[00:00:34] Speaker 04: The next case is Acor v. Artisan Technologies, Et al., 2014-1459, Mr. Trellis. [00:00:57] Speaker 01: Thank you, Your Honor. [00:00:58] Speaker 01: May it please the Court. [00:01:01] Speaker 01: In this case, the district court held [00:01:04] Speaker 01: that sales by defendants that admittedly gave rise to liability one day suddenly changed character the next. [00:01:12] Speaker 01: The court did so with respect to both willful infringement and the mental state required for induced infringement. [00:01:19] Speaker 01: We believe the court erred in both regards, and I'd like to talk about each in turn. [00:01:27] Speaker 01: As to willfulness, in the original case, the district court found that defendants willfully infringed [00:01:34] Speaker 01: by selling bus converters to Cisco between the December jury verdict and the January 24th entry of the injunction. [00:01:41] Speaker 01: The court held that was willful infringement. [00:01:43] Speaker 01: This court affirmed. [00:01:45] Speaker 01: Defendants Aztec, Belfuse, and Mirada continued to engage in precisely the same kind of sales with precisely the same awareness. [00:01:53] Speaker 07: There's a two-step right for willfulness. [00:01:55] Speaker 07: There is a finding of willfulness. [00:01:57] Speaker 07: And then there is the determination of what additional damages, if any, ought to be incident to that finding of willfulness. [00:02:04] Speaker 01: Yes, Your Honor. [00:02:05] Speaker 07: And so if I'm understanding you right, your argument is that to the extent, and you don't say it quite this way, so make sure you agree with me before you agree with me. [00:02:17] Speaker 07: My understanding of your argument is that the underlying finding of willfulness, a la whether they were intentionally manufacturing these products at a time when they knew they shouldn't have. [00:02:27] Speaker 07: couldn't possibly have been affected by the stay that went into place. [00:02:33] Speaker 07: Now that, of course, you recognize doesn't preclude the lower court from saying, OK, fine, another finding of willfulness, but no 1.75 times damages because Judge Ward said at the outset, even though it was dicta, that I wasn't going to award willfulness or additional damages during the stay period. [00:02:51] Speaker 07: And this judge replicated that statement. [00:02:54] Speaker 07: And so you realize that if you get what you want, [00:02:58] Speaker 07: It seems to me you potentially get a vacate and remand on that willfulness question, but that doesn't guarantee you by any means the 1.75 times damages, because circumstances could be viewed as different in light of Judge Ward's statement, and maybe those additional damages aren't warranted. [00:03:14] Speaker 01: I believe that's correct, Your Honor. [00:03:17] Speaker 01: Let me maybe restate our position, but I don't think there's much space between what you said and what we say. [00:03:25] Speaker 01: The district court here [00:03:27] Speaker 01: held as a matter of law that there could not be the willfulness finding. [00:03:30] Speaker 01: And so it didn't even get to the second part, the enhancement part. [00:03:36] Speaker 01: And that was the error, and we think that needs to be vacated and the case needs to be remanded to determine the degree of enhancement. [00:03:44] Speaker 01: Now, we don't think it should be less than 1.75, but you're certainly correct as a theoretical matter. [00:03:50] Speaker 01: The court could, in assessing all of the circumstances, including the stay and everything else, decide that it should be something other than 1.75. [00:03:58] Speaker 01: Maybe more, maybe less. [00:04:01] Speaker 01: Now, the rule that the district court applied on willfulness really has a perverse result when you think about it, because SYNCOR would have been better off if it had never even bothered to try to get a permanent injunction. [00:04:16] Speaker 01: So we proved we were entitled to a permanent injunction. [00:04:18] Speaker 01: irreparable harm, money damages are inadequate. [00:04:22] Speaker 01: If we had not even sought a permanent injunction and had just sat back and let the defendants continue to rack up sales that we know were willfully infringing, SYNCOR would have been getting the 1.75, would have been better off than if it had not even bothered to prove that it was entitled to the injunction. [00:04:40] Speaker 01: That doesn't make any sense. [00:04:42] Speaker 01: Now, the district court thought that result was compelled by the Amato decision. [00:04:46] Speaker 01: And that's just incorrect. [00:04:49] Speaker 01: Amado addressed the proper calculation of actual damages for post verdict sales made while an injunction was stayed. [00:04:58] Speaker 04: No one... Was the amount of damages, has it been briefed in this appeal? [00:05:04] Speaker 04: I'm sorry, Your Honor. [00:05:05] Speaker 04: Has it been briefed in this appeal? [00:05:07] Speaker 04: The amount of damages? [00:05:10] Speaker 01: No, the amount of actual damages. [00:05:12] Speaker 01: So that's not before. [00:05:14] Speaker 01: Right. [00:05:14] Speaker 01: That has not been disputed, the amount of actual damages that the court awarded for those infringing sales. [00:05:20] Speaker 01: Correct. [00:05:21] Speaker 01: But that was the issue in a motto. [00:05:23] Speaker 01: And no one argued in a motto, and the court certainly didn't hold, that sales during a stay can never be willful infringement. [00:05:30] Speaker 01: Now the court did say, and defendants quote, that willfulness as such is not the inquiry when infringement is permitted pursuant to a court-ordered stay. [00:05:39] Speaker 01: But that was because the district court in Amado had sua sponte presumed that post verdict sales were willful infringement when there hadn't been willful infringement before and so just trebled the actual damages found by the jury. [00:05:52] Speaker 04: Might the effect of the stay depend on the reason for the stay? [00:05:58] Speaker 04: If it's on the merits, like indicating a likelihood of success, then it might negate the idea of willfulness and intent. [00:06:08] Speaker 04: Whereas if it was for convenience to review the papers, it might be different. [00:06:14] Speaker 01: I think I agree with you, Your Honor. [00:06:16] Speaker 01: And let me say a couple of things. [00:06:19] Speaker 01: One is I think that as a threshold matter, the fact that a stay had been entered doesn't automatically preclude willfulness under any circumstances. [00:06:27] Speaker 01: I think it may lead to the kind of inquiry Your Honor was just suggesting. [00:06:31] Speaker 01: Now, in the Amato case, in fact, there was sort of a whole stay on appeal. [00:06:37] Speaker 07: Can I ask you for a factual clarification? [00:06:40] Speaker 01: Sure. [00:06:40] Speaker 07: Because I thought that part of your answer to Judge Lurie might include the following, but maybe I'm not understanding the facts right. [00:06:46] Speaker 07: The defendants actually didn't argue any of these three factors for granting a stay except for public interest harm. [00:06:54] Speaker 07: to the district court, which the district court expressly found, they didn't initially argue, did they, when they were opposing the permanent injunction and they asked for a stay, they didn't actually dispute the first three factors at all. [00:07:06] Speaker 01: Well, Your Honor, to be fair, certainly when they came to this court seeking the temporary stay, they did argue. [00:07:14] Speaker 01: Validity. [00:07:14] Speaker 01: They argued likelihood of success and validity, correct. [00:07:19] Speaker 01: Now, to get back to your question, Judge Lurie, [00:07:23] Speaker 01: The kind of stay entered here was purely a temporary stay to give this court a chance to consider whether it should enter a stay pending appeal. [00:07:32] Speaker 01: The court hadn't even heard from CINCOR at the time it granted the temporary stay, so to suggest that somehow the fact that I think it was Judge Lynn who entered the order was somehow making some sort of a determination about likelihood of success on the merits doesn't make any sense in light of the posture of the case. [00:07:48] Speaker 01: Then later when you get to April 11th when the court had fully considered the stay, [00:07:53] Speaker 01: It denied the stay as to sales to most of the defendant's customers, which also I think suggests that this was not a determination that they were likely to prevail on the merits because then you would think the stay would be across the board, which isn't what happened either. [00:08:08] Speaker 01: But in any event, that didn't happen until April 11th. [00:08:10] Speaker 01: The sales we're talking about now that were found to infringe but not willfully were in that interim period when it was only a temporary stay. [00:08:18] Speaker 01: Now, I'd like to turn to the inducement question, and this has to do with [00:08:22] Speaker 01: the BIN C red dot labeled sales. [00:08:27] Speaker 01: Now we think that in finding no inducement liability for those sales, the district court simply misapplied or misunderstood what the willful blindness standard means for inducement liability. [00:08:40] Speaker 01: And I say that because really the material underlying facts are not in dispute. [00:08:44] Speaker 01: The defendants told this court that Cisco needed to buy their bus converters and it needed to buy them through September [00:08:52] Speaker 01: in order to meet its U.S. [00:08:53] Speaker 01: needs or else basically the economy would come crashing down. [00:08:57] Speaker 01: They testified that they believed it when they said it, they believed it afterwards, and they never changed their belief in what Cisco needed. [00:09:03] Speaker 01: Now based on this and the fact that they were indemnified for infringing sales and continued to make those sales, the district court found inducement liability for what I'll call the unlabeled bus converters, but it viewed this red dot system, this bin C system, [00:09:21] Speaker 01: as a completely new fact that changed everything. [00:09:23] Speaker 01: Well, the court really stated that conclusion, but it never really explained why it changed everything. [00:09:29] Speaker 01: And in fact, it wasn't a new fact, and it didn't change either Cisco's needs or defendant's understanding. [00:09:35] Speaker 04: But these are facts, and they're based on intent, aren't they? [00:09:39] Speaker 01: That's a fair point, Your Honor. [00:09:40] Speaker 01: They are facts, and of course, intent is normally a fact-laden inquiry. [00:09:44] Speaker 01: And there was a factual determination by the district court here. [00:09:48] Speaker 01: But to go back to what I started with, [00:09:50] Speaker 01: The underlying facts, the real operative facts, are not in dispute. [00:09:55] Speaker 01: It's really this conclusion that the court drew from that. [00:09:59] Speaker 01: So I think it's more maybe the right way to characterize it as a mixed question of fact and law where the court was... We know about those. [00:10:07] Speaker 01: I know that you know very well about those, Your Honor. [00:10:11] Speaker 01: So basically the court took facts that really the underlying facts aren't disputed and drew essentially a legal conclusion from them. [00:10:18] Speaker 01: And we think that's where the court went astray. [00:10:21] Speaker 01: Now, the reason that the red dot system didn't change anything is because, first of all, Cisco had developed it well in advance of the injunction being entered. [00:10:32] Speaker 01: The defendants knew about it when they were telling this court that Cisco has to buy our bus converters or it's going to go crashing down. [00:10:39] Speaker 01: Two of the defendants, Aztec and Power One, were already using the system. [00:10:43] Speaker 01: At the time they were telling this court, Cisco has to buy from us through September. [00:10:47] Speaker 01: So basically, their statements to this court, which they said they continued to believe, assumed that red stickers were going to be put on these bus converters at some point. [00:10:56] Speaker 01: Cisco never told them its needs had changed, and they never asked. [00:11:00] Speaker 01: Now, whether they didn't ask because they didn't want to know the answer, because it would confirm what they strongly suspected, or because they didn't care, because they were being indemnified for everything, including enhanced damages, either way, it doesn't matter, because what it means is that this red dot system [00:11:16] Speaker 01: was just a smoke screen, something that could give them plausible deniability. [00:11:20] Speaker 01: It was not really designed to prevent continued infringement. [00:11:23] Speaker 01: Intent again. [00:11:25] Speaker 01: Intent again, Your Honor. [00:11:26] Speaker 01: Fair point. [00:11:28] Speaker 01: Now, the defendants point to SYNCOR and Erickson as being possible sources of supply. [00:11:33] Speaker 03: But that's direct evidence of intent, correct? [00:11:37] Speaker 03: I mean, the bin process and putting the red dots on these converters, [00:11:44] Speaker 03: These are actions that are taken that recognizes the infringing cells. [00:11:50] Speaker 03: So what evidence are you already? [00:11:54] Speaker 03: Circumstantial evidence against that? [00:11:57] Speaker 01: Well, here's what we're pointing to, Your Honor. [00:12:00] Speaker 01: We're pointing to what the defendants told this court, what they testified they believed when they said it, and continued to believe throughout the period at issue. [00:12:10] Speaker 01: And that is that Cisco absolutely had to have their bus converters or else it would default on all its US obligations. [00:12:17] Speaker 01: The fact that they never asked Cisco. [00:12:19] Speaker 01: So forget about the stay and all of that for a minute and what they told this court. [00:12:24] Speaker 01: You're a businessman. [00:12:25] Speaker 01: You thought your biggest customer absolutely had to have your bus converters for this period of time for its US sales. [00:12:33] Speaker 01: And then suddenly, it seems, well, they don't need your bus converters. [00:12:40] Speaker 01: You don't even ask, well, what happened? [00:12:42] Speaker 01: How come you don't need me anymore? [00:12:44] Speaker 01: That's what I think points to the willful blindness here, Your Honor. [00:12:49] Speaker 01: The red dots were not direct evidence of intent when you view them in the context of everything else that was going on, which are the representations, the understandings, and the continued sales. [00:12:58] Speaker 01: And for several of these defendants, [00:13:00] Speaker 01: substantially increased sales during the same period when they said that Cisco, which brings half of the 50 percent of its products into the U.S. [00:13:08] Speaker 03: So it seems like you're asking us to infer intent from the defendant's follow up on, that they failed to follow up with the BNC process. [00:13:19] Speaker 03: So I understand your argument. [00:13:22] Speaker 03: I'm just wondering what kind of evidence did you put forth to show that goes to the intent argument? [00:13:31] Speaker 01: Here's what we have, Your Honor. [00:13:33] Speaker 01: Defendants knew that Cisco needed their bus converters through September. [00:13:38] Speaker 07: No, defendants knew that Cisco needed bus converters. [00:13:41] Speaker 01: No, no, Your Honor. [00:13:41] Speaker 01: And I'm glad you said that. [00:13:43] Speaker 07: It's not a single supplier case, which is why you don't win on this point. [00:13:46] Speaker 07: It's not a single supplier case. [00:13:47] Speaker 07: You've got a million different people all supplying Cisco. [00:13:50] Speaker 07: And I believe I'm red dotting, and I'm yellow sticker labeling every box. [00:13:54] Speaker 07: And you know what? [00:13:55] Speaker 07: I think that we're all good. [00:13:57] Speaker 07: And you're not sending mine to the US because you're not supposed to. [00:13:59] Speaker 07: I mean, this is intent, like Judge Laurie said. [00:14:02] Speaker 07: How is that not good enough in a multi-supplier scenario? [00:14:05] Speaker 01: Here's why it's not good enough, Your Honor, because each of the defendants told that these things are not fungible because they have to be qualified for particular Cisco end products. [00:14:17] Speaker 01: So even if they look the same, they have to go through a rigorous testing process, and their briefs are full of how rigorous that process is. [00:14:24] Speaker 01: ASTEC told this court, this is at A10763, [00:14:29] Speaker 01: An injunction that disrupts the supply of the products, Aztec supplies to Cisco will have all these horrible consequences. [00:14:35] Speaker 01: There will be harm to that 10-7-70. [00:14:38] Speaker 01: Harm to the public if Cisco were precluded from obtaining the parts it needs from Aztec. [00:14:42] Speaker 07: But that was at the time of the injunction. [00:14:45] Speaker 01: And they testified that they continued to believe that throughout the relevant period, all the way to September. [00:14:50] Speaker 01: So that didn't change. [00:14:51] Speaker 01: So it's not, I hear what you're saying, Your Honor. [00:14:54] Speaker 01: It isn't that, oh, well, Aztec thought they were getting it from Belpheuse, and Belpheuse thought they were getting them from [00:14:59] Speaker 01: They all told this court, Cisco needs our parts, specifically, and two of them, Aztec and Valpuse, in their stay request, listed all the specific part numbers that Cisco had to get and could only get from them. [00:15:11] Speaker 01: So it is a multi-supplier case, but it's a multi-supplier, I would submit it's a multi-supplier case where they're siloed and they have to be the source of supply for particular parts. [00:15:21] Speaker 03: So we have your attorney arguments with respect to those statements that were made, but we've got direct evidence that [00:15:28] Speaker 03: the defendants took steps to avoid infringement. [00:15:31] Speaker 03: And the court considered that, did consider the BNC process, the red dot process, and the other actions, direct evidence of activity that they took to avoid infringement. [00:15:44] Speaker 01: Well, the only activity that they even point to as to avoid infringement is putting these red stickers on there. [00:15:51] Speaker 01: At a time when their stated intent was, [00:15:54] Speaker 01: Notwithstanding these red stickers, we know that Cisco still needs our parts through September. [00:16:00] Speaker 01: So I think the direct evidence of intent is actually the other way, and that what you have here is direct evidence of, as I said, a smoke screen designed to manufacture deniability, which is the definition of willful blindness. [00:16:14] Speaker 04: Mr. Trela, as you see, you've consumed your time. [00:16:17] Speaker 04: We'll give you five minutes of rebuttal time back. [00:16:21] Speaker 04: And let's hear from the three appellees. [00:16:24] Speaker 01: Thank you, Your Honor. [00:16:28] Speaker 04: Mr. Berlini, you're representing table one. [00:16:30] Speaker 04: Yes, Your Honor. [00:16:31] Speaker 04: Five minutes. [00:16:36] Speaker 04: May it please the court. [00:16:37] Speaker 04: You had a summary judgment. [00:16:39] Speaker 02: Yes, Your Honor. [00:16:42] Speaker 02: It has long been the law of this court and its predecessor courts that a U.S. [00:16:45] Speaker 02: patent has no extraterritorial effect. [00:16:48] Speaker 02: And by that I mean that a U.S. [00:16:50] Speaker 02: patent [00:16:50] Speaker 02: cannot be used to prevent legitimate business activity, including the sales of a product outside of the United States. [00:16:57] Speaker 02: But that is exactly what SYNCOR is attempting to achieve here in this appeal. [00:17:02] Speaker 02: While SYNCOR frames its infringement argument, it doesn't touch on any of these in its opening argument. [00:17:07] Speaker 07: So if you had not stood up, you would not be allowed to address them at all on reply. [00:17:10] Speaker 07: You realize that, right? [00:17:11] Speaker 07: That's the way this works. [00:17:13] Speaker 07: By standing up and talking, you've now opened the door for him to address these issues on reply when he didn't have that option. [00:17:20] Speaker 07: time to the other two, they could have kept him out of all of this. [00:17:23] Speaker 02: Well, thank you, Your Honor. [00:17:27] Speaker 02: It's undisputed here that Power One complied with the terms of the permanent injunction. [00:17:32] Speaker 02: It never availed itself of the stays ordered by the district court or by this court, and it instituted additional protections against importation. [00:17:42] Speaker 02: Council has talked about the red dot, but that wasn't all that Power One did. [00:17:45] Speaker 04: Isn't your point lack of genuine issue material fact, defending summary judgments? [00:17:50] Speaker 02: Yes, Your Honor. [00:17:52] Speaker 02: And here, there's no evidence in the record of intent, as has been pointed out. [00:17:58] Speaker 02: Now, counsel has focused a lot on the arguments in the stay briefing. [00:18:03] Speaker 02: And I'd like to direct my attention to those. [00:18:06] Speaker 02: First of all, Power One never availed itself of the stays. [00:18:11] Speaker 02: It joined the motions for stay in order to keep its legal options open. [00:18:16] Speaker 02: But at the end of the day, [00:18:17] Speaker 02: It never availed itself. [00:18:19] Speaker 02: It never took advantage of the stays. [00:18:21] Speaker 02: It always complied with the injunction and it implemented additional protections in terms of getting the agreement by Cisco to not import. [00:18:35] Speaker 02: As Judge Moore pointed out, this is a multi-supplier market. [00:18:38] Speaker 02: Every supplier knows only what it sells to Cisco. [00:18:44] Speaker 02: It doesn't know what the other suppliers are providing. [00:18:47] Speaker 02: It doesn't know [00:18:48] Speaker 02: Cisco's overall demand. [00:18:50] Speaker 02: And because Power One had these protections in place, it was reasonable for Power One to believe that its components would go for the overseas markets and that other suppliers would supply the U.S. [00:19:01] Speaker 02: market. [00:19:02] Speaker 02: SYNCOR told this court that it could supply two-thirds of Cisco's needs, so we were reasonable in relying upon that. [00:19:11] Speaker 02: At most, what [00:19:14] Speaker 07: And is it true you never had an indemnification agreement? [00:19:17] Speaker 07: Is that right? [00:19:17] Speaker 02: We did not. [00:19:17] Speaker 02: That is true. [00:19:19] Speaker 02: Power One believed that because it was implementing these procedures and it had Cisco's agreement to not import that, that an indemnification agreement was unnecessary. [00:19:30] Speaker 07: That was an oral agreement, correct, not in writing. [00:19:32] Speaker 02: That's correct. [00:19:33] Speaker 02: But that fact is undisputed in the record. [00:19:40] Speaker 03: When was it disputed that Judy had one or that one was offered and you didn't take it? [00:19:47] Speaker 02: SYNCOR argues that there was no written agreement, but it hasn't presented any evidence that there wasn't an oral agreement. [00:19:57] Speaker 02: Those facts were undisputed. [00:19:59] Speaker 02: They've tried to speculate that because there's no written agreement that there was some breakdown or some dispute over that, but there's no evidence in the record of that. [00:20:08] Speaker 02: The undisputed evidence is that there was an oral agreement. [00:20:12] Speaker 02: The last thing I'd mention is that if we look at the information in the stay briefing that counsel keeps referring to, at most, it shows that there was a possibility of infringement. [00:20:23] Speaker 02: And this court has said that that's enough. [00:20:25] Speaker 02: In fact, Judge Lurie, in the Warner-Lambert case, he said that mere knowledge of possible infringement by others does not amount to inducement. [00:20:33] Speaker 02: Specific intent and action to induce infringement must be proven, and in this case, [00:20:37] Speaker 02: power one took all actions possible and reasonably practical to avoid infringement. [00:20:46] Speaker 02: That just simply shows that they were not actively inducing infringement. [00:20:50] Speaker 02: I'm not sure where I am on time, but if there's no further questions, I'll pass to my [00:20:56] Speaker 04: Thank you, Mr. Berlina. [00:20:58] Speaker 04: Mr. O'Quinn is next with eight minutes. [00:21:03] Speaker 04: We might let you run over a little bit of his questioning, but please proceed. [00:21:09] Speaker 05: Thank you, Judge Laurie. [00:21:10] Speaker 05: And may it please the court, John O'Quinn on behalf of Morata, Belpheuse, and Aztec. [00:21:15] Speaker 06: I'd like to start briefly on the issue of inducement [00:21:19] Speaker 06: Sincor's claim that these defendants actively induced after April 11, 2011, and with respect to ASTAC for a limited period before April 11, 2011, was thoroughly vetted during the four-day bench trial. [00:21:32] Speaker 07: Why don't you move on to the willfulness? [00:21:33] Speaker 06: I'd be happy to judge more. [00:21:35] Speaker 06: So with respect to willfulness, and this only applies to the pre-April 11, 2011 sales, the court concluded that sales intended for [00:21:46] Speaker 06: US use while the injunction was fully stayed were not reckless acts of infringement. [00:21:52] Speaker 06: Let's be clear about what the circumstances were. [00:21:54] Speaker 06: This is not a case where a jury found that there had been willful infringement. [00:21:59] Speaker 06: Sinclair took the issue of willfulness off the table in order to keep out from the jury what was going on in the re-examinations, re-examinations in which subsequently the examiner found that every single one of the asserted claims [00:22:12] Speaker 06: was invalid. [00:22:14] Speaker 06: Now those decisions were, at least some of them have been reversed by the PTAB, and some of them are currently on appeal to this court, and this court heard argument in Vicor versus Singh Court last month. [00:22:24] Speaker 06: But the jury didn't make a finding of willfulness. [00:22:27] Speaker 06: In fact, there was no finding of willfulness prior to any of these sales being played. [00:22:32] Speaker 07: Yes, but once a verdict was rendered finding you to be infringing and finding the patents valid as against all the defenses raised, [00:22:41] Speaker 07: I think the district court at that point said your continued sales after the verdict are in fact willful. [00:22:49] Speaker 06: Judge Moore, respectfully, the district court actually didn't do that analysis. [00:22:52] Speaker 06: In fact, if you look at the district court's opinion in SYNCOR 1, and that's not before the court, I understand. [00:22:57] Speaker 06: But there's no finding that the defendant's defenses are objectively unreasonable, as required by Seagate and by Bard too. [00:23:05] Speaker 07: Why does he have to do that post verdict? [00:23:07] Speaker 07: Why, after the verdict has been rendered, does he need to make a finding? [00:23:11] Speaker 07: The jury already made that finding. [00:23:13] Speaker 06: Well, Judge Moore, the jury made a finding, but there were post trial motions that were pending. [00:23:18] Speaker 06: There was an appeal that was pending. [00:23:20] Speaker 06: I mean, is the court really going to take the position that any time there has been a jury verdict, [00:23:25] Speaker 06: any further acts of infringement are in parallel of being willful, even though they may very well be reversed by this court. [00:23:33] Speaker 07: And in fact, that's the significance of the state. [00:23:42] Speaker 07: the harm associated with what you just said. [00:23:45] Speaker 07: I don't see the problem. [00:23:46] Speaker 07: Once a jury has adjudicated you to be an infringer and the patent to be valid, why isn't every sale you make after that day potentially a willful infringing sale and potentially liable for exceptional damages? [00:24:00] Speaker 06: Well, Judge Moore, I mean, to be sure, every sale is potentially just like every sale potentially before the jury's verdict was as well. [00:24:07] Speaker 06: Of course, [00:24:08] Speaker 06: In this case, Wilkins had been taken off the table, so there is a... We're not talking about pre-verdicts. [00:24:13] Speaker 07: We're talking about post-verdicts. [00:24:15] Speaker 07: What do you know? [00:24:16] Speaker 07: The patent's valid and infringed. [00:24:18] Speaker 06: But you don't know that, Judge Moore. [00:24:19] Speaker 06: And particularly... Sure you did. [00:24:20] Speaker 07: A jury just told you it was. [00:24:22] Speaker 06: And this court reverses jury verdicts with some frequency. [00:24:25] Speaker 07: So you think defendants should have a compulsory license at pre-verdict rates [00:24:33] Speaker 07: regardless of the fact that a jury has now come along and awarded damages and infringement. [00:24:42] Speaker 06: Judge Moore, that's not at all our position. [00:24:43] Speaker 06: And that's not the position that this court took in a motto. [00:24:46] Speaker 06: And a motto made clear that when you're talking about supplemental damages, and that's what we're talking about here. [00:24:51] Speaker 06: We're not talking about a follow-on case where the issue has been put in front of the jury. [00:24:55] Speaker 06: When you're talking about supplemental damages, willfulness as such is not the inquiry. [00:25:00] Speaker 07: And in fact... No, willfulness is not... What your district court did wrong in a motto was they simply said, well, we're going to use the willful infringement. [00:25:10] Speaker 07: Boom, there is an automatic award. [00:25:12] Speaker 07: And what Judge Lynn and this court did in that case was to actually articulate, no, here's all the factors you're supposed to be looking at. [00:25:18] Speaker 07: Here's the kind of stuff you're supposed to do. [00:25:20] Speaker 07: And isn't that what the district court did in this case at 57-691? [00:25:25] Speaker 07: and 692 when the district court issued its order in which it decided to enhance by 1.75 times the damage award. [00:25:34] Speaker 07: In fact, I would like to draw your attention to the precise reasons that the district court gave for doing that. [00:25:39] Speaker 07: I'll give you a sec to find it. [00:25:40] Speaker 06: I'm sorry, which page you're on? [00:25:42] Speaker 07: 57691 and 57692. [00:25:47] Speaker 07: This is where the lower court decided that the 1.75 [00:25:52] Speaker 07: times enhancement for supplemental damages was appropriate. [00:25:56] Speaker 07: That's what we're arguing about now, whether it ceased to be appropriate the day of the stay or whether it continued to be appropriate. [00:26:04] Speaker 07: What were the reasons he gave this district court judge for enhancing the damages by 1.75 percent? [00:26:10] Speaker 07: You tell me, what were the reasons he gave? [00:26:11] Speaker 06: Judge Moore, the only, the reasons he gave is he said that the defendants did not cease the sales of these products that had been found to infringe, but continued to sell these products. [00:26:19] Speaker 07: I remember what he said. [00:26:20] Speaker 07: This not only had the effect of rendering SYNCOR's exclusive rights meaningless, but also deprived SYNCOR of the opportunity to develop goodwill of its customers and brand recognition of its products. [00:26:29] Speaker 07: isn't that exactly the kind of thing that we said in Amato is what you should consider? [00:26:33] Speaker 07: It sounds compensatory, doesn't even sound fused. [00:26:36] Speaker 07: It sounds to me like this guy found that a compulsory license at a higher rate was warranted post verdict. [00:26:42] Speaker 06: So Judge Moore, I think you're conflating a couple things. [00:26:44] Speaker 06: First of all, [00:26:45] Speaker 06: That's not what he was doing. [00:26:47] Speaker 06: If it had been, it would be a different inquiry. [00:26:51] Speaker 06: Because what this court on appeal did, if- I just read the opinion. [00:26:55] Speaker 07: How can you say that's not what he was doing? [00:26:56] Speaker 07: Which part that I read is not right? [00:26:58] Speaker 06: Judge Moore, if you look back at the Sinclair 1 decision of this court on appeal, the question was whether or not this was enhancement under 284, not because of changed circumstances, but because it was willful behavior. [00:27:13] Speaker 06: And I would agree with you if what the district court had done originally was simply say, look, for this period of time, I've found that there are these changed circumstances. [00:27:22] Speaker 06: And the district court looked at changed circumstances here, too, I might add. [00:27:25] Speaker 06: That's at 829, 1840, 19. [00:27:29] Speaker 07: The court finds that this post verdict conduct of these defendants was intended to and did actually harm SYNCOR. [00:27:36] Speaker 07: And Judge Morris said- Supplemental damages should be enhanced by 1.75 times. [00:27:39] Speaker 06: So he's either doing one of two things. [00:27:42] Speaker 06: He's either in – and this is Judge Ward in the original opinion. [00:27:45] Speaker 06: He's either going through and saying, I'm taking into account changed circumstances. [00:27:49] Speaker 06: Or he's going through and making a willfulness inquiry without taking into account what the objective reasonableness of the defenses were and whether they were still objectively reasonable on appeal. [00:28:02] Speaker 06: Now, he's either doing one or the other. [00:28:04] Speaker 07: – How about the appeal? [00:28:04] Speaker 07: How could they be objectively reasonable on appeal? [00:28:06] Speaker 07: He's deciding what you're doing the minutes after the verdict is rendered. [00:28:09] Speaker 07: There is no appeal at that point in time. [00:28:11] Speaker 07: and he has no reason to think you're going to appeal. [00:28:14] Speaker 06: Judge Moore, first, that's not true. [00:28:15] Speaker 06: The time this opinion came down, appeal was pending. [00:28:19] Speaker 06: This is August of 2011. [00:28:20] Speaker 06: This is after all of the sales that are at issue in this case have already been made. [00:28:26] Speaker 06: This is after all of that. [00:28:27] Speaker 06: That's when this opinion happened, August of 2011. [00:28:30] Speaker 06: And the fact that a stay by this court was granted pending appeal is significant for two things. [00:28:35] Speaker 06: You have defendants here who are not behaving recklessly. [00:28:38] Speaker 06: They are playing by the rules. [00:28:40] Speaker 06: That is, you have [00:28:41] Speaker 06: An injunction is entered, and there's testimony to this. [00:28:45] Speaker 06: These defendants stopped making sales. [00:28:47] Speaker 06: You can see it at A9932 and A57573. [00:28:51] Speaker 06: They stopped making sales. [00:28:53] Speaker 06: And then, when the stay was granted, they resumed making sales. [00:28:58] Speaker 06: The significance of the stay having been granted is twofold. [00:29:01] Speaker 06: Number one, it's important as a matter of public policy. [00:29:04] Speaker 06: This court is, in the words of a motto, granting its imprimatur to those sales taking place. [00:29:09] Speaker 06: That doesn't mean that they're not going to have to be compensatory. [00:29:11] Speaker 06: And it doesn't mean that the district court can't take into effect other factors like the change circumstances in making a compensatory award. [00:29:19] Speaker 06: And the district court here did that. [00:29:21] Speaker 06: If you look at A19 and A24, the district court in this case [00:29:27] Speaker 06: took into account the changed circumstances in doing the compensatory award. [00:29:31] Speaker 06: But it would be bizarre for this court to have one panel grant its informant to say the injunction has stayed, sales may proceed, and for another panel to come back later and say, and those sales are going to be willful. [00:29:44] Speaker 06: And it would be bizarre for two reasons. [00:29:45] Speaker 06: Number one, it would thwart the purpose of having grandads stay in the first place. [00:29:49] Speaker 06: The whole point of a stay was so that sales could occur. [00:29:53] Speaker 07: And the second reason is to maintain status quo. [00:29:57] Speaker 07: status quo prior to the stay was that they were receiving 275%, 1.75% enhancement, a regular damage award on every single one. [00:30:07] Speaker 06: That was not the status quo, Judge Moore. [00:30:11] Speaker 06: Now, respectfully, his enhancement occurred after the stay was granted. [00:30:16] Speaker 06: Again, the timeline here is important, and respectfully, I think you're not understanding the timeline. [00:30:21] Speaker 06: All of these things, the only decision with respect to enhancement [00:30:24] Speaker 06: and the decision that they would receive 2.75 happened in August of 2011. [00:30:28] Speaker 06: The stay was granted in originally in January of 2011 and then subsequently in April of 2011. [00:30:37] Speaker 06: This court modified it. [00:30:39] Speaker 06: It specifically recited all of the factors required for a stay. [00:30:42] Speaker 06: It identified likelihood of success on the merits as being one of the quote critical factors [00:30:48] Speaker 04: And consistent with Board 2, the state shouldn't automatically negate willfulness. [00:30:55] Speaker 04: Shouldn't it depend upon the reason for the state? [00:30:58] Speaker 06: Well, Judge Laurie, respectfully, if the court's following the standard that the Supreme Court set out in Ken v. Holder, [00:31:05] Speaker 06: One of the factors that the court is going to always have to consider in granting a stay is likelihood of success on the merits, and there has to be some finding of likelihood of success. [00:31:13] Speaker 04: That was not the reason for the stay here. [00:31:14] Speaker 06: Well, Judge Lari, respectfully, if you look in August, excuse me, if you look at the April 11, 2011 decision modifying the stay, the court recites the stay standard, identifies likelihood of success on the merits as one of the two, quote, critical factors for granting a stay. [00:31:31] Speaker 06: It's one evaluated here. [00:31:32] Speaker 06: which was evaluated in this case, Your Honor. [00:31:35] Speaker 06: The parties had specifically argued about likelihood of success on the merits. [00:31:39] Speaker 04: It was in... That's not what the judge said as a reason for finding lack of wealthfulness. [00:31:47] Speaker 06: Well, I'm sorry. [00:31:48] Speaker 04: You mean this court? [00:31:50] Speaker 04: This court. [00:31:52] Speaker 04: The district court whose decision we're reviewing. [00:31:55] Speaker 06: Oh, no. [00:31:55] Speaker 06: The district court found that the fact that the stay had been granted and the fact that the stay had been granted... Negated wealthfulness. [00:32:02] Speaker 06: Well, there's a couple reasons for it. [00:32:05] Speaker 06: One is that you have the granting of the imprimatur, the fact that it's a matter of public policy to say we want these sales to continue, but to then say not just that you can't be compensated for them, of course they can be compensated for them, that you're going to be punished for it. [00:32:18] Speaker 06: But second, that you have the finding by this court of finding that there's at least some likelihood of success on the merits. [00:32:24] Speaker 06: You have objective reasonableness. [00:32:25] Speaker 06: And of course, under this court's precedent in board two, [00:32:31] Speaker 06: that is Board v. Gore 2. [00:32:34] Speaker 06: The question of objective reasonableness is the question of law that's reviewed by this court. [00:32:39] Speaker 06: And when you look at the totality of the circumstances here, whether you agree with the specific reasoning that the district court used in this case or not, there's no need to remand the issue of willfulness. [00:32:48] Speaker 03: When you look and take everything into account, you can't say that these defendants were objectively... The district court basis decision on this reading of a model, is that reading correct? [00:33:00] Speaker 03: Didn't the court [00:33:01] Speaker 03: read a motto too narrowly in this situation as limited only to willfulness and no consideration of other circumstances? [00:33:12] Speaker 06: So Judge Raina, I think that the district court's reading of a motto as applied to the facts of this case is correct. [00:33:19] Speaker 06: And the reason is because the motto looks just like this case. [00:33:22] Speaker 06: It isn't a situation where you have a [00:33:24] Speaker 06: jury determination of willfulness, and someone's continuing to make sales in the face of that. [00:33:29] Speaker 06: What you had in a motto was a calculation of supplemental damages, and that's what you have at issue in this case as well, supplemental damages. [00:33:38] Speaker 06: And a motto, I think, instructs that you're not supposed to ask the question about whether or not it was, quote, willful, but you already take into account... Right. [00:33:45] Speaker 03: That willfulness is not the inquiry. [00:33:46] Speaker 06: That's right. [00:33:46] Speaker 06: Willfulness is not the inquiry. [00:33:47] Speaker 06: You already take into account changed circumstances. [00:33:49] Speaker 03: You can take into account... Where do we see that the court did that? [00:33:53] Speaker 06: You can see that in two places in the record, Your Honor. [00:33:56] Speaker 06: You can see it at A-19. [00:33:58] Speaker 06: That's where the District Court recites the motto for that proposition that he's supposed to take into account change circumstances. [00:34:05] Speaker 06: And you can see it, if I remember correctly, at A-24. [00:34:08] Speaker 06: And A-24, the District Court, in this case, in determining compensatory damages, in determining what the rate should be. [00:34:16] Speaker 04: Thank you, Mr. Oakland. [00:34:17] Speaker 04: We've given you a good deal of extra time. [00:34:19] Speaker 04: Thank you, Judge Laurie. [00:34:21] Speaker 04: You should hear from Mr. Deaver. [00:34:30] Speaker 04: And you have two minutes. [00:34:33] Speaker 00: In light of appellate not raising any issues on Juniper, I will pass my time. [00:34:42] Speaker 04: All right. [00:34:43] Speaker 04: Thank you very much, Mr. Trello. [00:34:45] Speaker 04: We'll give you five minutes to respond. [00:34:48] Speaker 04: We gave you five minutes. [00:34:51] Speaker 01: Thank you, Your Honor. [00:34:52] Speaker 01: Let me touch on on willfulness very briefly. [00:34:55] Speaker 01: Mr. O'Quinn said the timeline is very important, and I agree with him, but I think it's Mr. O'Quinn who's confused about the timeline. [00:35:03] Speaker 01: What matters is the conduct that was at issue. [00:35:08] Speaker 01: Between the jury verdict and the injunction, that conduct was willful infringement. [00:35:12] Speaker 01: We know that. [00:35:13] Speaker 01: This court affirmed that. [00:35:15] Speaker 01: Much of what Mr. O'Quinn had to say was basically re-arguing the willfulness determination from the first case. [00:35:21] Speaker 01: That's gone, and that's not on the table. [00:35:24] Speaker 01: Now, this court, and he was also confused about the timeline of the stays. [00:35:30] Speaker 01: The stay that matters for purposes of the district court's willfulness determination was a temporary stay, entered in January, without hearing from CINCOR, simply to allow the court to fully consider whether it should stay the case pending appeal. [00:35:45] Speaker 01: Whatever happened on April 11 certainly didn't affect the defendant's mindset, because these sales we're talking about right now all occurred before April 11. [00:35:53] Speaker 07: And moreover... But what about the Federal Circuit's emergency state? [00:35:56] Speaker 07: The District Courts didn't continue until April 11th. [00:35:59] Speaker 07: The Federal Circuit... Right. [00:36:01] Speaker 01: And that's the state I was talking about. [00:36:03] Speaker 01: That was without hearing from CINCOR. [00:36:05] Speaker 01: And that was simply and expressly to allow the Court to fully consider whether a state should be entered pending appeal. [00:36:12] Speaker 01: And that was purely to preserve the status quo, to give the Court enough time. [00:36:16] Speaker 01: Remember, the defendants came in on emergency motions. [00:36:20] Speaker 01: saying that the world was going to come to an end if they couldn't keep selling these bus converters. [00:36:25] Speaker 01: So this was simply, this was, I think it's just incorrect to suggest there was any assessment of the merits. [00:36:30] Speaker 07: The federal government was going to shut down, all the corps. [00:36:32] Speaker 01: The military. [00:36:33] Speaker 07: The Navy ship. [00:36:34] Speaker 01: Exactly. [00:36:35] Speaker 01: Hospitals were going to shut down. [00:36:36] Speaker 07: Despite the fact that the government is free to infringe. [00:36:40] Speaker 01: Exactly. [00:36:42] Speaker 01: Anyway, enough said on Wolf on this one. [00:36:44] Speaker 01: The door having been opened, it would be rude for me not to go through it on Power One. [00:36:49] Speaker 01: And I think the Power One summary judgment really underscores the district court's misunderstanding of willful blindness. [00:36:55] Speaker 01: Power One, like the other defendants, told the court that Cisco needed to buy its bus converters through September for US use. [00:37:03] Speaker 01: Power One testified it believed that. [00:37:05] Speaker 01: Cisco never told it anything different. [00:37:07] Speaker 01: Now, the court focused and counsel focused on two things. [00:37:11] Speaker 01: One is the supposed oral non-importation agreement. [00:37:14] Speaker 01: Now, even if that agreement existed, it doesn't change anything because [00:37:18] Speaker 01: on Power One's version of the facts, that agreement was already in place at the same time it was telling this court that it absolutely had to keep selling to Cisco for Cisco to use its bus converters in the United States. [00:37:31] Speaker 01: There was nothing equivocal about it. [00:37:32] Speaker 01: It wasn't, you know, gee, Federal Circuit, we're just preserving our options. [00:37:38] Speaker 01: It was, Cisco needs to buy from us, notwithstanding this non-importation agreement, which supposedly was in place already by February 1st. [00:37:46] Speaker 01: The other factor that Council and the District Court focused on was the supposed lack of an indemnification agreement. [00:37:54] Speaker 01: First of all, even if that's true, all that means is that there's one less additional fact showing intent. [00:38:00] Speaker 01: It doesn't erase the other evidence of intent. [00:38:03] Speaker 01: And it's not an undisputed fact. [00:38:05] Speaker 01: The facts are, the evidence is, Power One said it would not ship to Cisco without an indemnification agreement. [00:38:11] Speaker 01: Cisco said, fine, send them a proposed written indemnification agreement. [00:38:18] Speaker 01: After that, Power One starts shipping again. [00:38:21] Speaker 01: And the witness they put on to say, oh, well, we didn't have an indemnification agreement with Cisco, also disclaimed any knowledge about the actual discussions with Cisco, and basically pointed to somebody else who was not offered as a witness on this issue. [00:38:34] Speaker 07: In their red brief on page 22, you don't need to pull it out. [00:38:37] Speaker 07: I'll just tell you what it says. [00:38:39] Speaker 07: that SYNCOR has admitted, quote, the bus converters bracketed Power One cells are fungible commodities. [00:38:47] Speaker 07: So why doesn't this play into the question I asked you in the very beginning about a multiplayer market where each individual doesn't necessarily know it's theirs that are going to the US? [00:38:59] Speaker 01: The reason is because that quote was taken way out of context. [00:39:04] Speaker 01: And in fact, and the record is quite clear on this, [00:39:08] Speaker 01: Particular bus converters have to be qualified by Cisco. [00:39:11] Speaker 01: Even if they are very similar, they go through a month-long qualification process for Cisco to be put in particular Cisco products. [00:39:21] Speaker 01: And Power One bus converters were approved for particular Cisco products. [00:39:25] Speaker 01: Although physically later it may turn out that they're fungible, they were not fungible during this qualification period. [00:39:31] Speaker 01: And that's what we're talking about here. [00:39:33] Speaker 03: Even if bus converters have to meet certain specifications, [00:39:38] Speaker 03: It doesn't mean that you don't have a multi-player market that can meet those specifications. [00:39:43] Speaker 01: It means that during the period at issue here, which Cisco said it would take at least until September to qualify. [00:39:50] Speaker 01: This isn't that new bus converters would have to be developed. [00:39:53] Speaker 01: These are existing bus converters, but it would take them until then to qualify them. [00:39:57] Speaker 01: So you're right, Your Honor, but during the time period we're talking about here, it's the same as them as they're not being available. [00:40:04] Speaker 01: I will not abuse the court by using more than you've given me. [00:40:07] Speaker 04: We appreciate that. [00:40:08] Speaker 04: Thank you, Mr. Cello. [00:40:09] Speaker 04: The case will be taken under advisement.