[00:00:00] Speaker 03:
Good morning.

[00:00:13] Speaker 04:
We have four argued cases this morning.

[00:00:16] Speaker 04:
The first of these is number 15-1103, Summit Data Systems versus NetApp.

[00:00:25] Speaker 03:
Thank you, Your Honor.

[00:00:27] Speaker 03:
Good morning, Your Honors, and may it please the Court

[00:00:30] Speaker 03:
The district court in this case abused its discretion to award Section 285 fees against Summitt, a party who was in a winning position at the time that it chose for economic reasons to dismiss voluntarily.

[00:00:45] Speaker 03:
It would send the worst possible message to the federal court system, to parties, to district judges, if this court were to affirm.

[00:00:52] Speaker 03:
It would mean that a party who has a case that the party discovers is a merits winner, but a money loser,

[00:01:00] Speaker 03:
would have to go through the irrational process of taking the case through trial or otherwise risk ruinous sanctions.

[00:01:08] Speaker 00:
Doesn't that start the analysis long after the basic problem arose?

[00:01:15] Speaker 00:
That is, you had a case that either 100% or say 47% was going to be based on use of certain Microsoft products.

[00:01:28] Speaker 00:
I gather it

[00:01:29] Speaker 00:
just not disputed as the case comes to us that you did not check whether that claim failed because of a license to Microsoft.

[00:01:44] Speaker 00:
And therefore, by the time the later events arose, that piece of the case was going to go away and you hadn't developed the alternative piece of the case in a serious way.

[00:01:58] Speaker 00:
And in any event,

[00:01:59] Speaker 00:
You decided the rest of the case wasn't worth pursuing.

[00:02:03] Speaker 03:
If I may answer the question in two or three parts.

[00:02:06] Speaker 03:
The first part being with 53% of the damage claim remaining, we don't have a situation that fits under octane where the substantive strength of the overall case was lacking merit.

[00:02:17] Speaker 03:
The overall case still had a viable claim that could go forward to trial.

[00:02:22] Speaker 03:
But to answer more directly.

[00:02:24] Speaker 03:
We can't answer on a claim by claim basis.

[00:02:26] Speaker 04:
You can't look at it on a claim by claim basis.

[00:02:29] Speaker 04:
Let's assume that the Microsoft devices were licensed and that you're right that the Unix and Linux infringement remained a possibility at least up to the time that you filed your expert report which I guess is your contention, right?

[00:02:48] Speaker 04:
The expert report didn't cover them so once you filed the expert report it was going to be too late to include them in the case.

[00:02:55] Speaker 04:
Why isn't it possible to award attorney's fees because a major part of the claim was lacking in merit or privilege?

[00:03:06] Speaker 03:
To answer, Your Honor, under Octane Fitness, it's a case-by-case analysis.

[00:03:11] Speaker 03:
It's not a claim-by-claim analysis.

[00:03:13] Speaker 03:
And I'm not familiar with any precedent that's taken a party who is in a winning position and carved out its various subclaims and decided whether one of those should or should not have been brought at the outset.

[00:03:25] Speaker 03:
In the usual case of a Section 285 proceeding, you would have someone who's absolutely affirmative, affirmatively a party who's won on the merits.

[00:03:34] Speaker 04:
Well, that seems to suggest that even if it had been 90-10, even if 90% of the case had been Microsoft and 10% had been Linux, that we still couldn't affirm an award of attorney.

[00:03:47] Speaker 04:
Is that your position?

[00:03:49] Speaker 03:
It is our position, and we have at least a district court case to back that up.

[00:03:53] Speaker 03:
That's not EONNET, but the other EON case.

[00:03:57] Speaker 03:
It's a district court decision that says it can't be sanctionable conduct to proceed with a claim that's not worth very much.

[00:04:04] Speaker 03:
Now, in the usual case, in every litigation, things don't always end up the way they first appear.

[00:04:12] Speaker 03:
Parties win and lose issues and sub-issues all the time during the course of the case.

[00:04:16] Speaker 03:
That doesn't make a case rare or exceptional.

[00:04:18] Speaker 03:
under Octane Fitness.

[00:04:20] Speaker 00:
I guess what I keep thinking is that perhaps you had an argument that after dismissal of the claim that some of the fees should not be chargeable because you still had some remaining piece of the case.

[00:04:42] Speaker 00:
But am I wrong in my understanding you did not make that argument to

[00:04:47] Speaker 00:
the District Court you didn't say that all the litigation work that the other side had to do for the 53% as a shorthand, that shouldn't be chargeable to us even if all the litigation work that they did for the 47% should be.

[00:05:06] Speaker 03:
There was not an explicit allocation argument but it was certainly implicit in the presentation to the District Court which explained that the Unix and Linux functionalities

[00:05:15] Speaker 03:
The instrumentalities where Unix and Linux play the role of a host computer were still in play.

[00:05:21] Speaker 03:
So that was an argument made to the district court.

[00:05:23] Speaker 02:
Where did you try to break down the fees attributable to that percentage of the case versus the Microsoft percentage of the case?

[00:05:29] Speaker 03:
Where do?

[00:05:30] Speaker 02:
Where did you try to break down the apportionment of the fees?

[00:05:33] Speaker 02:
I mean, if that's a viable argument, wouldn't you have been required to say this portion of the fees shouldn't be charged because that's not part of the exceptional case?

[00:05:42] Speaker 03:
The argument was not made below in those terms.

[00:05:44] Speaker 03:
That's correct, Judge.

[00:05:45] Speaker 04:
What you were arguing was that because part of the case was viable, that that precludes an award of fees for any part of it, right?

[00:05:52] Speaker 03:
That's right, Your Honor, and I don't see any precedent to the contrary.

[00:05:55] Speaker 03:
We've seen no precedent cited by NetApp or any of the amici which say that a partially meritorious case ends up meriting Section 285 fee shifting as a rare exceptional case.

[00:06:08] Speaker 00:
So... Can I ask one other question?

[00:06:11] Speaker 00:
I guess this is about a piece of the record that...

[00:06:14] Speaker 00:
remains confidential, and that is, did you argue to the district court that the license agreement between Summit and RPX did not automatically confer a license on Microsoft?

[00:06:36] Speaker 03:
That argument in those terms was not made to the District Court.

[00:06:40] Speaker 03:
What we pointed out in our briefs is we are refuting the proposition stated for the first time in the judicial opinion that merely reading the agreement would lead one to conclude that Microsoft had some sort of sub-license rights.

[00:06:53] Speaker 03:
We even can point, Your Honor, to A2369.

[00:06:55] Speaker 03:
That's where the licensing and damages expert of NetApp

[00:07:00] Speaker 03:
was analyzing the terms of the license agreement and concluded that there's no automatic grant of a sublicense.

[00:07:06] Speaker 03:
It concluded that it says what it says.

[00:07:08] Speaker 03:
The agreement itself is in the record.

[00:07:11] Speaker 03:
The agreement is 1465.

[00:07:17] Speaker 00:
My question was not about the wording of the license agreement but about what you argued to the district court about the meaning of

[00:07:26] Speaker 00:
of that license agreement?

[00:07:27] Speaker 03:
It was not argued in those terms to the district court because by that point in time, there was no dispute amongst the parties that there had been a sublicense.

[00:07:35] Speaker 03:
The inferences were made that the sublicense had been granted.

[00:07:39] Speaker 03:
There was a decision to disengage from the lawsuit.

[00:07:42] Speaker 03:
So, you know, at that point, it was already a moot issue insofar as anyone purportedly trying to argue hypothetically there was no sublicense grant.

[00:07:51] Speaker 03:
Some of it didn't do that.

[00:07:53] Speaker 03:
In fact, that's an indication of good faith.

[00:07:55] Speaker 03:
by summit to accept the reality on the ground as it developed, as it learned the facts through discovery.

[00:08:02] Speaker 04:
So... Yeah, but I think the problem that you have is you're now arguing there's a substantial question here about the license, whereas that wasn't raised below and it wasn't raised contemporaneously when the license was first brought up.

[00:08:16] Speaker 03:
Well, Judge, like I said, for the very first time in the entire record,

[00:08:20] Speaker 03:
The district court said in its final opinion that merely reading the license would have allowed someone to conclude, merely reading the RPX agreement would have allowed someone to conclude that Microsoft had sublicense rights and therefore by extension the accusation against NetApp shouldn't use that instrumentality.

[00:08:37] Speaker 03:
But again, the record also shows that that was against the other inferences to be drawn from reading the agreement.

[00:08:45] Speaker 03:
One inference to be drawn from reading the RPX agreement was that both RPX and

[00:08:49] Speaker 03:
summit had carved out NEDAP as someone who needed additional rights and would have to pay a substantial sum to get them.

[00:08:58] Speaker 00:
Can I ask you, you make an argument or suggestion in your brief about, I'll put it under the heading of NEDAP was

[00:09:11] Speaker 00:
lying in the weeds for six or more months from April, early April when you turned over the license agreement until the email at the beginning of October when it contacted you and said we've got a license, there's a license here that defeats at least a big chunk of your claim.

[00:09:33] Speaker 00:
Can you explain what steps in the,

[00:09:37] Speaker 00:
litigation process took place between early April and October at which you think they should have made their contention based on the license agreement known.

[00:09:52] Speaker 03:
I'm glad you brought that up, Judge, because I was just moving to that point.

[00:09:56] Speaker 03:
Between April and October was virtually all of the heavy activity of the litigation.

[00:10:01] Speaker 03:
Up until then, it had been the closing of the pleadings.

[00:10:04] Speaker 03:
There was a claim construction proceeding before then.

[00:10:06] Speaker 03:
and then discovery was just starting to be exchanged.

[00:10:09] Speaker 03:
So between early April and October, all the depositions were taken.

[00:10:15] Speaker 03:
All the expert work was done.

[00:10:17] Speaker 03:
I believe the record would even show that all or almost all of the expert fees charged on NetApp side were charged in this interim period.

[00:10:26] Speaker 03:
So I did want to point that out because in this report.

[00:10:30] Speaker 00:
I guess it seems to me that your suggestion

[00:10:35] Speaker 00:
lying in wait depends on there having been filings that NEDAP did make or had to have made, and in those filings, it did not make the point it ultimately made in October.

[00:10:52] Speaker 00:
So what are those moments?

[00:10:54] Speaker 03:
Very simple.

[00:10:54] Speaker 03:
It's the interrogatory answer that NEDAP was obligated to give, and that was, I believe, was Interrogatory 5.

[00:11:01] Speaker 04:
Describing their defenses.

[00:11:02] Speaker 03:
It was one of the conventional interrogatories.

[00:11:05] Speaker 03:
You've pled license and exhaustion.

[00:11:07] Speaker 03:
Please state the factual basis for your pleading of license and exhaustion.

[00:11:10] Speaker 03:
That was a pending interrogatory.

[00:11:12] Speaker 03:
There was a boilerplate answer at the outset.

[00:11:14] Speaker 03:
At that point, this is fully brief, at that point, once they learned the information that they ended up putting together for their license offense, they were under an obligation to disclose that.

[00:11:25] Speaker 03:
Remember, license is a waivable affirmative offense.

[00:11:28] Speaker 03:
We haven't even talked about the fact that there are... When did they see the RPX agreement?

[00:11:32] Speaker 03:
Pardon?

[00:11:32] Speaker 04:
When did they see the RPX agreement?

[00:11:34] Speaker 03:
That was produced on April 2nd of that year.

[00:11:37] Speaker 03:
I think it was 2012.

[00:11:38] Speaker 04:
Before the interrogatory answer?

[00:11:41] Speaker 03:
I believe... I would have to check, Your Honor.

[00:11:43] Speaker 03:
I'll tell you in the rebuttal time.

[00:11:45] Speaker 03:
And I see that my time is up.

[00:11:48] Speaker 03:
If there are no further questions, I'll save my time for rebuttal.

[00:11:51] Speaker 03:
I'll come back with the answer.

[00:11:52] Speaker 04:
Okay, don't stop the clock for a moment because this agreement is marked confidential and I think the panel really wonders whether that's really necessary.

[00:12:05] Speaker 04:
It's going to make it difficult for us to write an opinion given that fact.

[00:12:10] Speaker 04:
Is it possible for the parties to get together and decide that the agreement or at least major parts of it are not confidential?

[00:12:16] Speaker 03:
I think it's very possible.

[00:12:18] Speaker 03:
I think the parties are really being solicitous to the third party who doesn't have a voice in these proceedings.

[00:12:24] Speaker 04:
Well, why don't you check with them and if you conclude that it doesn't need to be confidential, why don't you file new briefs to delete the confidentiality markings.

[00:12:33] Speaker 04:
That would be helpful.

[00:12:34] Speaker 04:
Yes, Your Honor.

[00:12:35] Speaker 04:
Okay.

[00:12:36] Speaker 04:
Thank you.

[00:12:37] Speaker 04:
See you in a minute.

[00:12:41] Speaker 04:
Mr. Reines.

[00:12:42] Speaker 01:
Good morning, Your Honors, and may it please the Court.

[00:12:46] Speaker 01:
The district court judge here has heard thousands of patent cases, and it is extremely rare that he's ever designated anything 285.

[00:12:55] Speaker 01:
I mean, just a handful at most.

[00:12:58] Speaker 04:
Well, could he do that when, let's assume hypothetically for the moment, that 47 percent of the claim was potentially meritorious, or at least hasn't been shown not to be meritorious?

[00:13:12] Speaker 04:
Assuming that... And the 53 percent was

[00:13:16] Speaker 04:
not meritorious with his privilege.

[00:13:18] Speaker 01:
Assuming that, which obviously we don't agree with, I think of course he can because of the flexible nature of the test.

[00:13:26] Speaker 01:
I mean, I think that's the point of the Supreme Court's jurisprudence recently in this area, that each case needs to be looked at at his own.

[00:13:34] Speaker 01:
For this judge to pick out this one case with the pattern of settlement, with the nature of the expert admissions here, which we

[00:13:43] Speaker 01:
haven't really talked about with the shifting explanations.

[00:13:46] Speaker 01:
I mean, just this court alone today has gotten shifting explanations.

[00:13:49] Speaker 01:
The argument below about why they didn't know that the heart of their case was licensed activity was that it was a mutual mistake.

[00:13:58] Speaker 04:
That when... The heart of their case wasn't licensed activity if you assume that part of the case was the Linux and Unix operating system.

[00:14:08] Speaker 01:
I think that's an example of where the district court judge has a real

[00:14:12] Speaker 01:
good vantage point because the contention that they made in April, which was their contention interrogatory, at least according to them now, relies on Microsoft only and only one product.

[00:14:22] Speaker 01:
And then even in expert reports, it's sort of hard to set aside the record.

[00:14:26] Speaker 04:
When was the contention interrogatory?

[00:14:30] Speaker 04:
Wilmington doesn't have the Northern District of California rules, right?

[00:14:32] Speaker 04:
So you rely on the interrogatories.

[00:14:34] Speaker 01:
It was mid-April.

[00:14:36] Speaker 01:
Mid-April.

[00:14:36] Speaker 01:
So let me just do a reset on the

[00:14:39] Speaker 01:
timeline because that seems to be important to this.

[00:14:43] Speaker 01:
The license interrogatory was in March before we had the RPX agreement, before we had their contention or anything else.

[00:14:50] Speaker 01:
We got a wave of information in April.

[00:14:53] Speaker 01:
Of course, it sounds simple to say you got the RPX agreement, but as you know, it was in a wave of

[00:14:58] Speaker 01:
electronic stuff that have to get processed.

[00:15:00] Speaker 00:
Right, but just on that, wasn't it a matter of mere days when your co-defendant, EMC, took a deposition of Mr. Lee, their Rule 36 witness, and specifically examined him about the license?

[00:15:12] Speaker 01:
He has questions, right.

[00:15:14] Speaker 00:
At least within days, this was not still buried?

[00:15:17] Speaker 01:
Well, I mean, buried in the sense that you only have a couple of days to prepare for definition.

[00:15:23] Speaker 01:
It had been unearthed.

[00:15:24] Speaker 01:
The other way, I mean, we only had a couple days and someone else was taking the deposition.

[00:15:28] Speaker 01:
There was eight parties at the time.

[00:15:30] Speaker 01:
I mean, now when we look back, it's so easy with hindsight to say this.

[00:15:34] Speaker 01:
But what's really important about this timeline, I think that does a real reset for you, is at the time of all this information exchange, the expert discovery cutoff was June 1.

[00:15:47] Speaker 01:
And both parties in their interrogatory said, this is all premature.

[00:15:50] Speaker 01:
You're going to get it in the expert report in a matter of weeks.

[00:15:55] Speaker 01:
And to go in Delaware and try and get discovery enforcement on that is not practical.

[00:16:02] Speaker 00:
It's not on... You said in March, before the turnover of this agreement, that's when you filed your answers to... The licensing and derogatory.

[00:16:15] Speaker 00:
The licensing and derogatory.

[00:16:17] Speaker 00:
Yeah.

[00:16:18] Speaker 00:
Where we said it was premature.

[00:16:20] Speaker 00:
And was there an obligation

[00:16:23] Speaker 00:
at some point to update the answers or something or even a new date for?

[00:16:30] Speaker 01:
Well, under Rule 26, I mean, there's a seasonability requirement.

[00:16:35] Speaker 01:
And in the course of this case, the seasonability requirement would turn on the expert report being on June 1st, which is just weeks away.

[00:16:42] Speaker 01:
That was the position they took on their contention.

[00:16:45] Speaker 01:
I mean, you can't have a licensed defense before you understand what's being accused.

[00:16:51] Speaker 04:
You didn't understand what was being accused until the expert report is what you're saying, right?

[00:16:56] Speaker 04:
Absolutely.

[00:16:57] Speaker 00:
If you look back at their content, it eventually became the end of August, right?

[00:17:01] Speaker 01:
August 31st?

[00:17:02] Speaker 01:
It moved once to August 1.

[00:17:06] Speaker 01:
Later on, before June 1, it moved to August 1, and then before August 1, it moved to August 28.

[00:17:12] Speaker 01:
So it was always just a few weeks away to really fault NetApp for not bringing the fact that Acacia had licensed this technology already clearly and was suing based on it as the heart of the case.

[00:17:23] Speaker 01:
But if you look at their contentions, we can now parse now what it says, but it's one of these things where they just put lines to diagrams and you don't know what they're alleging.

[00:17:32] Speaker 01:
And we challenge that.

[00:17:33] Speaker 01:
And it says right in their things, this is preliminary information, it's all premature, because people hadn't exchanged documents until April.

[00:17:41] Speaker 04:
But I guess the problem that I'm having is until the expert report was filed focusing on Microsoft, that it was open to them under the allegations of the complaint and the local rules to accuse the Linux and Unix operating systems.

[00:17:57] Speaker 04:
Once they filed the expert report, it became too late to add those.

[00:18:03] Speaker 04:
So at least until the filing of the expert report,

[00:18:06] Speaker 04:
that was potentially a part of this case that wasn't affected by the Microsoft license, correct?

[00:18:13] Speaker 01:
Not in agreement for a few reasons.

[00:18:16] Speaker 01:
The first most important reason why I'm not in agreement, and again, I think some of the weakness of their positions I want to reset, which is the license wasn't just to Microsoft.

[00:18:24] Speaker 01:
It was to 43 companies.

[00:18:26] Speaker 01:
It was to anybody that sold equipment.

[00:18:29] Speaker 01:
It was HP.

[00:18:30] Speaker 01:
It was IBM.

[00:18:31] Speaker 04:
There's been no contention that the claims with respect to Unix and Linux operating systems were barred by the license.

[00:18:37] Speaker 01:
Of course.

[00:18:38] Speaker 01:
Those would be loaded on host computers, which would be IBM or anything else.

[00:18:44] Speaker 04:
They couldn't possibly... Were they licensed parties under the RPX agreement?

[00:18:47] Speaker 01:
Yeah.

[00:18:49] Speaker 01:
Everyone was licensed.

[00:18:50] Speaker 01:
What happened was they licensed the computer industry.

[00:18:53] Speaker 01:
Anyone like, you know, I mean everyone, just you name it.

[00:18:55] Speaker 01:
The entire computer industry, that's half of the claim.

[00:18:58] Speaker 01:
The other half of the claim is the storage server industry.

[00:19:01] Speaker 01:
They sued the storage server industry.

[00:19:02] Speaker 04:
Yeah, I understand what you're saying, but I don't recall that your brief made this point that there was a license defense with respect to the Linux and Unix operating system.

[00:19:11] Speaker 01:
Absolutely.

[00:19:12] Speaker 04:
The point, the point- Wait, wait, wait.

[00:19:13] Speaker 04:
Where?

[00:19:14] Speaker 04:
Where in your brief did you say that?

[00:19:17] Speaker 01:
I didn't know.

[00:19:17] Speaker 01:
Where first the 43 parties were licensed.

[00:19:20] Speaker 01:
that they couldn't possibly come up with the claim.

[00:19:21] Speaker 04:
Where do you say that the case with respect to the Linux and Unix operating systems was frivolous?

[00:19:26] Speaker 04:
Look now, but I think where... Wait, wait, wait.

[00:19:28] Speaker 04:
They too were licensed.

[00:19:33] Speaker 01:
It's the question.

[00:19:34] Speaker 01:
I mean, among other places, it's where I said to their expert, you couldn't come up with any evidence.

[00:19:39] Speaker 01:
Let me answer this one piece.

[00:19:41] Speaker 01:
You couldn't come up with any evidence that Unix and Linux were

[00:19:45] Speaker 01:
license because in the view of the fact that 43 different companies had licenses to the computer, you can come up with a configuration that's in a question of mine that I quote and block and then quote.

[00:19:54] Speaker 01:
I don't have the page number for you right now.

[00:19:57] Speaker 04:
But what I'm looking for in your brief is where you say that the claims with respect to Unix and Linux were also frivolous from the beginning because their operating systems were also licensed.

[00:20:06] Speaker 04:
I don't recall that argument being made in the red brief.

[00:20:09] Speaker 01:
I don't have a page size for you.

[00:20:11] Speaker 01:
I'm sure a review of that and the brief below.

[00:20:14] Speaker 01:
will discover that the whole computer industry was licensed, how could the storage server industry be sued?

[00:20:21] Speaker 00:
At least, I guess what I'm remembering, which may not quite be a contention in this forum, is you're disputing of the 53% figure because that figure didn't take into account all of the other RPX sub-licensed companies

[00:20:42] Speaker 00:
so that, in fact, much of that use may itself have been licensed.

[00:20:47] Speaker 00:
And you depose their ex-zimmerman about this.

[00:20:49] Speaker 01:
This is the reason, among others, why their expert couldn't establish there was any viable theory.

[00:20:55] Speaker 01:
I mean, the burden shouldn't be shifted to us to prove that they didn't have a claim that their expert said he couldn't make and he had no evidence of.

[00:21:02] Speaker 01:
It's a little Alice in Wonderland.

[00:21:04] Speaker 01:
Their expert said he didn't.

[00:21:05] Speaker 02:
There's an argument on the other system, essentially,

[00:21:10] Speaker 02:
any computer system those operating systems would work on had already been licensed.

[00:21:15] Speaker 02:
Any computer company, whether it's an HP, whether it's a Mac, whether it's whatever, they'd already been licensed.

[00:21:22] Speaker 02:
There's no system or no company that makes computers that would use these Linux systems that weren't licensed.

[00:21:29] Speaker 01:
That's correct, but there's four or five other reasons why their expert refused to give the opinion.

[00:21:34] Speaker 01:
I mean, their expert said he didn't have evidence of the position.

[00:21:37] Speaker 01:
I don't know why it would be deemed a viable position, why we would have to go disprove it, but I will.

[00:21:41] Speaker 04:
You're the one who's seeking fees.

[00:21:43] Speaker 04:
That's the problem.

[00:21:44] Speaker 04:
And so in order to establish right to fees, it seems to me that the burden is on you to show frivolity.

[00:21:51] Speaker 01:
We showed that the only thing their expert put evidence on, Your Honor said the only thing they put in their expert report was Microsoft and that that was frivolous by everyone's account.

[00:22:02] Speaker 02:
And that should be the end of the discussion, but if... And the reason there's no more evidence on the Linux stuff is because it wasn't in their expert report, and they dropped the case before there could be any more discovery into that issue.

[00:22:13] Speaker 01:
Well, just, I mean, the expert reports is your time to do it.

[00:22:16] Speaker 01:
I mean, nobody says you can go and do it afterwards, but their expert admitted he didn't have the evidence.

[00:22:19] Speaker 01:
But the other point, at the expert report at age 15, 68, he says that these

[00:22:25] Speaker 01:
that Linux and Unix work according to a standard that must support one connection but doesn't require multiple connections to be supported.

[00:22:32] Speaker 00:
I thought it's 1573.

[00:22:34] Speaker 00:
He said pretty clearly though without pointing to something concrete that a Linux Unix complementary product would in fact.

[00:22:47] Speaker 01:
They support it is the assertion with no documentary support.

[00:22:53] Speaker 00:
I'm not disputing the absence of documentary support but I thought of 1573 was the one place in his opening expert report where he mentioned the possibility.

[00:23:05] Speaker 01:
At 1568 is the precursor where he introduces the standard and he says the standard says they must support at least one connection and may support several connections.

[00:23:15] Speaker 01:
So under the standard you might do it and then

[00:23:19] Speaker 01:
The fact is, Rx could put in, but Red Hat and numerous other Linux don't support multiple connections.

[00:23:26] Speaker 01:
They just don't, so you couldn't use it.

[00:23:28] Speaker 01:
Two is you'd have to show that not only was it being supported, which is optional under the standard, but then someone was configuring it to do that.

[00:23:37] Speaker 01:
Then you'd have to show not only they were configured to do that, but they were actually doing that.

[00:23:41] Speaker 01:
Then you'd have to show that they weren't being used with an HP, an IBM, an Apple, or a Microsoft computer.

[00:23:48] Speaker 01:
It's a frivolous position from start.

[00:23:51] Speaker 01:
That's why their own experts didn't take the position.

[00:23:53] Speaker 01:
It's their burden.

[00:23:54] Speaker 01:
Let me address the burden issue.

[00:23:57] Speaker 01:
An emotion under 285, where we're saying they're dropping their case because they admit that what I'm describing is the heart of the case, because that's what their expert report asserted.

[00:24:05] Speaker 01:
You would think that would be fair.

[00:24:07] Speaker 01:
That that was frivolous.

[00:24:08] Speaker 01:
By all accounts, they immediately acknowledged it.

[00:24:10] Speaker 01:
They said, yes, you're right.

[00:24:12] Speaker 01:
We licensed it.

[00:24:13] Speaker 01:
They originally argued that was a mutual mistake that they gave a border license and they thought they've abandoned that now and they say they're making this condition subsequent argument.

[00:24:21] Speaker 04:
But I think the district court's decision to award fees was not based entirely on the failure to withdraw the suit, dismiss the suit between the time of the expert report in October.

[00:24:37] Speaker 04:
He goes back to the beginning and says that this case was frivolous from the outset.

[00:24:42] Speaker 04:
And at least, as you just said, until the expert report was filed, that it remained open to them to accuse other operating systems as well as the Microsoft system.

[00:24:52] Speaker 01:
So the expert report revealed the frivolousness which was from the start.

[00:24:55] Speaker 01:
What the court said was it was reckless to sue systems that relied on Microsoft as the heart of your case, which is what happened, when you could have just looked at the license and figured out that it was licensed.

[00:25:06] Speaker 01:
Okay?

[00:25:06] Speaker 01:
And then he said, and your assumptions and guesses

[00:25:09] Speaker 01:
that maybe if someone configured some other equipment some other way in some other situation without expert support isn't enough to insulate you given the pattern of settlements, given the other activity.

[00:25:22] Speaker 01:
That's a completely reasonable thing.

[00:25:24] Speaker 04:
Let me ask you about the pattern of settlements because I think what the district judge said in that connection raises some questions because as I understand it based on past cases including our recent decision at SFA that

[00:25:40] Speaker 04:
a pattern of nuisance settlements is significant only if the nuisance settlements are achieved through the assertion of frivolous claims rather than through the assertion of meritorious claims.

[00:25:53] Speaker 04:
And I don't read the district court here as finding that these nuisance settlements in these other cases were nuisance settlements resulting from the assertion of frivolous claims.

[00:26:04] Speaker 01:
I think the way the court read it because he was

[00:26:07] Speaker 01:
familiar with it from client construction, discovery, everything else, was that this was an attempt, they'd licensed the entire computer industry, which specifically said the storage servers would be licensed to, then they sued the entire storage server industry, and then they settled with them one at a time for 150,000, 150,000.

[00:26:26] Speaker 04:
There's nothing to matter with that as long as the claims aren't frivolous, right?

[00:26:31] Speaker 04:
But this goes to the point that- Wait, wait, is that true?

[00:26:34] Speaker 01:
I wouldn't say on the totality of circumstance, I'm not going to give you an absolute like that, but I agree with you that it's more significant if it's frivolous.

[00:26:42] Speaker 01:
I think the answer here is whether they, after the behavior that happened where the heart of their case was shown to be frivolous, that they had a duty to say, here's what we were thinking.

[00:26:54] Speaker 01:
Here's what we were thinking about why we sued the others.

[00:26:56] Speaker 01:
Here's what we were thinking about why Linux

[00:26:58] Speaker 01:
They didn't come forward with any evidence that suggested that any of this was in good faith.

[00:27:04] Speaker 02:
Can I ask you about the expert fee portion of this award?

[00:27:07] Speaker 02:
Aren't expert fees awarded under a different standard?

[00:27:12] Speaker 01:
Well, it's under a standard that was met by the district court judge here under Mark Tech.

[00:27:15] Speaker 02:
Where did he articulate that standard and describe that standard as applicable here?

[00:27:21] Speaker 01:
He didn't invoke the inherent authority expressly.

[00:27:24] Speaker 01:
It's just like the Mark Tech case, which is 2012 case.

[00:27:28] Speaker 01:
And there they said where it's clear that there was problems, like that was a baseless case that caused expert discovery that was needless, it's on all fours here, that it would be only logical to allow the recovery of the expert fees because they necessarily followed from the baselessness.

[00:27:48] Speaker 02:
I mean the idea that NetApp, let me... It seems a little sloppy though.

[00:27:52] Speaker 02:
I mean if there's two different standards and we're going to keep letting district courts just use the 285 standard

[00:27:57] Speaker 02:
and not talk about the other standard, then we don't have anything to review on what he thought the reasons for bad stages were.

[00:28:05] Speaker 01:
I agree that it was sloppy, but it wasn't sloppy by the district judge.

[00:28:09] Speaker 01:
It was sloppy by Summit at best, because they didn't make the argument.

[00:28:14] Speaker 01:
They didn't oppose the expertise.

[00:28:15] Speaker 01:
They didn't say it was unrecoverable.

[00:28:17] Speaker 01:
They didn't say anything about that.

[00:28:18] Speaker 01:
They didn't make the argument at all.

[00:28:20] Speaker 01:
It's very difficult.

[00:28:21] Speaker 01:
I mean, the second guessing of the district judge here is very, very difficult.

[00:28:25] Speaker 02:
Let me clarify that.

[00:28:26] Speaker 02:
So when you filed your

[00:28:27] Speaker 02:
application, you articulated the reason for expert fees under the proper standard, and they didn't oppose that.

[00:28:35] Speaker 01:
I believe so.

[00:28:37] Speaker 00:
Can I ask one more procedural question about the amount of the fees?

[00:28:45] Speaker 00:
In the final footnote of Summit's opposition to your fee motion, Summit said if you are planning to award fees, please give us

[00:28:56] Speaker 00:
an additional opportunity to contest the amount after discussing the amount with NetApp.

[00:29:05] Speaker 00:
Is there a local rule, a practice, some basis on which an expectation of a second stage proceeding might have been reasonable of the sort that, what is it, Rule 54 contemplates, though doesn't mandate

[00:29:26] Speaker 01:
A good question, absolutely not.

[00:29:28] Speaker 01:
Here, this was unique because there was a specific order when they attempted to dismiss the case with strings attached, which is the opposite of good faith.

[00:29:37] Speaker 01:
The district just said, no, I'm going to dismiss the case, but you can move for fees and set an order requiring when our application for fees, it wasn't bring a motion for exceptional case, it was your application for attorney's fees.

[00:29:48] Speaker 01:
And then an opposition date was ordered in a unique order that required them to do so.

[00:29:54] Speaker 01:
On top of that, in reply, we

[00:29:56] Speaker 01:
point to that.

[00:29:57] Speaker 01:
We said, they haven't, this footnote's a little more cockamamie than that, but whatever it said, we said, we don't know what they're talking about.

[00:30:05] Speaker 01:
They've waived any argument about this.

[00:30:07] Speaker 01:
They then made other submissions to the court and never said, well, if they're going to argue waiver, then here's our opposition or anything else.

[00:30:13] Speaker 01:
We put in all our billing records with all the burden and things that are associated with that, and they just

[00:30:21] Speaker 01:
in the way they treated the whole litigation, they flagrantly blew it off and they gave themselves relief.

[00:30:26] Speaker 01:
Any relief under Delaware Civil Local Rule 7.1.2a has to be sought by motion.

[00:30:33] Speaker 01:
If they want an extension of time, they're entitled to an extension of time.

[00:30:37] Speaker 04:
But isn't it fair to read their footnote as saying or postponing any discussion about objections that we have to the amount of the fees until later?

[00:30:47] Speaker 01:
I think there is a genuine

[00:30:50] Speaker 01:
concern at district court level if parties were able to give themselves that kind of extension in footnotes and if this court gave that in perimeter, non-prec or otherwise, that... Could it have given itself that extension if it had been in text?

[00:31:07] Speaker 00:
I mean, it's a local rule such that by merely asking for an opportunity to oppose the amount later that they're automatically entitled to that opportunity?

[00:31:18] Speaker 01:
Absolutely not.

[00:31:19] Speaker 01:
That would be chaos in district court.

[00:31:22] Speaker 01:
I could tell the number of times I would avail myself of a footnote that says the other half, if we lose on our first argument, we'll only address the second argument.

[00:31:29] Speaker 01:
We're going to negotiate with the other side and do it later.

[00:31:32] Speaker 04:
I mean, the district court judge here... It comes back to the question of whether that was the practice in Wilmington.

[00:31:38] Speaker 01:
That was not the practice.

[00:31:39] Speaker 01:
The cases they cite, well, first of all, the things that we've had to deal with in this case, on this issue, in their appeal brief, they did not argue

[00:31:49] Speaker 01:
any explanation why they failed to raise this issue below and address waiver.

[00:31:53] Speaker 01:
All of this supposed practice came in in reply.

[00:31:57] Speaker 01:
Absolutely a waiver, absolutely outrageous as far as I'm concerned.

[00:32:01] Speaker 01:
I didn't have the opportunity to brief this, but I can tell you, so I can verbally do it, in many of those cases, amounts were put in and basically the district court judge said, well, we're only going to give a fraction so we need briefing on that, or I'd like more briefing on reasonableness.

[00:32:15] Speaker 01:
That is completely different from this circumstance.

[00:32:18] Speaker 01:
Not one of those cases was from Judge Sleet.

[00:32:20] Speaker 01:
Each of the four District Delaware judges have their own practices.

[00:32:23] Speaker 01:
And if you know Judge Sleet, that's where, if you know, I was in the District Court on this, Judge Sleet, you don't give yourself an extension in Judge Sleet's courtroom.

[00:32:32] Speaker 01:
Right now, I'll tell you that.

[00:32:33] Speaker 01:
And any local counsel there knows that.

[00:32:37] Speaker 04:
Okay.

[00:32:37] Speaker 04:
Thank you, Mr. Ryan.

[00:32:38] Speaker 01:
Thank you so very much.

[00:32:45] Speaker 04:
To bring you back to the timeline, Your Honors, it was... Why don't you begin by addressing the last point as to whether there was such a practice in the District Court.

[00:32:54] Speaker 03:
Sure.

[00:32:55] Speaker 03:
To be fair to Mr. Reinus, Judge Toronto, your question to him may have been addressed to me as well, because it was our position that there is a local practice.

[00:33:05] Speaker 03:
and it's borne out by the case law.

[00:33:07] Speaker 03:
There's no, I can't point to a written rule.

[00:33:09] Speaker 04:
I can't point to... Well, why isn't it discretionary with the district judge to allow you to postpone it or not postpone any objections to the specific amount of the fees?

[00:33:23] Speaker 03:
I think it is discretionary with the district judge.

[00:33:26] Speaker 03:
And so what you see in our arguments in our reply brief is we do face head on the allegation of waiver.

[00:33:31] Speaker 03:
We say,

[00:33:32] Speaker 03:
We don't think it's a waiver.

[00:33:34] Speaker 04:
Well, it's not so much a waiver, is it?

[00:33:35] Speaker 04:
I mean, it's just that the district court didn't create an opportunity to challenge the fees in a later proceeding.

[00:33:43] Speaker 03:
Right.

[00:33:43] Speaker 03:
It's discretionary, but we had no signal from the district court that it was going to rush to this kind of judgment when there are 10 or 15 cases we cited to you in the reply brief, Your Honors, where there was a staged approach, which was the expectation in Delaware practice.

[00:33:59] Speaker 02:
Were any of those from Judge Sleep?

[00:34:01] Speaker 03:
I haven't reviewed that myself recently, but I'll take it.

[00:34:06] Speaker 02:
Given the fact that you can't cite a particular local rule in writing, how can you rely on the practice of other district court judges to have some kind of assumption on what a different district court judge is going to do?

[00:34:18] Speaker 03:
It's something I'm sure we wish we would have had an opinion from Judge Sleet that we could show you.

[00:34:23] Speaker 03:
We found what we found, and if there's not one from Judge Sleet, then there's not.

[00:34:27] Speaker 04:
What about the contention that the Linux and Unix operating systems were also licensed and that there was no basis for a claim with respect to them either?

[00:34:40] Speaker 03:
There is no position in this court that 42 other companies, there are 43 members.

[00:34:46] Speaker 03:
There is no position in this court that 42 other companies had a license.

[00:34:50] Speaker 03:
There is no proof of that.

[00:34:51] Speaker 03:
There is no evidence of that.

[00:34:53] Speaker 03:
It would require yet another round of

[00:34:55] Speaker 03:
trying to determine if there was a sub-license granted from RPX to those other 43.

[00:34:59] Speaker 04:
So are they listed in the RPX agreement?

[00:35:01] Speaker 03:
They're listed as members, so they're candidates who can receive a sub-license.

[00:35:05] Speaker 03:
But there's no proof, there's no inference, there's no acknowledgement that they actually did.

[00:35:09] Speaker 03:
And at worst, your honor, let's say all 43 had licenses or sub-licenses at the outset.

[00:35:16] Speaker 03:
What that amounted to is say end users were using a Hewlett-Packard computer versus, I don't know, a Gateway or an ASUS.

[00:35:25] Speaker 03:
I'm sure I could find a type of computer, a brand of computer that's not on that list of 43.

[00:35:32] Speaker 03:
On their best day, what that does is it really constricts our damages claim.

[00:35:37] Speaker 03:
It's not a happy place to be as a plaintiff, I agree.

[00:35:39] Speaker 03:
It's appropriate that if they were going to have that as a live issue to restrict and constrict and constrict our damages claim, of course the rational thing is for us to go and voluntarily dismiss.

[00:35:49] Speaker 03:
Another point on that

[00:35:51] Speaker 03:
The more they argue that the entire computer industry was licensed through the RPX agreement, the more odd the rest of the RPX agreement becomes because the RPX agreement did have a carve out for NetApp itself to become a sub-licensee.

[00:36:08] Speaker 03:
It was never executed but it was a substantial amount of funds that would have to be paid for NetApp to become a sub-licensee under the RPX agreement.

[00:36:16] Speaker 03:
That provision would make no sense if RPX,

[00:36:19] Speaker 03:
and summit at the time they contracted had some sense or awareness that all routes to an infringement claim had been blocked via some sub-license operation.

[00:36:31] Speaker 04:
Okay, you're almost out of time.

[00:36:32] Speaker 04:
Do you have one last point you want to make?

[00:36:35] Speaker 03:
Only one last point, not buried.

[00:36:38] Speaker 03:
The RPX agreement was produced in a production of something like 200 pages, so it was certainly easy to roll through and learn what was in it.

[00:36:46] Speaker 03:
And so with that, Your Honors, we would request a reversal or at least a remand for reconsideration with this court's guidance.

[00:36:53] Speaker 04:
And I thank you for your time.