[00:00:00] Speaker 04:
I agree with sciences.

[00:00:01] Speaker 04:
Mr. Montana.

[00:00:13] Speaker 02:
Good morning and may it please the court.

[00:00:16] Speaker 02:
Bayer sold rights to its soybean events to the Stein Group of Companies.

[00:00:20] Speaker 02:
Harry Stein asked Bayer to divide the rights to split up the rights Bayer was willing to sell to the Stein Group between two Stein entities.

[00:00:29] Speaker 02:
They are granted non-sublicensable commercial rights to Stein Seed for $4.6 million and a research license to MS Tech for $1 million.

[00:00:40] Speaker 02:
But Dow won this case by arguing that the MS Tech license, in fact, included sublicensable commercial rights, the very thing that was banned in the Stein Seed agreement.

[00:00:51] Speaker 04:
But you're not re-arguing the merits.

[00:00:53] Speaker 04:
You're just telling us what?

[00:00:55] Speaker 04:
That there was a substantial basis for the position taken?

[00:00:59] Speaker 02:
Absolutely, Your Honor.

[00:01:00] Speaker 02:
We accept and understand that we lost.

[00:01:03] Speaker 02:
It's unfortunately somewhat difficult when you come here in a 285 posture.

[00:01:06] Speaker 02:
You do have to sort of relate back the merits and why we thought we could have won.

[00:01:10] Speaker 02:
But yes, you're correct.

[00:01:12] Speaker 02:
The district court here awarded fees under Section 285 for reasons that not even Dow will defend anymore.

[00:01:18] Speaker 02:
The district court said at page 810 of its ruling that Bayer's position was contrary to the plain language of the MS Tech Agreement.

[00:01:26] Speaker 02:
In fact, this was the first reason the district court gave

[00:01:28] Speaker 02:
in awarding summary judgment to Dow.

[00:01:31] Speaker 02:
But now Dow has finally admitted that Bayer's reading is plausible.

[00:01:34] Speaker 02:
Page 53 of its brief, Dow says that which reading is correct depends entirely on context.

[00:01:39] Speaker 02:
And Dow has to say that.

[00:01:41] Speaker 00:
But maybe what they meant was in the context of looking at both of the license agreements together, i.e.

[00:01:47] Speaker 00:
you look at the Stein-Zeed agreement, you look at the MS Tech agreement, you see how they fit together, and you look at all of the different provisions, the first recital,

[00:01:58] Speaker 00:
all the way down to exhibit 3.1.5.

[00:02:02] Speaker 00:
And when you look at all the relevant provisions together in the two license agreements, you arrive in the context of those two agreements at an irrefutable conclusion that MS Tech had an exclusive license to fully exploit these patented technologies, except for the fact that Stein Seed had a non-exclusive right to commercialize.

[00:02:26] Speaker 00:
I think that's their argument.

[00:02:28] Speaker 00:
So if that's their argument, then you can go ahead and keep talking.

[00:02:31] Speaker 02:
And if that were entirely correct and no reasonable person could conclude otherwise, Dow should have won its motion to dismiss because Judge Andrews had all of that in front of him as well.

[00:02:40] Speaker 02:
And we prevail on that motion to dismiss and went forward.

[00:02:42] Speaker 02:
But there's other reasons why, including all the language that you just cited, other reasons why our reading of the contract was plausible.

[00:02:50] Speaker 02:
As I said, Judge Andrews denied the motion to dismiss.

[00:02:52] Speaker 02:
And of course, retired Justice Lord Collins not only said,

[00:02:55] Speaker 02:
that our reading was plausible, but that ours was the only reading.

[00:02:59] Speaker 00:
He acknowledged, though, that he wasn't aware of the factual matrix, right?

[00:03:03] Speaker 00:
And then he kind of had to back away in light of being questioned by the judge below that his testimony wasn't really a full, complete one because he wasn't aware of the factual matrix.

[00:03:17] Speaker 02:
Well, what he actually said was, as an English jurist and under English law,

[00:03:22] Speaker 02:
experts are not permitted to offer final opinions as to issues of law, and are just law applied to facts, and are just supposed to say what the law is.

[00:03:31] Speaker 02:
And I think that's what he was saying.

[00:03:33] Speaker 02:
But irrespective, the district court said the plain language allowed only one reading.

[00:03:38] Speaker 02:
In retired justice, Lord Collins said, actually, the only reading it allowed was ours.

[00:03:42] Speaker 02:
So irrespective of what facts he was looking at, many of the things, of course.

[00:03:46] Speaker 00:
Did Lauren, Lord Collins, consider and testify as to understanding of the first recital

[00:03:52] Speaker 00:
divesting the asset, and then looking at all the other provisions, including the exhibit 3.1.5.

[00:04:00] Speaker 02:
I believe he did as to the recitals, because the sixth recital, the carve-out, was pretty important to retired Justice Lord Collins's opinion.

[00:04:09] Speaker 02:
How about the first recital?

[00:04:11] Speaker 02:
I don't recall, Your Honor.

[00:04:14] Speaker 02:
But in any event, when you're referring to the plain language, of course he said the plain language only went one way, and the district court said the plain language could only go the opposite way.

[00:04:22] Speaker 02:
But there's a second and more fundamental problem with the district court's 285 ruling.

[00:04:26] Speaker 02:
And that's its repeated refrain that no witness supported Bayer's view, even going so far as to say that Bayer's witnesses supported Dow's view.

[00:04:35] Speaker 02:
And this is clear error.

[00:04:36] Speaker 02:
And just a few weeks ago in this large audience display system's per curiam opinion, a panel of this court remarked that while the octane fitness requires looking at the totality of the circumstances, the circumstances upon which a district court relies must actually exist.

[00:04:51] Speaker 02:
and findings that such circumstances exist must be justified by the record.

[00:04:55] Speaker 02:
And on this no witness point, those circumstances do not exist and are not justified.

[00:05:00] Speaker 02:
Margaret Keating, the lawyer who negotiated the deal for Bayer, testified over and over again that she read the contract the way Bayer thought it should be read.

[00:05:09] Speaker 02:
First she said, we wanted to be very sure we were transferring what was appropriate and only as broad as it needed to be, setting out that the bundle of rights Bayer was giving to the Steinberg

[00:05:18] Speaker 02:
was only going to be as broad as Bayer needed it and Stein needed it to be for the Stein group to commercialize.

[00:05:23] Speaker 00:
I thought she also testified that nobody was thinking about, or no one was discussing at that point in time, at the time of the license agreements, that Bayer had any intention of reserving commercialization rights.

[00:05:38] Speaker 02:
Well, at A7454, page 100 of her deposition, she says she did recall a discussion of retaining rights.

[00:05:44] Speaker 02:
But that brings up a very interesting point.

[00:05:47] Speaker 02:
retaining commercialization rights.

[00:05:49] Speaker 02:
As a practical matter, Bayer was not going to immediately reenter the soybean business because they'd given, they'd sold all the assets, the physical material to MS Tech and Stein.

[00:06:00] Speaker 02:
And in order to go back into this business and the glyphosate IP, they would need a license back from MS Tech, which had the research license.

[00:06:07] Speaker 00:
Didn't Morgan and Schulte say

[00:06:10] Speaker 00:
Bayer was getting out of the soybean business.

[00:06:13] Speaker 00:
That's absolutely correct.

[00:06:14] Speaker 00:
And it's utterly consistent.

[00:06:15] Speaker 00:
And so now they were looking to liquidate their assets in the soybean technology world.

[00:06:21] Speaker 00:
Absolutely, Judge Chen.

[00:06:22] Speaker 02:
And that brings me to the point.

[00:06:23] Speaker 02:
What price you're willing to sell your liquidated assets to depends on your counterparty.

[00:06:28] Speaker 02:
Here's the Stein Group of companies.

[00:06:30] Speaker 02:
So Stein Group's willing to pay $4.6 plus $1 million for these assets.

[00:06:36] Speaker 02:
If the Stein Group was acting as a straw purchaser for BASF,

[00:06:40] Speaker 02:
or Syngenta or Dow or Pioneer, the price would have been different.

[00:06:44] Speaker 02:
It's not retained commercialization rights in the sense that Bayer intends to jump back into the business and all Bayer's witnesses testified to that fact.

[00:06:51] Speaker 02:
It's a retained right to be a part of the conversation if Stein is going to fund that flip and turn around like they did and go to Dow and hand over our valuable IP at a price that we never would have accepted from Dow and we know that because Dow's been ordered to pay

[00:07:07] Speaker 02:
$500 million for what it did with respect to enlist in the Bayer III arbitration.

[00:07:12] Speaker 02:
We have a good idea of what it is Bayer would have demanded if Stein had been acting as a straw for Dow.

[00:07:19] Speaker 02:
And that's what Margaret Keating said at 4844 when she said, we were only wanted to transfer what was appropriate and only as broad as it needed to be.

[00:07:28] Speaker 03:
But she also said, I have no specific memory of them not having the right to sell, didn't she, on the prior page in her testimony?

[00:07:34] Speaker 02:
Well, which is really not surprising.

[00:07:36] Speaker 02:
She actually said she had no specific memory of conversations about that, but that's really not surprising.

[00:07:41] Speaker 02:
The best evidence of what could be done are the agreements themselves.

[00:07:44] Speaker 02:
And to turn it around, Judge Stoll, there is absolutely no explanation from Dow, and there never has been, of why the commercial rights in the Stein Seed Agreement are not sublicensable.

[00:07:56] Speaker 02:
There is no explanation for that.

[00:07:58] Speaker 02:
There can be none other than when the bundle of rights were handed over, the commercial rights that were handed over to the Stein Group,

[00:08:04] Speaker 02:
were non-sublicensable.

[00:08:06] Speaker 03:
But I understood that there is evidence in the record that you didn't care, your client didn't care who was paying what for what part of the rights, that they were able to divide it up amongst themselves as they wished.

[00:08:17] Speaker 03:
At least there's testimony to that.

[00:08:19] Speaker 02:
That's absolutely correct, Judge Stone.

[00:08:20] Speaker 02:
It gets to the key non-sequitur of the district court's opinion.

[00:08:23] Speaker 02:
Bayer did not care how the bundle it was handing over was divided up.

[00:08:28] Speaker 02:
That doesn't mean Bayer didn't care what the bundle was.

[00:08:31] Speaker 02:
The district court took testimony from Morgan

[00:08:34] Speaker 02:
from Ms.

[00:08:35] Speaker 02:
Keating and from our 36th witness saying Bayer didn't care how Stein allocated these rights to mean Bayer didn't care what the rights were.

[00:08:43] Speaker 02:
That's a non sequitur.

[00:08:44] Speaker 02:
Bayer cared deeply.

[00:08:46] Speaker 02:
Ms.

[00:08:46] Speaker 02:
Keating said it at 84844 in testimony the district court relied on for finding that no witness supported Bayer.

[00:08:54] Speaker 02:
In fact, Ms.

[00:08:54] Speaker 02:
Keating over and over again said that our interpretation was correct.

[00:08:59] Speaker 02:
She said she remembered discussion of retained rights, as I've said.

[00:09:02] Speaker 02:
At A7443, she said that Stein Group could only commercialize if they worked together.

[00:09:07] Speaker 02:
She said that MS Tech did not get commercial rights at A4845.

[00:09:12] Speaker 02:
And yes, she said she had no specific recollections of discussions about this.

[00:09:17] Speaker 02:
But this is memorialized in the agreements themselves.

[00:09:20] Speaker 02:
And actually, if you take a look at A5789, that's the first draft of these provisions authored by MS Tech's lawyer, Mr. Saluri.

[00:09:31] Speaker 02:
And if you look at the provision for MS Tech in there, it's clear as day that the exception is meant as an exception to the power to sub-license.

[00:09:39] Speaker 02:
And I'd encourage you to just take a look at that.

[00:09:41] Speaker 02:
These were drafted by MS Tech and Stein.

[00:09:44] Speaker 02:
These reflect what the parties understood.

[00:09:46] Speaker 02:
And what the parties understood is there was a ban on sub-licensing.

[00:09:49] Speaker 02:
And again, I know it sounds like I'm re-arguing the merits.

[00:09:52] Speaker 02:
But I do so only to point out that Bayer's position wasn't so exceptionally weak that we should be here on a 285 finding.

[00:10:00] Speaker 02:
And in that sense, I'd like to.

[00:10:01] Speaker 03:
Do you agree that the district court's opinion is based on both the merits of the position and the way in which the case was litigated?

[00:10:09] Speaker 02:
I do agree insofar as the conduct over the ownership issue is implicated.

[00:10:16] Speaker 02:
And I'm into my rebuttal time, but I'd like to answer your question.

[00:10:19] Speaker 02:
As to the preliminary injunction and the speed with which we move to amend the complaint, those are inextricably tied up with the merits of the case.

[00:10:26] Speaker 02:
You can move quickly if you have a good case, and you can file for a preliminary injunction if you have a good case.

[00:10:30] Speaker 02:
As to ownership, it's actually laid at Dow's door what went on with ownership.

[00:10:37] Speaker 02:
At A9941 is Dow's press release announcing enlist.

[00:10:41] Speaker 02:
At the bottom of it is a sentence that says, unequivocally, a public statement from a public company, Dow owns enlist.

[00:10:48] Speaker 02:
If Dow owns enlist, then there's no way MS Tech or Stein could have given any rights to Dow, because all MS Soybean events have to be by or for MS Tech.

[00:10:58] Speaker 02:
So Dow started this problem.

[00:11:00] Speaker 02:
by saying they owned Enlist, that by itself creates a good faith basis.

[00:11:04] Speaker 00:
We're talking about your conduct, though, and what you said to this court in Bayer II and then what you said in the arbitration in Bayer III right around the exact same time.

[00:11:16] Speaker 00:
And it looked like they're saying this.

[00:11:20] Speaker 00:
They are Janus-faced.

[00:11:23] Speaker 02:
Well, Janus-faced in the sense that we've lost

[00:11:25] Speaker 02:
summary judgment when Dow submitted a declaration at the summary judgment phase for the first time with one of its witnesses testifying no MS Tech owns enlist.

[00:11:35] Speaker 02:
So we lose.

[00:11:36] Speaker 02:
And then apparently, I guess what we're supposed to do is agree to lose both cases on irreconcilable factual theories.

[00:11:43] Speaker 02:
No, what we did was not litigation misconduct.

[00:11:48] Speaker 02:
To do anything else would have been malpractice to go to the Bayer III arbitration and agree to lose on a theory we had already lost on

[00:11:55] Speaker 02:
in the district court.

[00:11:56] Speaker 02:
It doesn't make any sense.

[00:11:57] Speaker 02:
And yes, we did appeal the issue to this court.

[00:11:59] Speaker 02:
There was plenty of evidence that Dow had some ownership interest.

[00:12:02] Speaker 02:
We lost.

[00:12:03] Speaker 02:
We did the right thing.

[00:12:04] Speaker 02:
And we did not litigation misconduct to tell the arbitration panel in paragraph 148 of our submission that it was judicial estoppel.

[00:12:12] Speaker 02:
Dow says we didn't use judicial estoppel.

[00:12:14] Speaker 02:
It's right there in our reply brief.

[00:12:16] Speaker 02:
Thank you, Your Honor.

[00:12:17] Speaker 02:
I'll take the rest of my time.

[00:12:18] Speaker 04:
Thank you, Mr. Montana.

[00:12:26] Speaker 04:
Mr. Davies?

[00:12:27] Speaker 01:
Good morning, Your Honor.

[00:12:28] Speaker 01:
May it please the Court.

[00:12:31] Speaker 01:
The word we didn't just hear was the word deference, so let's start there.

[00:12:34] Speaker 01:
As the Supreme Court recently held, this Court's review of a Section 285 Fees Award is deferential.

[00:12:42] Speaker 01:
And it's deferential, the Court explained, because the District Court lives with the case over a prolonged period of time.

[00:12:49] Speaker 04:
But there really is a fundamental issue, is there not?

[00:12:53] Speaker 04:
on the question of when attorney's fees are to be awarded in this evolving jurisprudence that we have back and forth between us and the Supreme Court and various cases.

[00:13:06] Speaker 04:
And perhaps the standard has been liberalized, but the question is, how far does that go?

[00:13:12] Speaker 01:
I think that's well put, Your Honor.

[00:13:15] Speaker 01:
The point I would like to make is underlying.

[00:13:18] Speaker 01:
But I think this court and certainly Supreme Court's

[00:13:20] Speaker 01:
jurisprudence is respect for the district court process.

[00:13:24] Speaker 01:
And what happened here is we had a district court pour over the record, two-day summary judgment hearing, issue a 32-page fees award, finding that Bayer's theory here rested on contorted theories of a contract and had no witness support.

[00:13:44] Speaker 01:
And the district court not only had the fees, not only had that hearing, but had magistrate

[00:13:49] Speaker 01:
a detailed opinion issued after a fee's hearing.

[00:13:52] Speaker 01:
So as the district court observed, if ever there were an exceptional case, it is this one.

[00:13:57] Speaker 01:
DAS has invested millions of dollars in an innovative product.

[00:14:01] Speaker 01:
As we explained, Bayer decided not to compete and instead has filed this meritless patent litigation the court should affirm.

[00:14:11] Speaker 01:
The first reason why this case is exceptional is the complete lack of pre-suit diligence.

[00:14:18] Speaker 01:
Here's a district court, and this is Appendix 27.

[00:14:21] Speaker 01:
Had Bayer done any due diligence, Your Honor, any, it would have learned that no witness supported Bayer's construction of the agreement.

[00:14:29] Speaker 00:
And this case... Have we ever said that the lack of pre-filing investigation is solid grounds for a 285?

[00:14:39] Speaker 01:
So I don't think on its own.

[00:14:41] Speaker 01:
It's certainly been a factor, and even the Martek opinion and Judge Newman's opinion, the failure to understand

[00:14:48] Speaker 01:
your case before filing is, I think it's a key part of the problem.

[00:14:53] Speaker 01:
What the doctrine is designed to do is to make people think twice before filing a patent lawsuit.

[00:14:58] Speaker 01:
Here, two days after we issued a press release, they accused us of infringing seven patents on 100 claims.

[00:15:07] Speaker 01:
Two days later, there was no investigation.

[00:15:11] Speaker 01:
They didn't call their witnesses, some of whom were either current or former employees.

[00:15:16] Speaker 01:
They had no theory about why we couldn't work with the partner, MS Tech, that was named in the press release.

[00:15:21] Speaker 01:
And even worse, there's an additional wrinkle here.

[00:15:23] Speaker 01:
The relevant agreement here is under UK law, under English law.

[00:15:27] Speaker 01:
And it's common ground that under English law, the facts have to be developed, have to be understood before you can read the contract.

[00:15:33] Speaker 01:
And they made no effort to explore the facts.

[00:15:37] Speaker 01:
Now, my colleague on the other side mentioned Judge Andrews, and he did deny the motion to dismiss.

[00:15:41] Speaker 01:
But let's look at exactly what he said.

[00:15:43] Speaker 01:
This is at Appendix 737.

[00:15:45] Speaker 01:
All he's saying is, if you assert a licensed defense, that's a factual defense, and you're not going to win a motion to dismiss.

[00:15:54] Speaker 01:
And that's what the magistrate does.

[00:15:55] Speaker 01:
And he says, Appendix 18329, Andrew did not address the merits of buyer's claims.

[00:16:02] Speaker 01:
That a plaintiff survives a motion to dismiss does not necessarily mean that the plaintiff's had a colorable claim.

[00:16:09] Speaker 03:
How do you respond to Mr. Montero's point that

[00:16:12] Speaker 03:
Ms.

[00:16:13] Speaker 03:
Keating's testimony was supportive of their position.

[00:16:19] Speaker 01:
I think you read the testimony, Your Honor, but let me point you to one.

[00:16:23] Speaker 01:
Appendix 484-4.

[00:16:24] Speaker 01:
The key question in this case is whether MS Tech has the right to commercialize.

[00:16:28] Speaker 01:
That's common ground.

[00:16:29] Speaker 01:
That's the key question.

[00:16:30] Speaker 01:
She was asked this question three times.

[00:16:32] Speaker 01:
Here's a quote.

[00:16:33] Speaker 01:
Do you have a memory of anybody involved in the deal suggesting that MS Tech won't have the right to commercialize seats?

[00:16:41] Speaker 01:
So that's the key question.

[00:16:42] Speaker 01:
She was asked it three times.

[00:16:44] Speaker 01:
And you want to refer to this earlier.

[00:16:45] Speaker 01:
It's the same page.

[00:16:46] Speaker 01:
Quote, I don't have a specific memory of that specific comment.

[00:16:51] Speaker 01:
And another part of their argument now, anyway, is that buyer retained its commercial rights.

[00:16:56] Speaker 01:
But she was asked that as well.

[00:16:57] Speaker 01:
That's the same page.

[00:16:59] Speaker 01:
She was asked that question.

[00:17:00] Speaker 01:
And again, no specific memory of anyone ever discussing their retaining commercial rights.

[00:17:04] Speaker 01:
Now remember, this is hundreds of millions of dollars decision.

[00:17:07] Speaker 01:
We have the head of that divestment team, Morgan,

[00:17:10] Speaker 01:
saying we had a choice, we did a study, we decided we were not going to spend the hundreds of millions of dollars to do the research and the development.

[00:17:17] Speaker 01:
They were getting out.

[00:17:19] Speaker 01:
You would have thought that the Associate General Counsel negotiating this would remember that, as she remembers many of the details.

[00:17:25] Speaker 01:
Now, she does in a few places endorse the current theory that Byer is arguing.

[00:17:31] Speaker 01:
But if you look at the language, again, it's a 4845, what she is only saying is she's just reading the contract, Your Honor.

[00:17:38] Speaker 01:
She's just saying, quote,

[00:17:39] Speaker 01:
what the language says.

[00:17:40] Speaker 01:
She's not remembering.

[00:17:42] Speaker 01:
She's not a factual witness when she's giving that testimony.

[00:17:48] Speaker 01:
There was a colloquy about Lord Collins.

[00:17:52] Speaker 01:
And I remember, I think it's notable, Lord Collins was not in the picture when they decided to file this lawsuit, Your Honor.

[00:17:57] Speaker 01:
He enters the picture much later, and as the district court found, he testified live.

[00:18:02] Speaker 01:
So this is when the world of deference

[00:18:04] Speaker 01:
when you have a district court listening to a witness and concluding as follows in appendix 26, note 10, quote, clear to this court through the cross-examination that he was unaware of the factual matrix.

[00:18:15] Speaker 01:
So Lord Collins can't help them, because in the UK law, you can't construe the contract at the outset without understanding the facts.

[00:18:22] Speaker 01:
He did not know the facts.

[00:18:23] Speaker 01:
They did not give him the Keating deposition we were just talking to.

[00:18:27] Speaker 01:
He did not have the Morgan deposition that I mentioned earlier.

[00:18:31] Speaker 04:
Well, we don't know.

[00:18:33] Speaker 04:
all of the interaction, of course, but we do have the opinion.

[00:18:37] Speaker 04:
And this is really, I think, what we need to decipher.

[00:18:42] Speaker 04:
How far do we advance the loser pays concept under the present state of the law?

[00:18:50] Speaker 01:
I think that's exactly right, Your Honor.

[00:18:51] Speaker 01:
And I understand the court's care in this context, because we don't want a situation where just because you win a summary judgment motion, you then go and get fees.

[00:19:00] Speaker 01:
That's not what we're suggesting here.

[00:19:03] Speaker 01:
We're suggesting this case is exceptional, the lack of the presuit diligence that I just talked about.

[00:19:08] Speaker 01:
And also, let's talk about the plain language reading of the contract that Judge Chen was asking about.

[00:19:13] Speaker 01:
There are simply two agreements.

[00:19:15] Speaker 01:
And when you read the two agreements together, there's only one answer.

[00:19:19] Speaker 01:
And so it's exceptional, Your Honor, because we have the lack of the presuit diligence.

[00:19:23] Speaker 01:
We have a plain language argument that we have not backed away from, as Judge Chen explained.

[00:19:27] Speaker 01:
A plain language argument that the district court here found contorted.

[00:19:31] Speaker 01:
And here's the key part, Your Honor, no witnesses that support their theory.

[00:19:36] Speaker 01:
That's another reason why this case is so unusual.

[00:19:38] Speaker 01:
No witnesses came forward to support the theory that MS Tech did not have commercialization rights.

[00:19:44] Speaker 01:
To the contrary, their witness, Morgan, says, no, we were getting out of the business.

[00:19:48] Speaker 01:
We were done with that business.

[00:19:49] Speaker 01:
So it's exceptional because

[00:19:51] Speaker 01:
no pre-suit diligence.

[00:19:52] Speaker 01:
It's exceptional because it's premised on a theory that doesn't hold up when you actually just read the words of the two contracts.

[00:19:59] Speaker 01:
And it's exceptional because they have no witnesses to support their theory.

[00:20:03] Speaker 00:
And just to qualify that last statement, they do have Lord Collins and they do have Keating saying that they read the contracts as holding back commercialization rights.

[00:20:14] Speaker 00:
I understand your response, which is that's their

[00:20:18] Speaker 00:
present-day reading, it has nothing to do with facts on the ground, factual matrix, and lead up to licensing agreement of some contemplation of what the contracts were trying to drive at.

[00:20:30] Speaker 01:
That's exactly right.

[00:20:31] Speaker 01:
The only little tweak I would add, Your Honor, is we do have Keating saying that she does not remember.

[00:20:35] Speaker 01:
So we have a really clear record of a contract that cannot be read, of the theory of a case that they have no witnesses

[00:20:43] Speaker 01:
to support on contemporaneous time.

[00:20:46] Speaker 01:
So it's already a very narrow case, Your Honor.

[00:20:48] Speaker 00:
What about the first draft of the license agreement by Solori that the other side points to?

[00:20:53] Speaker 01:
The splitting up language, Your Honor.

[00:20:56] Speaker 01:
So what we were talking about there is just the contract language where we would, instead of one entity having exclusive rights to sell, there's now two entities.

[00:21:04] Speaker 01:
So it's split up in that sense.

[00:21:06] Speaker 01:
But it's nothing more than that.

[00:21:09] Speaker 01:
I mean, it wouldn't have made sense

[00:21:10] Speaker 01:
for the parties to decide, oh, we'll give back the commercial rights to bear.

[00:21:14] Speaker 01:
It wasn't even asking for it.

[00:21:15] Speaker 01:
They were just dividing up instead of the one entity, two entities were sharing that right.

[00:21:19] Speaker 01:
That's all that's about.

[00:21:21] Speaker 00:
I'm not sure what to think about the E3 ownership issue.

[00:21:27] Speaker 00:
While you're in litigation, you don't know which side different tribunals are going to come out.

[00:21:33] Speaker 00:
You don't want to be on the losing end of the stick in both tribunals.

[00:21:39] Speaker 00:
it's illogical to be on likewise the winning side of both when you're arguing X and then you're arguing not X in two tribunals.

[00:21:49] Speaker 00:
But in order to preserve your interests, why is it so terrible to advance a position that helps you in both those tribunals not yet knowing which way either tribunal is going to come out and then potentially stop yourself from taking the counter position in the

[00:22:08] Speaker 00:
in the parallel proceedings.

[00:22:10] Speaker 01:
And as Your Honor states it, there'll be nothing untoward about that at all.

[00:22:15] Speaker 01:
It's not what happened here.

[00:22:16] Speaker 01:
And it's not what the district court was worried about.

[00:22:18] Speaker 01:
So Your Honor, what the district court is worried about here is needless expense of patent litigation.

[00:22:23] Speaker 01:
And the E3 conduct illustrates the harm when you have parties not taking the process seriously.

[00:22:29] Speaker 01:
So yes, now in the arbitration, they quickly agree about who owns E3.

[00:22:35] Speaker 01:
But there was a big fight about it in district court.

[00:22:39] Speaker 01:
on that very topic.

[00:22:40] Speaker 01:
And that was a complete waste of the system's time.

[00:22:43] Speaker 01:
That's the part that the district court was upset about.

[00:22:46] Speaker 01:
I think, you know, there's also some sort of, you shouldn't refile on May 7th a reply brief in this court saying there are genuine disputes of material fact regarding whether E3 was made for MST or for Dow.

[00:22:58] Speaker 01:
That's the appendix 13995 on May 7th.

[00:23:00] Speaker 01:
And then six days later,

[00:23:03] Speaker 01:
in a different hearing, say MS Tech owned E3 and doubted not.

[00:23:07] Speaker 01:
So it's there.

[00:23:08] Speaker 01:
I don't know what to make of it.

[00:23:09] Speaker 01:
I think Your Honor has used the word factoring in.

[00:23:11] Speaker 01:
I think it factors into the overall picture.

[00:23:14] Speaker 01:
But what we have here is a totality of the circumstances inquiry from the Supreme Court.

[00:23:19] Speaker 01:
And that is part of the story of the unreasonable manner in which this case was litigated.

[00:23:26] Speaker 01:
The other piece, aside from lack of precinct diligence here, is the preliminary injunction that I think really upset the district court.

[00:23:33] Speaker 01:
She didn't use the phrase gamesmanship, but it does feel like that's what she was upset about.

[00:23:38] Speaker 01:
So March 2012 is when the complaint is filed.

[00:23:43] Speaker 01:
Almost a year later, in February 19th, they file a preliminary injunction.

[00:23:48] Speaker 01:
So why wasn't it filed when the complaint was filed if it was so urgent?

[00:23:52] Speaker 01:
If the damage was so irreparable, why wait the year?

[00:23:55] Speaker 01:
No answer.

[00:23:57] Speaker 01:
Did something change?

[00:23:58] Speaker 01:
Nothing changed.

[00:23:59] Speaker 01:
There's just a filing to cause problems.

[00:24:02] Speaker 01:
There was no urgency around that preliminary injunction, Your Honor.

[00:24:04] Speaker 01:
Again, it's an example of stressing the system in a way that Section 285 is designed to prohibit.

[00:24:12] Speaker 00:
It's a little speculative, though, isn't it?

[00:24:15] Speaker 00:
There's nothing in the law that bars someone from filing a preliminary injunction motion in any particular time in a proceeding.

[00:24:27] Speaker 01:
No, but you don't want parties filing frivolous.

[00:24:29] Speaker 01:
That's what the district court used the word frivolous preliminary injunction motion.

[00:24:32] Speaker 01:
That's part of the unreasonable manner in which this case was litigated.

[00:24:35] Speaker 01:
Sure, you have a preliminary injunction motion that you have a chance of winning on the merits, that you have irreparable harm.

[00:24:41] Speaker 01:
Why was it frivolous?

[00:24:42] Speaker 01:
Because there was absolutely no irreparable harm at that moment in time?

[00:24:46] Speaker 01:
Right.

[00:24:46] Speaker 01:
There was no urgency to it.

[00:24:47] Speaker 01:
I mean, the timing of the way they filed it shows that they were just really just trying to... Because your side was still years away from actually commercializing?

[00:24:55] Speaker 01:
Exactly, Your Honor.

[00:24:56] Speaker 01:
And actually, if you look at the order that they proposed, and it's a 2112 to three, what they wanted the court to issue was an order destroying the very research and development that they are now saying, MS Tech was allowed to let us do.

[00:25:14] Speaker 01:
So there's just a district court, and we have to defer.

[00:25:17] Speaker 01:
So what we have here is a district court who's very familiar with the record, who's seeing this, what she called a frivolous

[00:25:24] Speaker 01:
preliminary injunction.

[00:25:26] Speaker 01:
So if the needless litigation expense, Your Honor, that's language from our check, Your Honor, the needless litigation expense that buyer has inflicted on the system from the unreasonable manner in which this case has been litigated.

[00:25:39] Speaker 03:
Was it also considered frivolous because at that point depositions of witnesses had been taken and they had explained that they

[00:25:47] Speaker 03:
didn't have a contemporaneous memory and things like that.

[00:25:50] Speaker 01:
Yes, the timing did seem to the district court to be playing games with the way the depositions were coming out.

[00:25:56] Speaker 01:
It seemed like the depositions weren't going well, and so they filed a preliminary injunction.

[00:26:00] Speaker 01:
So yes, that's another thing that upset the district court.

[00:26:03] Speaker 01:
The economic setting is the final point that I want to get across here.

[00:26:08] Speaker 01:
The way we have portrayed the deal makes a lot of sense.

[00:26:12] Speaker 01:
What happened here is buyer got out and made the decision to get out.

[00:26:16] Speaker 01:
Steinseed got in, but with limited rights because it didn't want to trigger other obligations.

[00:26:23] Speaker 01:
And MS Tech got in only for a million dollars, but now was going to have to spend tens of millions of dollars in research and development.

[00:26:32] Speaker 01:
And in fact, that's why Bayer got out.

[00:26:33] Speaker 01:
But it didn't want to take the effort and the risk that MS Tech got in.

[00:26:38] Speaker 01:
And that's not me talking.

[00:26:39] Speaker 01:
That's quotes.

[00:26:40] Speaker 01:
So appendix 4766, a lot of expense to deregulate the product.

[00:26:44] Speaker 01:
Appendix 976I.

[00:26:46] Speaker 01:
risk to spend funds and never market anything.

[00:26:49] Speaker 01:
On the other side of the ledger, you just have what the district court calls creative lawyering, Appendix 8978.

[00:26:56] Speaker 01:
There is just, quote, no record evidence of any other theory other than the one I just described.

[00:27:03] Speaker 00:
Just for my edification, what is a soybean event?

[00:27:09] Speaker 00:
We keep talking about events here all over the place, Bayer soybean events, MS soybean events.

[00:27:13] Speaker 01:
As opposed to seeds.

[00:27:14] Speaker 00:
Yeah.

[00:27:15] Speaker 01:
It's the technology that goes into the gene that allows the seed to have the characteristics that we want.

[00:27:22] Speaker 01:
So it's the technology as opposed to the actual just the seed.

[00:27:25] Speaker 03:
It's not an actual, an event, isn't the cell, anything, it's just, I'm sorry.

[00:27:33] Speaker 01:
It's a genetic modification too that allows the resistance.

[00:27:40] Speaker 04:
Okay.

[00:27:40] Speaker 04:
Okay.

[00:27:40] Speaker 04:
Thank you, Mr. Davies.

[00:27:43] Speaker 04:
Thank you.

[00:27:43] Speaker 04:
Mr. Montana.

[00:27:45] Speaker 04:
Full rebuttal, please.

[00:27:50] Speaker 02:
Thank you, Your Honor.

[00:27:51] Speaker 02:
I'd like to start just briefly with Judge Stoll's question about the preliminary injunction motion.

[00:27:55] Speaker 02:
It is false that the depositions have started.

[00:27:57] Speaker 02:
It's at footnote six of our reply brief.

[00:27:59] Speaker 02:
It has all the dates.

[00:28:00] Speaker 02:
You can see them right there.

[00:28:01] Speaker 02:
I'd like to now go to where Council opposite- What happened to that preliminary injunction motion?

[00:28:06] Speaker 02:
It was never decided, Your Honor.

[00:28:07] Speaker 02:
Why was that?

[00:28:08] Speaker 02:
I cannot speculate, Your Honor, nor will I speculate as to why the district court felt certain things.

[00:28:13] Speaker 02:
I mean, was it not decided because your side withdrew it?

[00:28:16] Speaker 02:
No.

[00:28:17] Speaker 02:
Your note was always pending.

[00:28:18] Speaker 03:
Was there a hearing on it?

[00:28:19] Speaker 02:
No.

[00:28:20] Speaker 03:
Just fully briefed by both the parties?

[00:28:22] Speaker 02:
Correct.

[00:28:23] Speaker 02:
And it's not unusual, by the way, to file a preliminary injunction motion well in advance of the event that's really going to hurt you.

[00:28:29] Speaker 02:
I actually do it all the time.

[00:28:30] Speaker 02:
It's because you want to give the district court time to get whatever evidentiary hearing it needs to have in place.

[00:28:36] Speaker 02:
Three years?

[00:28:38] Speaker 02:
You never know.

[00:28:38] Speaker 02:
I mean, I have filed preliminary injunction motions 18 months more in advance of the precipitating event, because you never know how a court is going to manage the discovery necessary for a PI or the evidentiary hearing that some circuits hold is actually mandatory.

[00:28:53] Speaker 02:
So it's not that unusual.

[00:28:54] Speaker 00:
So just to be clear, your side never withdrew the preliminary injunction motion.

[00:28:58] Speaker 00:
That's correct.

[00:28:59] Speaker 00:
It just laid there.

[00:29:01] Speaker 00:
Yes.

[00:29:03] Speaker 00:
And nobody went and picked it up and touched it.

[00:29:06] Speaker 00:
Correct.

[00:29:06] Speaker 00:
And the summary judgment motion was this.

[00:29:09] Speaker 00:
Your side didn't pursue it any further?

[00:29:12] Speaker 00:
Say, excuse me, Judge.

[00:29:14] Speaker 00:
We have a pending preliminary injunction motion.

[00:29:15] Speaker 00:
We're very hot under the collar.

[00:29:17] Speaker 02:
We need some resolution.

[00:29:19] Speaker 02:
Well, Dow is filing this motion for summary judgment in the hearing they're on when three months later a ruling against us sort of put the end to all of that.

[00:29:27] Speaker 02:
But I would like to go to the first point Council opposite mentioned, which is the so-called rush to filing something.

[00:29:33] Speaker 02:
The district court at A7 in note two

[00:29:36] Speaker 02:
said that it was in no way holding against Bayer, that after six months of a motion to amend pending, we dropped the motion to amend and refiled a new lawsuit.

[00:29:47] Speaker 02:
Six months we had to continue to look in to all of this and hundreds and hundreds of hours billed by the Milbank firm outside council.

[00:29:54] Speaker 02:
It was not 48 or 72 hours.

[00:29:57] Speaker 02:
The operative complaint here was filed six months after the Dow press release, which is where I'd like to go next.

[00:30:03] Speaker 02:
And I know Judge Chen, you said it's not about

[00:30:05] Speaker 02:
Dow's conduct, and it isn't.

[00:30:07] Speaker 02:
But the press release in 9941 says Dow owns Enlist.

[00:30:12] Speaker 02:
Dow cannot own Enlist if MS Tech gave it a license, because MS Tech can only give licenses, even if you buy their commercial rights theory.

[00:30:20] Speaker 02:
MS Tech can only give licenses for MS Tech events made by or for MS Tech.

[00:30:25] Speaker 02:
If Dow owns Enlist, Dow is violating our patent rights.

[00:30:29] Speaker 02:
We filed this suit.

[00:30:31] Speaker 02:
The evidence the district court relied on

[00:30:33] Speaker 02:
to decide MS Tech owned enlist is the Rojas declaration filed by Dow in the summary judgment briefing two years later after the press release.

[00:30:45] Speaker 02:
It's an A8962 where the district court relies on the Rojas declaration.

[00:30:49] Speaker 02:
Two years go by and we find internal Dow documents that say Dow owns enlist A16249 and we see the press release.

[00:30:59] Speaker 02:
This is a press release from a public company.

[00:31:01] Speaker 02:
It's not true that we didn't have a basis to go forward, even putting the commercial rights completely to the side.

[00:31:06] Speaker 02:
When Dow says it owns that trait, Dow is admitting it's violating our patent rights because MS Tech cannot give it patent rights under the MS Tech agreement for a trait that Dow owns.

[00:31:18] Speaker 02:
And that was only cleared up when Dow's witness gave testimony in a declaration at summary judgment.

[00:31:24] Speaker 02:
So that entire time bears pursuing a plausible alternative theory that has nothing to do with the commercial rights issue.

[00:31:31] Speaker 02:
is that this is not made by or for MS Tech by Dow's own admission.

[00:31:37] Speaker 02:
We lose, and then we take that into the arbitration, and I think the way you described it, Judge Chen, is absolutely correct.

[00:31:43] Speaker 02:
What were we supposed to do?

[00:31:45] Speaker 02:
Lay on our sword, die on our sword both times on utterly irreconcilable factual theories?

[00:31:51] Speaker 02:
And yes, there's a lot of money at issue here, but that really confuses the issue.

[00:31:55] Speaker 02:
Stein only paid $5.6 million for this.

[00:31:58] Speaker 02:
If Dow had been our counterparty,

[00:32:00] Speaker 02:
If BASF had been our counterparty, they would have paid a lot more, which is exactly why, however you look at the language, Bayer did retain a right to be a part of the conversation.

[00:32:10] Speaker 02:
Witnesses did support Bayer.

[00:32:12] Speaker 02:
Margaret Keating did.

[00:32:13] Speaker 02:
And the last point I'll make is David Morgan testified repeatedly that Bayer viewed MS Tech and Stein as the same thing.

[00:32:20] Speaker 02:
Over and over again, the district court even observed it at A17 note 17.

[00:32:26] Speaker 02:
A4488 is an example of Morgan testifying this way.

[00:32:30] Speaker 02:
Margaret Keating did, too.

[00:32:31] Speaker 02:
Everybody looked at the Stein Group the same way, which is why everybody at Bayer agreed the Stein Group could commercialize.

[00:32:37] Speaker 02:
That's got nothing to do with whether the Stein Group could sublicense.

[00:32:41] Speaker 02:
And yes, there's no evidence that anyone from Bayer recalled the Stein Group not having the right to sublicense.

[00:32:47] Speaker 02:
But there's absolutely no evidence that anyone even talked about the Stein Group sublicensing.

[00:32:51] Speaker 02:
None at all.

[00:32:52] Speaker 02:
The agreements speak for themselves.

[00:32:54] Speaker 02:
There was a ban on sublicensing.

[00:32:55] Speaker 04:
Thank you.

[00:32:57] Speaker 04:
Thank you.

[00:32:58] Speaker 04:
Thank you both.

[00:32:58] Speaker 04:
The case is taken under submission.