[00:00:00] Speaker 03:
Pace's log-in precision versus genius electronic optical company 2015-1695.

[00:00:06] Speaker 03:
Mr. Donner, when you are ready.

[00:00:43] Speaker 04:
Good morning and may it please the court.

[00:00:46] Speaker 04:
Genius argues that Logan has presented zero evidence on its active inducement charge.

[00:00:56] Speaker 04:
That contention is not only inconsistent with direct evidence that's in the case, but it's inconsistent with a ton of circumstantial evidence in the case.

[00:01:06] Speaker 04:
And a good place to start is Genius's argument that

[00:01:11] Speaker 04:
There's a dispute that we haven't established that the bargain patents cover the claims.

[00:01:18] Speaker 04:
The district court found to the contrary on page A-15.

[00:01:21] Speaker 01:
He said that there's no... I guess I would like you to focus on what they allege as a whole in your case, which is the failure to establish that any genus lenses ended up in the United States.

[00:01:38] Speaker 01:
So if you could just focus all of your argument right there, that would be useful.

[00:01:44] Speaker 04:
All we need to do is show that it's more probable than not.

[00:01:49] Speaker 01:
And I think we have... I have a curiosity.

[00:01:51] Speaker 01:
Why did you not just break open an Apple phone?

[00:01:53] Speaker 01:
I mean, I have one back in the chambers.

[00:01:55] Speaker 01:
It would have been so easy to do.

[00:01:57] Speaker 01:
Why didn't they break open a single phone, a single iPad, anything just to be able to show that some devices made their way into the U.S.

[00:02:06] Speaker 01:
with genus lenses?

[00:02:08] Speaker 04:
Your Honor, I think the evidence is circumstantially overwhelming that they made their way into the United States.

[00:02:14] Speaker 04:
and that Genius believed that.

[00:02:16] Speaker 04:
First of all, they were put on repeated notice from Largon that the Largon patents covered the Genius products.

[00:02:26] Speaker 01:
One of those documents, 8810, expressly said that... But again, I have no objection to your arguments about infringement in terms of the lenses being covered by the Largon patent.

[00:02:39] Speaker 01:
My only question to you

[00:02:41] Speaker 01:
is where is the evidence that these things ended up in the US?

[00:02:45] Speaker 01:
Because there's no direct infringement unless they're in the US.

[00:02:49] Speaker 01:
So where is that evidence?

[00:02:50] Speaker 01:
Circumstantial evidence is fine, but where is the circumstantial evidence of that?

[00:02:55] Speaker 04:
The evidence is that Genius believed that they went in the United States and they were told that their products were in the United States.

[00:03:06] Speaker 04:
On 8810, they were told expressly

[00:03:09] Speaker 04:
that their lenses were incorporated in Apple products sold in the United States.

[00:03:15] Speaker 04:
They were told that expressly.

[00:03:17] Speaker 04:
Secondly, they had a... 8810?

[00:03:19] Speaker 04:
8810.

[00:03:20] Speaker 04:
Told by whom?

[00:03:22] Speaker 04:
Pardon?

[00:03:22] Speaker 04:
Told by whom?

[00:03:24] Speaker 04:
Told by Largan.

[00:03:25] Speaker 04:
Told by Largan.

[00:03:28] Speaker 04:
In that document.

[00:03:30] Speaker 01:
Wait, so the patentee tells them that their products with their lenses are ending up in the U.S.

[00:03:38] Speaker 01:
You think the patentees claim that they're ending up in the US is evidence that they did end up in the US?

[00:03:45] Speaker 01:
If that were true, wouldn't it eliminate the need for actual evidence in every case?

[00:03:50] Speaker 04:
It's a totality of circumstances argument.

[00:03:53] Speaker 04:
Let me just add to that.

[00:03:55] Speaker 04:
The argument is that not only were they told that their products were covered by US patents, but the documents that we have relied on showed that they said,

[00:04:08] Speaker 04:
They had a patent problem.

[00:04:10] Speaker 04:
They changed one design because of a bargain patent.

[00:04:14] Speaker 04:
They said it was a big issue for their company.

[00:04:17] Speaker 04:
They engaged in a multi-year, two-year project to evaluate whether or not they infringed US patents.

[00:04:25] Speaker 04:
No rational company would engage in a two-year project.

[00:04:29] Speaker 00:
Just to follow up on Judge Moore's question, the points you're making are points that are relevant to whether

[00:04:36] Speaker 00:
genius itself had a subjective belief that some of its lenses were ending up in the United States.

[00:04:43] Speaker 00:
But I don't know if you can point to what they may have subjectively believed or not believed as evidence to meet your burden that the lenses actually arrived in the United States.

[00:04:55] Speaker 00:
And I guess that's the piece that I hear Judge Moore wondering about, and I'm also wondering about, is what evidence can you point to that

[00:05:06] Speaker 00:
We know what's going on inside the black box of the supply chain in China to have some comfort that yes, genius lenses have arrived in the United States inside of Apple products.

[00:05:17] Speaker 04:
Your honor, there are two batches of evidence.

[00:05:21] Speaker 04:
One is the document I mentioned, ADA 10, where they were told their product was in the United States.

[00:05:27] Speaker 04:
Secondly, the test is more probable than not, and I say a reasonable jury

[00:05:32] Speaker 04:
could assume that because Genius engaged in this multiple year investigation, because they said in documents there was a big risk for them, because they changed the design of a product because of a US patent, all I'm saying is when you put all these things together, no rational, and one of the letters was sent to the head of the IP department, the very first letter in Genius.

[00:06:00] Speaker 04:
So we're not talking about people.

[00:06:01] Speaker 01:
That letter didn't reference any of the patents at issue in this lawsuit.

[00:06:05] Speaker 01:
It wasn't until the end of the two-year period that Largan made Genus aware of these patents.

[00:06:11] Speaker 01:
You're absolutely right.

[00:06:13] Speaker 01:
Genus conducted a two-year attempt to design around other patents that Largan made it aware of.

[00:06:19] Speaker 01:
I don't see any evidence in this record that Largan made it aware of these patents until the end of that two-year process.

[00:06:25] Speaker 01:
So I'm not sure circumstantial evidence of attempts to design around different patents

[00:06:30] Speaker 01:
not in this lawsuit is the circumstantial evidence that you need.

[00:06:34] Speaker 04:
Your Honor, all I'm saying is if you put all of this evidence in a bucket and you look, what does this evidence tell you?

[00:06:43] Speaker 04:
It tells you that Genius wouldn't have gone through any of this if they didn't believe their products were sold in the United States.

[00:06:53] Speaker 04:
It tells you not only as to the patents in suit, but as to the patents not in suit.

[00:06:59] Speaker 04:
It tells you there's a document that says their product is in the United States.

[00:07:04] Speaker 04:
And we couple that.

[00:07:05] Speaker 04:
But is that evidence or is that supposition?

[00:07:10] Speaker 04:
You draw inference from all reasonable inferences are to be drawn in favor of the non-moving party, which is Lorgan.

[00:07:16] Speaker 03:
In other words, your strongest argument is that this shouldn't have been decided on summary judgment?

[00:07:23] Speaker 04:
No, there can be a dispute.

[00:07:25] Speaker 04:
The judge can put it to trial.

[00:07:27] Speaker 04:
All we need to show is that a reasonable jury could have ruled for a largon on these facts.

[00:07:32] Speaker 04:
And what I didn't mention, which has to be added to the points I did mention, is that, and there are certain things I cannot say in court because they have been masked out, but it's clear that hundreds of millions of lenses of largon and genius were sold around the world.

[00:07:52] Speaker 04:
It's clear that hundreds of millions were sold in the United States.

[00:07:56] Speaker 04:
It's clear that Apple did not differentiate between Largon and Genius.

[00:08:00] Speaker 01:
We don't know what the suppliers did.

[00:08:03] Speaker 01:
I don't believe any of this is confidential.

[00:08:05] Speaker 01:
Just wave your hands at me.

[00:08:06] Speaker 01:
If I start going there, I'm going to avoid all numbers, OK?

[00:08:08] Speaker 04:
Right.

[00:08:09] Speaker 01:
I think that's the key confidential stuff.

[00:08:10] Speaker 01:
But we know there are at least two Asian suppliers in the supply chain.

[00:08:15] Speaker 01:
There are people who get the lenses from Genius and put them in camera modules.

[00:08:19] Speaker 01:
There are people that take the camera modules.

[00:08:21] Speaker 01:
A separate company takes the camera modules and puts them in phones and iPads.

[00:08:26] Speaker 01:
Then those phones and iPads are imported by the second company sent to Apple for Apple's distribution in the US.

[00:08:33] Speaker 01:
We know that Apple didn't care or place any limitations on whether it was Largon or Genus lenses that were put in whichever phones were going anywhere.

[00:08:42] Speaker 01:
That is in the record.

[00:08:44] Speaker 01:
But what we don't know is how did each of these two suppliers handle it?

[00:08:49] Speaker 01:
Maybe supplier number one said, let's put all the Genus lenses and the ones going abroad and the Largon lenses going to the US.

[00:08:55] Speaker 01:
Maybe supplier number two said, let's only ship the iPhones with the largen lenses to the US.

[00:09:01] Speaker 01:
There would have been good reason for them to do that, in fact, because those suppliers were the ones that imported the product directly and therefore could have ended up being accused of direct infringement.

[00:09:10] Speaker 01:
We don't know.

[00:09:11] Speaker 01:
It's a black box.

[00:09:12] Speaker 01:
And you all could have taken discovery on all of that at any point in time and didn't and added it to this record.

[00:09:18] Speaker 04:
Your Honor?

[00:09:19] Speaker 01:
You're right.

[00:09:19] Speaker 01:
There is a probability in the abstract it could have happened.

[00:09:23] Speaker 01:
We know abstract didn't, Apple didn't dictate how it happened, but we don't know what two separate companies in the chain decided to do.

[00:09:31] Speaker 04:
Your honor, our position is there was no reason for the suppliers to discriminate against Genius Lens as ship only.

[00:09:40] Speaker 01:
Sure there was.

[00:09:41] Speaker 01:
The supplier is the one who imported them.

[00:09:43] Speaker 01:
They would have been guilty of importation of an infringing device or inducing infringement by importing the device.

[00:09:49] Speaker 04:
I don't understand what reason would they have had to ship only Larkin products in the United States?

[00:09:55] Speaker 01:
If they had been aware of the Larkin patent, which we don't know, then they would have been aware that if they shipped the iPad with the genus lens, they'd have been infringing the Larkin patent because they were the ones that imported.

[00:10:07] Speaker 04:
Your honor, that certainly is a possibility.

[00:10:09] Speaker 04:
All I'm saying is when you put all of these items in the bucket, it is a reasonable jury on this evidence

[00:10:18] Speaker 04:
could have found four largen on this issue.

[00:10:22] Speaker 04:
It could have found, that is more probable than not, that given the fact that they went through an investigation, given the fact that they found that three largen patents were infringed by three genius products at the end of the investigation or in the middle of it, they found that.

[00:10:39] Speaker 01:
None of them were in the US.

[00:10:41] Speaker 04:
Pardon?

[00:10:41] Speaker 01:
None of them were in the US.

[00:10:43] Speaker 04:
Your Honor, you don't reach a conclusion that a patent is infringed

[00:10:48] Speaker 04:
A U.S.

[00:10:48] Speaker 04:
patent is infringed unless you have reason to believe that your products are in the United States to infringe that patent.

[00:10:56] Speaker 04:
You don't have any reason to reach that conclusion.

[00:10:59] Speaker 04:
You don't have any reason to change the design of your product unless you believe that your products are in the United States.

[00:11:05] Speaker 04:
All I'm saying is that is substantial evidence on which a jury could rely to rule in favor of Largin.

[00:11:12] Speaker 04:
That is more probable than not.

[00:11:16] Speaker 04:
You're raising, the district court said,

[00:11:18] Speaker 04:
Well, maybe their investigation had to do with those samples that were sent in the United States.

[00:11:22] Speaker 04:
And on page five of the red brief, they argue those were de minimis samples, 0.50s and a 2, 2 millionth of a percent of the total products.

[00:11:32] Speaker 01:
All I'm saying is a reasonable jury could- Well, the district court also exempted from the summary judgment a particular product line, a couple of particular product lines, right?

[00:11:42] Speaker 01:
One product line that genus was almost exclusively providing to.

[00:11:46] Speaker 04:
So sourced.

[00:11:47] Speaker 01:
Yeah, I'm trying to be very careful with all the confidential information and another product line where it was clear that based on the raw number of lenses produced by Largan and the raw number of lenses produced by Genus and the number sold in the US, some of the Genus lenses in that product line had to have ended up in the US, right?

[00:12:10] Speaker 04:
That is true.

[00:12:11] Speaker 01:
So the district court exempted from summary judgment all of those

[00:12:16] Speaker 04:
That is true, your honor.

[00:12:18] Speaker 04:
And all I'm saying is that the test is a very low test.

[00:12:23] Speaker 04:
And I think we meet that low test, the test more probably than not, drawing inferences in Lorgan's favor.

[00:12:31] Speaker 04:
The district court drew no inferences in Lorgan's favor.

[00:12:35] Speaker 04:
The district court drew all the inferences in Genius's favor.

[00:12:39] Speaker 04:
I think from my standpoint, it is a common sense analysis.

[00:12:45] Speaker 04:
A common sense analysis tells you that when the products were interchangeable, when either one could have been provided, when Apple was putting no pressure from the record on any of its suppliers to put one or the other into the United States, coupled with this long two-year analysis that shows you that Genius believed its products were in the United States or it wouldn't have done all the things that it did.

[00:13:12] Speaker 04:
I say that is substantial evidence to show that the products were not only in the United States, but that genius believed that they were in the United States.

[00:13:21] Speaker 03:
Let's say the rebuttal time, Mr. Donner.

[00:13:24] Speaker 04:
I will, Your Honor.

[00:13:25] Speaker 03:
And before we begin, Mr. Shapiro, this is a useful time to commend the parties for submitting supplemental briefs and appendices, lessening the amount of material claimed to be confidential.

[00:13:39] Speaker 03:
The Court appreciates that.

[00:13:40] Speaker 04:
Thank you, Your Honor.

[00:13:52] Speaker 02:
May it please the court, addressing some of the points the court has raised.

[00:13:56] Speaker 02:
It is precisely the case, as Judge Moore has noted and Judge Shannon has followed up on, there is no evidence on the record of an Apple product having a genius lens being in the United States.

[00:14:08] Speaker 02:
They never cracked one open.

[00:14:10] Speaker 03:
But there's a good basis to suppose, isn't there?

[00:14:13] Speaker 03:
Most of the Apple products are sold in the United States, and the products were designed

[00:14:22] Speaker 03:
with the Apple people in the United States?

[00:14:26] Speaker 03:
Isn't there enough there to survive summary judgment?

[00:14:30] Speaker 02:
No, because the evidence is that the amount of lenses that were sold could have been supplied by Largon.

[00:14:37] Speaker 02:
We've carved out, as we've talked about, a couple of categories that are in dispute.

[00:14:41] Speaker 02:
And with respect to what's left, all of the lenses that came in the United States in cameras, in phones, could have been supplied by Largon.

[00:14:48] Speaker 03:
But aren't they entitled to a trial on the question of whether they were?

[00:14:55] Speaker 02:
Well, in a circumstance where they could have obtained the evidence, their argument is based on randomness.

[00:15:00] Speaker 02:
They're saying there must have been a random distribution.

[00:15:02] Speaker 02:
There is no evidence of a random distribution here.

[00:15:05] Speaker 02:
In fact, the only citation of the record that we've seen that we cited was at 6281, where there's some indication by our own employee that largan lenses, in some circumstances, perform better.

[00:15:16] Speaker 02:
We also know that Largon hasn't been sued for patent infringement.

[00:15:20] Speaker 02:
So the real issue is, since Apple doesn't know, who would know?

[00:15:25] Speaker 02:
The module integrators or the system integrators?

[00:15:27] Speaker 02:
They would have a reason to discriminate or know where things go.

[00:15:31] Speaker 02:
Both issues would be covered.

[00:15:33] Speaker 02:
But a single subpoena was served on them.

[00:15:35] Speaker 02:
There was no attempt to take any discovery.

[00:15:37] Speaker 02:
There was no effort whatsoever to create a record on this.

[00:15:40] Speaker 02:
And in that circumstance, to give them the benefit of the doubt seems totally improper.

[00:15:43] Speaker 02:
There has to be some basis.

[00:15:45] Speaker 02:
Ninth Circuit law, which governs the standard here with respect to summary judgment, says mere allegation and speculation do not create a factual issue of dispute.

[00:15:54] Speaker 02:
So with respect to that specific issue, where they could have created a record and there is none, they're not entitled to get inferences based on a randomness supposition.

[00:16:04] Speaker 00:
What if hypothetically they did try to get that information from the system integrators and camera module integrators?

[00:16:13] Speaker 00:
they were unable to get that information, then would our fact pattern be exactly the same and we would still be granting summary judgment under that scenario?

[00:16:23] Speaker 02:
No, there's another piece though, because that's not the only place they could have gone.

[00:16:27] Speaker 02:
There are people who are experts in this field.

[00:16:28] Speaker 02:
This is the Apple supply chain.

[00:16:30] Speaker 02:
There are people who know how it works, and they know how things are distributed.

[00:16:33] Speaker 02:
They didn't talk to any of them either.

[00:16:35] Speaker 02:
They could have had expert testimony on this.

[00:16:37] Speaker 02:
They could have spoken to someone who knows that supply chain and how those decisions were made.

[00:16:41] Speaker 02:
Why do certain lenses go in certain cameras and up to certain places?

[00:16:45] Speaker 02:
We're talking about worldwide distribution.

[00:16:48] Speaker 01:
But there are some lenses, weren't there, where the district court didn't grant summary judgment?

[00:16:56] Speaker 01:
Correct, Your Honor.

[00:16:57] Speaker 01:
So one was to a whole product line where there was a sole supplier situation.

[00:17:03] Speaker 02:
Although we dispute that, that's the issue.

[00:17:04] Speaker 02:
It was disputed.

[00:17:05] Speaker 01:
Whatever.

[00:17:05] Speaker 01:
But it's on summary judgment.

[00:17:07] Speaker 02:
Yes, ma'am.

[00:17:07] Speaker 01:
It's not granted.

[00:17:08] Speaker 01:
But then there was a second group

[00:17:11] Speaker 01:
products where it was a numbers game.

[00:17:15] Speaker 01:
The number of lenses Largan produced wouldn't have actually been sufficient to supply the entire number of U.S.

[00:17:22] Speaker 01:
sales and so the district court denied summary judgment there too because it has to be the case.

[00:17:28] Speaker 01:
If it's two supplier market and Largan only made 10 units and 12 were sold in the U.S.

[00:17:33] Speaker 01:
it has to be the case that the other two had genus lenses, right?

[00:17:37] Speaker 01:
I'm making up numbers for the obvious reason.

[00:17:39] Speaker 01:
Isn't there a second product group where that's the case, a particular project?

[00:17:44] Speaker 02:
Well, there are two product numbers.

[00:17:46] Speaker 02:
There are a product number in ours, but it's actually one specific product we're talking about.

[00:17:49] Speaker 02:
And we had a dispute about whether or not there could have been inventory, there could have been other ways that things could have been supplied.

[00:17:55] Speaker 02:
It was a limited time period for a particular product.

[00:17:58] Speaker 01:
I understand the district court denied summary judgment on that.

[00:18:02] Speaker 02:
Correct.

[00:18:03] Speaker 01:
A limited time period for a particular product.

[00:18:09] Speaker 01:
Given that there's a question of fact, and it looks like genus lenses would have had to have been used or supplied to the products that ultimately ended up in the US during that particular time period for the particular product, why isn't that additional evidence that really strongly indicates that suppliers were not simply and only using largen lenses for US sales?

[00:18:36] Speaker 02:
There's an inference upon an inference.

[00:18:38] Speaker 02:
First of all, we dispute the fact that there was a sole source during that time those products would have come in.

[00:18:41] Speaker 02:
There's an issue of inventory and whether or not, while we may have been supplying during a particular time period, that's only supplying to the module integrator who goes to the system integrator.

[00:18:51] Speaker 02:
What the system integrator may have on shelves in terms of largen, we don't know.

[00:18:54] Speaker 02:
And so we disputed that issue, and the judge carved it out.

[00:18:57] Speaker 01:
But you don't have a strong case on that.

[00:18:58] Speaker 01:
So just assume for now that I think the district court is 100% right in not granting you summary judgment on that case.

[00:19:06] Speaker 01:
And that the strength of your case, in my mind, on that is not very strong.

[00:19:09] Speaker 01:
So now what?

[00:19:11] Speaker 01:
What happens?

[00:19:12] Speaker 01:
How does that fact implicate what the suppliers were doing with lenses in general?

[00:19:18] Speaker 02:
If we assume, if I may, for the purpose of this record, if we assume what you say is true, that in that circumstance, the module integrator passed the system integrator of these lenses, and there was no alternative supply.

[00:19:30] Speaker 02:
And therefore, to send the product to the United States, the system integrator in China

[00:19:36] Speaker 02:
would have had to use a genius lens.

[00:19:38] Speaker 02:
And that's applied with the United States.

[00:19:39] Speaker 02:
If we assume that, then they would like to infer, well, that means there's no discrimination.

[00:19:43] Speaker 02:
That means that they're willing to use.

[00:19:46] Speaker 02:
But that circumstance, if there's a sole source, there isn't a choice to be made, right?

[00:19:49] Speaker 02:
There is no other option.

[00:19:51] Speaker 02:
That's part of the problem.

[00:19:52] Speaker 02:
You're speculating one speculating.

[00:19:53] Speaker 02:
Who knows what their thought process was?

[00:19:55] Speaker 02:
But if in that circumstance is the case where they had no other choice and they imported it, that doesn't prove that there was no discrimination.

[00:20:02] Speaker 02:
It just proves in that case they didn't have a choice.

[00:20:05] Speaker 01:
The numbers here, which I will not articulate, but are so overwhelming that it just seems really unlikely that some genus lenses didn't end up in the US.

[00:20:23] Speaker 01:
But is it just simply, you know, it's their fault because they should have had to show that?

[00:20:27] Speaker 01:
What if they had come in and shown that one phone, what if they came in and said, we just bought this phone at Best Buy, we cracked it open,

[00:20:33] Speaker 01:
And look, there's our lens in it right there.

[00:20:36] Speaker 01:
Would that have been enough to get completely filled this hole in the proof?

[00:20:41] Speaker 02:
I don't think a single one would have been enough, because what we're talking about now... Why not?

[00:20:45] Speaker 01:
Because then this is summary judgment, and what it would have shown is at least some supplier let through genus lenses.

[00:20:52] Speaker 02:
It would have to depend on the circumstance.

[00:20:53] Speaker 02:
Just the example you gave could have been the circumstance of that sole source example.

[00:20:57] Speaker 02:
We need to know the circumstances, I would say.

[00:20:59] Speaker 01:
Doesn't that all go to damages?

[00:21:02] Speaker 01:
I mean, it just goes to damages.

[00:21:03] Speaker 01:
How many?

[00:21:04] Speaker 01:
How many goes to damages?

[00:21:06] Speaker 01:
The hole in the infringement question is, did any get over?

[00:21:09] Speaker 02:
That is true.

[00:21:11] Speaker 02:
And on this record, there is none.

[00:21:14] Speaker 02:
If you pose a hypothetical that some made it to the United States, then you have a case.

[00:21:18] Speaker 02:
But the fact is, they don't.

[00:21:19] Speaker 02:
And if I may, I don't have a lot of time, but I may switch you over to a couple of other issues.

[00:21:23] Speaker 02:
I think, honestly, that issue arguably is our weakest point.

[00:21:26] Speaker 02:
They focus on it, right?

[00:21:28] Speaker 02:
Percentage-wise, didn't some of them get through?

[00:21:30] Speaker 02:
The answer is there's no record to support they did.

[00:21:32] Speaker 02:
And they had a chance, and they didn't prove it.

[00:21:34] Speaker 01:
But that's why it isn't probabilities enough.

[00:21:36] Speaker 01:
I mean, this is summary judgment, and it's inferences.

[00:21:39] Speaker 01:
And why isn't a probability enough?

[00:21:42] Speaker 01:
I mean, suppose I'm making these numbers up, to be clear.

[00:21:46] Speaker 01:
But suppose they were the 75% supplier of lenses, and Apple says, we don't care which lenses you use in the products that come to the US.

[00:21:55] Speaker 01:
There's nothing in the supplier agreement that tells them, from Apple, they must use a particular lens.

[00:22:01] Speaker 01:
Suppose they're the 75% supplier.

[00:22:04] Speaker 01:
And yes, I guess it's possible that every lens that ended up in the US was, in fact, a Larkin lens.

[00:22:10] Speaker 01:
But why, under those circumstances, where Apple says, we don't care, these two lenses are interchangeable, and we don't care which one you use?

[00:22:17] Speaker 02:
What you're going back to, I would say, in those circumstances, you're going to random.

[00:22:21] Speaker 02:
You're saying, therefore, there must be some random distribution.

[00:22:25] Speaker 02:
Because if there was a principled reason why, for example, the system integrator or the module integrator didn't want to put a genius lens in a camera that went into an Apple product, that would completely exclude the possibility of importation of a genius product in the United States.

[00:22:42] Speaker 02:
That's possible in this record.

[00:22:43] Speaker 02:
We don't know.

[00:22:44] Speaker 02:
The only way that you get to the point you're discussing is by randomness.

[00:22:48] Speaker 02:
You're saying, well, it's a random situation.

[00:22:50] Speaker 02:
Anything could have happened.

[00:22:51] Speaker 02:
But the point is,

[00:22:52] Speaker 01:
But when Apple tells them it doesn't matter which lenses to use, why should we assume, in the absence of any evidence, that they nonetheless chose to segregate the lenses?

[00:23:02] Speaker 02:
Oh, that's not the record.

[00:23:03] Speaker 02:
The record isn't that Apple told anybody that they don't care.

[00:23:06] Speaker 02:
What Apple said is we don't track it.

[00:23:08] Speaker 02:
There's no evidence what the module or system indicators are saying.

[00:23:11] Speaker 01:
No, Apple also said the supply agreements don't require either particular kind of lens, right?

[00:23:17] Speaker 01:
Isn't that what Apple said?

[00:23:18] Speaker 01:
Didn't Apple say, I

[00:23:20] Speaker 01:
We can dig through our evidence, but I'm pretty sure Apple said that they don't place any requirements on the suppliers with regard to which lens.

[00:23:30] Speaker 02:
I believe that's right.

[00:23:31] Speaker 02:
They don't have any geographic requirement with respect to lenses.

[00:23:33] Speaker 02:
But there's no discussion about whether Apple told them, oh, gee, you can do anything you want, or that we have a preference.

[00:23:39] Speaker 01:
But Apple is the ultimate customer.

[00:23:41] Speaker 01:
And if the customer says to the supplier, oh, you know what?

[00:23:44] Speaker 01:
I don't care which lens you use.

[00:23:45] Speaker 01:
Either one of these is fine.

[00:23:47] Speaker 01:
Here are two suppliers that I have.

[00:23:50] Speaker 01:
You may use either of their lenses to fill this order.

[00:23:53] Speaker 01:
If that's the case, then why isn't that enough?

[00:23:57] Speaker 01:
I mean, this is summary judgment.

[00:23:58] Speaker 01:
We're just wondering if they proved enough to get to the next stage.

[00:24:02] Speaker 02:
Well, they haven't, because the source of that decision making is at the system integrator and module integrator level, and there's no evidence.

[00:24:11] Speaker 02:
And under the case law, when there's no evidence, you can't just randomly make inferences on the record.

[00:24:17] Speaker 02:
You have to make reasonable inferences.

[00:24:19] Speaker 02:
And under the circumstances where all of the lenses could have come from one source, where there's evidence on the record, for example, as we pointed to at 6280,

[00:24:27] Speaker 02:
But there's evidence that Largon lenses performed better, where we have evidence that Largon didn't have, quote unquote, an infringement problem.

[00:24:36] Speaker 02:
The system integrator could have decided not to use them.

[00:24:38] Speaker 03:
Isn't there evidence that Genius met with Apple in the United States to design the lenses?

[00:24:49] Speaker 03:
Isn't that evidence?

[00:24:50] Speaker 03:
Yes.

[00:24:51] Speaker 03:
Isn't that circumstantial evidence from which one can infer?

[00:24:55] Speaker 03:
that some of the products got into the United States?

[00:24:59] Speaker 02:
Absolutely not.

[00:25:00] Speaker 02:
Apple is in the United States.

[00:25:01] Speaker 02:
They're in Cupertino, California.

[00:25:02] Speaker 02:
That's where you have to go if you want to talk to Apple.

[00:25:05] Speaker 02:
But Apple sells its products all over the world.

[00:25:07] Speaker 02:
And it's very easily the case that these products could have been dedicated just to China, or to Taiwan, or to Korea.

[00:25:15] Speaker 02:
Under the Pulse v. Halo case, or Halo v. Pulse case, this court has said that kind of contact doesn't establish

[00:25:21] Speaker 02:
enough to establish infringement.

[00:25:23] Speaker 03:
You say Apple is in the United States, of course, but lots of their products are manufactured in Taiwan or in China?

[00:25:34] Speaker 02:
China, primarily we're talking about here.

[00:25:36] Speaker 02:
But they're distributed all over the world.

[00:25:37] Speaker 02:
Just because you speak to someone in the United States doesn't mean you're selling in the United States.

[00:25:40] Speaker 02:
There's an assumption here, and it goes to this, if I could get to this act of encouragement issue,

[00:25:45] Speaker 02:
The easy, easy way out of this case, and it's very simple.

[00:25:48] Speaker 02:
The judge found on one basis, he found lack of knowledge.

[00:25:50] Speaker 02:
And we haven't talked about that very much here.

[00:25:52] Speaker 02:
But there was no knowledge, and there was no evidence to support it.

[00:25:56] Speaker 02:
But the easy out is active encouragement.

[00:25:59] Speaker 02:
There's a requirement under the law, Microsoft.

[00:26:01] Speaker 02:
Largan must show that genius took an affirmative act to encourage infringement with knowledge that the induced acts constitute patent infringement.

[00:26:11] Speaker 02:
You're not arguing willful blindness.

[00:26:13] Speaker 02:
Well, they're arguing willful blindness, but there's no evidence on that either.

[00:26:16] Speaker 02:
If you look at the case law on that, the Supreme Court case, the Global Tech case, there has to be something that you did affirmatively to do that.

[00:26:23] Speaker 02:
We have a Taiwanese company that didn't have lawyers, that did a technical analysis in engineers and looked to see where the elements were present.

[00:26:33] Speaker 02:
They got a letter on April 2, 2013, and they were sued on June 4, 2013.

[00:26:38] Speaker 02:
So it was a two-month period.

[00:26:41] Speaker 02:
During that pine period, they looked at some things.

[00:26:44] Speaker 02:
But there was no lawyer involved.

[00:26:45] Speaker 02:
There was no analysis done from a lawyer's perspective.

[00:26:47] Speaker 01:
But they know about the patent.

[00:26:49] Speaker 02:
They learned about it on that date.

[00:26:51] Speaker 02:
You were right about what you said.

[00:26:52] Speaker 01:
I know.

[00:26:52] Speaker 01:
But they learned about the patent.

[00:26:55] Speaker 01:
They manufactured the lenses for Apple, which it knew to be located in Cupertino, California.

[00:27:02] Speaker 01:
They knew Apple products were sold in the United States.

[00:27:07] Speaker 01:
Are you going to tell me your company doesn't know Apple iPad 2s are sold in the United States?

[00:27:13] Speaker 02:
Seriously?

[00:27:15] Speaker 01:
I feel like I could take judicial notice of that.

[00:27:18] Speaker 02:
Well, I guess you could, but that's not in the record.

[00:27:23] Speaker 02:
That's not necessary for the finding here.

[00:27:24] Speaker 02:
The point is, what active steps did genius take to encourage infringement by Apple in the United States, importation in the United States?

[00:27:35] Speaker 02:
What basis did genius have to believe even that importation in the United States was necessary?

[00:27:38] Speaker 02:
Mr. Dunner says that they must have believed that there was importation in the United States.

[00:27:43] Speaker 02:
The theory of liability in this case of luring, the primary theory of direct infringement, was by virtue of geniuses' activities in Taiwan and China, that it was a direct infringer.

[00:27:54] Speaker 02:
It has nothing to do with whether or not Apple products went in the United States.

[00:27:57] Speaker 02:
That's their primary theory of liability.

[00:27:59] Speaker 01:
Do both of these companies continue to produce lenses for Apple products currently?

[00:28:04] Speaker 02:
To my knowledge, yes.

[00:28:06] Speaker 01:
So if there is simply a hole in the proof, vis-a-vis what happens in the supply chain, couldn't L'Organ just bring, I mean, if patents not expired, couldn't L'Organ just bring another suit and satisfy that hole?

[00:28:20] Speaker 02:
I think they both, to the extent they try to satisfy the hole, they could try.

[00:28:24] Speaker 02:
But they have other holes, because there's no active inducement by L'Organ, of Genius, of anything that L'Organ does.

[00:28:30] Speaker 02:
Genius does not care where lenses go.

[00:28:32] Speaker 02:
That's established, uncontroverable in the record.

[00:28:36] Speaker 02:
a couple dozen depositions trying to find someone who said... That's why it's called willful blindness.

[00:28:41] Speaker 00:
Well... Or let's just assume that they know.

[00:28:44] Speaker 00:
That they know that some of their products are getting into the United States.

[00:28:50] Speaker 00:
And now they are selling those lenses to the supply chain.

[00:28:55] Speaker 00:
That doesn't count as active encouragement of Apple

[00:28:59] Speaker 00:
directly infringing the patented lens in the United States?

[00:29:03] Speaker 02:
No, I don't know how it would.

[00:29:04] Speaker 02:
The fact that Apple might sell in the United States, where Apple sells all over the world, you think about an inducement case where you have instructions or manuals or advertising or promotion or encouragement some way, there's nothing of that kind in this case.

[00:29:18] Speaker 02:
This client, this company, Genius, is indifferent to where the lenses get sold.

[00:29:23] Speaker 02:
And even if they knew, even if they knew that products weren't in the United States, whether

[00:29:28] Speaker 02:
that were in Apple products.

[00:29:30] Speaker 02:
There is no evidence whatsoever, and there's no basis for reasonable inference, that they did anything to encourage that, that they wanted Apple to bring things to the United States.

[00:29:38] Speaker 02:
There has to be a specific intent to encourage an active infringement.

[00:29:43] Speaker 03:
Thank you, counsel.

[00:29:44] Speaker 03:
Let's hear Mr. Donah's rebuttal.

[00:29:47] Speaker 02:
Thank you, Your Honor.

[00:29:58] Speaker 04:
I just like to get a few points.

[00:29:59] Speaker 04:
One is that the question is, Judge Moore asked some questions and I know they were just questions, but nevertheless she focused on, isn't it more likely than not that given the total number of products that were sold that some came into the United States, and the answer is the test, it's a 50% plus a feather is the test.

[00:30:21] Speaker 04:
That's what the courts talk about.

[00:30:23] Speaker 04:
And I think it is inconceivable.

[00:30:26] Speaker 04:
that given all these facts, that some of the products didn't come into the United States.

[00:30:30] Speaker 04:
Now they charged us, how come we didn't investigate?

[00:30:34] Speaker 04:
And when we said they should have investigated, they said, well, they would have hit a blank wall.

[00:30:40] Speaker 04:
The fact is, all they had to do to get out of the infringement issue that was created by Largan's letters was to show that their products were not so important in the United States.

[00:30:52] Speaker 04:
They never did any of that.

[00:30:54] Speaker 04:
They talk about... That's an interesting question.

[00:30:57] Speaker 00:
Who has the burden of looking inside the black box called the supply chain here?

[00:31:04] Speaker 00:
Is it the patent owner or is it the defendant?

[00:31:09] Speaker 04:
Your Honor, the patent owner has the burden of proving active inducement by a preponderance of evidence.

[00:31:17] Speaker 04:
So we have the burden.

[00:31:18] Speaker 04:
But all I'm saying is when you've got this bucket with all these facts,

[00:31:22] Speaker 04:
And it would have been the easiest thing for them to have established that their products were not sold in the United States.

[00:31:29] Speaker 04:
That's something they easily could have found and they didn't.

[00:31:32] Speaker 04:
They didn't do that.

[00:31:33] Speaker 04:
All I'm saying is that's a piece of evidence that goes to what is more likely than not.

[00:31:38] Speaker 04:
What is 50% plus a feather?

[00:31:40] Speaker 03:
What you're saying is they didn't carry a burden that they didn't have.

[00:31:46] Speaker 04:
No, what I'm saying is that it's a piece of evidence

[00:31:51] Speaker 04:
We have the ultimate burden, but it's a piece of evidence that goes into whether it's more likely than not that they were selling products from the United States.

[00:32:01] Speaker 04:
They mentioned briefly, willful blindness and active encouragement.

[00:32:05] Speaker 04:
I would direct the court to the MEMC case on active encouragement.

[00:32:10] Speaker 04:
On willful blindness, I would direct the court to Infohold and Suprema.

[00:32:14] Speaker 04:
The facts of those cases were very similar to the facts of this case.

[00:32:18] Speaker 04:
And I see Judge Lurie you're looking at me as though my time has expired.

[00:32:21] Speaker 03:
Thank you.

[00:32:22] Speaker 03:
Mr. Donahue will take the case and look at it with a very careful lens.

[00:32:28] Speaker 01:
The honor course is adjourned until tomorrow morning at 10.