[00:00:01] Speaker 03:
The next case is Angel Score, Inc.

[00:00:04] Speaker 03:
versus Tri-Remy Medical, 16-1126.

[00:00:31] Speaker 03:
Ms.

[00:00:39] Speaker 03:
Platt, I see that you've divided your time with one of your colleagues.

[00:00:44] Speaker 03:
You're going to speak for eight minutes.

[00:00:48] Speaker 03:
You're reserving three minutes for rebuttal?

[00:00:50] Speaker 00:
Yeah, three minutes.

[00:00:51] Speaker 03:
Three minutes for rebuttal, right?

[00:00:55] Speaker 03:
And Ms.

[00:00:57] Speaker 03:
Pritz, you have four minutes.

[00:00:58] Speaker 03:
Is that correct?

[00:00:59] Speaker 03:
That's correct.

[00:01:01] Speaker 03:
We may proceed.

[00:01:02] Speaker 00:
Okay, thank you, and may it please the court.

[00:01:04] Speaker 00:
My name is Lisa Blatt, and I represent the corporate defendants.

[00:01:08] Speaker 00:
With the court's permission, I'd like to start with the subject matter jurisdiction issue.

[00:01:13] Speaker 00:
The district court erred in even reaching the state law claims because they did not arise out of a common nucleus of operative facts with the patent claims.

[00:01:21] Speaker 00:
The state law claims centered on Dr. Constantino's relationship with angioscler, chocolate's development... When we look at common nucleus, what are we looking at?

[00:01:31] Speaker 04:
Are we looking at the elements to prove the separate claims?

[00:01:35] Speaker 04:
Are we looking at the overall factual situation?

[00:01:38] Speaker 04:
I looked at some of the case file, but it wasn't very clear to me what that is.

[00:01:42] Speaker 00:
You know, I think that's a fair point.

[00:01:44] Speaker 00:
The courts have been looking at both because it's operative facts.

[00:01:47] Speaker 00:
So operative, you have to, and the Supreme Court standard is claimed.

[00:01:50] Speaker 00:
So you have to know what the claims are and then the core facts that prove those claims.

[00:01:56] Speaker 00:
And here you have a fiduciary duty case.

[00:01:58] Speaker 00:
It's the state case.

[00:01:59] Speaker 00:
and then a federal patent case.

[00:02:02] Speaker 00:
And if you look at both the claims and the facts that prove them, they're distinct.

[00:02:07] Speaker 00:
In the state case, you have just the relationship between the board and, I'm sorry, the company and the board member, this invention, and whether this company had any interest in either acquiring or developing chocolate.

[00:02:21] Speaker 00:
And this all occurs by February 2010.

[00:02:26] Speaker 00:
These events are all over.

[00:02:28] Speaker 00:
Now, the patent case starts two years later, and that case centers around this validity of a completely different product.

[00:02:36] Speaker 00:
Angioscore had this 119 patent that was never practiced and whether chocolate's elements infringe that.

[00:02:43] Speaker 00:
And those facts were the prior art on the 119 patent and whether chocolate had these so-called end-to-end struts.

[00:02:53] Speaker 00:
and whether any of these struts attach to the catheter shaft.

[00:02:56] Speaker 00:
And I hope I have all the technical stuff.

[00:02:59] Speaker 00:
But it's just looking at the two 119 patent and the chocolate device.

[00:03:05] Speaker 00:
And I think the proof is in the pudding.

[00:03:07] Speaker 00:
There's a 110-page state law opinion by the district court and 224 findings of fact.

[00:03:14] Speaker 00:
And not a single word mentions the 119 patent.

[00:03:18] Speaker 00:
And if you go to the patent trial,

[00:03:20] Speaker 00:
Judge Hughes, no party even mentioned the state law claims or Dr. Constantino's fiduciary duty.

[00:03:27] Speaker 03:
Is there an overlap here in the facts with respect to damages?

[00:03:33] Speaker 00:
So the, you're looking at, you're definitely looking at the sales, you looked at the sales of chocolate on the one hand and what the angiosculpt did, but no.

[00:03:44] Speaker 00:
So the damages facts on

[00:03:46] Speaker 00:
And the common damages expert was on completely different theories, because one is based on the fiduciary duty claim is based on chocolate never having been on the market.

[00:03:58] Speaker 00:
So just if Angiosculp had sold more sales.

[00:04:00] Speaker 00:
And I think in the patent case, it's a very traditional royalty based on the sales of chocolate.

[00:04:06] Speaker 00:
So the expert, even though the same expert testified in both trials, it was on completely separate theories.

[00:04:13] Speaker 04:
And the only other thing I'd like to say just- Are you aware of any cases where they found supplemental jurisdiction just based upon overlapping damages theories?

[00:04:24] Speaker 00:
No.

[00:04:25] Speaker 00:
No, and I just wanted to give out a hypo if I could, because I think what the district court said is that chocolate was the heart of the case.

[00:04:32] Speaker 00:
And just the fact that the same product features in both cases can't be sufficient.

[00:04:37] Speaker 00:
And for instance, if you imagine a plaintiff who brings an admiralty case in federal court,

[00:04:43] Speaker 00:
arising out of a boating accident.

[00:04:45] Speaker 00:
He can't add a state law claim that says the defendant stole that boat for him two years ago.

[00:04:50] Speaker 00:
And I think just the same is true here, although chocolate, it certainly features in both cases, the core facts about chocolate are just different in each case.

[00:05:00] Speaker 00:
And that's all I wanted to say about subject matter jurisdiction.

[00:05:02] Speaker 00:
I wanted to go to corporate opportunity unless you want me to stay.

[00:05:06] Speaker 04:
Although if we agree with you on that,

[00:05:08] Speaker 04:
that gets rid of most of the case except for your attorney fees case on the patent side?

[00:05:14] Speaker 00:
Yeah, that's correct.

[00:05:15] Speaker 00:
That's correct.

[00:05:16] Speaker 00:
And I think it does, if we're going to talk about corporate opportunity, all the sort of the craziness of that doctrine and the way it was applied here really should have led the court to sort of not embark upon very scary and choppy waters of Delaware law because of all the questions that that raises about

[00:05:38] Speaker 00:
assuming that the corporate opportunity doctrine could apply to a director's own patentable ideas.

[00:05:44] Speaker 00:
And the three basic problems with that are, and they are serious, is that under Delaware law, fiduciaries have the right to prepare to compete.

[00:05:53] Speaker 00:
Federal law second, excuse me, federal law, you need an express assignment before divesting inventors of their patent rights.

[00:06:01] Speaker 00:
And third, the right the court created, which was this right to acquire ownership,

[00:06:08] Speaker 00:
is quite unworkable and it suffers all the same problems of stifling innovation of the implied right of outright ownership that the court held and recognized was untenable.

[00:06:19] Speaker 00:
So first turning to the right to prepare to compete, Delaware law already has a doctrine of the breach of loyalty that applies when a fiduciary uses his or her own own skills and ingenuity and it's called the duty not to compete.

[00:06:35] Speaker 00:
But 25 years ago, in that science accessory case that the Delaware Supreme Court issued, the court held that fiduciaries can prepare to compete, but they have to resign before they actually compete.

[00:06:47] Speaker 00:
And preparing to compete in that case was soliciting investors, developing an invention, and doing a working model.

[00:06:54] Speaker 00:
And this is critical in this case because that court held that fiduciaries have no duty of disclosure and can conceal any and all plans to compete.

[00:07:04] Speaker 00:
So I'd like to give you another hypo if I could of Picasso.

[00:07:07] Speaker 00:
Assume that Picasso was working, excuse me, Picasso was on the board of an art gallery.

[00:07:12] Speaker 00:
Picasso can paint all he wants.

[00:07:14] Speaker 00:
He doesn't have to tell the art gallery.

[00:07:16] Speaker 00:
He just can't sell his paintings.

[00:07:19] Speaker 00:
But Dr. Constantino here never sold a painting when he was on the board.

[00:07:24] Speaker 00:
He resigned from the board in 2010, and that was almost two years before he ever sold the chocolate device.

[00:07:32] Speaker 00:
But the court below held that this doctrine, excuse me, the corporate opportunity doctrine, prevented any kind of development and any kind of solicitation of investors without first disclosing any and all preparations and plans to compete.

[00:07:47] Speaker 00:
But that perversely construes Delaware law to penalize and punish the very conduct, i.e.

[00:07:53] Speaker 00:
concealment and disclosure, that Delaware law affirmatively encourages

[00:07:57] Speaker 00:
in order to stimulate competition and industry.

[00:08:00] Speaker 00:
The court in that case said, we have to have, you have to be able to, in effect, lie to your employer or lie to your corporation about plans to compete.

[00:08:08] Speaker 00:
As long as you're out of there before you actually compete, otherwise we wouldn't have competition.

[00:08:12] Speaker 00:
And that's, frankly, how lawyers can leave their law firms too.

[00:08:15] Speaker 00:
They don't have to go around and disclose that.

[00:08:18] Speaker 00:
And you see this other mismatch when the court says, well, the doctor here went beyond preparing to compete because he usurped a corporate opportunity, albeit it was one he created.

[00:08:28] Speaker 00:
But both the duty not to compete and the duty not to usurp corporate opportunities are merely subspecies of this broader duty of loyalty.

[00:08:37] Speaker 00:
And if designing a valuable invention and concealing those plans are okay under the duty not to compete, they're not usurping a corporate opportunity either.

[00:08:47] Speaker 00:
And our second point, which is that federal law encourages an express assignment before you can be divested of your rights, if you think about

[00:08:56] Speaker 00:
What happens here, if the state law says that companies can inquire these ownership rights, they acquire them instantly, a second pops into the idea of a board member.

[00:09:07] Speaker 00:
And it's already too late for the board member to resign.

[00:09:10] Speaker 00:
He's already thought of the idea.

[00:09:12] Speaker 00:
He thinks, oh, I'm going to invent a light bulb.

[00:09:13] Speaker 03:
Well, and now I'm- Why wouldn't the design or the planning, the making of the chocolate device not be viewed as infringing?

[00:09:21] Speaker 03:
Be viewed as a what?

[00:09:22] Speaker 03:
Infringing.

[00:09:23] Speaker 00:
So the 119 patent hadn't even issued until well after he left the company.

[00:09:30] Speaker 00:
And I don't know how you infringe by just thinking of an idea.

[00:09:33] Speaker 00:
You would definitely know that more than me.

[00:09:35] Speaker 00:
But there is a 119 patent.

[00:09:38] Speaker 00:
And my understanding of the way the courts have construed making, using, or selling is you actually have to start developing and manufacturing it.

[00:09:47] Speaker 00:
I don't just think thinking of something in your mind or going talk to an investor.

[00:09:51] Speaker 00:
If Picasso said, would somebody think about investing or helping me buy my paints, and I'm thinking about Guernica, I don't see how somebody could say that's an infringement about something you thought of.

[00:10:03] Speaker 00:
But I'm going to defer to you on the law of infringement.

[00:10:06] Speaker 05:
Excuse me.

[00:10:09] Speaker 05:
Since we've interrupted your chain of thought, let me interrupt it a step further.

[00:10:16] Speaker 05:
In my years on the court, I haven't run into this

[00:10:20] Speaker 05:
duty of loyalty issues very often.

[00:10:24] Speaker 05:
And I'm a little puzzled by, is it the case that the law regarding fiduciary duty of a director and duty of loyalty includes the encouragement to lie to the employer?

[00:10:40] Speaker 00:
So Science Accessories uses the word, he secreted, S-E-C-R-E-T-E-D, and concealment.

[00:10:48] Speaker 00:
And then it talks about you can't

[00:10:50] Speaker 00:
fiduciaries have no duty to talk about your plans to compete.

[00:10:54] Speaker 00:
And it says, expressly says this, we have to do this to encourage industry and free competition.

[00:11:01] Speaker 00:
But also keep in mind, this is a quarter century ago.

[00:11:03] Speaker 00:
This is not like some newfangled theory that Delaware law came out two years ago.

[00:11:07] Speaker 00:
So it has been the law for a quarter century in Delaware that fiduciaries don't have a duty of disclosure.

[00:11:13] Speaker 00:
And this is one of the huge problems with this case, is that the court held that

[00:11:19] Speaker 00:
that an implied right of outright ownership was just completely untenable, because that would subvert all ingenuity and innovation.

[00:11:28] Speaker 00:
But then the court turned around in its damages award and said, oh, Angius Court didn't assume that Angius Court paid zero for the right.

[00:11:35] Speaker 00:
And so the court essentially imposed the very same implied right of outright ownership that the court held was just untenable.

[00:11:42] Speaker 00:
And so the third problem with this is just imagine, because this right which you're talking about, this right of just to offer

[00:11:49] Speaker 00:
or whatever it is.

[00:11:49] Speaker 00:
I don't even know what the court said.

[00:11:51] Speaker 00:
But the court said that it's an implied right to acquire ownership.

[00:11:56] Speaker 00:
And the problem with that one is it just doesn't work and has its own problems.

[00:12:00] Speaker 00:
And just think about it again.

[00:12:01] Speaker 00:
If the corporation can exercise this right on whatever terms it chooses, then this just reduces to the untenable right that the court just rejected.

[00:12:10] Speaker 00:
Now, if it's something less than that, then parties are left in hopeless deadlock

[00:12:14] Speaker 00:
if they can't reach a mutual agreement, even if both sides are acting in good faith.

[00:12:18] Speaker 00:
I mean, that's a mediation.

[00:12:19] Speaker 00:
Parties all the time think their claims are worth X, Y, and Z, and the other side thinks it's not worth X, Y, and Z, and they're both acting in good faith.

[00:12:26] Speaker 05:
What would be the effect if we conclude that there was no common nucleus of operative fact?

[00:12:36] Speaker 00:
Then the case is over, as Judge Hsu said, except for attorney's fees.

[00:12:39] Speaker 00:
And I've wasted five minutes.

[00:12:42] Speaker 05:
I would have thought that would have been your strongest argument, but you sort of went through it rather quickly.

[00:12:48] Speaker 00:
Well, we can go back.

[00:12:48] Speaker 00:
I mean, the reason why I think the merits, it does at least go to the abuse of discretion, that this is so, you know, that even if there was one, because the cases were bifurcated and this was such a novel duty and an extension of Delaware law, the court would have abused its discretion.

[00:13:02] Speaker 00:
But most of our brief is devoted to the subject matter jurisdiction argument because of all the concessions in the other side's briefing,

[00:13:11] Speaker 00:
and the strangeness of, and the time periods being so distinct.

[00:13:15] Speaker 03:
OK, let's hear from Ms.

[00:13:17] Speaker 03:
Pruitt.

[00:13:17] Speaker 01:
Good morning, Your Honor.

[00:13:24] Speaker 03:
Good morning.

[00:13:25] Speaker 01:
Angie Skor's claim for breach of fiduciary duty is barred by the three-year statute of limitations in addition to the arguments that my co-counsel just made.

[00:13:34] Speaker 01:
The record here is uncontroverted.

[00:13:37] Speaker 01:
No one at Angie Skor was misled,

[00:13:40] Speaker 01:
And Angioscore believed at all times that Dr. Constantino was developing competitive products, including chocolate, while sitting on the board.

[00:13:49] Speaker 01:
Although Angioscore had the burden of proof on tolling, no one from Angioscore denied that they had notice of the facts of the development of a competitive device by Dr. Constantino.

[00:14:04] Speaker 01:
And no one testified at trial, not a single Angioscore witness, that they had been misled.

[00:14:09] Speaker 01:
This evidence was ignored in its entirety by the district court, and it overwhelmingly demonstrates that Angios Court not only suspected, they in fact knew from their conversation with Dr. Constantino on February 3, 2010, that Dr. Constantino was working on a competitive specialty balloon product while sitting on the board.

[00:14:32] Speaker 01:
In fact, at the time, the CEO, Mr. Trotter,

[00:14:37] Speaker 01:
directly accused Dr. Constantino of breaching his fiduciary duty in a number of emails and letters but Angioscore made a deliberate and a strategic business decision not to file suit then or at any time in the following three years and they didn't seek to add fiduciary duty claims to the patent suit until May 2014 long after the statute of limitations had run and because

[00:15:04] Speaker 01:
The corporate defendants had had a successful IPO and raised funds.

[00:15:10] Speaker 01:
The district court erred in failing to dismiss these claims as time-barred.

[00:15:14] Speaker 01:
Instead, the court found, contrary to all the evidence, that Angios Court was not on inquiry notice of its claims and that the limitations period was told.

[00:15:24] Speaker 01:
There is no evidence to support these findings.

[00:15:27] Speaker 01:
Delaware law requires that once a plaintiff is suspicious of wrongdoing, just suspicious,

[00:15:33] Speaker 01:
The plaintiff is obligated to diligently investigate and file within the limitations period.

[00:15:40] Speaker 01:
Angioscore was suspicious.

[00:15:42] Speaker 01:
Angioscore investigated.

[00:15:44] Speaker 01:
And Angioscore garnered all of the evidence it needed to bring the very claims it brought, yet it chose not to file suit.

[00:15:52] Speaker 01:
And let me go into some of the detail here.

[00:15:55] Speaker 01:
It's undisputed that Dr. Constantino disclosed his development of a specialty balloon

[00:16:00] Speaker 01:
to Angioscore's CEO, Trotter, in February 2010.

[00:16:06] Speaker 01:
Angioscore immediately asked Dr. Constantino to resign due to an alleged conflict and after determining that their insurance would not reimburse the judgment.

[00:16:18] Speaker 03:
At that point in time, that's the first time that they learned that

[00:16:22] Speaker 03:
Mr. Constantino planned to enter into the specialty balloon market, is that it?

[00:16:26] Speaker 01:
Yes, February 3, 2010, and by February 5, 2010.

[00:16:30] Speaker 03:
Before that time, they thought he was just working on something.

[00:16:34] Speaker 03:
They didn't know he was working on a specialty balloon.

[00:16:37] Speaker 01:
I believe they did not.

[00:16:39] Speaker 01:
I believe they did not.

[00:16:40] Speaker 01:
But February 3, 2010 is more than four years before they actually brought the claims.

[00:16:46] Speaker 01:
And one of the things that I think is very telling, the court rested its decision basically

[00:16:51] Speaker 01:
on these two letters that were written by Dr. Constantino's counsel after he had resigned from the board, after he was no longer a fiduciary.

[00:17:00] Speaker 01:
And she said, you know, these letters were misleading.

[00:17:03] Speaker 01:
Well, what's interesting about that is how no one was misled.

[00:17:08] Speaker 01:
The CEO, Mr. Trotter, testified at trial that he didn't think the letters were truthful.

[00:17:13] Speaker 01:
And there was evidence from other board members and even third parties that at that time.

[00:17:18] Speaker 03:
And in the first letter he denied any involvement in any development work or licensing of angioplasty technology that involves specialized features such as scoring, cutting, and those two items, the scoring and the cutting, that was the technology of these catheters or stents?

[00:17:38] Speaker 01:
That was not the technology of chocolate, however.

[00:17:40] Speaker 01:
Chocolate was not a scoring catheter.

[00:17:42] Speaker 01:
Chocolate operated by having these little pillows and grooves.

[00:17:47] Speaker 01:
It was a completely new and different way of doing it.

[00:17:50] Speaker 05:
In fact, the argument is that the metal parts didn't actually touch the inside of the vein or whatever.

[00:17:59] Speaker 05:
It was the pillows.

[00:18:00] Speaker 01:
That's my understanding, Your Honor.

[00:18:02] Speaker 05:
Under your invention.

[00:18:03] Speaker 01:
And what I think is interesting and the point that I wanted to bring out is that these letters were really the centerpiece of the court saying, oh, there was an intent.

[00:18:11] Speaker 01:
The lawyer that wrote these letters, he didn't have all the facts.

[00:18:15] Speaker 01:
There was an intent to deceive.

[00:18:17] Speaker 01:
After receiving these letters, both of these letters,

[00:18:21] Speaker 01:
Angioscore went to its insurance company to find out, and this is after reading these letters, they didn't believe anything in those letters.

[00:18:29] Speaker 01:
They were convinced that Dr. Constantino was in the throes of developing a competitive angioplasty product.

[00:18:37] Speaker 01:
They went to their DNO carrier and said, we'd like to sue, basically, and will you cover any judgment?

[00:18:44] Speaker 03:
Could you conclude for us, please?

[00:18:46] Speaker 03:
You're out of time.

[00:18:47] Speaker 01:
Oh, sorry.

[00:18:48] Speaker 01:
And what I was going to say is the fact that they were intending to sue him in 2010 after all of the evidence the court relied on and continued to feel that way throughout the limitations period, tracking the device, the 510K, the patent application.

[00:19:04] Speaker 01:
This was not a case where there was any fraudulent concealment because nobody was misled.

[00:19:09] Speaker 05:
Thank you.

[00:19:10] Speaker 05:
One quick question for you, which is

[00:19:12] Speaker 05:
Is it customary in this stent industry to name products after ice cream flavors?

[00:19:20] Speaker 01:
I'm afraid I can't answer that, Your Honor.

[00:19:22] Speaker 01:
I think what's customary is to try to be somewhat unique in naming your product.

[00:19:26] Speaker 01:
And chocolate was certainly a unique name.

[00:19:29] Speaker 02:
OK.

[00:19:29] Speaker 02:
Thank you.

[00:19:31] Speaker 02:
The record does not reflect the answer to the court's question about naming ice cream.

[00:19:39] Speaker 05:
About naming.

[00:19:39] Speaker 05:
Yes.

[00:19:40] Speaker 05:
I couldn't find anything in the record on that.

[00:19:43] Speaker 02:
I can tell you why, if you'd like, but not on my time.

[00:19:47] Speaker 02:
Robert Feldman for the plaintiff.

[00:19:48] Speaker 02:
I'd like to address, if I might, subject matter jurisdiction.

[00:19:52] Speaker 02:
The operation of the chocolate device was front and center in both claims.

[00:19:58] Speaker 02:
You can see that, among other places, in Judge Rogers' written ruling on substantive summary judgment motion in which she said

[00:20:08] Speaker 02:
Defendants argue the technical differences between angiosculpt and chocolate to conclude that they do not fall in the same line of business, line of business being an element of the breach of fiduciary duty claim.

[00:20:25] Speaker 02:
So the technical operation of the chocolate product was front and center in the breach of fiduciary duty case, and you know better than anyone

[00:20:36] Speaker 02:
that the operation of the product would be front and center in the patent case.

[00:20:41] Speaker 02:
But it's not just what Judge Rogers said.

[00:20:43] Speaker 02:
There are sites in the briefs and in the record before you.

[00:20:47] Speaker 02:
The sites in the brief are at footnote eight, at which we set forth the number of places in which, as just one example, scoring, whether this advice scored, was a central issue in the breach of fiduciary duty case.

[00:21:06] Speaker 02:
and a central issue in the patent case.

[00:21:09] Speaker 02:
And there are citations to the record, actual record sites, in footnote eight of our brief.

[00:21:15] Speaker 02:
And since it's important, and since your honor asked the question about common nucleus, if I would be permitted to cite two additional sites in the record that are not in our brief but are in the record that reflect that scoring was front and center in both cases.

[00:21:32] Speaker 02:
Well, Mr. Feldman, while you're on that point,

[00:21:36] Speaker 05:
What state the common nucleus of operative fact that connects the patent case to this supplemental jurisdiction issue?

[00:21:50] Speaker 05:
Scoring is one.

[00:21:52] Speaker 05:
I don't see how that really is an operative fact in the question of whether there was a breach of the... I can explain that to you.

[00:22:04] Speaker 02:
to be more general and specific at the same time.

[00:22:08] Speaker 02:
The first common operative fact is how the product worked.

[00:22:15] Speaker 02:
The same product, chocolate.

[00:22:18] Speaker 02:
How it worked, as Judge Rogers said in her summary judgment order with respect to the fiduciary duty claim, was critical because the defendants claimed that because the products operated differently according to them,

[00:22:35] Speaker 02:
My clients would not have been interested, and it was not in my client's line of business.

[00:22:41] Speaker 02:
And that was a major part of the fiduciary breach trial, how the chocolate product operated, and given that, whether my clients would have been interested.

[00:22:52] Speaker 02:
You have not had to grapple, not that there's much grappling required, with the elements of a breach of fiduciary duty claim under Delaware law, but it includes

[00:23:03] Speaker 02:
whether the product at issue is within my client's line of business, whether it would have been something that my clients would have had an interest and expectancy in, and whether by pursuing it while he was on the board, he put himself in a position that was inimical to our client.

[00:23:23] Speaker 05:
Well, that would be relevant to the supplemental jurisdiction.

[00:23:27] Speaker 05:
Yes.

[00:23:27] Speaker 05:
But that's not relevant to the patent case.

[00:23:30] Speaker 05:
Oh, it certainly is.

[00:23:31] Speaker 05:
You would know better than I that how the product operates is exactly what... Okay, that's one item, how the product operates.

[00:23:39] Speaker 05:
What else?

[00:23:42] Speaker 02:
Anything else?

[00:23:44] Speaker 02:
Yes, of course.

[00:23:45] Speaker 02:
But let me respond because I detect a note of skepticism.

[00:23:50] Speaker 02:
In the patent case, the question is, how does the product operate?

[00:23:55] Speaker 02:
And that consumed an enormous amount of time.

[00:23:58] Speaker 02:
In fact, that was the bulk of the patent case as well.

[00:24:01] Speaker 02:
So the issue of how the product operates is one of the common operative facts.

[00:24:08] Speaker 02:
The second common operative fact is Constantino's role at Angioscore.

[00:24:17] Speaker 02:
That was obviously front and center in the breach of fiduciary duty case.

[00:24:21] Speaker 02:
And we relied on his role at Angioscore to prove that when he was at Angioscore in the patent case, excuse me, back up.

[00:24:31] Speaker 02:
His role at Angioscore was obviously front and center in the breach of the judiciary duty case.

[00:24:37] Speaker 02:
And in the patent case, we relied on his role at Angioscore for the following things, among others.

[00:24:45] Speaker 02:
Number one, that he approved the purchase of the patent application as a director and as CEO, in fact, that became the 119 patent, showing that he believed it was valid.

[00:25:00] Speaker 02:
Second, we relied on his knowledge of the 119 patent from his time at Angioscore in an attempt to show willfulness.

[00:25:10] Speaker 02:
So his role was the second common nucleus of operative fact.

[00:25:15] Speaker 02:
The third was the extent of competition between the companies.

[00:25:19] Speaker 02:
The same experts addressed the role of competition

[00:25:24] Speaker 02:
between the two companies in both... Yeah, but using the same expert doesn't tie anything together.

[00:25:29] Speaker 02:
No, but they addressed the role of... I appreciate your honest comment.

[00:25:34] Speaker 02:
The same expert addressed the extent of competition between Angioscore and Trirem in both cases.

[00:25:44] Speaker 02:
In the breach of fiduciary duty case, it was important to show the extent of competition for both liability and damages,

[00:25:53] Speaker 02:
It showed that it was the same line of business, that he placed himself in an inimical position to my client.

[00:26:02] Speaker 02:
And it certainly showed lost profits.

[00:26:04] Speaker 02:
Likewise, in the patent case, the extent of competition was important as one of the key Georgia Pacific factors.

[00:26:12] Speaker 02:
And in this case, it was the key Georgia Pacific factor.

[00:26:15] Speaker 05:
Yeah, but that goes to damages.

[00:26:17] Speaker 05:
That doesn't go to the fundamental question of

[00:26:20] Speaker 05:
of infringement?

[00:26:22] Speaker 02:
Well, certainly there's no case that distinguishes between liability and damages for determining whether there is a common nucleus of operative fact.

[00:26:31] Speaker 04:
And the fourth thing... Are you aware of any cases that find supplemental jurisdiction based upon just overlapping damages?

[00:26:39] Speaker 02:
No, I'm not.

[00:26:40] Speaker 02:
I don't think there is any such case, but that's not the only thing that we have.

[00:26:43] Speaker 02:
And I actually think that in an appropriate case,

[00:26:49] Speaker 02:
If the only overlap were damages, depending upon the role of damages in a given trial, it might or might not.

[00:26:57] Speaker 02:
But the fourth thing that would constitute a common nucleus of operative fact is that the, we heard about the statute of limitations, which I'll address in a moment, but the conduct of the patent case is what produced the documents that put us on inquiry notice of what actually had happened.

[00:27:19] Speaker 02:
until the documents were produced in the patent case.

[00:27:22] Speaker 04:
Well, that can't be the grounds for supplemental jurisdiction, could it?

[00:27:25] Speaker 04:
I mean, you can come up with all kinds of state law claims in discovery that should be filed in the state courts.

[00:27:30] Speaker 02:
That's absolutely true.

[00:27:31] Speaker 02:
This is just another example of a common nucleus, because we have to prove.

[00:27:35] Speaker 04:
Well, I don't see how it's a common nucleus at all, that you discover documents and discovery.

[00:27:42] Speaker 02:
Well, we then proved that they were the ones that showed us what actually had happened.

[00:27:49] Speaker 02:
Neither the damages nor the statutory notations are the keys.

[00:27:52] Speaker 02:
The ones that really matter are the liability and those are the ones that we address in our brief.

[00:28:00] Speaker 02:
Liability with respect to how the product operates and Constantino's role at both companies.

[00:28:06] Speaker 02:
The second part of the subject matter jurisdiction test is whether the cases would have been tried together and these cases were one month from being tried together.

[00:28:16] Speaker 02:
they actually would have been tried together and the record is very clear that the only reason that they were not tried together is that we dismissed the only fiduciary breach claim that carried a jury trial right and the court was expressed in saying that she would take that opportunity to relieve jurors of having to sit through two trials and in her hope that by addressing one of the trials first that the second trial would not be necessary.

[00:28:44] Speaker 02:
There are

[00:28:45] Speaker 02:
additional factors that I could go through, but I'd like to turn, if I might, to the subject matter of the breach of fiduciary duty law.

[00:28:58] Speaker 02:
I take to heart your honest comment that you haven't grappled with this very much.

[00:29:05] Speaker 02:
I will tell you that the breach of fiduciary duty law in Delaware, as you might expect, is very well developed.

[00:29:12] Speaker 02:
In fact, in the Braas case, 1996, so that's 20 years ago now, Braas and the Delaware Supreme Court referred to the contours of the doctrine as being well-established.

[00:29:27] Speaker 02:
The guidelines that were set forth in that case and in a case called Guth required the court to balance the equities, set forth a four-part test for the plaintiff to prove,

[00:29:40] Speaker 02:
and a four-part test for the defendant to take advantage of.

[00:29:44] Speaker 02:
There are, the Supreme Court said, no hard and fast rules.

[00:29:51] Speaker 02:
And what we're hearing today and in the briefing is that there's a ninth factor, not one that the Delaware Supreme Court listed, but a ninth factor, this business about invention, that is dispositive.

[00:30:10] Speaker 02:
So far from adhering to Delaware law, which, as I said, Your Honor, is well established and has two four-part tests, the defendant would seek to urge upon you a ninth factor, and notwithstanding the Delaware Supreme Court saying that no factor is dispositive, they're all for the court to balance, and they're all to be considered, they would say that by virtue of the defendant supposedly coming up with this by himself,

[00:30:40] Speaker 02:
he is somehow exonerated.

[00:30:44] Speaker 02:
I would suggest to you that this is an unusual case for that argument to be made since the very first finding of fact by the court and something that the defendants proclaim is that this was jointly come up with by the defendant, Constantino, and one of his friends.

[00:31:02] Speaker 02:
And it defies common sense to suggest that whether a director comes up with something by himself or it's suggested to him

[00:31:11] Speaker 02:
or it's presented to him, should determine whether or not a fiduciary duty is breached or observed.

[00:31:18] Speaker 02:
And I would say that the law of fiduciary duty does not suggest that directors or lawyers are supposed to lie to people.

[00:31:26] Speaker 02:
And it certainly doesn't count, and it's what happened in this case.

[00:31:30] Speaker 02:
So for example, Your Honor, at A-61656 of the record,

[00:31:39] Speaker 02:
Constantino, while he was a director of the company, compared angioscope and chocolate and said that chocolate was a step up over angioscope while he was on the board.

[00:31:56] Speaker 02:
He said that the dissection rate, which means the bad failure rate of chocolate, was better than angioscope's dissection rate while he was on the board.

[00:32:09] Speaker 02:
61656.

[00:32:10] Speaker 02:
He said it was a step up, A151.

[00:32:16] Speaker 02:
So that is not what the Delaware Supreme Court had in mind.

[00:32:21] Speaker 02:
With respect to the statute of limitations, I would say the following.

[00:32:26] Speaker 02:
The district court entered an order that said that my clients had acted diligently.

[00:32:32] Speaker 02:
To be very clear, I want to be very clear about this, she also found

[00:32:38] Speaker 02:
that Constantino deceived his lawyers and my client.

[00:32:43] Speaker 02:
The lawyers wrote that letter.

[00:32:45] Speaker 02:
Constantino was cc'd on it.

[00:32:48] Speaker 02:
He provided the information, and she made a specific factual finding that he deceived his lawyers.

[00:32:54] Speaker 02:
So let there be no confusion about who was responsible for that letter.

[00:32:58] Speaker 02:
That finding was at A155.

[00:33:02] Speaker 02:
But the real facts here are that there were two letters

[00:33:06] Speaker 02:
A law firm, Cooley Godward, wrote twice to Dr. Constantino to try to find out what he had done and when.

[00:33:14] Speaker 02:
And he said, among other things, no development had taken place.

[00:33:20] Speaker 02:
False, she found.

[00:33:23] Speaker 02:
He said, I hadn't done anything.

[00:33:25] Speaker 02:
False, the court found.

[00:33:28] Speaker 02:
And at the conclusion of those letters, Angioscore had no information about what he had done

[00:33:37] Speaker 02:
It had no information about what the product was.

[00:33:42] Speaker 02:
So it could not have sued had it wanted to.

[00:33:47] Speaker 02:
All it could have said was, we understand he may be going into specialty balloons.

[00:33:54] Speaker 02:
We don't know what the balloon is, and we don't know whether he's actually worked on it, except that it turned out he had.

[00:34:04] Speaker 02:
So the court was entirely correct.

[00:34:06] Speaker 02:
in its factual finding that he had deceived my client and his lawyers.

[00:34:13] Speaker 02:
There is one thing in the reply brief that I would mention, and then I'll sit down here.

[00:34:18] Speaker 02:
There's a reference to a disclosure that he had found financing, or he was looking for financing.

[00:34:27] Speaker 02:
I would point out to the court, this is not in our brief, but it is in the record, that

[00:34:32] Speaker 02:
Mr. Trotter, this is an important fact to respond to their reply brief about the issue of financing.

[00:34:39] Speaker 02:
Mr. Trotter had just assisted, just assisted his fellow director in attempting to find financing.

[00:34:47] Speaker 02:
That's at A91.

[00:34:50] Speaker 02:
And in the March 21st letter and in the conversation that they had about Glider in December, it was clear that this company that we're talking about, Trireme,

[00:35:03] Speaker 02:
at the time had no money.

[00:35:05] Speaker 02:
So it was not surprising at all that the defendant would have revealed that he was looking for financing.

[00:35:11] Speaker 02:
There's no statement about that financing being tied directly to specialty balloons.

[00:35:17] Speaker 02:
Unless the court has any questions, I'll call the court.

[00:35:19] Speaker 02:
No.

[00:35:19] Speaker 02:
Thank you very much.

[00:35:20] Speaker 02:
And the reason it's called chocolate, Your Honor, is because the pillows stick up and somebody thought it looked like a chocolate bar.

[00:35:29] Speaker 05:
Thank you.

[00:35:29] Speaker 02:
Don't add it.

[00:35:30] Speaker 02:
That's not my fault.

[00:35:34] Speaker 00:
Thank you, and may it please the court.

[00:35:36] Speaker 00:
There is agreement on the name of the chocolate.

[00:35:38] Speaker 00:
It looked like a chocolate bar.

[00:35:39] Speaker 00:
So the parties concur on that one.

[00:35:42] Speaker 00:
So if it's OK with you, I'm going to go upside down from where his argument went.

[00:35:46] Speaker 03:
Chocolate for a stint?

[00:35:48] Speaker 03:
I mean, would anybody really want to stick chocolate in a bar?

[00:35:51] Speaker 00:
I wouldn't.

[00:35:53] Speaker 00:
Dogs are allergic to chocolate, and that would scare me.

[00:35:54] Speaker 04:
Can I just ask you to get straight to, it seemed to me that the primary argument on the jurisdiction was that how this product worked.

[00:36:03] Speaker 04:
was overlapping both claims of infringement.

[00:36:07] Speaker 04:
It's clear how it goes to the infringement.

[00:36:10] Speaker 04:
I'm still a little fuzzy on how it goes to the fiduciary duty or not.

[00:36:13] Speaker 00:
Right.

[00:36:13] Speaker 00:
So, okay.

[00:36:14] Speaker 00:
So we'll start there.

[00:36:15] Speaker 00:
He kept saying it was front and center and how the product operates.

[00:36:19] Speaker 00:
But then he was very fuzzy on what he meant by that.

[00:36:22] Speaker 00:
So the scoring, which was weird that he even raised this because scoring was relevant and it was discussed in the fiduciary state case and in the court's opinion.

[00:36:31] Speaker 00:
But when Angie's score tried to prove its patent case, it didn't rely on the scoring as an affirmative way of showing functional equivalence.

[00:36:39] Speaker 00:
Now, our side mentioned scoring, but it was icing on the cake, and I'm sorry to go desserts again, but it was more on the way that it can't be equivalent.

[00:36:49] Speaker 00:
But most of it, and the heart of this, was whether it was the end-to-end struts and the attachment to the catheter shaft and what the prior art revealed.

[00:36:56] Speaker 00:
And this is a response that goes to all of it.

[00:36:59] Speaker 00:
It has to be the core

[00:37:00] Speaker 00:
It can't be, I mean, I can't believe I actually looked on the Google images what a core looks like, but it can't be the membrane and the nucleoplasm.

[00:37:07] Speaker 00:
It has to be the center.

[00:37:09] Speaker 00:
So just the fact that they can point to little things here and there, it's not the core.

[00:37:12] Speaker 00:
So you can go to those sites.

[00:37:14] Speaker 00:
I don't think they're going to help them.

[00:37:16] Speaker 00:
The second one was his role at Angioscore.

[00:37:20] Speaker 00:
He proved it.

[00:37:21] Speaker 00:
I guess it's valid.

[00:37:23] Speaker 00:
But his main thing was on willfulness.

[00:37:25] Speaker 00:
And again, I'm very surprised by this, but I'm going to give you the site for this.

[00:37:28] Speaker 00:
At the pretrial conference on August 21, pages 82 and 83 and 87, that lawyer for Andrew Skork conceded that he would not rely on anything dealing with the state law case because it was not helpful.

[00:37:43] Speaker 00:
And willfulness was not mentioned in the patent trial.

[00:37:46] Speaker 00:
So I checked on that.

[00:37:47] Speaker 00:
The closing argument made a passing reference and said, you know, Jerry, I could argue willfulness, but I'm not really.

[00:37:52] Speaker 00:
So again, I don't understand that argument.

[00:37:57] Speaker 00:
The third one is on the competition, but that's even a more curious argument, because if Andrew Score had never even been in business, you have a patent case.

[00:38:04] Speaker 00:
This 119 patent never practiced.

[00:38:06] Speaker 00:
So it could have been owned by, I don't know, one of you or me, and you could bring the patent case.

[00:38:11] Speaker 00:
So Andrew Score didn't even have to exist to bring that patent case.

[00:38:15] Speaker 00:
And then the final thing is the discovery, and I think that

[00:38:18] Speaker 00:
you could make the same thing about the boat case, and again, it has to be the core.

[00:38:24] Speaker 00:
And just briefly on the corporate liability, the comparison of the two products to the investors, I'm surprised he didn't mention science accessory because that is what the director fiduciary did there.

[00:38:36] Speaker 00:
He compared his product in an investor prospectus.

[00:38:39] Speaker 00:
So it's the exact fact pattern that you can compare it.

[00:38:42] Speaker 00:
So that is one of the things that you would talk about is what's in the market.

[00:38:45] Speaker 00:
So that is covered squarely by that case.

[00:38:48] Speaker 00:
And then his final one about well-developed, if I could just do another Picasso and Matisse example, because he says, why does it matter if it's a third party?

[00:38:56] Speaker 00:
So when Picasso is painting, the federal right is vindicated if he can sell his invention when he leaves.

[00:39:02] Speaker 00:
But if Picasso's on the board member and Matisse and Moreau come to him and say, you know, I've got a painting, Picasso's got to turn that over to the art gallery.

[00:39:11] Speaker 00:
He can't go cahoot with them.

[00:39:15] Speaker 00:
But the turnover right, Matisse is going to get paid.

[00:39:18] Speaker 00:
Matisse is going to get paid for his paintings in So Moreau.

[00:39:21] Speaker 00:
The other thing is when you have the Matisse presenting this opportunity, you know what you're talking about because that third party articulates what it is.

[00:39:29] Speaker 00:
Here we have no clue what this thing is.

[00:39:31] Speaker 00:
The court never told us what this right to acquire is.

[00:39:34] Speaker 00:
Didn't tell us whether it was an option right and if it's an option right, whether there'd be an option period, option price, royalty, what the procedures.

[00:39:41] Speaker 00:
Also, the very other thing that's very curious is the duty when you have your third party, it arises at presentment.

[00:39:47] Speaker 00:
Third party, Matisse, comes to you and says, hey, Picasso, I've got this another cutout.

[00:39:51] Speaker 00:
Are you interested in it?

[00:39:52] Speaker 00:
Here, the court held the duty arises, the instant an idea becomes concrete.

[00:39:58] Speaker 00:
Concrete enough to what?

[00:39:59] Speaker 00:
To solicit inventors and to file a patent application.

[00:40:02] Speaker 00:
But an inventor has no way of knowing when that's concrete enough.

[00:40:06] Speaker 00:
Picasso could say, do you want to buy my next painting?

[00:40:09] Speaker 00:
I don't even know what it is yet.

[00:40:10] Speaker 00:
And that certainly would be quite marketable.

[00:40:12] Speaker 00:
So would it have been for Steve Jobs.

[00:40:14] Speaker 00:
But other people, you might have to have a whole bunch of patent applications to get somebody to convince you.

[00:40:19] Speaker 00:
And so that's just another problem.

[00:40:21] Speaker 00:
In the third party, you have the actual right of issue being articulated.

[00:40:27] Speaker 00:
You have the inventor getting paid.

[00:40:28] Speaker 00:
And then the first reason is at least Delaware already has a doctrinal box for when it's the own director.

[00:40:34] Speaker 00:
And that's the duty to compete.

[00:40:35] Speaker 00:
So it's just the wrong analytical box.

[00:40:37] Speaker 03:
Concluding thoughts?

[00:40:38] Speaker 03:
No.

[00:40:39] Speaker 03:
OK.

[00:40:39] Speaker 03:
Thank you very much.

[00:40:40] Speaker 03:
That's it for arguments today.

[00:40:42] Speaker 03:
All rise.

[00:40:45] Speaker 02:
The Honorable Court is adjourned until tomorrow morning at ten o'clock a.m.