[00:00:02] Speaker 04: We have six cases before us today. [00:00:09] Speaker 04: Two of them have been submitted on the briefs. [00:00:12] Speaker 04: And our first case this morning is Adaptix Inc. [00:00:16] Speaker 04: versus Apple Inc. [00:00:18] Speaker 04: 15-1441. [00:00:19] Speaker 04: Mr. Russell, are you ready? [00:00:23] Speaker 05: I am, Your Honor. [00:00:24] Speaker 04: You may proceed. [00:00:26] Speaker 05: Good morning. [00:00:26] Speaker 05: May it please the court, Kevin Russell on behalf of plaintiff of Adaptix Inc. [00:00:31] Speaker 05: Defendants Verizon and AT&T condition access to their LTE networks on their customers using smartphones and tablets that will practice the method having that issue in this case upon the carrier's command. [00:00:44] Speaker 05: That is immediately upon receipt of an instruction from the carrier's cell tower base station. [00:00:49] Speaker 04: Mr. Russell, am I correct in my assessment that there currently exists no test for assigning responsibility for steps that are performed by device [00:00:59] Speaker 05: I think that is correct, that this court has not directly and clearly grappled with that. [00:01:04] Speaker 05: We think that the parties have offered this court two frameworks for analyzing that question. [00:01:11] Speaker 05: One is the one that we offer, which is to ask who controls and directs the device's performance of the method. [00:01:17] Speaker 05: And the defendants have suggested, no, instead, you should simply assume that the end user who owns, possesses, and generally controls the device is responsible for performing the method, even if they don't control its specific performance of this activity. [00:01:31] Speaker 05: After this court's decision in Akamai, we win under either framework. [00:01:35] Speaker 05: Because even if you accept the defendant's position that the consumer should be seen as performing the method steps that are taking place inside the phone, we should still be entitled to show that those [00:01:45] Speaker 05: infringing actions ought to be re-attributed back to the carriers because the carriers have conditioned access to their network. [00:01:52] Speaker 04: What initiates the performance of the method steps? [00:01:55] Speaker 05: Here the last thing in the string of causation, and of course all things have strings of causation that are complex at times, but the last thing that happens is the carrier sends a signal to the handset to produce a Mode 3 report, and producing a Mode 3 report is to perform the method. [00:02:12] Speaker 05: And that action will take place if and only if that instruction is sent. [00:02:17] Speaker 05: It's as if the defendants are flicking the light switch. [00:02:20] Speaker 05: That is, you could ask, who is in control of the light turning on? [00:02:24] Speaker 05: And you could say, look, the light's not going to turn on unless somebody manufactures and designs the light bulb and the light switch. [00:02:29] Speaker 04: But I want to be clear about this. [00:02:31] Speaker 04: The method, the initiation of the performance of the method, is it initiated when the phone gets a pinging from a cell tower? [00:02:41] Speaker 04: Or does a phone on its own at certain times initiate the performance? [00:02:47] Speaker 05: No. [00:02:48] Speaker 05: In this mode, so we're talking about that the base stations can operate in modes that don't infringe. [00:02:53] Speaker 05: But in mode three... Can I have you just to speak up just a little bit more? [00:02:57] Speaker 05: The phones can operate and the network can operate in modes that don't infringe. [00:03:01] Speaker 05: It only infringes when the base stations are operating in mode three. [00:03:04] Speaker 05: They instruct the phone to operate in mode three and the phone has to do it. [00:03:08] Speaker 05: And it'll only happen in that circumstance [00:03:11] Speaker 05: The cell tower base station sends the instruction that there's nothing the user can do to direct the phone to practice the patent. [00:03:20] Speaker 05: It'll only ever happen if that instruction is used. [00:03:22] Speaker 05: Can the user stop the performance of the method? [00:03:25] Speaker 05: They can't once that signal is received. [00:03:27] Speaker 05: It happens in milliseconds. [00:03:29] Speaker 05: Of course, they can turn the phone off. [00:03:30] Speaker 05: It's not going to perform if the phone is not on. [00:03:32] Speaker 05: But that's to return to the light switch analogy. [00:03:35] Speaker 05: That's like plugging in the lamp. [00:03:37] Speaker 05: It doesn't necessarily, it's not going to, the lamp's not going to turn on without it being plugged in, but plugging the lamp in isn't to use the lamp, and it's not to control it. [00:03:46] Speaker 05: But it turns on the light, doesn't it? [00:03:47] Speaker 05: Well, no, it doesn't until somebody flips on the switch. [00:03:50] Speaker 04: That's what I mean. [00:03:50] Speaker 04: You've got to flip it on in order to make it work. [00:03:52] Speaker 04: So the steps aren't performed unless the user turns on the remote phone. [00:03:57] Speaker 05: No, so in my analogy, I think that the proper way to view it is the user is plugging in the lamp, so that the process isn't going to happen. [00:04:05] Speaker 05: The light's not going to turn on unless that happens. [00:04:07] Speaker 05: But plugging it in doesn't turn the light on. [00:04:09] Speaker 05: Somebody has to flick the switch. [00:04:11] Speaker 05: And here it is the carriers who are flicking the switch. [00:04:13] Speaker 05: They are sending an instruction that the principal purpose of which is to tell the phone, practice the method. [00:04:19] Speaker 00: Does the claim require flicking on the switch? [00:04:22] Speaker 00: I'm sorry? [00:04:22] Speaker 00: Does the claim require flicking on the switch? [00:04:25] Speaker 03: Using your analogy, if the switch is already turned on, when the user plugs in the lamp, the lamp goes on. [00:04:32] Speaker 05: Well, that's, again, I think you would, in that analogy, still say that the person who had turned on the lamp before [00:04:37] Speaker 05: It got plugged in. [00:04:38] Speaker 05: It's the person who is controlling the lamp and responsible for it being turned on. [00:04:42] Speaker 05: But here, to be clear, all the things that the customer does simply connect them to the network. [00:04:47] Speaker 05: And it doesn't preordain that there's going to be infringement, because the defendants themselves have emphasized that the network can work in other modes that don't infringe the patent. [00:04:56] Speaker 01: Now, if we disagree with you and think that there's no direct infringement, and instead it's induced infringement, why can't you, why have you presented [00:05:08] Speaker 01: an argument on induced infringement under 271B or one of these alternatives? [00:05:12] Speaker 05: We included that in our plan. [00:05:13] Speaker 05: We have not preserved it. [00:05:14] Speaker 05: It went by the wayside, and we're not trying to resurrect it here on appeal. [00:05:17] Speaker 05: But the reasons that this court has told plaintiffs... Let me be clear. [00:05:21] Speaker 04: So you're not arguing any type of vicarious performance or vicarious liability? [00:05:26] Speaker 05: Well, we are. [00:05:27] Speaker 05: We are saying that we're... So let's distinguish two things. [00:05:30] Speaker 05: One is Akamai vicarious liability. [00:05:33] Speaker 05: Okay. [00:05:33] Speaker 05: And we are arguing that. [00:05:34] Speaker 05: I took your question. [00:05:35] Speaker 01: Let me ask you, when you say Akamai vicarious liability, you're not arguing contributory infringement as in Akamai where there's one actor that performs one step and one actor that performs the other steps. [00:05:47] Speaker 01: That's not your situation. [00:05:48] Speaker 01: But you're kind of taking Akamai and saying that it also applies in a situation where you're controlling the performance of the method by pinging [00:06:04] Speaker 01: if you will, and also by having particular software in the phone that will automatically perform the method. [00:06:11] Speaker 05: So you're not saying that this is a divided infringement case. [00:06:15] Speaker 05: We are disputing the contention that Akamai applies only to divided infringement cases. [00:06:20] Speaker 05: And you can look at the way that this court described the rule in Akamai. [00:06:23] Speaker 05: It said at page 1022, direct infringement under 271A occurs when all the steps of the claim to method are performed or attributable to an entity. [00:06:32] Speaker 05: The Supreme Court expressed the same [00:06:34] Speaker 05: understanding in limelight, and when Akamai was before the court at page 2117, that under that rule the person is attributed either because the defendant actually performed the steps or because he directed or controlled others who performed them. [00:06:48] Speaker 05: And there's no reason to have a different rule for a defendant who controls all but one of the steps through his control over another person than it is but not to apply that same rule when they control [00:06:59] Speaker 05: all of the steps. [00:07:00] Speaker 04: But there's no control over another person here, is there? [00:07:04] Speaker 04: I mean, we're talking about control of the remote device. [00:07:07] Speaker 04: That's right. [00:07:07] Speaker 04: We're talking about a device, not another person. [00:07:10] Speaker 05: That's right. [00:07:10] Speaker 05: And to be very clear, we're making two arguments in the alternative. [00:07:14] Speaker 05: The Akamai argument is raised only if you reject our principle argument that they're controlling the device and therefore they should be charged with direct infringement. [00:07:22] Speaker 05: If instead you adopt the defendant's position that we should treat the end user as performing the method because they own the phone. [00:07:29] Speaker 05: Then we say that if you're going to go down that road, we ought to be able to show that the defendants control their customers under the Akamai principle, because they condition receipt of a benefit that is access to their LTE network on the consumers performing the method at the time and in the manner that the carriers direct. [00:07:47] Speaker 04: But was there any any, and Albert recalled this from the record, was there any discussion or argument below [00:07:58] Speaker 04: as to whether when somebody purchases a phone, and you sign that big, long agreement, or sometimes you don't read it. [00:08:08] Speaker 04: I mean, it's like small print, 19 pages, you're eager to use your phone. [00:08:15] Speaker 04: Does a carrier, especially a carrier who sells the phones as well, is there any clause in that agreement that says the user agrees to allow the carrier to conduct [00:08:28] Speaker 04: tests, do anything like that? [00:08:32] Speaker 05: Well, the user agreements are not in the record, and I don't know of any. [00:08:35] Speaker 04: All right. [00:08:35] Speaker 05: I know the answer to the question. [00:08:36] Speaker 05: But here, I don't think. [00:08:39] Speaker 05: Alkmaar has departed from the idea that you can only control through a contract. [00:08:42] Speaker 05: And here, as a practical matter, they are able to control their users because you cannot use the phone on the LTE network if it doesn't respond to this command by performing the method. [00:08:52] Speaker 05: It just doesn't work. [00:08:54] Speaker 05: And as a matter of fact, consistent with that, [00:08:57] Speaker 05: I think it's fair to say that they condition access to their network on the users using a phone that they can control. [00:09:03] Speaker 05: And I think that under the rationale of Akamai and under the underlying principles of court law that it arose from, it's fair to say that the defendants, through that level of control over the infringement, ought to be viewed as using the patent here. [00:09:16] Speaker 05: Because after all, the correction and control test is simply an attribution rule. [00:09:20] Speaker 05: It is a rule that this court has used to say, look, when you [00:09:24] Speaker 05: having you cross the line between simply encouraging infringement, which is classic inducement, to controlling. [00:09:31] Speaker 04: Sir, in Centillion, we recognize liability for remotely using a claim system. [00:09:37] Speaker 04: This is a method. [00:09:39] Speaker 04: That's right. [00:09:39] Speaker 04: Should this court extend Centillion out to cover method claims? [00:09:44] Speaker 05: I'm not asking you to extend the actual rule of Centillion. [00:09:47] Speaker 05: I'm saying that you ought to apply the same rationale to this context, because there is no [00:09:52] Speaker 05: reason why you should have an attribution role about control of a system that is different than an attribution role that's about control of a device's performance of a method. [00:10:01] Speaker 05: In both cases, it's fair to say that somebody can use a method remotely through their control over a machine that they do not possess, that they do not own. [00:10:11] Speaker 05: But nonetheless, if you were to ask who is it who is actually using the method, who is it who is controlling the device's performance of the method, it is the person who is instructing [00:10:20] Speaker 05: the machine to engage in the patented activity. [00:10:24] Speaker 05: And that's, I think, reasonable as a matter of language of what you ask who is using the patents, the person who's causing the device to perform it. [00:10:32] Speaker 05: It's reasonable in light of the background principles of attribution liability. [00:10:35] Speaker 01: I understand your position. [00:10:37] Speaker 01: And I can see how SERF in some way has some language that helps you. [00:10:43] Speaker 01: Where I'm struggling is how to deal with Ericsson, for example, or Rigo. [00:10:48] Speaker 01: And I don't think those cases support your position at all. [00:10:51] Speaker 01: So could you explain to me what your response is? [00:10:54] Speaker 05: I think those cases support our position indirectly, because what didn't happen in that case, those cases won't happen here. [00:11:00] Speaker 05: In Erickson, for example, this court made the point that D-Link, who manufactured the Wi-Fi routers, did not control the routers after they had been sold. [00:11:08] Speaker 05: There's nothing that they're doing that are instructing the Wi-Fi routers to practice. [00:11:12] Speaker 05: Nothing. [00:11:12] Speaker 05: It's the users who are doing that by using the device. [00:11:16] Speaker 05: What's different about this case, and what's different about this case from many others, is that the defendants here are not simply providing a device that's programmed to inference. [00:11:25] Speaker 05: They are taking the additional step of sending the actual instruction to the device to practice the method. [00:11:31] Speaker 05: And so I think Erickson would have been a very different case if D-Link retained the authority to tell the Wi-Fi writers when to practice the method and when not to. [00:11:41] Speaker 04: You're into your rebuttal time. [00:11:42] Speaker 04: Do you want to continue, or? [00:11:44] Speaker 05: I'd like to reserve a reminder. [00:11:45] Speaker ?: OK. [00:11:46] Speaker 04: We'll restore you back to four minutes. [00:11:53] Speaker 04: Mr. Lee, can you cite us to any law that you consider to be controlling in this case? [00:12:00] Speaker 02: Yes, Your Honor. [00:12:01] Speaker 02: And that was going to be the first point I'd like to make. [00:12:04] Speaker 02: While I don't know that it answers precisely the question you put to Mr. Russell, Rico, Symantec, and Erickson all involve patented methods on devices. [00:12:15] Speaker 02: And the person who was identified as a direct infringer was the user in all of those occasions. [00:12:22] Speaker 02: And for two reasons. [00:12:24] Speaker 02: One, legal. [00:12:24] Speaker 04: In Erickson, isn't there missing the control element? [00:12:28] Speaker 04: Your opponent says that in Erickson, Erickson did not retain the ability to control the performance or any performance on the devices once they were sold. [00:12:39] Speaker 02: Your Honor, two answers to the question. [00:12:42] Speaker 02: If we focus on direct infringement, the direct infringer in Ericsson was the user. [00:12:48] Speaker 02: The question of whether there was vicarious indirect infringement liability on the part of someone else goes to the issue you've raised. [00:12:56] Speaker 02: It was not a control issue. [00:12:58] Speaker 02: The user was a direct infringer. [00:13:00] Speaker 02: And as I said, there's both a legal and a factual reason. [00:13:04] Speaker 02: In all three cases, the factual reason is it was the user who was using the computer. [00:13:10] Speaker 02: The legal reason is 271A, B, and C all refer to whoever uses. [00:13:17] Speaker 02: It's a person, and so they've identified the person. [00:13:20] Speaker 02: And actually, Adaptix's position below was consistent with those three cases and what we think is pretty well-settled law. [00:13:28] Speaker 02: And it goes to Judge Stoll's question about indirect infringement. [00:13:33] Speaker 02: There was an indirect infringement claim below. [00:13:36] Speaker 02: It's at A6004. [00:13:39] Speaker 02: It was a claim that you would expect to see. [00:13:41] Speaker 02: The users, the handset users, who we claim today would be the direct infringers if anyone was, were identified in the complaint as the direct infringers. [00:13:53] Speaker 02: And the claim against the carriers and the handset sellers at the time was indirect infringement or inducement under 271B or C. That claim was abandoned below, and it's been abandoned on appeal. [00:14:07] Speaker 02: And that's why we're left with these two direct infringement theories. [00:14:11] Speaker 04: Let me ask you a question. [00:14:12] Speaker 04: So your position, as I understand it, is that we should assign responsibility on the basis of who owns, possesses, or operates the devices. [00:14:24] Speaker 02: To phrase it even more precisely, Your Honor, I would say who operates and uses the device is consistent with 271A, which is where we're focusing today. [00:14:33] Speaker 02: And that actually would allow me to answer the question you posed to Mr. Russell about how this happened. [00:14:38] Speaker 04: Let's say you own the phone. [00:14:40] Speaker 04: You possess it. [00:14:41] Speaker 04: You own it. [00:14:42] Speaker 04: But you're not initiating the performance of the method. [00:14:49] Speaker 04: Your opponent is saying, and this is where I think the rubber meets the road. [00:14:55] Speaker 04: Right. [00:14:56] Speaker 04: OK. [00:14:56] Speaker 04: So your opponent is saying the performance of the method is what we should be looking at. [00:15:02] Speaker 04: And that's controlled by the carriers. [00:15:06] Speaker 02: And that is incorrect as a factual matter, and it's something... It's incorrect that it's... They're not controlling. [00:15:12] Speaker 04: Here is... Do you disagree that the performance of the method is initiated upon receipt of a ping from the base? [00:15:22] Speaker 02: Your Honor, not to quarrel about what's initiated is where I would quarrel, and the answer is yes. [00:15:26] Speaker 02: So here's a series of steps, which I don't think there's any dispute, [00:15:30] Speaker 02: If the series of steps doesn't answer your question, I'll come back and try to come up with a different answer. [00:15:36] Speaker 02: So the user turns on the device. [00:15:38] Speaker 02: That's within the control of the user. [00:15:40] Speaker 02: The user actually then has to decide to use cellular communications rather than Wi-Fi, for instance. [00:15:47] Speaker 02: The user actually has to go one step further and actually enable the handset to use LTE. [00:15:54] Speaker 02: There actually is a portion of the handsets that allow you to disable LTE, [00:16:00] Speaker 02: because it is a power-hungry communication mechanism, and it also is expensive. [00:16:09] Speaker 02: And in fact, their expert said, I disable LTE on many occasions. [00:16:14] Speaker 02: Then, even if you've done all that, you have to get yourself into an LTE. [00:16:19] Speaker 02: So then you have to make a data defined that is one that would require a mode one or a mode two. [00:16:29] Speaker 03: Does the record reflect when the average user purchases the device from the store? [00:16:40] Speaker 03: Is it set in LTE mode and does the average user leave it on LTE mode? [00:16:47] Speaker 02: Your Honor, it's not in the record. [00:16:49] Speaker 02: What is in the record was the question put to their expert about [00:16:54] Speaker 02: two things, whether you can disable LT mode and whether people do and there are good reasons to. [00:17:00] Speaker 03: Right, I know that. [00:17:02] Speaker 02: I don't think that, your precise question I don't think is there. [00:17:05] Speaker 02: And then there are two more steps before you get to the mode three request. [00:17:09] Speaker 02: You have to make a data request, a cellular data request that is substantial enough that you would implicate mode one and mode three. [00:17:19] Speaker 02: And then, without going to confidential information, you will see in footnote 22 of our brief the thresholds that have to be met. [00:17:28] Speaker 02: And then a mode three request can be sent. [00:17:30] Speaker 02: But the thresholds involve the communication of mode one information. [00:17:35] Speaker 04: They involve the number of hands that... So it seems to me that your argument, you've departed from whether the person owns, possesses, or operates. [00:17:46] Speaker 04: You're arguing a control. [00:17:50] Speaker 02: No, Your Honor. [00:17:53] Speaker 02: We're arguing that if you look at the steps of Claim 1, every single step of Claim 1 begins with the subscriber unit. [00:18:03] Speaker 02: There are five steps. [00:18:05] Speaker 02: Every single one identifies what the device is. [00:18:10] Speaker 02: To go to Your Honor's characterization, it's the subscriber unit. [00:18:14] Speaker 02: That's the device. [00:18:16] Speaker 02: That's the device. [00:18:17] Speaker 02: And the person who owns [00:18:20] Speaker 02: and operates and uses the device is the subscriber. [00:18:24] Speaker 02: If the subscriber doesn't take the five steps that I've just identified, and you can break them down if you count them more or less, you will never get to a Mode 3 request. [00:18:34] Speaker 04: So if I'm a blogger and I employ an infringing program and I upload it to a server, let's say Amazon or some server, they don't know it. [00:18:49] Speaker 04: and I'm blogging away, but it's residing on a server that's owned by Amazon. [00:18:55] Speaker 04: Under your theory, then, Amazon, because they own the server, would be liable for the infringement. [00:19:03] Speaker 02: No, I actually think Arthur would give you the opposite conclusion. [00:19:07] Speaker 02: Your Honor's hypothetical is very close to Symantec, which this court decided is one of the three cases that I think answers your Honor's first question. [00:19:17] Speaker 02: In Symantec, it's [00:19:18] Speaker 02: You're sitting at your computer. [00:19:20] Speaker 02: You have a virus detection device. [00:19:23] Speaker 02: But the virus detection device requires that you go outside your computer to a server, download a document, download it to your computer, and then the virus works. [00:19:35] Speaker 02: And what this court said is the direct infringer is the user, not the server. [00:19:42] Speaker 02: The carrier here, which creates the step in the middle, if it's performed at all, is actually [00:19:49] Speaker 02: equivalent of the server, both in your example and Symantec. [00:19:52] Speaker 02: So Symantec actually is very close to this case, and it's what distinguishes it from Cerf. [00:19:58] Speaker 02: The one step they claim, and I think there's one important thing here that I heard from Mr. Russell today, is while claim eight was argued separately to you and the brave says that divided infringement claim, they said today there's no divided infringement argument. [00:20:12] Speaker 02: This is just a direct infringement argument. [00:20:15] Speaker 02: And so if you look at the steps of claim one, [00:20:20] Speaker 02: The only place the carrier is mentioned is in the third step. [00:20:24] Speaker 02: And it's providing information that will be used by the handset. [00:20:30] Speaker 02: That's exactly what happened in Symantec. [00:20:34] Speaker 02: Symantec is, Your Honor, the closest of the three cases to your hypothetical. [00:20:38] Speaker 02: But I think it answers actually most of the questions that were posed by the panel, which would include these. [00:20:47] Speaker 02: Who is the whoever? [00:20:49] Speaker 02: and it's the user in Symantec. [00:20:52] Speaker 03: Mr. Lee? [00:20:52] Speaker 02: Yes, sir. [00:20:54] Speaker 03: If LTE is never enabled, is the device never infringing? [00:20:59] Speaker 02: If LTE is not enabled, on these facts, it's not infringing. [00:21:02] Speaker 03: But there's no argument about whether it's not infringing. [00:21:06] Speaker 02: Actually, Your Honor, the fact that the device could be in LTE mode or not was a fact that's in the record below. [00:21:13] Speaker 02: And it was an important fact because [00:21:15] Speaker 02: That actually tells you a little bit about who is in control and who isn't. [00:21:19] Speaker 02: I understand that. [00:21:21] Speaker 02: This is one of those circumstances where the fact that you can be operating out, not using the method. [00:21:27] Speaker 02: So if you turn your device on and you're only using Wi-Fi, you're never going to use LTE anyway. [00:21:32] Speaker 01: Is that in the appellate record? [00:21:34] Speaker 01: And where would that be if it is? [00:21:36] Speaker 02: If this last point, that people don't use it all the time, it's the, I don't have the exact date, [00:21:44] Speaker 02: But in the brief, you will find there is a reference to the discussion with their expert on the question of whether LTE is enabled all the time. [00:21:53] Speaker 02: And he says, in fact, personally, he doesn't use it all the time, and he disables it frequently. [00:22:00] Speaker 02: So that is in the record. [00:22:01] Speaker 02: I think the broader question that Judge Wallach asked, but I don't think is in the record, but this one, which is, do people use LTE all the time? [00:22:10] Speaker 02: The answer is no. [00:22:13] Speaker 02: There are good reasons for it. [00:22:15] Speaker 01: I'd like to ask you about claim eight. [00:22:16] Speaker 01: I agree with you that my question probably doesn't matter, given that there is no divided infringement issue here. [00:22:22] Speaker 01: But do you think it's even possible that somebody could infringe a dependent claim but not the independent claim? [00:22:28] Speaker 02: I think it's the way these two claims are written, it's an odd argument that you could infringe claim eight. [00:22:35] Speaker 02: And you could not infringe claim one and not infringe claim eight. [00:22:42] Speaker 02: The argument that's not being pursued now that would answer your question is this. [00:22:46] Speaker 02: At the very best reading, Adaptix replied, it would be a divided infringement argument. [00:22:52] Speaker 02: But as you know, they disclaimed divided infringement below. [00:22:56] Speaker 02: They also never argued claim eight separately below. [00:23:00] Speaker 02: And they, in fact, said specifically below that on all the claims, all the steps are performed at the handset unit. [00:23:09] Speaker 02: So in this particular case, it would be impossible, I think, practically. [00:23:13] Speaker 01: Thank you. [00:23:14] Speaker 01: Your adversary has said that he thinks that Erickson and Rico would be decided differently if there were a situation like this, where the last immediate step for the method was some sort of initiation by the accused infringer. [00:23:31] Speaker 01: What's your response to that? [00:23:32] Speaker 02: Your Honor, I don't think that's correct. [00:23:35] Speaker 02: Actually, Ericsson is an interesting comparator for this reason. [00:23:40] Speaker 02: The Ericsson case involved the Wi-Fi standard. [00:23:44] Speaker 02: This involves the LTE standard. [00:23:46] Speaker 02: The standards are actually, as the court knows, the sort of an agglomeration of the result of the meetings of many different minds in many different disciplines. [00:23:58] Speaker 02: The implementation standard involves the baseband manufacturer, the base tower manufacturer, the carriers, the handset sellers, the users, all of them. [00:24:09] Speaker 02: I think the answer to your question precisely is when you look at the divided infringement cases, they compare or contrast the concept of multi-parties acting independently. [00:24:19] Speaker 02: This is multi-parties acting independently. [00:24:23] Speaker 02: Qualcomm, Alcatel, Lucent, [00:24:25] Speaker 02: Erickson, the carriers, the handset sellers, HTC and Apple, the handset users, they're all complying with the standard, right? [00:24:35] Speaker 02: But no one of them is controlling the other. [00:24:38] Speaker 02: So I think we have to look at the specific elements of this, claim one if I were to use it. [00:24:44] Speaker 02: An interesting thing is their light switch turning on, the request for mode three, that's not part of the claim, right? [00:24:52] Speaker 02: as we argued, starts with the subscriber unit. [00:24:56] Speaker 02: But what they've done is they've gone back just one step in the process and said, well, here's the request. [00:25:03] Speaker 02: That's enough to control. [00:25:05] Speaker 02: But if you go back further in the process, as I tried to do, Judge Rainier, in response to your question, it's quite clear that most of the decisions, if there are decisions that are going to determine whether you ultimately have a mode 3 request, are actually [00:25:19] Speaker 04: Mr. Lee, you keep couching your arguments in terms of control. [00:25:25] Speaker 04: And if control is the issue, then don't we have a material issue of fact and dispute here? [00:25:32] Speaker 04: Who has control of the remote device? [00:25:35] Speaker 02: Your Honor, I think I've been using control because that's the way they've articulated their argument. [00:25:40] Speaker 04: We think it's... No, your examples and your hypos have also centered on control. [00:25:44] Speaker 02: No, actually, Your Honor, then I've been unclear. [00:25:47] Speaker 02: Let me say it this way. [00:25:48] Speaker 02: If I focus on the elements of the claim, they all require the handset user, the subscriber unit, to do something. [00:25:58] Speaker 02: That is something, the handset unit, is being used by the subscriber. [00:26:04] Speaker 02: It's use and operation, which I hope I said an answer to one of my questions. [00:26:08] Speaker 04: Let's go back even a little step further, OK? [00:26:12] Speaker 04: The phone itself is not the infringer or a potential infringer, correct? [00:26:16] Speaker 04: The device. [00:26:17] Speaker 02: Absolutely. [00:26:18] Speaker 02: That's exactly, I mean, the statute says it has to be whoever. [00:26:21] Speaker 04: Right. [00:26:21] Speaker 04: It's whoever. [00:26:23] Speaker 04: So now we got two entities involved in the whoever. [00:26:28] Speaker 04: Isn't the central path to get to the answer here is control? [00:26:37] Speaker 02: And you're... I think not. [00:26:42] Speaker 02: I mean, that's the way they've tried to articulate it. [00:26:44] Speaker 02: And I think I can give you these three answers. [00:26:47] Speaker 02: The central inquiry is who is using the device to perform the method. [00:26:52] Speaker 02: And the user of the device. [00:26:54] Speaker 04: Suppose that I buy the phone and forget about it. [00:26:59] Speaker 04: Go get another one. [00:27:01] Speaker 04: And then this one is left there. [00:27:04] Speaker 04: I'm not using that. [00:27:05] Speaker 04: I'm not possessing that. [00:27:06] Speaker 04: But suppose that performance of the method is still going on. [00:27:10] Speaker 02: May I answer the question? [00:27:12] Speaker 04: Yes, please. [00:27:13] Speaker 02: The answer would be you would have to buy the phone [00:27:16] Speaker 02: You would have to enable cellular. [00:27:20] Speaker 02: You would have to enable LTE. [00:27:24] Speaker 04: Somehow, the phone... You see, isn't that control? [00:27:27] Speaker 04: I mean, the buying, I understand. [00:27:29] Speaker 04: You bought it, and now you possess it. [00:27:31] Speaker 04: You got it in the box. [00:27:33] Speaker 04: But to make it all happen, you've got to turn it on. [00:27:39] Speaker 04: You've got to ask for this type of service. [00:27:43] Speaker 04: There's some element of use that seems to me, and this is why I'm exploring with you, that seems to me to be centered on control. [00:27:51] Speaker 02: Your Honor, it is use and control. [00:27:54] Speaker 02: We've been talking about control because this is how they've couched the decision. [00:27:58] Speaker 02: Let me give two answers since I've passed my time. [00:28:01] Speaker 02: I'll give you the time, Pastor, and whatever my colleagues, any questions they may have as well. [00:28:05] Speaker 02: Your Honor, it is whoever uses because it's the use of the method that it infringes. [00:28:11] Speaker 02: Control has been injected into the case because if you consider Judge Graywall's, the district court's footnote where he addresses the control argument, the argument was that he rejected the argument correctly, we think, that merely selling the device that performs a method is enough control under their concept to infringe. [00:28:34] Speaker 02: And in fact, of the three cases he cited, two of them were affirmed by this district, by this court. [00:28:40] Speaker 02: after he decided the case. [00:28:43] Speaker 02: So he was focused on use and responding to their control. [00:28:49] Speaker 02: And what we're saying is just two things. [00:28:51] Speaker 02: One is use is the right concept. [00:28:54] Speaker 02: And if you think about Rico and Erickson and Symantec, it is all about use. [00:29:01] Speaker 02: And to the extent you address control, the judge did address control. [00:29:06] Speaker 02: He addressed it very specific and said, no. [00:29:10] Speaker 02: setting the request is in control, and all I'm doing is responding by saying, if you were going to go back up the series of steps in an effort to determine who's actually using by our characterization, if you go back to where this starts, it is the handset subscriber unit user that's using. [00:29:36] Speaker 04: If we find that [00:29:40] Speaker 04: Assuming that we find that control is the factor here, would you say that we would have to send this back to the court, that there's a maternal fact in dispute? [00:29:54] Speaker 02: No, Your Honor, for this reason. [00:29:55] Speaker 02: If you look at A-40 and the magistrate judge's opinion, the magistrate judge specifically found that there was no evidence in the record of control. [00:30:08] Speaker 02: And Your Honor, it was not a coincidence because there was an interrogatory. [00:30:14] Speaker 02: Let me see if I can give you the precise citation. [00:30:18] Speaker 02: There was an interrogatory that was asked during the district court proceedings of ADAPTICS. [00:30:23] Speaker 02: It said, tell us how the carriers direct or control the handset users to perform any step of the method. [00:30:33] Speaker 02: That's A6694 to 95. [00:30:38] Speaker 02: And it's a typical interrogatory answer. [00:30:40] Speaker 02: There are a lot of objections. [00:30:42] Speaker 02: But what you'll find by omission, there is nothing there about the hand, the carriers controlling the handset user. [00:30:51] Speaker 02: So you have a specific question. [00:30:53] Speaker 01: But what about controlling the handset itself? [00:30:55] Speaker 01: I think that's their argument. [00:30:57] Speaker 01: They're not arguing that they're controlling the user so much as that it's controlling the handset. [00:31:02] Speaker 02: Fair enough. [00:31:03] Speaker 02: Yeah, I think that's correct, Your Honor. [00:31:05] Speaker 02: But if you look at the interrogatory answer, so the progression is, tell us, since you're focused on control, tell us what the evidence is of control. [00:31:15] Speaker 02: There's information there about controlling other things, but not the handset devices or users in our argument. [00:31:24] Speaker 02: And in fact, at 6606, you'll see this was specifically part of the argument made to the district court. [00:31:30] Speaker 02: So the district court then makes the finding that's at A40. [00:31:34] Speaker 02: no direction or control. [00:31:36] Speaker 02: To say 840? [00:31:37] Speaker 02: 840. [00:31:38] Speaker 02: It's the very last page of the Judge's opinion. [00:31:41] Speaker 02: Thank you. [00:31:42] Speaker 02: So Judge Rainier, to go to your question is, if the court were to move to a control concept, which we take the acrimy one step further, we suggest, you have a record where the district court actually had to afford an interrogatory, had to afford the argument [00:31:58] Speaker 02: and made a finding that there was no evidence that would even meet that, even under that legal test. [00:32:03] Speaker 01: Do you have any questions? [00:32:05] Speaker 01: I do. [00:32:05] Speaker 01: You had mentioned that there was about five steps the user would have to take before the method could be performed. [00:32:13] Speaker 01: Where is that in the record? [00:32:16] Speaker 02: Your Honor, I can tell you, if you actually look at the text that accompanies our footnote 22, [00:32:27] Speaker 02: I apologize for doing it this way. [00:32:30] Speaker 02: Footnote 22 has confidential information about the fifth step, so it is in the portion of the brief. [00:32:35] Speaker 02: I think it's in our brief, A3738, but it's a text that accompanies Footnote 22. [00:32:42] Speaker 02: And Footnote 22 has the confidential information about the fifth step. [00:32:47] Speaker 01: Okay, thank you. [00:32:47] Speaker 01: And then I just wanted to ask you about Centillion. [00:32:51] Speaker 01: If this court were to take a different approach with respect to use or kind of adopt centillion for use in that, how would that impact the outcome of this case in your view? [00:33:01] Speaker 02: I'd say two things, Your Honor. [00:33:03] Speaker 02: Centillion is a system claim, not a method claim. [00:33:07] Speaker 02: So the person who initiates use of the system is a direct infringer under this court's law. [00:33:13] Speaker 02: So it's not the method claims are treated differently. [00:33:17] Speaker 02: I think the answer is if you extend centillion [00:33:20] Speaker 02: ADAPTICS has requested you to do, you're going to collapse indirect infringement and direct infringement in an awful lot of circumstances. [00:33:28] Speaker 02: And I think given what this court has said about the intent required under Global Tech, what this court has said about the requirements under 271B, and I think this is important. [00:33:41] Speaker 02: Really, what they're coming to you and saying is, it's a direct infringement case. [00:33:45] Speaker 02: Let's either extend Centilian or let's extend Appamai. [00:33:50] Speaker 02: to capture direct infringement, which today is captured by, there are doctrines that capture all of this. [00:33:57] Speaker 02: If I'm the user, to be more precise, I'm the direct infringer. [00:34:03] Speaker 02: If I induce the user, I'm an indirect infringer. [00:34:08] Speaker 02: If I supply a 271 contributory infringing product, I'm an indirect infringer. [00:34:13] Speaker 02: And then ACMA fills in for a method claim, the missing, if you call it the missing bucket, which is, [00:34:20] Speaker 02: two people performing the steps under what circumstances is one a direct infringer. [00:34:25] Speaker 02: Those four doctrines, direct infringement, divided infringement, inducement, contributory infringement, actually cover all of the circumstances we've addressed. [00:34:38] Speaker 02: And it's for the reason that I think that Rico and Symantec and Erickson came out the way they did. [00:34:44] Speaker 04: All right. [00:34:44] Speaker 04: Thank you very much. [00:34:48] Speaker 04: Mr. Russell, I allow Mr. Lee to go 40 minutes over his time. [00:34:52] Speaker 04: I can extend those seven minutes to you as well, to the extent that you need them. [00:34:56] Speaker 05: Thank you. [00:34:56] Speaker 05: I will try to be brief. [00:34:57] Speaker 05: I would like to start with the statutory language, move to the precedent, talk about the facts, and maybe get to this question about the interrogatories, if I could. [00:35:08] Speaker 05: We agree that the central question here is who uses the method when the method is performed by a device. [00:35:16] Speaker 05: They seem to think that it's obvious that it is the person who is holding, owning, generally controlling the device. [00:35:23] Speaker 05: They've now abandoned the owning and possessing part, and we're in agreement it's about control. [00:35:28] Speaker 05: Their position is controlling the device in general is sufficient. [00:35:32] Speaker 05: Our position is you have to control the aspect of the device which is running the method. [00:35:38] Speaker 05: And that, although it sounds like a small difference, is a critically important one because in our increasingly interconnected world, [00:35:45] Speaker 05: all have devices that we do not exercise complete control over. [00:35:49] Speaker 05: And it's perfectly understandable that a cell phone company will want to control those aspects of a cell phone that are necessary to make it work on their network. [00:35:57] Speaker 05: But with that control comes responsibility to make sure that the operations that they are controlling on the phone do not infringe the patent. [00:36:06] Speaker 05: Now, with respect to precedent, our [00:36:10] Speaker 05: contention is my answer to you when you ask is there on-point precedent is there is precedent in which the court has assumed that the end user is responsible for the device's performance of a method patent. [00:36:23] Speaker 05: But those results are consistent with either their interpretation that we just attributed to the device's owner or to ours because in all of those cases the end user was doing the act that immediately triggers the performance [00:36:36] Speaker 05: of the method, for example, in Symantec downloading files from the internet, which is what triggered the performance of the virus scanning method on their computer. [00:36:46] Speaker 05: So I think you're going to have to figure this out, I think, on your own. [00:36:50] Speaker 05: And you can't simply point to some prior decision. [00:36:52] Speaker 01: I'd like to ask you a hypothetical. [00:36:56] Speaker 01: So what if there's an implantable defibrillator for someone's heart? [00:37:02] Speaker 01: And it's programmed by the company. [00:37:04] Speaker 01: There's a company that makes it. [00:37:06] Speaker 01: Then the doctor programs it specifically for this individual. [00:37:09] Speaker 01: They put it in the person. [00:37:12] Speaker 01: They implant it. [00:37:13] Speaker 01: And then the person has a particular episode. [00:37:15] Speaker 01: Their heart acts in a certain way. [00:37:17] Speaker 01: And between the doctor's programming and the way that it was set up by the manufacturer, it goes ahead and shocks the heart. [00:37:24] Speaker 01: Under your theory of control, who controlled that? [00:37:26] Speaker 01: And who's the infringer? [00:37:28] Speaker 05: Well, I think that's the right question to ask. [00:37:30] Speaker 05: It's who controls the actual performance of the method. [00:37:32] Speaker 01: Well, maybe. [00:37:33] Speaker 01: Maybe it's who has it. [00:37:35] Speaker 01: Maybe possession and use is a better way to look at it in a way that's been considered by this court. [00:37:40] Speaker 01: But anyway, I'm sorry. [00:37:42] Speaker 05: I agree. [00:37:42] Speaker 05: It's a simpler rule. [00:37:44] Speaker 05: It's a much simpler rule. [00:37:45] Speaker 05: But it's a rule that you simply cannot square with the text of the statute. [00:37:48] Speaker 05: It focuses on who is using the patented invention. [00:37:52] Speaker 05: And you can very easily use a patented invention that is practiced on the device that is in somebody else's hand or in somebody else's body. [00:38:00] Speaker 05: So, for example, if your hypothetical involved the doctor being able to remotely instruct the defibrillator to shock the heart because they think he's having a heart attack, I would think the answer is clear. [00:38:11] Speaker 05: There's the doctor pushing the button, telling the defibrillator to practice the method. [00:38:15] Speaker 01: How is that different from the doctor programming the device in advance to go off when the heartbeat is acting in a particular way? [00:38:27] Speaker 05: May not be. [00:38:29] Speaker 01: Then you run into Rico, don't you, though? [00:38:31] Speaker 01: You run into Rico at that point. [00:38:33] Speaker 05: Well, I think there may be some difficult questions of who is controlling a device in some circumstances. [00:38:39] Speaker 05: But I think that's why we think that referring to doctrine's approximate cause is a helpful thing to do here. [00:38:45] Speaker 05: Because all that the defendants have pointed to in their example of all the things a user must do is that the user is a butthole cause of the infringement, in the same way that the manufacturers are. [00:38:55] Speaker 05: But they're not saying that the manufacturers, because they are a but-for-cause, are the people who are practicing the method. [00:39:02] Speaker 05: All the but-for-causes lead up to is the device being on the LTE network. [00:39:08] Speaker 05: But that doesn't preordain that there will be infringement. [00:39:11] Speaker 05: Because, as I said before, the defendants have emphasized that you can use a phone in LTE mode on their network without infringing on the patent, so long as they have not elected to use mode three on their base stations. [00:39:23] Speaker 05: That decision is the intervening cause, and to speak in proximate cause terms, of the infringement. [00:39:28] Speaker 05: And it's their specific instruction to the device to practice the method that is the final and most direct, and in our view, the most appropriately viewed cause of controlling the performance of the method patent. [00:39:41] Speaker 05: And that makes perfect sense here, because these defendants are far better situated than anyone else to know and to figure out whether the operation of this device in this setting in this respect [00:39:52] Speaker 05: is violating somebody's patent and to take steps to avoid it. [00:39:55] Speaker 05: They can just operate their base positions in another mode in order to avoid the infringement. [00:40:00] Speaker 05: And we think that that is what Congress would have intended. [00:40:02] Speaker 04: Do you agree that if we adopt a position that we're going to create parallel with divided infringement and other aspects of law, we have multiple actors involved? [00:40:12] Speaker 04: I'm sorry. [00:40:13] Speaker 04: I didn't hear the first part. [00:40:15] Speaker 04: With your position, do you agree with your opponent that if we adopt a position that we're going to create [00:40:21] Speaker 04: Let's say havoc within the indirect infringement law. [00:40:24] Speaker 05: No, I don't think it creates any more havoc than this court's decision saying direction and control of a person is as direct infringement. [00:40:31] Speaker 05: And that's because that doctrine has not allowed an evasion of indirect infringement liability, and neither will ours. [00:40:38] Speaker 05: Somebody who is simply inducing infringement, somebody who simply encourages, who sells the phone, cannot be said to control the infringement. [00:40:45] Speaker 05: They are about for cause, but they are not controlling the infringement because [00:40:49] Speaker 05: the phone can be used in a non-infringing manner. [00:40:52] Speaker 05: Somebody who simply provides a component, like the chip manufacturer here, will not be able to be sued. [00:40:58] Speaker 01: What if the phone is programmed that, you know, once a day it's going to go ahead and perform the method? [00:41:05] Speaker 05: Well, I think that's a more difficult case because, but that's not this case, because here the phone will not perform the method unless and until it receives this instruction from the carrier. [00:41:17] Speaker 05: You may have other cases in which [00:41:19] Speaker 05: you would have that scenario of the pre-programmed device. [00:41:22] Speaker 05: I think you can easily point to RICO in other cases and say, look, we've already held that that's not direct infringement here. [00:41:29] Speaker 05: This case, I think, is involving an important but narrow set of circumstances in which a device is being controlled by another person remotely. [00:41:38] Speaker 05: And it is a question of control. [00:41:40] Speaker 05: It's not a fact. [00:41:41] Speaker 05: And here, to maybe make my last point about the record, [00:41:45] Speaker 05: When the district court said that there was no factual evidence of control, that was based on his misconception, legal misconception, of what control means in this context. [00:41:55] Speaker 05: There was ample evidence in the record, of all the things we've been talking about, of the fact that the method is performed only upon the receipt of the command from the base station. [00:42:04] Speaker 05: That's in our expert's declaration, which was attached to our opposition to the motion for summary judgment. [00:42:09] Speaker 05: We think, at the very least, this is a case that should go forward. [00:42:14] Speaker ?: Any questions? [00:42:15] Speaker 04: Thank you very much. [00:42:16] Speaker 04: We thank the party for the argument.