[00:00:27] Speaker 00:
Okay.

[00:00:27] Speaker 00:
The next case before the court, small versus implant, direct manufacturing, LLC, case number 151163, an appeal from the Southern District of New York.

[00:00:41] Speaker 00:
Mr. Kleinberg?

[00:00:43] Speaker 00:
Good morning, Your Honors.

[00:00:44] Speaker 00:
You want five minutes for rebuttal?

[00:00:46] Speaker 03:
Yes, Your Honor.

[00:00:47] Speaker 00:
Okay.

[00:00:47] Speaker 00:
If I need it.

[00:00:48] Speaker 00:
Okay.

[00:00:51] Speaker 03:
I've come from California to spend up to 15 minutes to try to convince you

[00:00:56] Speaker 03:
that the lower court abused her discretion in denying her motion.

[00:01:04] Speaker 03:
We think there are two bases for an abuse of discretion.

[00:01:08] Speaker 03:
One is that Judge Buchwald set out certain parameters which had to be met in order to find an exceptional case.

[00:01:17] Speaker 03:
And we believe that those parameters were much higher than those suggested by the Supreme Court in the Octane case.

[00:01:25] Speaker 03:
The second is that we believe that even with the higher parameters, if one examines the case, one finds that we met those parameters, that this is truly an exceptional case.

[00:01:40] Speaker 03:
The judge said that it was certainly unique, but later said that unique doesn't mean exceptional.

[00:01:46] Speaker 03:
But it is uncommon.

[00:01:48] Speaker 03:
We have several instances where the plaintiff acted in a manner that

[00:01:55] Speaker 03:
really requires that she be sanctioned in some way.

[00:02:01] Speaker 03:
You're not arguing litigation misconduct, are you?

[00:02:04] Speaker 03:
No, we're arguing patent office misconduct.

[00:02:08] Speaker 03:
We're saying that at the filing of her case, she failed to disclose the public use that Judge Buchwald found and therefore filed her application 14 months after a reduction to practice, which was held to be public use.

[00:02:24] Speaker 03:
But that was nowhere revealed to anybody.

[00:02:28] Speaker 03:
Second, in her continuation in part, the judge found that there was, or at least in the claims that were ultimately allowed on the reissue, the court found that no reasonable juror could find substantial support in the specification for those claims.

[00:02:49] Speaker 00:
Well, on the reissue issue, on the reissue question,

[00:02:54] Speaker 00:
Even if ultimately that's true with respect to the merits, is there any indication that the plaintiff was aware that the reissue was problematic given that the PTO authorized it?

[00:03:10] Speaker 03:
Well, Your Honor, the judge also mentioned that it really wasn't the PTOs.

[00:03:15] Speaker 03:
It was the PTO that came up with the claim rather than the inventor.

[00:03:19] Speaker 03:
And I would like to refer to Judge Learn at hand in his 1924 decision where he pointed out that patent solicitors with their ant-like persistence will overcome the patience of the examiners, which I think is exactly what happened here.

[00:03:36] Speaker 03:
This reissue case was pending for close to four or five years.

[00:03:42] Speaker 03:
And it was only after three years did Dr. Small advance

[00:03:49] Speaker 03:
the error that she felt had to be corrected.

[00:03:52] Speaker 03:
But the claims that were ultimately allowed were not the result of that error.

[00:03:57] Speaker 03:
They were in a completely different area.

[00:03:59] Speaker 03:
They were in the area of the recess which she had abandoned in seeking the allowance of the continuation in part application.

[00:04:10] Speaker 03:
But the judge also pointed out that the reissue application

[00:04:19] Speaker 03:
was questionable, that she felt that even if we don't consider the idea of claims being recaptured, we do have the situation where the judge felt that the reissue wasn't completely applied for until long after the time for a broadening reissue had expired.

[00:04:45] Speaker 03:
But there was yet another point the judge

[00:04:48] Speaker 03:
went to the question of patent trolls and came up with a decision that defined patent trolls.

[00:04:56] Speaker 03:
And in her earlier memorandum and order, she set forth those very elements that define the patent troll, that Dr. Small filed her case as soon as it was issued.

[00:05:10] Speaker 03:
Within six days, she had filed suit against several defendants.

[00:05:16] Speaker 03:
a couple of years later filed suit against additional defendants, not to defend a product, but rather to seek some kind of settlement based on nuisance value.

[00:05:29] Speaker 03:
And we believe that this case has gone from, it has over 363 docket entries.

[00:05:38] Speaker 03:
It's gone from 2006 to date.

[00:05:45] Speaker 03:
which would seem to be an unusual case.

[00:05:49] Speaker 03:
It's unusual because of not disclosing the prior art to the patent office at the outset, which is a violation of Rule 56.

[00:05:58] Speaker 00:
Now, did that issue go to the 945, or did that go to the 246?

[00:06:03] Speaker 03:
246, Your Honor.

[00:06:07] Speaker 00:
But the court said that Small didn't assert the 246 against.

[00:06:15] Speaker 00:
You're fine.

[00:06:15] Speaker 03:
No, but it affects the other case because it's a continuation in part of what was now to be found an invalid patent.

[00:06:25] Speaker 03:
Based on, in other words, the initial failure to disclose taints the whole family.

[00:06:32] Speaker 03:
It destroys the parent and it must adversely affect the children because the office would not be able to examine the case properly.

[00:06:40] Speaker 03:
They would not be able to have access to relevant prior art.

[00:06:44] Speaker 03:
because of the claim priority.

[00:06:47] Speaker 00:
So you're saying that trial court's abuse of discretion in assessing the objective validity of her claims is that, or the objective reasonableness of her claims is that the trial court did exclude the 246 from consideration?

[00:07:02] Speaker 03:
We don't have to consider the 246, Your Honor.

[00:07:04] Speaker 03:
What we're saying is that if you overall look at the behavior of the plaintiff, this has to be considered an exceptional case.

[00:07:13] Speaker 03:
There has been

[00:07:14] Speaker 03:
at least three or four years of extensive litigation just to determine that the initial disclosure or the reduction of practice was 14 months before the application for patent.

[00:07:31] Speaker 00:
Before the application for the 246?

[00:07:34] Speaker 03:
Of the parent.

[00:07:35] Speaker 03:
And yet we have a situation where this is uncommon.

[00:07:39] Speaker 03:
It's unusual.

[00:07:40] Speaker 03:
It's unique.

[00:07:42] Speaker 03:
Why is it not exceptional?

[00:07:44] Speaker 03:
It's exceptional, even on a higher level, that the judge said.

[00:07:49] Speaker 03:
Because she said no reasonable jury could find support in the specification.

[00:07:55] Speaker 04:
But that's the Jamal standard.

[00:07:56] Speaker 04:
I mean, if you're saying the Jamal standard is enough to award exceptional circumstance fees, then we're going to have attorney fees in dozens of cases.

[00:08:05] Speaker 04:
And that doesn't sound exceptional to me.

[00:08:08] Speaker 03:
Well, Your Honor, I can't find another

[00:08:12] Speaker 03:
This would be considered a patent troll case.

[00:08:15] Speaker 04:
And she said that... I don't remotely see how this is close to a patent troll case.

[00:08:21] Speaker 04:
I mean, she actually, whether or not she was entitled to patent what she invented, she certainly invented something.

[00:08:27] Speaker 04:
It's something that she used in her practice.

[00:08:30] Speaker 04:
It may be that she couldn't get a patent because it was obvious or she prosecuted it badly, but she's not a non-practicing entity.

[00:08:40] Speaker 03:
She has not, there is no product that she's defending.

[00:08:44] Speaker 03:
She's seeking, she delayed her prosecution over the years to identify potential targets and then sued them within six days after her reissue came out.

[00:08:57] Speaker 03:
And that's what the Judge Buchwald defined as a patent troll.

[00:09:03] Speaker 03:
One who immediately files against a number of defendants, primarily for a

[00:09:10] Speaker 03:
Noosa's settlement rather than to defend the patent.

[00:09:14] Speaker 03:
She said that of Dr. Small and yet did not consider that in reaching her conclusion as to whether it was an exceptional case.

[00:09:24] Speaker 02:
Well, your problem is that this is an abuse of discretion standard.

[00:09:28] Speaker 02:
Sir?

[00:09:29] Speaker 02:
Your problem is that this is an abuse of discretion standard.

[00:09:32] Speaker 03:
Yes, Your Honor.

[00:09:33] Speaker 03:
And we think her discretion was abused because she failed to even follow her own higher standard, which we believe

[00:09:40] Speaker 03:
was an abuse of discretion to impose a higher standard than that offered by the Supreme Court in its case, which in effect lowered the standards for an exceptional case.

[00:09:54] Speaker 00:
So what part of the articulation of her standard do you think is outside the bounds of acting?

[00:10:02] Speaker 03:
Well, she said it had to be something exceptional in terms of

[00:10:07] Speaker 03:
either the prosecution of the case or in the prosecution of the mitigation.

[00:10:15] Speaker 03:
And we feel that that was a much higher standard than the court authorized.

[00:10:21] Speaker 00:
But exceptional is the word used in the statute, right?

[00:10:23] Speaker 00:
I mean, it does have to be exceptional, but you're saying that you can get exceptionality without looking at how the case was prosecuted?

[00:10:32] Speaker 03:
We can look at exceptionality by the way the patent was obtained.

[00:10:37] Speaker 00:
OK, so you think there was inequitable conduct in the obtaining of the parent patent?

[00:10:43] Speaker 03:
We think that the record would certainly suggest that, Your Honor.

[00:10:52] Speaker 00:
OK, you're into your rebuttal time.

[00:10:53] Speaker 00:
Anything else you want to add?

[00:10:54] Speaker 00:
Thank you, Your Honor.

[00:10:55] Speaker ?:
OK.

[00:11:09] Speaker 01:
Good morning, Your Honors.

[00:11:10] Speaker 01:
May it please the court, Gerard Haddad for the appellee, Dr. Paula Small.

[00:11:16] Speaker 01:
The only question here today, Your Honors, is whether Judge Bookwald abused her discretion when she denied ImplantDirect's motion for fees.

[00:11:25] Speaker 01:
ImplantDirect has not shown that Judge Bookwald's decision was clearly unreasonable, arbitrary, fanciful, or based on clearly erroneous findings of fact or conclusions of law.

[00:11:38] Speaker 00:
Did Judge Buchwald say that you have to have actual inequitable conduct before the Patent Office or litigation misconduct before you can get attorney's fees?

[00:11:50] Speaker 01:
No.

[00:11:51] Speaker 01:
In fact, inequitable conduct isn't even an issue in this case.

[00:11:54] Speaker 01:
No one's raised it.

[00:11:58] Speaker 01:
You won't see any inequitable conduct issue raised in any of the briefing.

[00:12:01] Speaker 01:
This is the first I've heard of inequitable conduct as we're sitting here today.

[00:12:09] Speaker 01:
addressed the issue of recapture and the other issue on written description, but there's nothing they addressed related to inequitable conduct.

[00:12:24] Speaker 01:
I don't know if I answered your honest question.

[00:12:26] Speaker 00:
Well, I'm still trying to understand.

[00:12:28] Speaker 00:
Do you believe that Judge Buchwald said you have to have one or the other before you could get fees?

[00:12:34] Speaker 01:
No, I think she looked at it and said, you have to look at the totality of the circumstances here.

[00:12:39] Speaker 01:
which she addressed.

[00:12:40] Speaker 01:
She addressed whether Dr. Small's arguments were objectively baseless.

[00:12:47] Speaker 00:
Okay.

[00:12:48] Speaker 00:
But she actually didn't discuss whether the arguments were objectively basis.

[00:12:51] Speaker 00:
She only looked at one side of it.

[00:12:54] Speaker 00:
She didn't discuss the recapture question.

[00:12:56] Speaker 00:
Shouldn't the trial court, if they're going to decide if anything is objectively basis that's asserted, have to look at every single claim that's asserted?

[00:13:06] Speaker 01:
Well, is Your Honor saying that she didn't address the recapture issue in her decision on fees?

[00:13:13] Speaker 01:
So the court certainly had the entire record in front of her.

[00:13:18] Speaker 01:
She was the same judge who decided the issue of recapture on summary judgment.

[00:13:26] Speaker 01:
Certainly, both parties briefed the issue of recapture in the motion for fees.

[00:13:33] Speaker 01:
And in addition, I think that Ed Page

[00:13:37] Speaker 01:
ten, I'm sorry, eleven of her decisions she did address although somewhat generally she said it was the patent office, the patent examiner himself who supplied Dr. Small with the language of the claim and thereby implied that it was sufficient to support a reissue patent.

[00:13:59] Speaker 01:
So I believe she addressed the issue generally and she certainly had all the facts and all the legal issues briefed

[00:14:08] Speaker 01:
uh, when she dealt with this on, uh, you know, I think conclusion of the case.

[00:14:14] Speaker 00:
So once again, we're hearing an invitation to say that the judge impliedly ruled on this question.

[00:14:21] Speaker 01:
No, I think she actually ruled on it.

[00:14:22] Speaker 01:
I think she said that, uh, that the patent examiner gave Dr. Small a reasonable basis to proceed with a litigation by giving Dr. Small the language, uh, to amend the claim.

[00:14:38] Speaker 01:
in order to issue the reissued patent.

[00:14:42] Speaker 01:
I think she did deal with it at page A11 of the record.

[00:14:48] Speaker 04:
And she also said to Paige before that even though her arguments weren't sufficient to save it from immolidity, they weren't objectively baseless.

[00:14:59] Speaker 01:
Yes, sir.

[00:15:00] Speaker 01:
They weren't objectively baseless.

[00:15:02] Speaker 04:
And she goes on to discuss one example of that, but perhaps doesn't

[00:15:08] Speaker 04:
Fully discuss the other.

[00:15:10] Speaker 01:
It didn't fully discuss it, but certainly in the record and in the briefing she had before her the citations to the... She certainly knew what the invalidity arguments were.

[00:15:21] Speaker 01:
Yes.

[00:15:22] Speaker 01:
Yes, Your Honor.

[00:15:26] Speaker 02:
And she did do a post-Octane analysis.

[00:15:30] Speaker 01:
The case was stayed, the briefing on this was stayed pending because the Octane case was up at the Supreme Court, so the parties, it was stayed.

[00:15:38] Speaker 01:
And she did a thorough analysis of Octane and of the few district court cases that had come out since then as well.

[00:15:47] Speaker 00:
You didn't even appeal the validity determination.

[00:15:50] Speaker 01:
We did not, Your Honor.

[00:15:51] Speaker 00:
Should we make anything of that in terms of this assessment?

[00:15:56] Speaker 01:
It had nothing to do with this assessment, Your Honor.

[00:16:00] Speaker 01:
That was a decision made by the client not to continue the litigation any further.

[00:16:08] Speaker 00:
But it seemed to indicate that there wasn't a firm belief in the strength of those positions.

[00:16:13] Speaker 01:
Had nothing to do with a firm belief in the strength of those positions, Your Honor.

[00:16:16] Speaker 01:
I think our brief here on appeal shows that we think Dr. Small did have a fair basis and to ultimately have prevailed at the district court, despite the fact that the judge Buchwald found otherwise.

[00:16:35] Speaker 00:
Did Dr. Small practice this in her practice?

[00:16:38] Speaker 01:
She did, Your Honor, in fact, she did experiment on one patient and when she actually came up with the invention, there was a patient who had come into the NYU Clinic and had a loose dental implant and she actually created some slots in the existing implant in order not to have to pull out the entire implant.

[00:17:02] Speaker 01:
So that's where she came up with the idea

[00:17:05] Speaker 01:
for the slots, the very beginnings of the idea.

[00:17:15] Speaker 01:
Judge Bookwell also noted that the case was not determined at the pleading stage, but actually continued all the way through discovery to summary judgment as another factor.

[00:17:26] Speaker 01:
And of course, Judge Bookwell noted that there's no evidence that this case was brought in bad faith.

[00:17:34] Speaker 01:
And there's no evidence that there was any litigation misconduct by Dr. Small.

[00:17:39] Speaker 01:
And in fact, Implant Direct hasn't alleged any litigation misconduct in this case.

[00:17:46] Speaker 01:
And finally, this issue of patent troll, I think, Judge Hughes, you're correct in that Dr. Small is a practicing dentist and the inventor here.

[00:17:59] Speaker 01:
There was no evidence that she's a patent troll.

[00:18:04] Speaker 01:
And in fact, this idea of nuisance value settlements, it's the first time I've heard of it.

[00:18:09] Speaker 01:
There's no evidence in the record that Dr. Small was seeking nuisance value settlements from any defendant here.

[00:18:18] Speaker 02:
And the fact that Judge- The district court mentions the existence of those settlements as evidence of good faith.

[00:18:25] Speaker 01:
That's right, Your Honor.

[00:18:26] Speaker 01:
She did.

[00:18:28] Speaker 01:
And the fact that

[00:18:32] Speaker 01:
Dr. Small sued within days of her patent issuing, I think just shows that Dr. Small didn't sit on her rights.

[00:18:40] Speaker 01:
So I think that in some, Judge Bookwell lived through this case from before the summary judgment stage all the way through to today to the issuance of her opinion on fees and that she's entitled to deference on this issue and her order should be affirmed.

[00:19:02] Speaker 01:
reserve the rest of my time for any questions.

[00:19:06] Speaker 00:
No, that's OK.

[00:19:06] Speaker 00:
Thank you.

[00:19:07] Speaker 00:
Thank you.

[00:19:09] Speaker 00:
All right, you've got some rebuttal time left, almost your whole five minutes.

[00:19:14] Speaker 03:
Your Honor, it's really more of a question of looking at the case as a whole, is it unusual?

[00:19:21] Speaker 03:
And it is unusual.

[00:19:23] Speaker 03:
You don't often find a case where there's been a case.

[00:19:27] Speaker 02:
An unusual case is entitled to attorney space?

[00:19:30] Speaker 03:
I believe that's what the Supreme Court said.

[00:19:32] Speaker 02:
No, they did not.

[00:19:34] Speaker 03:
They said, if it's uncommon, I believe, was the language that was used in the case.

[00:19:40] Speaker 04:
Well, the statute says exceptional.

[00:19:41] Speaker 04:
Pardon?

[00:19:42] Speaker 04:
The statute says exceptional.

[00:19:44] Speaker 03:
Exceptional.

[00:19:45] Speaker 03:
What rises to exceptional?

[00:19:49] Speaker 03:
I mean, how many cases does one find where the prosecution runs between?

[00:19:54] Speaker 04:
Did you raise?

[00:19:56] Speaker 04:
a claim of inequitable conduct as a defense to their patent assertion?

[00:20:00] Speaker 04:
No, I don't believe we did, Your Honor.

[00:20:01] Speaker 04:
Then why are we talking about it today?

[00:20:03] Speaker 03:
We're talking about it in the light of looking at extending the prosecution for the wrong period of time.

[00:20:10] Speaker 04:
I mean, those are all very fact-based questions.

[00:20:12] Speaker 04:
I mean, we can't determine on the record whether there is inequitable conduct.

[00:20:15] Speaker 04:
If you wanted to assert that, you should have asserted it before the district court.

[00:20:19] Speaker 04:
And then maybe the district court could have found inequitable conduct and used that as basis for fees.

[00:20:24] Speaker 04:
But we're not going to look at the record and say there's inevitable conduct here.

[00:20:27] Speaker 03:
I'm basing my arguments primarily on the district court's memorandum and order, which held that the patents were invalid.

[00:20:37] Speaker 03:
And I'm only taking statements from the judge to come to my conclusions, which is she found all kinds of special

[00:20:48] Speaker 03:
unusual things happening in this case.

[00:20:50] Speaker 03:
She commented about the fact that it was three years before Dr. Small came up with a proper application for reissue and therefore decided that it was untimely.

[00:21:03] Speaker 03:
That's unusual.

[00:21:04] Speaker 03:
That's exceptional.

[00:21:06] Speaker 03:
It's different.

[00:21:07] Speaker 03:
It's unique.

[00:21:08] Speaker 03:
It doesn't happen every day.

[00:21:10] Speaker 03:
It's the sort of thing that a district judge would say,

[00:21:13] Speaker 03:
You know, this is a new one for me.

[00:21:15] Speaker 04:
Sounds like she had a bad patent prosecutor, not that it's unique.

[00:21:19] Speaker 03:
Pardon your honor?

[00:21:20] Speaker 04:
No, go ahead.

[00:21:23] Speaker 03:
Well, part of it is the patent prosecution.

[00:21:26] Speaker 03:
It took the discovery to discover the public use.

[00:21:30] Speaker 03:
There was no way of finding out about it except by deposition of Dr. Small.

[00:21:35] Speaker 03:
And the public use came up and that was part of the motion for summary judgment.

[00:21:40] Speaker 03:
So that even if you look at

[00:21:42] Speaker 03:
Judge Buckwell's higher standards, we believe that this case meets them just by reading her opinion alone.

[00:21:51] Speaker 03:
If you read her memorandum in order, it cries out for a special case, an exceptional case.

[00:21:58] Speaker 03:
She just didn't use the language.

[00:22:00] Speaker 03:
She used unique, but then later said unique doesn't mean exceptional.

[00:22:04] Speaker 03:
We think it does.

[00:22:06] Speaker 03:
Thank you, Your Honors.

[00:22:08] Speaker 00:
Thank you.

[00:22:08] Speaker 00:
The case will be submitted.

[00:22:10] Speaker 00:
Is this a class that's here?

[00:22:14] Speaker 00:
No, intern?

[00:22:15] Speaker 00:
Yes, a class?

[00:22:16] Speaker 00:
From where?

[00:22:19] Speaker 00:
From where?

[00:22:21] Speaker 00:
Oh, okay.

[00:22:23] Speaker 00:
Okay, well welcome.

[00:22:25] Speaker 00:
It's always good to have a learning experience.

[00:22:28] Speaker 00:
All right, the case will be submitted.

[00:22:31] Speaker 00:
This court is adjourned.