[00:00:53] Speaker 00: Okay, the next case is number 15, 1892, Drone Technologies Incorporated against Parrot SA. [00:01:02] Speaker 00: Mr. Lampkin, you're ready. [00:01:11] Speaker 02: Thank you, and may it please the court. [00:01:14] Speaker 02: This case arises from an across-the-board default on all infringement issues, all invalidity issues, [00:01:21] Speaker 02: all unenforceability issues. [00:01:24] Speaker 02: I want to start by discussing standing, then turn to disproportionate nature of the sanction of default, which went to issues that had no conceivable relationship whatsoever to the disputed source code that gave rise to the default. [00:01:38] Speaker 02: And third, then turn to the multimillion dollar damages of work, which is difficult, if not impossible, to reconcile with this court's precedence. [00:01:49] Speaker 02: Standing goes to the court's jurisdiction. [00:01:51] Speaker 02: It's subject matter jurisdiction. [00:01:53] Speaker 03: So Lampkin, on the standing, we have here on its face valid assignee in the person of D.T. [00:02:03] Speaker 03: Why isn't the approach here just to accept D.T. [00:02:09] Speaker 03: for purposes of this litigation as an assignee based on the assignment? [00:02:16] Speaker 03: D.T. [00:02:16] Speaker 03: has standing to sue. [00:02:17] Speaker 03: And then if there's an inventorship issue, address that [00:02:22] Speaker 03: in the litigation. [00:02:24] Speaker 02: Your honor, because an element of standing is having all of the inventors, all of the owners before the court, when there's a challenge to the ownership before the court, that has to be addressed. [00:02:34] Speaker 02: It's a jurisdictional matter. [00:02:36] Speaker 02: And you cannot default that issue or exclude it and simply accept that the... But as of now, DT is the owner of the pen, or I'm sorry, the assignee of the pen. [00:02:46] Speaker 02: It's the assignee of reports to have title. [00:02:50] Speaker 02: but isn't the actual inventor and certainly isn't the sole inventor. [00:02:53] Speaker 02: And I think Ethicon in that respect is illustrative. [00:02:56] Speaker 02: In Ethicon, the court held that even for a past damages period where the plaintiff was the sole assignee of the sole person named on the patent, standing was absent. [00:03:09] Speaker 02: And standing was absent because the court later determined that there was another co-inventor. [00:03:13] Speaker 02: And therefore, that sole assignee of that sole person named on the patent could not sue. [00:03:20] Speaker 02: For that reason, here, likewise, you may have one named person on the patent. [00:03:26] Speaker 02: But once that's challenged, once that person's inventorship or right to that patent is challenged, the court must address the facts, the jurisdictional facts, giving rise to whether or not that they indeed hold an enforceable title. [00:03:38] Speaker 04: What about the other side's argument that the argument you're pitching would mean that courts could never invalidate a patent for misinventorship [00:03:49] Speaker 04: because we would constantly be dismissing those cases for lack of standing. [00:03:55] Speaker 02: No, I don't think that's true, Judge Shen. [00:03:58] Speaker 02: For example, in the event you don't name all inventors, but the patent's correctable, you would lack standing, but there would be no invalidity for incorrect inventorship. [00:04:09] Speaker 02: Conversely, if you name everybody who has these ownership interests in the patent, but the patent's not correctable, standing would be present, [00:04:19] Speaker 02: but you would hold the invention invalid because there's incorrect inventorship and it can't be corrected under 256. [00:04:28] Speaker 02: And that actually makes perfect sense in light of the principles and the reasons for the standing rule. [00:04:33] Speaker 02: The reason this court requires and the rules require you to name all of the patentees is in part to protect for other patent owners from the adverse consequences that occur if, for example, the patent's invalidated without their participation. [00:04:48] Speaker 02: Likewise, it protects the defendant from multiple lawsuits in the event that one of the absent owners then comes forward and tries to get damages as well. [00:04:57] Speaker 04: And if you prevent people from making this sort of challenge... I guess what I'm wondering is that just in the limited number of cases I've seen, this whole inventorship question's been bound up in a validity question, not a standing question. [00:05:11] Speaker 04: And so maybe you're better served in raising it as an inventorship question. [00:05:17] Speaker 02: Right. [00:05:18] Speaker 02: I think the difficulty is, Your Honor, because the district court purported us to default us on every issue relating to inventorship, that means the issue can come up only as a standing question if that sanctions upheld. [00:05:29] Speaker 02: But I would agree with you. [00:05:30] Speaker 02: In many cases, one step that can be taken is you correct the patent, show that there's an omitted inventor, put that omitted inventor on the patent, and then they dismiss for want of standing. [00:05:40] Speaker 02: But that step the district court held was not available to us because he defaulted us. [00:05:45] Speaker 02: And we think that that is just incorrect because standing is a jurisdictional question. [00:05:50] Speaker 02: It goes to the subject matter, the power of the court. [00:05:53] Speaker 02: The court can't default you on basic questions going to whether or not that person has standing to bring suit. [00:06:00] Speaker 02: And we think that's supported by Pandraw, for example, where the court said, yes, absolutely right. [00:06:05] Speaker 02: The question of ownership was defaulted as a defense on the merits. [00:06:09] Speaker 04: How would you have to address this? [00:06:11] Speaker 04: The motion to dismiss for lack of standing [00:06:14] Speaker 04: the judge denied. [00:06:15] Speaker 04: Would you read that judge's decision as saying, I've looked at the records, Ms. [00:06:23] Speaker 04: Lee has been identified as the inventor of the patent, there's an assignment here to Drone Technologies, that's all we can do for standing purposes. [00:06:35] Speaker 04: Or do you think the decision's best read as, I've looked at all of the testimony and evidence about inventorship and I find [00:06:45] Speaker 04: that Ms. [00:06:45] Speaker 04: Lee, in fact, is the inventor and so therefore everything else falls neatly into place for drone technology. [00:06:51] Speaker 04: There's two ways to read his decision. [00:06:52] Speaker 04: Which one is it to you? [00:06:54] Speaker 02: Regrettably, my answer is going to be neither. [00:06:57] Speaker 02: But I think what the district court said is it's possible this is really just inventorship. [00:07:02] Speaker 02: But I think the evidence is sufficient to show that she is the sole inventor. [00:07:08] Speaker 02: But what the district court didn't do is take the next step and say, OK, it's my job as the district court to make a determination whether she is the sole inventor. [00:07:15] Speaker 02: And on this record, I make that finding. [00:07:17] Speaker 02: And frankly, on this record, that's an impossible finding to make. [00:07:22] Speaker 02: If you line up the claims against the testimony, it's absolutely clear that Misley cannot be that sole inventor. [00:07:30] Speaker 00: As I recall, you didn't move for dismissal because the patent's invalid on its face, despite her admission that she didn't know anything about [00:07:44] Speaker 00: The subject matter. [00:07:46] Speaker 02: We moved for leave to amend our answer to make exactly that argument. [00:07:51] Speaker 02: The district court struck it as part of the sanction. [00:07:54] Speaker 02: And so frankly, if the court believes that there's difficulty trying to sort out whether this is inventorship or whether this is standing, that goes away entirely if the court also simply concludes that it was error for the district court to do an across-the-board default for all questions, including questions that have no relationship whatsoever to the disputed source code. [00:08:14] Speaker 02: that led to the default judgment here. [00:08:16] Speaker 03: Bill, can you refer to the default judgment, both responding to Judge Newman's question and earlier? [00:08:22] Speaker 03: How did we get into this big discovery mess? [00:08:25] Speaker 03: I mean, I looked at this. [00:08:26] Speaker 03: I'm thinking, why didn't the parties kind of try and sit down? [00:08:30] Speaker 03: It seems the only thing that we're fighting about is this source code. [00:08:34] Speaker 03: Is this the source code on the controlled device on the drone that's flying around? [00:08:39] Speaker 02: Exactly. [00:08:39] Speaker 02: It's the onboard source code, which is the most mission critical [00:08:44] Speaker 02: trade secret element that Parrott has. [00:08:47] Speaker 02: And Parrott did everything it could to hand that over in the way consistent with the way other courts do it, with the protections that are necessary to make sure there's no unauthorized access. [00:08:58] Speaker 02: And that unauthorized access that we're worried about isn't the hypothetical concern. [00:09:03] Speaker 02: Just last week, the Wall Street Journal reported the Cravath and Wiles servers had been breached [00:09:08] Speaker 02: They've been breached by people who are seeking quiet confidential information. [00:09:11] Speaker 03: Not in regard to the Wall Street Journal article, which is not in our record, obviously. [00:09:16] Speaker 03: But I did see you, meaning Parrott, came forward with a proposal for an order which would allow examination of the... And correct me, please, and I'd ask the same question at the other side. [00:09:33] Speaker 03: Correct me if I misunderstand. [00:09:34] Speaker 03: As I understand, there was a proposal that the judge denied for [00:09:39] Speaker 03: an examination of the source code on a computer that could not be connected to any other circuit or web or any. [00:09:47] Speaker 03: Is that correct or my misunderstanding? [00:09:49] Speaker 02: That's exactly right. [00:09:50] Speaker 02: We've found a model. [00:09:51] Speaker 02: We follow basically the ITC model, which says you can review it on a secure computer in a secure location. [00:09:57] Speaker 02: You print out relevant pages. [00:09:59] Speaker 02: Those relevant pages you can then take with you, but they have to be locked up as well. [00:10:03] Speaker 02: You can't re-digitize them. [00:10:05] Speaker 03: That request, as I understand it, was [00:10:07] Speaker 03: What I saw on the record in the appendix was something that was submitted after the judge had granted this motion to compel following alleged noncompliance with the July 1 order. [00:10:20] Speaker 03: Is that correct? [00:10:21] Speaker 03: Yes, Your Honor. [00:10:22] Speaker 03: Was that proposed earlier also, what was in the order? [00:10:25] Speaker 02: We proposed it on July 2. [00:10:27] Speaker 02: We asked for clarification that making secure access was an acceptable way of doing it. [00:10:32] Speaker 02: That motion for clarification was denied. [00:10:34] Speaker 02: We then made a specific proposal with an actual addendum [00:10:37] Speaker 02: of the order that's used by the ITC and that we were proposing. [00:10:42] Speaker 02: And in fact, this is also right now today, precisely the conditions that are used in the court below. [00:10:48] Speaker 02: The court below now recognize that these conditions are necessary to protect against unauthorized access. [00:10:52] Speaker 04: I guess at the time, back in July of 2014, was it such an abuse of discretion for the district court judge to follow [00:11:03] Speaker 04: its own local patent rules and the fact that they have a default protective order that's set up and designed to protect people's interests and he just decided, well we have this protective order in place in hand, we're just going to follow that. [00:11:21] Speaker 02: I think it was. [00:11:22] Speaker 02: I think it was because this is an area where the bar had fallen behind the reality of the dramatic risks that are involved when trade secrets like source code [00:11:32] Speaker 02: are not given adequate security. [00:11:34] Speaker 02: And the judge had before him example after example after example of other jurisdictions and the approaches they take, jurisdictions that are regularly dealing with these high-tech issues, and the approaches they take to protect source code. [00:11:46] Speaker 02: And I think it's an abuse of discretion to simply say, we have this highly confidential source code, but we won't prevent it from being placed on unsecured thumb drives, unsecured laptops, being emailed to Gmail accounts. [00:11:58] Speaker 02: We will provide none of those protections. [00:12:00] Speaker 02: I don't think any government agency in the country, even with moderately confidential data, would permit their employees to treat that data that way. [00:12:07] Speaker 02: I don't think any district court in the country. [00:12:09] Speaker 04: You know, it might be tough for us to say that the district court judge was without any discretion to simply use the protective order to protect protected information. [00:12:22] Speaker 04: But there's another argument you have, which is that [00:12:29] Speaker 04: The other side did not meet its burden and its motions to compel for explaining why the source code was so critical for their needs in terms of preparing for infringement contentions and things like that when it came to whether you complied with the requirements for initial disclosures and whether what you had already provided was or was not sufficient to show the operation of the Q's devices. [00:12:57] Speaker 02: I think that's right, Judge Chen. [00:12:59] Speaker 02: And I think I should be clear that even if it wasn't an abuse of discretion, it's certainly such a sensitive area that parrot protecting its trade secret source code, when it does that, it shouldn't result in an across the board default. [00:13:11] Speaker 02: And it especially couldn't do so when if you look at the type of balancing the court's supposed to do under Rule 26 and the local rules require, this was not a required production. [00:13:20] Speaker 02: The local rules said, make available for copying or inspection or produce source code [00:13:28] Speaker 02: documentation, dot schematics, or other documents sufficient to show the operation of the accused's devices. [00:13:35] Speaker 02: And there's been no finding at any point in this case that the devices, that the documents we already produced, were not sufficient to show the operation of the accused's devices. [00:13:45] Speaker 00: Was that pursued? [00:13:47] Speaker 00: I appreciate this is your argument. [00:13:49] Speaker 00: Was it presented to the district judge that without the source code, they would not be able to establish that [00:13:57] Speaker 00: the patent was infringed? [00:13:59] Speaker 02: No, I don't think there's any evidence and there's certainly no finding that they couldn't prove infringement without the source code. [00:14:05] Speaker 02: And in fact, this was because these are just initial disclosures. [00:14:08] Speaker 02: The whole point was just to let them make their infringement contentions. [00:14:13] Speaker 02: This isn't the be-and and end-all of discovery. [00:14:16] Speaker 02: There's no finding that would be difficult, impossible, or even impede their ability to prove infringement. [00:14:22] Speaker 02: Mr. Kalu, who is our technical expert from within Parrot, testified [00:14:27] Speaker 02: that all the materials produced, the designer guidelines, the schematics, the software protocols, and et cetera, were amply sufficient to show the operation of the Q's devices. [00:14:38] Speaker 02: But what the district court's order said was produce all documents relevant to the operation of the Q's devices. [00:14:45] Speaker 03: If I can, at the tail end of your opening argument here, I'm going to parade my ignorance if I could. [00:14:51] Speaker 03: Can you explain to me, in this case, exactly what source code is [00:14:57] Speaker 03: and what it does in terms of the controlled drone device. [00:15:02] Speaker 02: What the source code is is the high-level code, which shows exactly how, with notes from the writers, exactly how this drone operates and how it's responding. [00:15:14] Speaker 02: That is then compiled and put on devices to make them actually operate. [00:15:18] Speaker 02: And the compiled code isn't very informative. [00:15:20] Speaker 02: You can't really use it. [00:15:21] Speaker 02: The source code, though, is the keys to the kingdom because it shows you exactly how this drone operates. [00:15:26] Speaker 03: So the source code, for example... How it reacts to commands from the person holding the device? [00:15:32] Speaker 02: Yes, but not just that. [00:15:34] Speaker 02: How it uses the camera so it doesn't slam into the ground. [00:15:37] Speaker 02: How it does automatic takeoff, automatic landing. [00:15:40] Speaker 02: How it responds to changes in wind. [00:15:41] Speaker 02: How it changes its angle without flipping over. [00:15:44] Speaker 02: How it does all these amazing things almost instantaneously are all there. [00:15:49] Speaker 03: So in your view, the source code discloses how, to put it very briefly, [00:15:55] Speaker 03: the drone flies and operates. [00:15:58] Speaker 02: Is that correct? [00:16:00] Speaker 02: Everything, yes. [00:16:02] Speaker 02: Everything. [00:16:02] Speaker 02: And it is the absolute value of the company is in its software, not in just the ordinary bits of plastic that make up that drone. [00:16:11] Speaker 02: I see I'm running right into my time running out of rebuttal. [00:16:13] Speaker 02: If there are no further questions, I've reserved a half second left for rebuttal. [00:16:16] Speaker 02: Thank you so much. [00:16:19] Speaker 00: Thank you. [00:16:20] Speaker 00: We'll save you rebuttal time. [00:16:23] Speaker 00: Mr. Tabachnick. [00:16:25] Speaker 01: Thank you, Your Honor. [00:16:28] Speaker 01: May it please the Court. [00:16:29] Speaker 01: I think the Court has it exactly right in terms of the standing argument. [00:16:35] Speaker 01: Yutuan Li is the named inventor of both patents. [00:16:38] Speaker 01: It was a valid assignment executed and recorded by the USPTO, assigning all rights to drone technologies. [00:16:46] Speaker 01: Drone Technologies is the plaintiff in this case. [00:16:48] Speaker 00: Well, you do have a difficult problem. [00:16:51] Speaker 00: On its face, your inventor stated [00:16:55] Speaker 00: that she was not the inventor. [00:16:56] Speaker 00: How do you overcome that? [00:16:58] Speaker 01: With all due respect, Your Honor, she did not say she was the inventor. [00:17:01] Speaker 01: In every instance she was asked, she said she was the inventor. [00:17:06] Speaker 00: So she had no understanding of how the device worked, and yet this major argument here now is the provision of the source code. [00:17:15] Speaker 00: And yet the inventor has stated under oath that she doesn't understand any of this. [00:17:22] Speaker 01: What the inventor said under oath, Your Honor, [00:17:25] Speaker 01: was when presented with English language copies of the documents, not Chinese language copies of the documents, she said she couldn't talk about, she didn't understand, she couldn't explain the technical aspects of the invention. [00:17:38] Speaker 00: Now where are the technical aspects? [00:17:40] Speaker 00: Where is the source code in the patent? [00:17:43] Speaker 00: This demand for the source code for infringement requires some kind of correlation, does it not, between what is disclosed and claimed [00:17:55] Speaker 00: And the evolution of proof of infringement. [00:18:00] Speaker 01: It's very simple, Your Honor. [00:18:01] Speaker 01: In both patents, there's one independent claim and the rest are dependent claims. [00:18:06] Speaker 01: That one independent claim is structured in two pieces. [00:18:10] Speaker 01: It's a remote control system having one piece, which is the remote controller, which is the iPhone that controls the remote control device. [00:18:19] Speaker 01: And the second piece is the remote control device. [00:18:22] Speaker 01: In each of those sections, the way that independent claim is structured, there are signals that are created, signals that are sent, signals that are responded to. [00:18:31] Speaker 00: But those signals are not in the specification. [00:18:34] Speaker 00: I'm trying to understand the need for the source code when there is no disclosure of source code in the patent. [00:18:42] Speaker 01: Well, the source code was for the infringing device, Your Honor. [00:18:45] Speaker 01: That was for us to be able to... But I'm trying to understand you. [00:18:51] Speaker 00: In order to demonstrate infringement, you need to show a correlation between the proof and the patent. [00:18:57] Speaker 00: Exactly. [00:18:59] Speaker 00: In most of the cases that we see, there is the specification, the disclosure, where each function is described with a box around it, and it is then shown that the accused device performs the function. [00:19:14] Speaker 01: Correct. [00:19:15] Speaker 00: By observation not of [00:19:18] Speaker 00: how the electrons move within the computer chip, but the overt performance. [00:19:24] Speaker 00: So I'm trying to understand why the source code is a necessary element of proof of infringement. [00:19:32] Speaker 01: Well, let me give an example, Your Honor. [00:19:34] Speaker 01: There's a claim element referred to as target motion signal. [00:19:38] Speaker 01: The target motion signal is originally created in the remote controller based on the motion of the remote controller [00:19:46] Speaker 01: And then it's sent up to the remote control device. [00:19:49] Speaker 01: And in the remote control device, that target motion signal is acted upon within the device. [00:19:55] Speaker 01: That's what controls the drone, as Mr. Lemkin described. [00:19:59] Speaker 01: What we had was the source code at the remote controller side. [00:20:04] Speaker 01: But once that signal was sent up to the remote control device, they said, you can't see that. [00:20:08] Speaker 01: We're not going to tell you. [00:20:09] Speaker 01: We're not going to show you. [00:20:10] Speaker 01: We're not going to explain any of that. [00:20:13] Speaker 01: that whatever you say about that is fine. [00:20:16] Speaker 00: I don't understand why that's a necessary element of the proof based on the disclosure in your specification. [00:20:26] Speaker 01: I'm sorry. [00:20:26] Speaker 01: I didn't hear the question, Your Honor. [00:20:28] Speaker 00: I don't understand it. [00:20:31] Speaker 00: And it is unusual for the computer codes, for the coding system, for the minutiae of the operation [00:20:43] Speaker 00: to be included in the specification and to be involved in the proof and the requirement for provision of the source code and why that is necessary in order to establish that the functions, when all that's in the specification is a general statement of the functions, what the relationship is between these two such that it is so essential that a default judgment [00:21:13] Speaker 00: is appropriate. [00:21:14] Speaker 01: Well, Your Honor, as I explained, we were inquiring about their source code so that our technical expert could analyze what the accused devices do once the various signals are received by the remote control device. [00:21:28] Speaker 04: And why wouldn't block diagrams be good enough? [00:21:33] Speaker 04: I mean, I guess what we're hearing from the other side is they produced [00:21:36] Speaker 04: a lot of pages of technical documents, including flow diagrams and things like that on how the drone operates as well as how the remote control operates. [00:21:49] Speaker 04: Why do you actually need to go all the way into the nitty gritty and see all of their source code? [00:21:55] Speaker 04: That's the question. [00:21:56] Speaker 01: Because frankly, Your Honor, our technical experts asked for it. [00:21:59] Speaker 01: We don't direct them, we don't tell them what conclusion we want them to reach. [00:22:04] Speaker 01: They ask for the information that they feel they need to perform the analysis. [00:22:09] Speaker 04: And I guess the next question is, for your motion to compel, isn't the burden on you to explain why you needed the source code beyond just having whatever technical documents they had given you at that point? [00:22:23] Speaker 01: Well, I think in our first motion to compel, Your Honor, we made the showing that what they provided, A, was not adequate, and B, it was not up to them to decide what was sufficient to show and what was not. [00:22:37] Speaker 01: And I think the district court reviewed that record and reviewed those arguments and made that finding. [00:22:43] Speaker 04: Well, what was it that you said in your first motion to compel that said you needed the onboard source code? [00:22:51] Speaker 01: Well, we didn't talk specifically about the onboard source code and the first motion to compel. [00:22:56] Speaker 01: We were talking about the general documents that are required under local patent rule. [00:23:01] Speaker 04: We're talking about the free flight software app, which the source code for that, which you ultimately got. [00:23:07] Speaker 01: Right. [00:23:07] Speaker 01: And that was one piece. [00:23:08] Speaker 01: That's when I was responding to Judge Newman's question. [00:23:12] Speaker 01: That was the piece about the signals getting sent up to the remote control device. [00:23:17] Speaker 01: What happened once they got up to the remote control device? [00:23:20] Speaker 01: We didn't have that information because Garrett wasn't willing to provide it. [00:23:25] Speaker 04: Would you say that processing module, driving module, acceleration sensing module as claimed are means plus function limitations? [00:23:34] Speaker 01: I would not say that they're means plus function limitations, Your Honor. [00:23:39] Speaker 04: So are you saying driving module is specific structure? [00:23:46] Speaker 01: I would say it was a specific structure. [00:23:49] Speaker 04: Is there any software involved in a driving module? [00:23:52] Speaker 01: There could be. [00:23:52] Speaker 01: It could be implemented in hardware or software, a combination of both hardware and software. [00:23:58] Speaker 01: Do you need to disclose that in the specification? [00:24:00] Speaker 01: Well, if it's not known in the prior art, that would be correct. [00:24:05] Speaker 01: But actually, we have admissions by parrot here. [00:24:09] Speaker 01: They file two IPRs with PTAB. [00:24:13] Speaker 01: And in the IPR related to the 74A patent, they said that every element is disclosed except for the configuration control switch. [00:24:25] Speaker 01: That was the only thing that was missing from the prior art reference that they used. [00:24:29] Speaker 01: With regard to the 071 patent, they said it was anticipated by two different references. [00:24:37] Speaker 01: You can't raise indefiniteness rejections in an IPR. [00:24:40] Speaker 04: Is that right? [00:24:42] Speaker 04: That's correct, Your Honor. [00:24:45] Speaker 03: Mr. DeBatcha, picking up on the discussion I had with Mr. Lamkin, he said that number one, there was an offer to view what's required in connection with the source code on a freestanding computer that couldn't be, where information couldn't be sent beyond that device. [00:25:07] Speaker 03: And then I did see there was something like that in certain of the paragraphs. [00:25:12] Speaker 03: that were appended in the appendix here in connection with a document that was filed after the motion to compel was granted. [00:25:21] Speaker 03: Why was that not enough? [00:25:23] Speaker 03: I mean, why is that not... Assume for the moment everything you say about needing the source code is correct, what your experts said. [00:25:31] Speaker 03: Why is it not a reasonable compromise to say, okay, you can view it in this way? [00:25:38] Speaker 01: Your Honor, it was virtually two months after [00:25:41] Speaker 01: we had initially requested or should have received the initial disclosure documents that they made that offer. [00:25:49] Speaker 01: I was fortunate to have been involved at the district court level with the case, so I'm much more familiar with the record. [00:25:59] Speaker 03: So what you're saying is the first time this offer was made is in that paper that was filed [00:26:06] Speaker 03: seeking a protective order following the motion to compel? [00:26:09] Speaker 01: Is that what you're... Exactly, Your Honor. [00:26:11] Speaker 01: August 1st, 2014 at appendix page numbers 914 through 1020. [00:26:17] Speaker 04: As early as July 3rd, 2014 though, they did offer to make their onboard source code available for inspection, right? [00:26:24] Speaker 04: Which would be the other piece of [00:26:28] Speaker 04: Local Patent Rule 3.1, either produce the source code or make available for inspection. [00:26:34] Speaker 01: Right. [00:26:34] Speaker 01: And this was after the district court had ordered them to produce it. [00:26:37] Speaker 01: So once they lost the motion, then they said, OK, well, how about if we don't follow the court's order and we figure something else out? [00:26:46] Speaker 01: And it was a result of those discussions. [00:26:48] Speaker 01: They had very strict limitations that were, frankly, going to encumber our expert and encumber us in preparing our case, having to fly to Houston [00:26:57] Speaker 01: look at the source code, having to arrange three days in advance for them to do it, not be able to do what the experts wanted to do with it, which was sort of simulate what goes on with the software and things like that, because we would have to do it in opposing counsel's offices under their watchful eyes. [00:27:15] Speaker 04: If we were to conclude that your June 19 motion to compel didn't sufficiently explain why you needed all of the source code [00:27:27] Speaker 04: And we also didn't see the court's July 1 order explaining the reason for why it was going to grant you access to all the source code. [00:27:39] Speaker 04: Then what should we do with that? [00:27:42] Speaker 04: Is that a grounds for vacating the order? [00:27:45] Speaker 01: I don't think so, Your Honor. [00:27:46] Speaker 01: I think this court has a long history of respecting district courts [00:27:51] Speaker 01: decisions in terms of discovery rules, in terms of interpreting their local rules, in terms of managing their cases. [00:27:58] Speaker 01: And frankly, if this court is inclined to send it back saying that the district court got it wrong, that it abused its discretion, then I have a feeling this court's docket is going to be very full with reviewing discovery orders, whether it be through writs of mandamus, as Parrott tried to do 12 weeks after the fact, or on appeal after the entry of the sanction. [00:28:21] Speaker 01: You know, the courts have their respective roles. [00:28:25] Speaker 00: Remind me, what had been agreed in terms of protecting the proprietary nature of the source code? [00:28:33] Speaker 01: What had been agreed to was to follow the court's standard protective order that both parties had agreed to at the initial case management conference. [00:28:43] Speaker 00: That was before the onboard code had been placed into issue, was that right? [00:28:49] Speaker 01: I'm sorry, Your Honor, I didn't hear. [00:28:51] Speaker 00: That protective, the protective order had been agreed, was the standard protective order based on your initial request for a production? [00:29:00] Speaker 01: It had been agreed to before. [00:29:02] Speaker 01: I mean, in frankly, the council is from outside the Western District of Pennsylvania. [00:29:09] Speaker 01: They were admitted pro hoc vici and as part of their admission, they had to say that they read [00:29:13] Speaker 01: understood the local rules and agreed to apply them. [00:29:15] Speaker 00: That was before you had asked for the second installment of source code. [00:29:21] Speaker 00: Is that correct? [00:29:23] Speaker 01: Well, I mean, you say it's a second installment, but the local patent rule 3.1 says source code. [00:29:29] Speaker 01: It doesn't talk about onboard source code versus remote controller source code. [00:29:34] Speaker 00: But it also qualifies the source code. [00:29:35] Speaker 00: It says to the extent necessary or appropriate. [00:29:39] Speaker 00: And here we have an issue of whether the entire [00:29:43] Speaker 00: volume of volumes of source code meet that definition? [00:29:48] Speaker 01: Well, Franklin, Your Honor, the issue is whether we get the source code on the remote-controlled device. [00:29:53] Speaker 01: If we get to see what happens to those signals once they're received by the remote-controlled device, Herod decided that was what was sufficient to show, which is the language in Local Patent Rule 3.1, [00:30:05] Speaker 01: We just need to see the source code in the remote controller. [00:30:10] Speaker 01: We don't need to know what happens in the remote control device. [00:30:13] Speaker 01: And that was their position with the initial motion to compel. [00:30:18] Speaker 01: The court ruled against them. [00:30:20] Speaker 01: Two days later, they filed an emergency motion for reconsideration, making the same arguments. [00:30:25] Speaker 01: The court ruled against them again. [00:30:27] Speaker 01: They subsequently said, we're going to comply. [00:30:30] Speaker 01: We have or will imminently comply. [00:30:33] Speaker 01: with the court's order, and then they didn't. [00:30:36] Speaker 04: Well, in the same time, they persisted in continuing to propose offering to make it available for inspection. [00:30:44] Speaker 04: They never said, yes, we are going to provide the onboard source code. [00:30:48] Speaker 04: They never said that. [00:30:50] Speaker 04: They said, yes, they are planning on complying with this order by July 9 or by the following date, but they always proposed a clarification of the order to please allow them to [00:31:03] Speaker 04: control access of the onboard source code. [00:31:05] Speaker 01: Respectfully, I disagree, Your Honor. [00:31:08] Speaker 01: They made no distinction after the first order compelling the production. [00:31:14] Speaker 01: They said they had complied or will imminently comply with the order. [00:31:18] Speaker 01: That was just before the second motion to compel, the motion to compel. [00:31:23] Speaker 04: The July 3rd emergency motion, but in that July 3rd emergency motion, they also said they were willing to [00:31:33] Speaker 04: make available their onboard source code through making it available for inspection. [00:31:40] Speaker 04: So that was how they were looking to try to work with and comply with the July 1 order. [00:31:47] Speaker 01: And the district court rejected that argument. [00:31:49] Speaker 01: The district court ordered them to produce it. [00:31:51] Speaker 04: That is right. [00:31:51] Speaker 04: But I guess my point is that you were saying that they were blanketly saying they were going to comply with the order and they didn't. [00:32:00] Speaker 04: That's not exactly true. [00:32:01] Speaker 04: They were always looking to try to preserve the protections around their onboard source code. [00:32:08] Speaker 01: Respectfully, I disagree, Your Honor, because they made the argument in the emergency motion for reconsideration. [00:32:14] Speaker 01: The court rejected it a second time after the initial motion. [00:32:18] Speaker 01: And then they said, we have produced or will imminently produce documents required to comply with the order. [00:32:24] Speaker 01: They didn't say except for the source code, which we still stand by our original argument. [00:32:29] Speaker 01: file a petition for writ of mandamus at that point, which would have been appropriate. [00:32:35] Speaker 01: But this was just sort of the process they went through. [00:32:38] Speaker 01: They were changing positions. [00:32:40] Speaker 01: They were offering... Let's assume that I don't agree that they kept changing their position. [00:32:46] Speaker 04: Let's also assume that I still don't understand why you need the onboard source code for, at the opening act of discovery, initial disclosures. [00:32:57] Speaker 04: Right? [00:32:58] Speaker 04: the beginning, middle, and end of the play. [00:33:00] Speaker 04: This is the opening act of the play. [00:33:02] Speaker 04: So why did you need the onboard source code for developing your infringement contentions when you already had 14 millions of pages of initial disclosure? [00:33:13] Speaker 01: Well, first of all, our infringement contentions were due June 20th. [00:33:18] Speaker 01: So we needed it right away. [00:33:20] Speaker 01: Second of all, the 14 million pages of documents didn't come until two months later. [00:33:25] Speaker 01: There were 2,700 pages of documents that they had produced in terms of the initial disclosure. [00:33:31] Speaker 01: And virtually all of that is stuff that came off their website or publicly available information. [00:33:36] Speaker 01: There was nothing that was contemplated by Rule 3.1, any sort of internal documents, technical documents, flow charts, diagrams, or source code. [00:33:47] Speaker 01: In addition, Your Honor, this isn't about source code and wasn't only about source code. [00:33:52] Speaker 01: There were two models of accused devices, Bebop and Minidrome. [00:33:56] Speaker 01: They refused to produce any documents. [00:33:57] Speaker 01: Forget about source code. [00:33:58] Speaker 01: They refused to produce any documents about it. [00:34:01] Speaker 01: Are those products listed in the complaint? [00:34:02] Speaker 01: They weren't listed in the complaint, but they were expressly part of the district court's order. [00:34:06] Speaker 04: But perhaps that was based on a misreading of the local patent rule, which talks about providing initial disclosure sufficient to show the operation of the accused of devices listed in the complaint. [00:34:22] Speaker 04: Right now, at least with respect to those two devices, they're not in the complaint. [00:34:28] Speaker 01: The local patent rules have been in place in the Western District of Pennsylvania since 2009. [00:34:33] Speaker 01: Judge Schwab is one of the patent judges in the pilot program that the Western District of Pennsylvania is participating in. [00:34:40] Speaker 01: It's certainly within this court's power to say that Judge Schwab got it wrong. [00:34:47] Speaker 00: But under an appropriate protective order, and this is certainly part of the entire debate, [00:34:52] Speaker 00: is it not, in terms of protecting this extraordinarily valuable asset for the owner of it? [00:35:00] Speaker 00: And as to how much of that needs to be placed publicly available and how it's to be protected just seems to underlie this entire discussion. [00:35:12] Speaker 01: Well, Your Honor, this protective order in essentially its form has been in place since 2009. [00:35:20] Speaker 00: But how you administer a protective order [00:35:22] Speaker 00: for source code is critical. [00:35:26] Speaker 00: They have offered to make it available for observation in an environment in which it can't be transmitted and copied. [00:35:33] Speaker 00: And that's been refused, apparently. [00:35:36] Speaker 01: Well, it was refused in the context of which it was offered, which is two months later after the court had twice ordered Para to produce it. [00:35:45] Speaker 00: And so here we are arguing about it when it might have been resolved in that two-month period. [00:35:52] Speaker 01: It might have been resolved, except the restrictions were too egregious. [00:35:57] Speaker 01: They prevented us as lawyers and our technical experts from doing the job they needed to do with the source code. [00:36:03] Speaker 01: It was as if they weren't giving it to us at all. [00:36:06] Speaker 01: We would have to sit there and read it on a screen, ask permission to print portions of it. [00:36:12] Speaker 01: Our experts wouldn't be able to use the source code, to follow the signals, to practice or simulate [00:36:21] Speaker 04: What happens in a lot of other district courts, including the ITC though, making the source code available on a standalone computer connected to a server and then the opposing counsel goes in there and reviews the source code. [00:36:35] Speaker 04: I mean that's not that unusual and so it's not clear to me why, given the pervasiveness of that practice, it's all of a sudden so burdensome in this particular instance. [00:36:49] Speaker 01: Well, in the five or six years that the district court has had its local patent rules and the protective order applying to patent cases in place, apparently this has never been an issue and it's never been a problem. [00:37:01] Speaker 01: So there was no need to do it until Parrott came along and said, we're going to make this as expensive and as difficult for the plaintiff as possible. [00:37:08] Speaker 01: We're going to make them fight for every piece of discovery. [00:37:11] Speaker 01: We're not going to give anything. [00:37:14] Speaker 01: Parrott's head of legal sat [00:37:16] Speaker 01: in the witness box, six feet away from the bench and told the district judge, I understand the order. [00:37:23] Speaker 01: I know what I'm supposed to do. [00:37:24] Speaker 01: I know that there are consequences for not complying and I'm still going to ignore the order. [00:37:29] Speaker 01: She said that to the district court and she said, and we're not going to do this until we're forced to do it by the federal circuit. [00:37:36] Speaker 01: At that point, they had filed a petition for written mandamus. [00:37:40] Speaker 01: This court subsequently denied the petition. [00:37:43] Speaker 01: We never saw any source code. [00:37:44] Speaker 01: We never saw it under any circumstances. [00:37:47] Speaker 01: You know, frankly, from my perspective, these offers were teases. [00:37:51] Speaker 01: They weren't legitimate offers. [00:37:53] Speaker 01: They were teases in terms of dragging this out because their hope was the IPRs were going to run their course and that they were going to be successful in the IPRs. [00:38:02] Speaker 01: And if they could simply drag out the district court proceedings and make them cumbersome and expensive, that they would win. [00:38:10] Speaker 01: And it didn't work out that way. [00:38:11] Speaker 01: They lost the IPRs. [00:38:14] Speaker 01: And the district court. [00:38:15] Speaker 00: Answer your question. [00:38:17] Speaker 00: Okay, thank you. [00:38:19] Speaker 01: Thank you, Your Honor. [00:38:22] Speaker 00: Let's see, Mr. Lankin will restore your rebuttal, plus add the time that we have overrun. [00:38:28] Speaker 00: Let's make it eight minutes. [00:38:42] Speaker 00: Thank you, Judge. [00:38:44] Speaker 02: If I can start very briefly with respect to standing. [00:38:48] Speaker 02: The district court effectively gave two sentences of evaluation. [00:38:51] Speaker 02: That's simply not enough. [00:38:54] Speaker 02: In terms of what the supposed inventor knew, it is very clear on the record, if you look at each of the limitations, she did not understand what they were, didn't understand the modules, didn't understand the signals. [00:39:05] Speaker 02: I know that counsel now says, well, there was a language difficulty. [00:39:08] Speaker 02: There was no claim of language difficulty below. [00:39:11] Speaker 02: We had two interpreters, an interpreter and a Czech interpreter. [00:39:14] Speaker 02: Neither said there was a difficulty of language. [00:39:16] Speaker 02: She had the Chinese patents before her by that time. [00:39:20] Speaker 02: And in fact, the one thing she didn't understand wasn't the questions. [00:39:24] Speaker 02: She never said, I don't understand the questions. [00:39:26] Speaker 02: What she didn't understand was the technology supposedly invented. [00:39:30] Speaker 04: And that was true of all the other patents that she supposedly invented while her husband was... If we're going to make this about inventorship, it doesn't seem like there was a proper discovery process on the inventorship question. [00:39:43] Speaker 04: You did get a shot at [00:39:46] Speaker 04: deposing Ms. [00:39:47] Speaker 04: Lee and Mr. Ding, but it doesn't seem like there was a full evaluation of the inventorship question through a customary discovery process. [00:39:56] Speaker 02: Well, Your Honor, I think nobody's objected that the record is incomplete. [00:39:59] Speaker 02: And the record is, quite frankly, quite clear that it cannot be that Ms. [00:40:04] Speaker 02: Lee is the sole inventor of this item when she does not understand how any of the modules work, when it's comprised of modules, when she does not understand what the signals are. [00:40:14] Speaker 02: when it's comprised of modules that communicate to each other with signals. [00:40:17] Speaker 02: This record is absolutely clear on that. [00:40:19] Speaker 02: But I think I might be belaboring that point a little bit because I would probably prefer to switch very quickly to standing because that could ease, excuse me, sanctions, because that could ease whether or not we have an issue of inventorship here or whether it's really an issue of standing. [00:40:32] Speaker 02: And turning to sanctions, even if the district court didn't abuse its discretion in requiring us to turn over unsecured copies of our confidential source code, [00:40:42] Speaker 02: And we think it was an abuse of discretion, because I just can't imagine any other district court anywhere in the country ordering Apple or any other high tech company to turn over its confidential source code with no protection against it being emailed, no protection against it being put on unsecured thumb drives, no protection on it being put against unsecured laptops. [00:41:02] Speaker 02: I just can't imagine that happening. [00:41:05] Speaker 02: It's outside the box. [00:41:05] Speaker 02: But even if we're wrong, even if this at least is an issue [00:41:09] Speaker 02: that points out that the cross-the-board sanction of default simply goes too far. [00:41:16] Speaker 03: Let me ask you, how soon after the request was made for source code? [00:41:22] Speaker 03: In other words, source code specifically identified as being requested. [00:41:26] Speaker 03: How soon after that? [00:41:28] Speaker 03: Well, first of all, when was that, number one? [00:41:30] Speaker 03: And number two, how soon after that did Parrott come forward with its proposal for an examination on a freestanding [00:41:40] Speaker 03: Computer right so your honor. [00:41:42] Speaker 02: I think stand-alone computer Yeah, so the first inkling we had that the district court was ordering us to turn over Unencrypted copies of the source code was when it issued its july 1 motion to compel had there been a but had there been a request for it before from from the others from the entire focus up to that point was on the controller source code which was public source and [00:42:05] Speaker 02: And the focus was on that because we had gone through different changes. [00:42:09] Speaker 02: We had actually pulled out the allegedly infringing functionality from the controller for a period of time. [00:42:14] Speaker 02: And they wanted to see how that was done and try to determine the importance of that. [00:42:18] Speaker 02: But that was all turned over. [00:42:20] Speaker 02: The moment it went to the onboard source code, by July 3rd, we were asking for clarification from the district court. [00:42:26] Speaker 03: You're saying the first time it, quote, went to onboard source code as an issue was on July 1 when the motion to compel was filed? [00:42:34] Speaker 02: No, when the district court ruled. [00:42:35] Speaker 02: It was in the order. [00:42:37] Speaker 02: It suddenly said, produce all source code and we filed a motion two days later. [00:42:40] Speaker 02: Emergency motion, clarification, reconsideration. [00:42:43] Speaker 02: It hadn't been mentioned by drone technology before that? [00:42:47] Speaker 02: Not to my knowledge. [00:42:49] Speaker 04: Well, to be fair, the June 19th motion to compel was asking for source code. [00:42:54] Speaker 04: I mean, it was spotlighting the free flight software app, but it wasn't limited to just the free flight software app. [00:43:01] Speaker 02: Judge Chen, if we had known, [00:43:03] Speaker 02: if we had been aware that they were really after the onboard source code. [00:43:06] Speaker 02: The best thing for us to do would be to run it immediately and say, and this is easy for me to say with the appellate 2020 hindsight, which is not necessarily fair to trial counsel, but run and say, we can't produce that without protections. [00:43:19] Speaker 02: We will not produce that without protections. [00:43:22] Speaker 02: If the district court's inclined to order us to do so, please impose an immediate repealable sanction, and let's take this up to the Court of Appeals. [00:43:29] Speaker 02: But no one saw that coming, frankly. [00:43:32] Speaker 02: And no one's really interested in engaging in that kind of brinksmanship, which isn't necessary. [00:43:36] Speaker 02: What we tried to do is we tried to make it available on different term after different term that would produce its security but meet their objections. [00:43:42] Speaker 02: So for example, the first offer we offered to make it available on the same terms as the ITC. [00:43:48] Speaker 02: That wasn't good enough. [00:43:49] Speaker 02: So we offered to make it available on a secure relativity database where they could review the source code on screen in their own offices without any monitoring for us. [00:43:58] Speaker 02: That wasn't good enough. [00:43:59] Speaker 02: We offered two months before the contempt hearing. [00:44:02] Speaker 02: two months before the contempt hearing, to stipulate that we practice every single limitation of the onboard vehicle, taking that issue completely off the table. [00:44:12] Speaker 02: That's not the conduct of someone who's trying to obstruct the process. [00:44:15] Speaker 02: That's the conduct of someone who's trying to protect their source code and trying to move things along. [00:44:19] Speaker 02: But the answer we got in each instance was no, no, no, no. [00:44:25] Speaker 02: And we also were never told, why do you need that source code? [00:44:29] Speaker 02: Why isn't everything we gave you in these initial disclosures [00:44:32] Speaker 02: not good enough to get you past that initial point. [00:44:34] Speaker 02: And that's the last two points I want to make is, look, this is about initial disclosures. [00:44:39] Speaker 02: We barely got out of the box on this case in 60 days from the first motion to compel around June 19th to the motion for contempt, which result in default in August 18th. [00:44:51] Speaker 02: In 60 days, this court case took a complete U-turn from the merits to a sanction across the board. [00:44:57] Speaker 02: And it seems that under the circumstances, [00:44:59] Speaker 02: The one thing that seems clear is that across the board default on issues that have no relationship whatsoever to the disputed source code. [00:45:06] Speaker 02: So for example, controller limitations, for example, on invalidity, for example, on enforceability, those issues which have no connection to the disputed source code, making those the subject of fault just simply goes too far. [00:45:21] Speaker 02: If the court does not have any further questions, I'd be happy to. [00:45:25] Speaker 04: What would happen theoretically if we vacated [00:45:29] Speaker 04: Everything. [00:45:31] Speaker 04: Discovery order, the sanctions order, and damages verdict. [00:45:36] Speaker 04: But maybe the district court would have a second opportunity to explain why it believed that your initial disclosures were not enough to comply with rule 3.1. [00:45:52] Speaker 02: Certainly the district court might have that opportunity. [00:45:54] Speaker 02: The ordinary rule, since it's an abuse of discretion standard, [00:45:57] Speaker 02: the district court makes that decision in the first instance. [00:46:00] Speaker 02: I think given the tenor of what we got, the very likely result is we will get the maximum sanction possible. [00:46:05] Speaker 02: And therefore, I think it would be very helpful if this court were to articulate the outer boundaries and the circumstances as to what it thinks is appropriate. [00:46:12] Speaker 02: But I should make clear, though, that even in the district court below, its new local rules provide exactly the protections we're asking for. [00:46:19] Speaker 02: And one of the provisions of those new local rules say, when you're before the court, the parties are going to have to now sit down and discuss [00:46:26] Speaker 02: whether these new local rules and these new protective orders should apply. [00:46:29] Speaker 02: And that's, at the very minimum, one of the things that we think should happen on remand is we should have a chance to go back and apply the new local rules, which do what the ITC did, what we're proposing, what the Northern State of California does, what virtually every district does. [00:46:43] Speaker 03: What has happened, if you know, in the district court in other cases, given the advent of these new local rules, are ongoing cases [00:46:54] Speaker 03: adopting them or going with the old rule? [00:46:58] Speaker 02: Yeah. [00:46:58] Speaker 02: I don't know how people are handling these local rules. [00:47:01] Speaker 02: All I know is that they apply to new cases and parties who have ongoing cases have to discuss. [00:47:06] Speaker 02: There has to be a meet and confer on whether they apply. [00:47:08] Speaker 02: And they provide exactly what Parrott was asking for all along. [00:47:13] Speaker 02: Certainly under those circumstances, we should restore the truth-finding function of the trial here and reverse the sanctions [00:47:22] Speaker 02: remand this case for full consideration of the merits. [00:47:24] Speaker 02: To the extent the district court thinks the sanctions are still appropriate, it will have another chance at it. [00:47:29] Speaker 02: And we also ask that the court respectfully consider the possibility, the possibility of remanding the case for consideration before a district court judge. [00:47:37] Speaker 02: And I make that request very gingerly, because it's a sensitive topic. [00:47:40] Speaker 02: In 25 years, I've never made that suggestion. [00:47:43] Speaker 02: But the court believes that it's in the interest of justice, in the interest of the judicial system, in the interest of [00:47:49] Speaker 02: the appearance of impartiality, we would at least ask the court to consider it. [00:47:53] Speaker 00: Thank you.