's not a face. [00:13:01] Speaker 02: I mean, that's troubling. [00:13:03] Speaker 01: The reason I can say that is because this court said in Verizon and any number of other cases that when you're figuring out what a claim means, you don't just look at the words of the claim. [00:13:12] Speaker 01: You read the claim in light of the specification. [00:13:15] Speaker 01: And in fact, in Verizon, the court says. [00:13:16] Speaker 02: I don't see how the court could ever hold that someone [00:13:19] Speaker 02: argument that the claim terms should be given their plain meaning is on its face. [00:13:23] Speaker 02: Now perhaps their infringement contention, you may be on to something, but by them simply arguing that the term should be given its plain meaning, how can we be sanctioning [00:13:35] Speaker 04: half the lawyers that appear before us because that is sort of a ploy that a lot of lawyers use, and especially when you've got a word that's a pretty simple word like transaction. [00:13:45] Speaker 01: Let's use transaction as an example. [00:13:48] Speaker 01: We have the word transaction, they take the position, this doesn't need to be construed, and to the extent you construe it, it simply means an event. [00:13:55] Speaker 01: The defendant took the position, look, even on its face, the word transaction means something commercial. [00:14:01] Speaker 01: But, if that were not clear enough, let's look at the defendant's set from the outset at the specification, and I'm pointing at Joint Appendix 131. [00:14:09] Speaker 01: Column 2 of the specification has the summary of the invention. [00:14:12] Speaker 01: And it uses, again and again, the phrase, a feature of the present invention is, which this court said in Verizon and this said in other cases, limits the invention. [00:14:20] Speaker 01: The claim must be limited. [00:14:22] Speaker 04: How do you address the embodiment that your friend refers to in column three? [00:14:29] Speaker 04: That doesn't seem to have any commercial transactional. [00:14:34] Speaker 01: Well, Judge Romali, if I might, can I walk through column two and then turn right to column three? [00:14:38] Speaker 03: Sure. [00:14:38] Speaker 01: OK. [00:14:39] Speaker 01: So top of column two and bottom of one. [00:14:42] Speaker 01: A feature of the present invention is to provide a fluid delivery control system which is automatically activated when a fluid delivery nozzle is inserted into the corresponding input orifice of a fluid container. [00:14:53] Speaker 01: As the district court recognized, this is complement only with the idea that there's an external station or some kind of external pump and you're putting the gas pump into the gas tank and inserting gas or other fluid. [00:15:06] Speaker 01: Very next line, another feature of the present invention [00:15:10] Speaker 01: is identification for quote unquote filling purposes. [00:15:13] Speaker 01: Very next line, a further feature of the present invention is to permit automatic payment, quote unquote. [00:15:19] Speaker 02: I can go on and on, but there are six. [00:15:21] Speaker 02: I'll tell you what this reads to me. [00:15:23] Speaker 02: I mean, you probably are very familiar with patents. [00:15:26] Speaker 02: This reads to me more like it's an object of the invention too. [00:15:29] Speaker 02: It's an object of the invention too. [00:15:32] Speaker 02: I mean, they had the unfortunate choice of using the words present invention, and we have subsequently said those are magic words. [00:15:37] Speaker 02: But nonetheless, this doesn't read as though they meant to say every claim has to necessarily have every one of these features, right? [00:15:47] Speaker 02: Look, I don't see any other real list of the objects of the invention in this patent, which is quite a standard practice in patent law. [00:15:53] Speaker 02: Isn't this exactly where that would normally appear? [00:15:56] Speaker 02: And doesn't it read like that to you? [00:15:57] Speaker 01: I think two things, Judge Moore. [00:16:00] Speaker 01: Number one, this court has said again and again, and it's not just in Verizon. [00:16:07] Speaker 01: and Regents of the University of Minnesota and other cases that the words feature of the present invention are magic words. [00:16:13] Speaker 01: If you say that, and it's not with respect to a particular embodiment, that limits the scope of the invention. [00:16:18] Speaker 01: In fact, in the Eon net case, which Judge O'Malley was on, the court said it's perfectly proper when construing the claims to look at the purpose of the invention. [00:16:27] Speaker 01: Looking just for 30 seconds at column 2 of the specification, it was clear from the outset that plaintiff's constructions of fluid delivery system, fluid container, and so forth could not possibly be what this patent was about. [00:16:41] Speaker 01: And it's not just, by the way, column 2. [00:16:42] Speaker 01: If you look through the whole patent, column 10, yeah. [00:16:45] Speaker 04: Let's go back to where I was, because we also have plenty of cases, including one where I, as a district judge, was reversed because I looked too much at the specification. [00:16:54] Speaker 04: The court said, here's your problem. [00:16:56] Speaker 04: there is an embodiment that you're against, and you can't read an embodiment out of the claim. [00:17:02] Speaker 04: So how do we read this embodiment out of the claim? [00:17:05] Speaker 01: Right. [00:17:05] Speaker 01: So he points at column three, lines 40 through 47 or thereabouts. [00:17:10] Speaker 01: And this, by the way, let me mention at the outset, Judge O'Malley, this discussion had a great length during the Markman hearing. [00:17:18] Speaker 01: This point was raised below. [00:17:19] Speaker 01: They pointed to this column with a specification. [00:17:22] Speaker 01: And the answer that was given by the defendants below and that I will give now [00:17:25] Speaker 01: is that, first of all, if you look at the lines to which he's pointing, they mention nothing whatsoever about fuel. [00:17:31] Speaker 01: Claim 22 is about a fuel delivery transaction. [00:17:35] Speaker 01: And if you look here, there's nothing about fuel, there's nothing about fluid. [00:17:38] Speaker 01: It simply says, one of the things this invention can do is because you have this ID card, when you put it into the car, it'll allow you to turn the car on. [00:17:45] Speaker 01: It doesn't say anything about how that happens. [00:17:47] Speaker 01: Is it electronic? [00:17:48] Speaker 01: Is it by locking the steering wheel? [00:17:49] Speaker 01: There's no way to know. [00:17:51] Speaker 01: And if you look at the next column, column four, line 37, [00:17:55] Speaker 01: way, way later in this description of this particular environment, it says a refueling operation will now be described. [00:18:03] Speaker 01: And so what's going on in column three, not only is ambiguous at best, as opposing counsel stated, but it in fact, on its face, doesn't have to do with fluid transactions. [00:18:14] Speaker 02: Precisely, what is it that you think was frivolous? [00:18:18] Speaker 02: Their maintenance of the suit against the products that your company that you represent produces or particular phrases in terms of their claim construction argument? [00:18:32] Speaker 02: I mean, do you think what precisely would you direct us to is the crux [00:18:36] Speaker 02: of your argument about why either the appeal was frivolous or we also have your press appeal for Rule 11 here. [00:18:44] Speaker 02: So what is really the best argument you have? [00:18:48] Speaker 01: So let me address separately Rule 11 and Rule 38. [00:18:52] Speaker 01: On Rule 11, I think our argument is that from the outset, their infringement contentions and claim constructions, all three of the main ones were frivolous. [00:19:00] Speaker 01: And that's so because, first of all, I think, even on the face of the same constructions, we have the far better reading that a transaction is commercial, that a container can't possibly be a fuel line. [00:19:09] Speaker 01: But when you look at the column two of the specification, again, which uses the phrase feature of the present invention again and again, I think our position is they knew from the outset that these were frivolous arguments, that this invention simply has nothing to do with internal car security systems. [00:19:26] Speaker 01: back there at the very beginning of this case in 2011. [00:19:29] Speaker 02: But it can't be, so their contention were frivolous. [00:19:34] Speaker 02: I just want to be clear about what you think is frivolous because I don't read their claim construction arguments as having enough precision to fall into the category of frivolous, right? [00:19:43] Speaker 02: There's no clear statement in their claim construction about what [00:19:49] Speaker 02: something that I would deem is necessarily frivolous. [00:19:52] Speaker 02: That's what I'm having trouble with. [00:19:54] Speaker 02: But as applied, maybe, maybe the answer is, as applied to your product, even though they didn't say exactly what this meant, if they're applying it to your product, they clearly indicate that it means the following. [00:20:09] Speaker 02: Is that a way to think about it? [00:20:10] Speaker 01: I think that is a way to think about it. [00:20:11] Speaker 01: So I think if you want to break this down and look at the particular flame constructions, I think they're frivolous. [00:20:16] Speaker 01: And the reason they're frivolous [00:20:17] Speaker 01: is because when you aggregate it and you say, you have to read this claim, not standing alone, but as a whole, as part of the written description of this patent. [00:20:25] Speaker 01: And if you look at every jot and tittle of the written description of this patent, it's clear that what this patent is about is an external fuel source, like a gas station. [00:20:32] Speaker 01: You stick a gas hose into your car, and you put in fuel. [00:20:35] Speaker 03: One of the things that's confusing me is, as part of your argument for frivolity, you point to the fact that these guys indeed went back to the patent office and got these new dependent claims. [00:20:47] Speaker 03: Well, really, aren't we hard pressed to rely on sanctions and frivolity based on the fact that people went to the patent office and actually got their claims granted? [00:20:58] Speaker 01: I think not, Chief Judge. [00:21:00] Speaker 01: And here's why. [00:21:02] Speaker 01: If you look at the timing in this case, you have a situation where they applied for this patent in 1990 and got it in 1993. [00:21:08] Speaker 01: And as I said, I won't belabor the point. [00:21:10] Speaker 01: It's clear, if you read this patent, it's clear as day that the patent is about this external sort of fuel transaction where you're getting gas. [00:21:17] Speaker 01: Then, the car industry developed these keys that are securities against car theft. [00:21:23] Speaker 01: And then in 2004, this was a self-initiated re-examination. [00:21:26] Speaker 01: This is not something where someone was challenging their patent. [00:21:28] Speaker 01: They go back, self-initiated re-exam, and they stick independent claim 39, which redefines everything, and it's the equivalent. [00:21:37] Speaker 01: The patent examiner granted it, but this court has said in a number of different cases that, first of all, of course, this court is the one that determines whether claims are valid. [00:21:46] Speaker 01: But second of all, that the patent examiner, like any lower court, is not considering things that are not raised before it. [00:21:53] Speaker 01: And it's not as if there was an adverse party in this re-examination. [00:21:55] Speaker 03: No, I appreciate that. [00:21:56] Speaker 03: But I'm getting to the argument, to your sanctions argument. [00:21:59] Speaker 03: I mean, we're not getting to the merits of that. [00:22:01] Speaker 03: Certainly, the district court had no problem saying that these claims were invalid. [00:22:07] Speaker 03: But if you want us to rely on the fact that their conduct in going to the patent office and getting claims granted is frivolous, [00:22:16] Speaker 03: I mean, it's kind of hard to do, don't you? [00:22:19] Speaker 03: Do you understand my concern? [00:22:20] Speaker 01: I do understand your concern. [00:22:21] Speaker 01: Let me try to come at it this way. [00:22:24] Speaker 01: What went on in the patent office, to my mind, was abuse of the patent system. [00:22:29] Speaker 03: There's no allocation of inequitable conduct. [00:22:32] Speaker 01: No, I'm not. [00:22:33] Speaker 01: And that's not part of the Rule 11 calculus. [00:22:37] Speaker 01: So starting with Phillips, the original point is, what does this claim mean? [00:22:40] Speaker 01: We look at the claim as the patent was originally issued. [00:22:43] Speaker 01: And as the patent was originally issued, it is crystal clear that this patent is about, as I said, this external fuel transaction. [00:22:51] Speaker 01: So when you go in 2004 and you go back to the patent office and you say, hey, we're doing a self-initiated re-examination. [00:22:57] Speaker 01: We're adding all of this material. [00:22:59] Speaker 01: And you know full well that the sorts of products you're now trying to cover are far beyond what your original patent covered. [00:23:06] Speaker 01: You know that that's a rule 305 violation. [00:23:08] Speaker 01: Now, they managed to smuggle it past the patent office, but I don't think that that should... Smuggling past the patent. [00:23:13] Speaker 04: I mean, that assumes that these patent examiners do absolutely no work, do nothing, that they just rubber stamp something. [00:23:20] Speaker 04: I mean, you haven't alleged an equitable conduct. [00:23:24] Speaker 04: You haven't shown us anything in the prosecution history where they affirmatively misrepresented to the patent office what they were doing. [00:23:32] Speaker 04: It sounds to me like your problem is that you're trying to fit a square peg into a round hole. [00:23:38] Speaker 04: You're making arguments that might make sense under 285 and its locality of the circumstances analysis. [00:23:44] Speaker 04: And you're talking about whether or not what they did on their claim construction was objectively reasonable. [00:23:49] Speaker 04: But the standards under Rule 11 are much higher. [00:23:51] Speaker 01: Judge O'Malley, in every single case, of course, in which sanctions have ever been granted by this court, in the Raylon case, Chief Judge Prosser and Ian Nett and others, obviously someone managed to get their claim granted. [00:24:03] Speaker 01: I mean, there's always a valid patent in all of those cases. [00:24:05] Speaker 01: That has never stopped the court from imposing sanctions when they found that claim was frivolous or that something was blatantly invalid. [00:24:11] Speaker 01: There's no need to denigrate the patent examiners. [00:24:15] Speaker 01: They don't have a ton of time necessarily to look at these materials, but the fact of the matter is, [00:24:20] Speaker 02: If this logic applies... How precisely is claim 39 broader than claim 22? [00:24:26] Speaker 01: The short answer is this. [00:24:29] Speaker 01: You read claim 22 both on its face and in light of the specification and it's a situation where the district court was quite right. [00:24:36] Speaker 01: The fuel delivery system is an external tank of some sort, like a gas station. [00:24:41] Speaker 01: The fuel container is the gas tank of a vehicle and the transaction is commercial. [00:24:46] Speaker 01: and then you look at claim 39, and claim 39 is taking that and it's converting it entirely. [00:24:50] Speaker 02: Wait, no, no, no, time out. [00:24:52] Speaker 02: So if claim 39, right, is dependent on claim 38, which is dependent on 22. [00:24:58] Speaker 02: So if 22 on its face says commercial, according to you, then how could claim 39 possibly as granted be broader than that? [00:25:08] Speaker 01: Well, it's interesting that you say that. [00:25:10] Speaker 01: I was thinking about this as my opponent was talking. [00:25:13] Speaker 01: I think that the answer is [00:25:14] Speaker 01: It's either broader, or if you're going to read all the limitations... Or if their infringement contentions are wrong. [00:25:19] Speaker 02: But I don't see, right? [00:25:20] Speaker 02: Isn't that got to be the alternative? [00:25:22] Speaker 02: Not what you're saying, but if their infringement contentions are wrong. [00:25:25] Speaker 01: I agree, yes. [00:25:26] Speaker 01: So it's either broader, or if you say, we're going to read all the limitations from Claim 22 into Claim 39, as you have to do. [00:25:32] Speaker 01: And Claim 39 still doesn't cover these products, because it's still a commercial transaction, and so on and so forth. [00:25:37] Speaker 01: So we don't actually even need, I think, to reach the 305 issue to win here. [00:25:41] Speaker 01: I mean, all you have to do is read the limitations from claim 22 in. [00:25:44] Speaker 02: I think we have to reach the 305 issue as part of their appeal, don't we? [00:25:47] Speaker 01: Oh, sure. [00:25:48] Speaker 01: No, I mean, my point is that even if [00:25:50] Speaker 01: We did not. [00:25:51] Speaker 01: I mean, I think we have clearly the better case on 305, but even if we didn't, I think we still win because claim 22 can't possibly cover our product and neither can the dependent claim. [00:25:59] Speaker 02: So if I read the limitations of claim 22 into claim 39, then it isn't, in fact, broader. [00:26:07] Speaker 01: Well, I think so. [00:26:08] Speaker 01: I mean, if you look at it that way, then nothing can ever fail 305. [00:26:12] Speaker 02: Sure can. [00:26:14] Speaker 02: I don't understand. [00:26:15] Speaker 01: If you read all the limitations of 22 into 39, then you have a situation where... Well, no, I don't have to read them in. [00:26:22] Speaker 02: This is a dependent claim. [00:26:24] Speaker 02: Right. [00:26:25] Speaker 02: Considering if it was written in independent form with all of those plus this new one, the new condition. [00:26:31] Speaker 01: But all the previous limitations still have to apply or else it's broader. [00:26:34] Speaker 01: Right. [00:26:35] Speaker 01: Okay. [00:26:35] Speaker 01: So, but if all the previous limitations apply, and I hope I can still reserve a minute for the bottle and sanctions issue, but if all the previous limitations apply, then, I mean, there's any number of ways to think about this. [00:26:45] Speaker 01: One is it doesn't infringe, two is it's broader, and three is it doesn't make any sense, because then you have something that says it's a commercial transaction, it's an external fuel source, and yet somehow it's also inside the vehicle. [00:26:56] Speaker 01: I mean the bottom line is I think the simplest way to think about it is that it's obviously broader, but I think no matter how you think of it, we still prevail. [00:27:03] Speaker 04: Do you agree procedurally that if in fact you read all those limitations in and we would find non-infringement that because invalidity is only presented as a defense in this appeal, that we wouldn't need to reach that question? [00:27:20] Speaker 01: I think that's correct. [00:27:22] Speaker 01: Let me make, if I might, two very quick further points. [00:27:25] Speaker 01: Number one is the district court didn't write a rule of 11 opinion. [00:27:29] Speaker 01: Well, it did, but it simply said denied. [00:27:30] Speaker 01: And this court said in Raylon and the Fifth Circuit, whose law you're applying, that the district court has to do more than that. [00:27:36] Speaker 02: No, we said the district court has to do more than that if the record creates a scenario in which we think there was [00:27:42] Speaker 02: some significant merit to the Rule 11 petition. [00:27:46] Speaker 02: But both the Fifth Circuit and our court in B. Braun and others, or S. Braun and others, have also said if [00:27:52] Speaker 02: That's not the case. [00:27:53] Speaker 02: So we're not going to make the district court's right opinion unnecessarily in every instance. [00:27:57] Speaker 01: Yes, I agree with you. [00:27:58] Speaker 01: I think that there are a lot of cases where someone seeks sanctions sort of as pro forma matter. [00:28:03] Speaker 01: And it really is a close case. [00:28:05] Speaker 01: And of course, the courts have said in those situations, we're not going to make you write an opinion. [00:28:09] Speaker 01: I respectfully think this is not that case. [00:28:11] Speaker 01: And the last thing I'd just like to say quickly is, even putting aside rule 11, we have an argument for rule 38 sanctions here. [00:28:17] Speaker 01: And that stands on two bases. [00:28:19] Speaker 01: One is the frivolity of the infringement and claim construction arguments. [00:28:22] Speaker 01: But the other is the way this appeal has been conducted. [00:28:24] Speaker 01: The opening brief doesn't mention any of the reasons that the district court found against the plaintiffs. [00:28:28] Speaker 01: It doesn't talk about the words of the specification. [00:28:31] Speaker 01: It doesn't talk about ICU medical and other adverse precedent. [00:28:34] Speaker 01: And I think that, too, is a reason why sanctions are appropriate. [00:28:37] Speaker 04: Because you never did answer my question, isn't there a distinction between an analysis that might be appropriate under 285 and one that is appropriate under rule 11? [00:28:46] Speaker 01: Well, Rule 11, of course, you're right, is about the baselessness of particular assertions. [00:28:52] Speaker 01: And I think, and as I said to Judge Moore, the particular assertions we're relying on with respect to Rule 11 are plaintiff's assertions both in their complaint, in their briefing, in their Markham briefing, and so forth, and even their opposition to Rule 11 about how the plain instruction should work in this case. [00:29:06] Speaker 01: Each one of those, we would argue, was a frivolous and baseless contention. [00:29:10] Speaker 01: And they were on notice starting from 2011, documents number 106 and 110. [00:29:16] Speaker 01: Defendants filed counterclaims saying that the claims were, quote, frivolous, vexatious, and in bad faith, and seeking fees. [00:29:22] Speaker 01: They've been on notice of this since the outset. [00:29:25] Speaker 03: OK. [00:29:25] Speaker 03: We've exceeded your time as a result of questions. [00:29:28] Speaker 03: So we'll restore a minute of rebuttal on the sanctions question. [00:29:32] Speaker 03: And to keep it even, we'll add three minutes to your three and a half minutes that you have remaining. [00:29:39] Speaker 05: Thank you, Your Honor. [00:29:43] Speaker 03: Just a number of points in rebuttal. [00:29:46] Speaker 03: Just hold on one moment. [00:29:47] Speaker 03: I just want to make sure the clock is right. [00:29:48] Speaker 03: So can we add three minutes to this gentleman's time? [00:29:51] Speaker 03: Yes. [00:29:52] Speaker 03: So it would be 6.4. [00:29:59] Speaker 03: No. [00:30:03] Speaker 03: It's 6.4 by my count. [00:30:07] Speaker 03: It's remaining. [00:30:30] Speaker 03: Can you get back to six so I can come from there? [00:30:33] Speaker ?: OK. [00:30:35] Speaker 03: All right. [00:30:36] Speaker 03: We'll come to that. [00:30:38] Speaker 05: Thank you, Your Honor. [00:30:41] Speaker 05: A few points. [00:30:41] Speaker 05: First, the example that I point to in the specification, column three, lines 40 to 51, that was present in the specification when the patent was first filed in 1990. [00:30:54] Speaker 05: So that has always been an embodiment that was in the patent. [00:30:59] Speaker 05: My counterpart here criticizes that section because it's not clear whether it's referring to electronic locking or ignition shutoff. [00:31:15] Speaker 05: He also stated that this whole patent is about fuel delivery. [00:31:20] Speaker 05: That's what the whole patent is about. [00:31:22] Speaker 05: So if there's an example in the patent where someone gets into a vehicle, swipes a car and is able to drive away, the whole patent is about fuel delivery. [00:31:32] Speaker 05: So our argument is that that example is about fuel delivery. [00:31:36] Speaker 05: That's what this patent is about. [00:31:40] Speaker 05: This case, as was pointed out, was not brought against the automakers until claims ... I'm sorry. [00:31:50] Speaker 04: How is that start example about fuel delivery, meaning fuel delivery from the ignition switch? [00:31:58] Speaker 04: I don't know your column three example. [00:32:01] Speaker 04: How is that about fuel delivery? [00:32:03] Speaker 05: The position of Ride-X is that what that example shows, and it was claimed using 39 and 40, is that when the RFID card is swiped that the fuel is then allowed to flow to the engine. [00:32:19] Speaker 05: Without authorization of that RFID card, the fuel is not allowed to flow. [00:32:26] Speaker 05: This matter was not brought against the defendants here until claims 39 and 40 were issued, as was pointed out by the court. [00:32:38] Speaker 05: The court did point out that their criticisms of 39 and 40 and the fact that those were smuggled past the examiner somehow sounds an inextricable conduct, and that's not before the court. [00:32:50] Speaker 05: But this would be a far different case if Rydex had put this patent into a ray exam, attempted to get claims 39 and 40 issued based on its representations to the patent office, and the patent office had refused to issue those claims. [00:33:07] Speaker 05: And then Rydex had brought its suit based on its reading of claim 22. [00:33:13] Speaker 05: Then I would concede that that would be frivolous and that would be an improper construction and there would have been no merit to bringing that case. [00:33:25] Speaker 05: But the examiner is one that's presumed to be one ordinary skill in the art and the examiner found support in the specification for the issuance of claims 39 and 40. [00:33:34] Speaker 05: And Rydex's position has always been that the issuance of claims 39 and 40 established the prima facie case for Rydex's claim construction. [00:33:48] Speaker 05: And that it's prima facie evidence that its construction is not unreasonable. [00:33:55] Speaker 04: Do you agree that because 39 and 40 are dependent claims that you have to read all the limitations of claim 22 into 39 and 40? [00:34:06] Speaker 05: Yes, yes, that in order for claims 39 and 40 to be proper dependent claims, they have to be more narrow than claim 22. [00:34:18] Speaker 02: Well, in fact, they depend on claim 22, so they have to. [00:34:22] Speaker 02: So it's as though all of the limitations of 22 plus the new limitation of 39 is present in that claim, correct? [00:34:28] Speaker 05: Yes, Your Honor, absolutely. [00:34:30] Speaker 02: So what I don't understand is how you can argue infringement [00:34:37] Speaker 02: And that, in particular, what's bothering me is your argument that a fuel line, the portion of the vehicle that you've accused of infringement doesn't include the gas tank, for example. [00:34:48] Speaker 02: It's just the injection system. [00:34:50] Speaker 02: And so you've said the fuel line standing alone, no other components, is the fluid container. [00:34:58] Speaker 02: So how is that argument not frivolous? [00:35:02] Speaker 05: Well, it's not frivolous because at least from a technical perspective, it's true. [00:35:10] Speaker 05: The fuel lines contain fuel. [00:35:13] Speaker 02: Okay, but you know what? [00:35:14] Speaker 02: If I poured my glass of water in my hand and I'm holding water, is this now a fluid container? [00:35:21] Speaker 02: My hand is a fluid container according to this patent? [00:35:26] Speaker 05: It's containing fuel. [00:35:27] Speaker 02: So does that mean you meant to [00:35:30] Speaker 02: cover this using functional claim language. [00:35:33] Speaker 02: A fluid container is not a structure. [00:35:35] Speaker 02: It is rather anything capable of holding fluids, because functional claiming requires 112.6 compliance. [00:35:43] Speaker 02: I didn't see you make that argument. [00:35:45] Speaker 02: No, Your Honor. [00:35:46] Speaker 05: But it's integral to how a vehicle works. [00:35:50] Speaker 05: When a vehicle is operated, when a vehicle is shut off, [00:35:56] Speaker 05: the fuel does not drain from the fuel lines. [00:36:01] Speaker 05: In order for a vehicle to start, the fuel has to be in the fuel lines. [00:36:06] Speaker 02: Yes, but claim 22 set out a fluid container on the one hand and a separate element, which is the fluid delivery system, which included all the conduits and fuel lines. [00:36:17] Speaker 02: So given that claim 22 had two separate and discrete elements that are set out, [00:36:22] Speaker 02: How can you incline 38 morphums into a single thing? [00:36:26] Speaker 02: Haven't you just read out the fluid container when you do that? [00:36:30] Speaker 05: No, Your Honor, because the fluid delivery system is actually the fuel pump. [00:36:34] Speaker 05: The fuel lines are outside of the engine. [00:36:38] Speaker 05: They lead to the fuel pump. [00:36:40] Speaker 05: The fuel pump then takes the fluid and puts it into the engine and into the combustion chamber. [00:36:46] Speaker 05: where it is utilized by the vehicle in order to operate. [00:36:50] Speaker 02: All of the examples of fluid delivery system in this patent are the conduits for transferring the fluid from one place to another. [00:36:57] Speaker 02: They're not ever associated with the fluid container language. [00:37:05] Speaker 02: Why aren't the fuel lines part of the fuel delivery system quite clearly under this patent? [00:37:11] Speaker 05: Well, Your Honor, because there are further conduits. [00:37:14] Speaker 05: In the structure of a vehicle, the fuel lines lead to the fuel pump. [00:37:19] Speaker 05: And then there are further conduits from the fuel pump into the combustion chamber. [00:37:25] Speaker 05: So there's multiple structures there. [00:37:29] Speaker 02: But your argument that the fuel lines are the fluid container just by virtue of when you turn the car off, they still happen to have fuel. [00:37:36] Speaker 02: is akin to me saying a straw is a fluid container when it sits in a glass of water because there's a portion of it that has water in it. [00:37:43] Speaker 02: It doesn't make the straw a fluid container. [00:37:45] Speaker 02: It's still the conduit for moving the fluid from one place to the other, but the glass is the container. [00:37:52] Speaker 05: I don't know how much of this is actually on the record, so I don't want to go too far into adding facts for the court, but a vehicle won't start unless the fuel is present in the fuel lines in order for the fuel pump to deliver it to the combustion chamber through the conduits that exist between the fuel pump and the combustion chamber. [00:38:14] Speaker 05: The fuel line is the reservoir that the fuel pump draws from. [00:38:23] Speaker 05: When a car sits idle, the fuel drains out of the fuel pump. [00:38:27] Speaker 05: It's designed to do that because otherwise you'll get clogged injectors and back in the days when people had carburetors, you'd get carburetors that would gum up. [00:38:34] Speaker 05: So the fuel doesn't stay in the fuel pump, but the vehicle wouldn't operate if the fuel lines were dry when you started the fuel pump because it would have to, you'd have to have a pre-pump to then deliver the fuel from the gas tank into the lines so that the fuel pump would then be primed to be able to grab that fuel and through the conduits deliver it to the combustion chamber. [00:38:59] Speaker 05: So it's simply how [00:39:02] Speaker 05: internal combustion engines work. [00:39:05] Speaker 05: It's not a strain construction. [00:39:07] Speaker 05: And I just want to get one last point, I know I'm over time, but when claims 39 and 40 were issued by the Patent Office, Mr. Ryan acquired a property right. [00:39:20] Speaker 05: in those claims. [00:39:21] Speaker 05: And he has a right, and when the district court invalidated those claims, the district court took away that property right. [00:39:29] Speaker 05: And he has a right to an appeal for the deprival of that property right. [00:39:33] Speaker 02: And so... But only so long as your arguments made in that endeavor are not frivolous. [00:39:38] Speaker 05: Yes, Your Honor. [00:39:39] Speaker 05: And again, I would say that if this case had been brought on claim 22 after a situation where 39 and 40 were not allowed by the Patent Office, it would have been frivolous. [00:39:52] Speaker 03: Thank you. [00:39:53] Speaker 03: Thank you. [00:39:57] Speaker 03: So we'll give you three minutes if you need it. [00:40:00] Speaker 03: Thank you. [00:40:00] Speaker 03: To keep it even again. [00:40:01] Speaker 01: Let me just make four quick points. [00:40:03] Speaker 03: The first one is that... This is just on the crossfield. [00:40:07] Speaker 03: Yes. [00:40:07] Speaker 03: Your rebuttal time. [00:40:09] Speaker 03: Correct. [00:40:09] Speaker 01: Thank you. [00:40:11] Speaker 01: Firstly, I want to point the court to Joint Appendix 1262. [00:40:15] Speaker 01: This is my opponent's complaint. [00:40:18] Speaker 01: And they actually say, and this is in our brief as well, they actually say in their own complaint that the fuel lines are not the fuel container. [00:40:25] Speaker 01: They know that the fuel lines are at the fuel container and it's frankly absurd to contend otherwise, not just on the plain language, but also when the case is read and later the specification. [00:40:34] Speaker 01: Second point, and this goes to rule 38 sections, the plaintiffs have now changed positions five times on whether they're relying on the dependent claims to construe claim 22. [00:40:46] Speaker 01: At the Markman briefs, they said they were. [00:40:50] Speaker 01: At the Markman hearing, they said they weren't. [00:40:52] Speaker 01: In the opening brief, they did repeatedly on pages 5 through 15. [00:40:56] Speaker 01: In their opposition to Rule 38 sanctions, they said they were not. [00:40:59] Speaker 01: And in their reply brief, and now today, they are again. [00:41:01] Speaker 01: And I think that that, in addition to the frivolity of the claim construction position they've taken, supports the Rule 38 sanctions. [00:41:09] Speaker 01: And last but not least, [00:41:10] Speaker 01: Let me just close with a quote from Eon Net. [00:41:13] Speaker 01: Eon Net was a case that looked a lot like this one. [00:41:15] Speaker 01: It was about whether the claim used the word document. [00:41:19] Speaker 01: And the question is whether a document simply means a hard copy document or whether it's broader. [00:41:23] Speaker 01: The specifications said throughout that it meant a hard copy document that was both explicit and implicit. [00:41:28] Speaker 01: And this court said that when the specification, quote, repeatedly and consistently, unquote, defines the invention a certain way, that clearly refutes contrary arguments and makes them, quote, objectively baseless, unquote. [00:41:40] Speaker 01: It said that the sanctions are appropriate where the specification exposes the frivolity of the plaintiff's instruction. [00:41:47] Speaker 04: In that we were affirming a trial court's exercise of its discretion to award sanctions. [00:41:53] Speaker 04: So that was an abuse of discretion standard of review. [00:41:57] Speaker 04: And here we're also [00:41:59] Speaker 04: reviewing under an abusive discretion standard of review. [00:42:02] Speaker 01: Well, two things about that, Jojo Malek. [00:42:04] Speaker 01: Number one, there is no opinion explaining the district court's rationale. [00:42:09] Speaker 01: And I think that like in Raylon, excuse me, like in the cases where the court has, well, both Raylon and the Fifth Circuit cases, where the court has said the district court has to provide an explanation where there's [00:42:20] Speaker 01: I think this is such a case. [00:42:23] Speaker 02: I know you have a pending 285. [00:42:25] Speaker 02: Well, you don't. [00:42:26] Speaker 02: She ruled against you without prejudice to refile and she indicated she'd wait to see what we did on Clayton construction. [00:42:32] Speaker 02: Is it your belief [00:42:33] Speaker 02: that if we denied your cross appeal on Rule 11, then she would automatically deny your 285 motion. [00:42:41] Speaker 01: I don't think she would have to automatically deny it because of course Rule 285 under Highmark and Octane is a broader inquiry that can be based on other factors other than simply the frivolity of arguments as made in written pleadings. [00:42:53] Speaker 01: I do think that that actually comes the other way, Judge Moore, which is to say I think that the District Court denied the rule of 11 sanctions pro forma, or at least I would like to think so, and because when we went for rule 54 and 285 sanctions, the District Court didn't say no. [00:43:09] Speaker 01: She didn't say they're not appropriate. [00:43:10] Speaker 01: She said, I don't want to do sanctions until I see what the Court of Appeals thinks about this claim construction issue. [00:43:15] Speaker 02: Because to be clear, even if we denied your appeal for Rule 11, I'm going to give you a quote here, even if we denied your appeal for Rule 11, I don't think that means that a 285 motion should necessarily be denied. [00:43:28] Speaker 02: They aren't the same standard and you look at different things in each of those two inquiries, so nothing should be read into whatever it is that we do. [00:43:36] Speaker 01: Thank you for that. [00:43:37] Speaker 01: But let me also just say on the cop topic of Rule 11, I do think that at the very least, even if this court didn't think Rule 11 sanctions were appropriate from the outset of the case, starting when we put in a rule and give them notice of a Rule 11 motion and put it in in April of 2013, they were on notice, as this court said in the phonometrics case, that at that point, they should stop prosecuting the case. [00:44:00] Speaker 01: They shouldn't oppose the Rule 11 motion. [00:44:02] Speaker 01: They shouldn't take a frivolous appeal. [00:44:03] Speaker 01: And yet they did. [00:44:04] Speaker 01: And so I think not only rule 38, but rule 11 sanctions are appropriate in this case. [00:44:08] Speaker 01: Thank you. [00:44:09] Speaker 03: Thank you. [00:44:10] Speaker 03: We thank all counsel and the case is submitted.