[00:00:00] Speaker 04: Case for argument is 155057 Liberty Ammunition versus U.S. [00:00:44] Speaker ?: Thank you. [00:01:56] Speaker 04: Mr. Brown. [00:01:58] Speaker 00: Yes, your honor. [00:01:59] Speaker 00: May it please the court. [00:02:01] Speaker 00: The government's appeal in this case, chiefly relates to the construction of three claim terms directed to the structure of the outer interface of the claim small arms projectiles of the patent suit. [00:02:13] Speaker 04: Can I just ask you a process question, which does not indicate which way I'm leading here. [00:02:18] Speaker 04: I just want to know. [00:02:19] Speaker 04: If we were to agree with you on two of the three claim construction issues or three of the three claim construction issues, [00:02:26] Speaker 04: Does the invalidity contention go away? [00:02:30] Speaker 04: Yes, Your Honor. [00:02:31] Speaker 04: For example, it was an affirmative defense only, not a counterclaim, correct? [00:02:36] Speaker 00: Correct. [00:02:37] Speaker 00: So if Your Honor was to rule in our favor on the first term, intermediate opposite ends, which is in one independent claim, if you were to rule in our favor on reducer of contact, which is in the other independent claim, we would therefore not infringe [00:02:54] Speaker 04: So control rupturing is just duplicate. [00:02:58] Speaker 00: It's not. [00:02:58] Speaker 00: It's a second limitation in each claim. [00:03:01] Speaker 00: And if we were to prevail in that, this court would not have to reach the invalidity decisions or the obviousness appeal that we have. [00:03:09] Speaker 00: We wouldn't have to reach the damages issues, both the appeal and cross-appeal. [00:03:13] Speaker 00: This court will have to address the cross-appeal and the breach of contract claim. [00:03:19] Speaker 00: But in terms of the patent case itself, [00:03:21] Speaker 00: Those two limitations would eliminate. [00:03:23] Speaker 04: I have questions about the breach of contract claim. [00:03:26] Speaker 00: We'll get to that in due course. [00:03:28] Speaker 04: All right. [00:03:28] Speaker 04: So why don't you start with infringement? [00:03:30] Speaker 00: Sure. [00:03:32] Speaker 00: The first term is intermediate opposite ends. [00:03:34] Speaker 00: As I said, it's in claim 32, the second independent claim of the patent. [00:03:40] Speaker 00: It's our contingent based on the clear claim language and numerous specification disclosures. [00:03:45] Speaker 00: The government correctly construed this language. [00:03:48] Speaker 00: to require that the interface not reach either end of the cloning projectile. [00:03:53] Speaker 04: But the court of claims, Judge, here relied on the word comprising in the preamble, correct? [00:04:00] Speaker 00: The court relied on the term including, which is a second open transition term. [00:04:04] Speaker 00: Liberty relies on the term comprising. [00:04:07] Speaker 00: I think the arguments are identical whether you're looking at including or comprising. [00:04:10] Speaker 04: OK, so give me the article. [00:04:11] Speaker 04: We have to give some meaning to either of those terms, comprising or including. [00:04:16] Speaker 04: But where did the district court go wrong? [00:04:20] Speaker 00: It correctly identified those as open transition terms. [00:04:23] Speaker 00: But what it did wrong is in understanding that those terms could allow additional elements, they essentially allowed the comprising or including language to essentially abrogate a specific claim limitation. [00:04:36] Speaker 00: The claim specifies that the interface has to be disposed intermediate opposite ends. [00:04:41] Speaker 00: The court said because it's open transitional language, [00:04:44] Speaker 00: you can add elements, i.e. [00:04:45] Speaker 00: additional length to the interface so that it can stretch. [00:04:48] Speaker 04: So there's no dispute on how one would construe the claim in and of itself, the claim language in and of itself? [00:04:55] Speaker 00: That would be my understanding. [00:04:57] Speaker 00: My reading of the trial courts, both its claim construction ruling and its trial decision, it seems to say, yeah, intermediate opposite ends means middle or in between. [00:05:06] Speaker 00: However, because it's an open transition term, you can extend it all the way and then close either end of the projectile. [00:05:13] Speaker 02: So wouldn't that then include the whole full metal jacket prior art? [00:05:16] Speaker 02: Correct. [00:05:18] Speaker 00: That is correct. [00:05:19] Speaker 00: It would include any interface that somehow covered the middle. [00:05:24] Speaker 00: That's the only limitation as the trial court sees it. [00:05:28] Speaker 00: So therefore, we think it was improper for him to find that you could do that because you're left with the result we had in this case, that we're both accused of A1 projectiles that enclose the entire rear of the bullet and then extend forward roughly 2 thirds of the length of the bullet [00:05:43] Speaker 00: somehow infringe, even though they're not intermediate in any way. [00:05:47] Speaker 00: And that's really our point here, is he's abrogated the word intermediate. [00:05:51] Speaker 00: It's rendered meaningless in the claim, because there's nothing intermediate either about the prior MA55 jacket or the accused A1 projectile jacket. [00:06:01] Speaker 04: On the second term that's in dispute, reduced area of contact, you make a kind of indefiniteness suggestion here. [00:06:11] Speaker 04: But you never raised indefiniteness as a defense, right, as a validity contention? [00:06:15] Speaker 04: Because I'm struggling with this. [00:06:17] Speaker 04: I mean, if we agree with you that his construction is indefinite, I'm not sure that your alternative construction, one, is right, or two, would not also be indefinite. [00:06:30] Speaker 00: Well, I think you are correct, John. [00:06:32] Speaker 00: We did not argue that that plain term was hopelessly indefinite. [00:06:36] Speaker 00: At the time. [00:06:37] Speaker 04: Well, you don't want to use those words. [00:06:39] Speaker 04: That sounds like insolubly ambiguous. [00:06:41] Speaker 04: We've rejected that. [00:06:44] Speaker 00: Well, certainly, Your Honor, what we've argued is the trial course construction was definitely indefinite. [00:06:50] Speaker 00: And we argued against that construction from the very beginning. [00:06:54] Speaker 04: So tell me why you think you can justify your construction, your alternative construction. [00:06:59] Speaker 00: Well, the specification gives you one guidepost that's objective as to determining a reducer contact. [00:07:05] Speaker 00: It just so happens that it's in the same caliber as the chief accused product. [00:07:10] Speaker 00: And that it's also the predecessor to the accused product, chief accused product, the M855A1. [00:07:16] Speaker 00: So based on that, we would argue that it's pretty clear to someone skilled in the art trying to make a 5.5, 6 millimeter bullet, it would be pretty clear as to where the bounds were. [00:07:27] Speaker 00: You would know if you had more contact area or less contact area than the one single bullet provided in the specification. [00:07:34] Speaker 02: Where I'm struggling is where you need to have some sort of comparison for a different caliber bullet. [00:07:40] Speaker 00: Right. [00:07:41] Speaker 02: Then what do you do? [00:07:41] Speaker 00: Well, that gets you into the second accused product, the M-80A1. [00:07:46] Speaker 00: The M-855, as it points out in the specification, what do we know about it? [00:07:51] Speaker 00: It's the NATO and Army standard bullet. [00:07:54] Speaker 00: Now we're in the 7.62 caliber with M-80A1. [00:07:57] Speaker 00: So we have to make some determination of what's appropriate for that caliber. [00:08:02] Speaker 00: I think one of the skilled in the art would presume that if M855 is the 556 standard, that in the 7.62 caliber, the long-term NATO and Army standard bullet is the M80. [00:08:15] Speaker 00: So if you believe that M855 is the standard for M855A1, the logical conclusion would be that M80 is the standard for M80A1. [00:08:25] Speaker 00: And those are the only two accused products. [00:08:27] Speaker 00: Now, if we moved into other calibers, we'd have to make, [00:08:30] Speaker 00: another determination of what a traditional jacketed bullet would be. [00:08:34] Speaker 00: But in terms of the accused products, we think it's a pretty clear path to pick those particular bullets. [00:08:40] Speaker 00: The problem with the court's construction is it pretty much left it wide open to one of skill in the arc to pick a jacketed-led bullet in either caliber. [00:08:49] Speaker 00: And so we were left with 26 candidates for 556, and I believe 15 for 762. [00:08:58] Speaker 00: And that really is the epitome of indefiniteness. [00:09:01] Speaker 00: I mean, at some point, when you have 26 standards, it's standard-less. [00:09:05] Speaker 00: And I think that's the point we're making. [00:09:07] Speaker 00: So our view is, given that the chief accused product was M855A1, you have to say that one of the skills we are looking at would say the guidepost is M855. [00:09:19] Speaker 00: And if that's correct, then it's clear to us that we don't infringe [00:09:26] Speaker 00: We deliberately increased the contact area of both accused bullets. [00:09:31] Speaker 00: The MA55A1 has 12% more contact area than the MA55. [00:09:38] Speaker 00: The M80A1 has two variants of the M80, but we have 24% more contact area than one variant, and I believe 10% more than the other. [00:09:52] Speaker 00: So literal infringement is clear. [00:09:54] Speaker 04: Just before your time runs out, because I know you want to reserve your rebuttal, talk about a little, if you would, the running royalty question, which is an interesting question. [00:10:05] Speaker 00: It is an interesting question, Your Honor. [00:10:06] Speaker 00: And perhaps it's interesting because this Court has never addressed it before. [00:10:11] Speaker 00: And that's really the basis of our argument. [00:10:16] Speaker 00: This is an issue of first impression. [00:10:19] Speaker 02: I'm not familiar with the DeGraff and Fee case. [00:10:22] Speaker 02: It's a 1981 case on the Court of Claims. [00:10:26] Speaker 00: Vaguely, Your Honor. [00:10:28] Speaker 02: In that case, it specifically says that the plaintiff, we can only render money judgments for money presently due in owing from the United States. [00:10:40] Speaker 02: Plaintiff argues that it would be a waste effort to require it to bring suit for future infringements. [00:10:46] Speaker 02: Nevertheless, relief for future infringements is beyond the power of the court by declaratory judgment or otherwise. [00:10:53] Speaker 00: Well, I think that aligns to a large extent with what we're [00:10:57] Speaker 00: really arguing here is that if, you know, let's say that we do have an infringing product and we know, we anticipate it will be made in the future, we are asking that 1498 be construed in a way that would require them to file additional suits. [00:11:14] Speaker 00: That's really the practical effect. [00:11:16] Speaker 00: That may lead you to the question, why would that matter or why should we do that? [00:11:22] Speaker 00: I think that if we proceed under the trial course theory that we just have to pay royalties, [00:11:27] Speaker 00: If we were to change or accuse products in some substantive way that was not infringing, we would have to come back to the trial court and possibly a contempt proceeding and proceed in that manner. [00:11:39] Speaker 00: In this manner, if a complaint is filed and we change nothing, we would have to basically omit infringement and all of that. [00:11:48] Speaker 00: However, if we had defenses, we could bring them in the subsequent suits. [00:11:53] Speaker 00: So there is a very big practical difference in how things would happen in the future. [00:11:58] Speaker 00: And really, the basis for our position is that 1498 covers items that were used or manufactured in the past tense. [00:12:08] Speaker 00: And to the extent there's any ambiguity in that, legal principles should apply that say that sovereign immunity should be strictly construed in favor of the government. [00:12:21] Speaker 00: So that's the answer to your question. [00:12:24] Speaker 02: I mean, unless you have anything else besides that case to rely on. [00:12:27] Speaker 02: I mean, you do have other things, but. [00:12:29] Speaker 02: I think the main thing we're relying on. [00:12:31] Speaker 02: This court hasn't addressed it, but the predecessor court has. [00:12:35] Speaker 00: It has, Your Honor. [00:12:36] Speaker 00: And I think that's good to point out. [00:12:38] Speaker 00: In the Pitcairn and in the Irving Air shoot cases, which are many decades ago, both of them, the court essentially said that in terms of the statute of limitations, each [00:12:53] Speaker 00: each procurement or each production of a continuously produced item would be a separate taking. [00:12:59] Speaker 00: So therefore, our plaintiff does not bar simply because the initial production started before the critical date. [00:13:06] Speaker 00: So to be consistent with those cases, it does favor our position that future royalties are not permitted under the statute. [00:13:14] Speaker 04: You're into your ephedra, so why don't we get from the other side. [00:13:22] Speaker 04: Mr. Jedlock. [00:13:26] Speaker 01: Thank you, Your Honor. [00:13:29] Speaker 01: Stephen Jutlow speaking on behalf of Liberty. [00:13:31] Speaker 01: There was a serious problem confronting the US Army and the military, just to set the background for this, where in 1993, President Clinton had an executive order that mandated that at least 50% of the lead [00:13:56] Speaker 01: which is part of the previous bullet be removed. [00:14:01] Speaker 01: And that was part of a longer and continuing saga of taking lead out of virtually everything because it became something identified as a known carcinogenic. [00:14:18] Speaker 01: And the Army became concerned because they were under a lot of pressure by state [00:14:25] Speaker 01: environmental agencies to close their or at least clean up all the firing ranges in the United States because of the accumulation of lead and it got into ground orders and in some places like Massachusetts it actually got put into effect and there were several of these that were clean. [00:14:50] Speaker 01: The second problem that confronted [00:14:52] Speaker 01: the old bullet was the idea of through and throughs. [00:14:57] Speaker 01: That because of the change in stature of some of the enemy combatants, and in fact, even preceding that, through and throughs means a bullet hitting a target called a soft target. [00:15:13] Speaker 01: What it really means is an enemy combatant, if it goes clean through, enters and leaves the body, [00:15:22] Speaker 01: That isn't really, it's not good in any event. [00:15:27] Speaker 01: But the problem with it is that if it leaves, it hasn't expended all its energy, incubating tissue and perhaps organs in the body. [00:15:40] Speaker 01: And in the late part of the 1990s and early part of the first decade in 2000, [00:15:51] Speaker 01: This became a cause celebre because when we talk about this, Colonel Lynn Dean, who was in charge of the Army's research into debriefing the war fighters, finding out what they... Mr. Judlow, can I interrupt you? [00:16:11] Speaker 02: I was wondering, now, if we were to agree with the government on two or more of its claim construction arguments, [00:16:18] Speaker 02: Do you agree that that would resolve the infringement issues? [00:16:26] Speaker 01: I don't believe it would. [00:16:29] Speaker 01: First of all, it's a question of whether the complaint construction is proper. [00:16:38] Speaker 01: Now, I believe it to be settled law that if you haven't [00:16:45] Speaker 01: open-ended connector such as comprising such as including that that defines a limitation and that limitation must be met applying to an accused product where there's no infringement. [00:17:02] Speaker 01: When something says you need something between A and B and the construction for the jacket the interface in the first place means you need to hold the align [00:17:14] Speaker 01: penetrator and slug behind it to rotate together and stay together in flight once the projectile leaves the firing weapon. [00:17:24] Speaker 01: That means it needs to be over the joint and hold it together and that's what the judge found. [00:17:30] Speaker 04: Now I believe counsel... So you think that the term could be ought to be construed as covering every bullet including those that have a full metal jacket? [00:17:43] Speaker 01: I believe as far as that part of the claim, the answer is yes. [00:17:47] Speaker 04: But how isn't that problematic? [00:17:49] Speaker 04: Because that reads out the limitation in its entirety. [00:17:53] Speaker 04: The language is irrelevant if a full metal jacket is covered. [00:17:59] Speaker 01: Well, I would suggest that that isn't so. [00:18:04] Speaker 01: And in fact, the judge got it, I believe, exactly right when he says it must be. [00:18:12] Speaker 01: present between the ends of the court, of the penetrator and the slut. [00:18:19] Speaker 04: Except, but then his construction actually allowed for much more than that. [00:18:27] Speaker 01: That is correct. [00:18:31] Speaker 01: And in fact, Full Metal Jacket, the way he described it, but Full Metal Jacket is included in that, [00:18:39] Speaker 01: What it means is that it may, but doesn't have to, extend to either end of the jacket. [00:18:53] Speaker 02: Your point is that the interface portion can be anything so long as it's not just on the ends. [00:19:00] Speaker 01: Well, it has to be around the middle because it's got to hold the two things together for rotation and in flight or you don't have a weapon and you don't have a bullet. [00:19:12] Speaker 01: However, full metal jacket represents the very old prior art. [00:19:17] Speaker 01: It started with the Geneva Convention where full metal jacket became a safe harbor because one of the points of the Geneva Convention is [00:19:29] Speaker 01: metal shouldn't be flying all around a helter-skelter in a combat area. [00:19:35] Speaker 01: Full metal jacket will prevent the... the full metal jacket of the prior art prevents the the essence or one of the essence of this invention which is that the bullet and the interface breaks up when it strikes the target and full metal jacket does that for the most part. [00:19:57] Speaker 01: Certainly the prior art does and [00:19:59] Speaker 01: That was one of the problems with the M855, because it didn't break up when you had an aligned hit, so it went with most of the energy and velocity aligned with the travel path of the bullet. [00:20:18] Speaker 01: You got it through and through. [00:20:24] Speaker 04: Can I just move you forward, just because Thomas of the Essen Center, I know you want to get to your cross appeal. [00:20:29] Speaker 04: So let me just ask you about the running royalty question. [00:20:32] Speaker 04: The running royalty question. [00:20:34] Speaker 04: And you heard Judge Stoll identify a case by our predecessor court that seems to be on point. [00:20:42] Speaker 04: What's your best legal argument as to why that's? [00:20:45] Speaker 01: The best legal argument is that the statute that waives sovereign immunity here [00:20:52] Speaker 01: has in it a mandate that the complete and entire recovery is to be had for the infringer. [00:21:04] Speaker 01: Now, I've forgotten whether it was the court or Mr. Brown that raised it, but this notion of monetary damages, which is what the essence was in those cases, that you can't assign an amount of damage [00:21:22] Speaker 01: expecting the future to continue as if you could measure how many rounds would be spent. [00:21:29] Speaker 01: The reality is this judgment [00:21:32] Speaker 01: only says that you have infringed. [00:21:38] Speaker 01: And if you make more of these bullets, therefore the validity presumably having been upheld and the infringement having been upheld, at that point, we'll get from the Army the number of units sold. [00:21:52] Speaker 01: We'll apply by the royalty rate that we have measured. [00:21:55] Speaker 01: But not one penny beyond the end of this trial [00:22:00] Speaker 01: Part of any judgment that will come only if the government continues selling infringing rounds and this is precisely what I believe a lot of the results of patent cases are coming to because since injunctions are no longer I won't say automatic but When I remember clients asking the question of [00:22:27] Speaker 01: Will there be an injunction? [00:22:28] Speaker 01: The answer was yes. [00:22:30] Speaker 01: And the only exception I could find in the law was a 30-day permission to continue with a human waste treating plant in Michigan. [00:22:47] Speaker 01: As matters stand now, unless there are parts of those cases that [00:22:56] Speaker 01: kind of point of finger at the notion of, well, if there is no treatment of the continuing sale of the identical infringing products, that means, I suppose, you have to file new complaints hourly, monthly, daily. [00:23:18] Speaker 02: The deGraph and Feed case dealt with this very situation. [00:23:22] Speaker 02: There, the patentee was seeking a reasonable royalty. [00:23:25] Speaker 02: for all future use of the invention. [00:23:29] Speaker 02: And the court said, yes, there could be some wasted effort. [00:23:32] Speaker 02: The plaintiff argues it would be a waste of effort to require it to bring suit for future infringements. [00:23:37] Speaker 02: But the court held, nevertheless, that's what had to be done, given the court's jurisdiction. [00:23:43] Speaker 01: And it seems to me, it seems to us, [00:23:54] Speaker 01: The way this damage is structured, the Congress and the President passed a statute on the waiver of sovereign immunity for patent infringement. [00:24:11] Speaker 01: That statute required compensation of complete and entire relief. [00:24:17] Speaker 01: The notion of having to do this piecemeal [00:24:22] Speaker 01: is left to the courts as is everything else. [00:24:28] Speaker 01: When Congress wanted something not to happen, for example, no injunctions as a relief for an infringer, there was no problem in getting it into a statute. [00:24:47] Speaker 01: They knew what they wanted, and they had an impression. [00:24:51] Speaker 01: And there are lots of things that have happened with patent infringement relief here that are not explicitly in the statute but came from this court and from the claims court and the Court of Federal Claims more recently that provided relief such as [00:25:16] Speaker 01: convoyed sales, such as lost profits, such as a lot of things. [00:25:21] Speaker 02: But this is a case, this DeGraffenfield case, is dealing with the same statute we've got here, which is section 1498, and is saying specifically that there won't be future running royalties based on the statute itself. [00:25:36] Speaker 02: So how do you respond to that? [00:25:38] Speaker 01: Well, we've cited in our brief a trademark case [00:25:45] Speaker 01: I think it's from this court, in which some of the infringing trademark elements were disposed of, sold before or during trial. [00:26:04] Speaker 01: But not all of them. [00:26:05] Speaker 01: And then it was a question of, what happens with the rest of them? [00:26:07] Speaker 01: Can I dispose of them? [00:26:09] Speaker 01: And the answer for that was, at a price, yes. [00:26:14] Speaker 02: Do you want to talk about the counterclaim on the NDA? [00:26:18] Speaker 01: I certainly do. [00:26:24] Speaker 01: Before that, if I can work in the notion of the reduction of damages, we've counterclaimed really for two issues that are not necessarily the same. [00:26:43] Speaker 01: One was a reduction. [00:26:46] Speaker 01: There needed to be a damage number that came from the court about how much having found infringement, having found validity, to say a word about that, having quoted the defendant's own expert witness as admitting infringements, having told the court that they were only raising these [00:27:10] Speaker 01: Two issues. [00:27:11] Speaker 01: Intermediate the ends for purposes of claim 32 and its dependent claims. [00:27:16] Speaker 01: And the intermediate ends for claim 32 in the reduced area of contact where the claim was. [00:27:30] Speaker 04: Well, if I might urge you, given the length of time, that I think like Judge Stowe, I'm much more interested in the counterclaim dealing with the implied authority. [00:27:40] Speaker 04: that on whether or not Lieutenant Deal, Lieutenant Colonel Dean, had authority on that piece of it. [00:27:48] Speaker 04: So I want to make sure you reach that. [00:27:51] Speaker 01: OK. [00:27:52] Speaker 01: Let's talk about that right now then. [00:28:01] Speaker 01: The counterclaim on the NDAs begins with the notion that what happened at the trial court level is [00:28:10] Speaker 01: He applied what amounts to the FAR rule, the Federal Acquisition Regulations rule, A, that there are people called with authority of contracting agents, while acknowledging that you can also have authority implied because of your position and the job that you do. [00:28:38] Speaker 01: But there was no application, well, [00:28:40] Speaker 01: The emphasis of his argument was there are no contracting agents in the form of Dean or Campion or the other people who signed the contract. [00:28:51] Speaker 04: Well, let me ask you, what do you think, as I understand, as I recall, the standard applied by the Court of Claims is that the MBA, the person who signs, his signing MBAs has to be an integral part of his or her job. [00:29:05] Speaker 01: Yes. [00:29:07] Speaker 04: Ed, do you agree with that standard and just think it was misapplied? [00:29:11] Speaker 04: And if so, why? [00:29:12] Speaker 04: Or do you think it was an improper standard? [00:29:15] Speaker 01: No, I think it was a proper standard, but it was misapplied. [00:29:22] Speaker 01: Colonel Dean was at Fort Benning in Georgia. [00:29:30] Speaker 01: He ran the directorate. [00:29:33] Speaker 01: which was going to support the troops and the products they had and the ammunition that they had. [00:29:39] Speaker 01: And his job was to debrief the soldiers, the wall fighters, and find out whether they had any gripes that seemed legitimate, meaning better equipment, better ammunition, or better anything. [00:29:53] Speaker 01: And then when he found something that seemed to be worthy of it, then he should do something about it. [00:30:00] Speaker 01: Now to do something about it by his own testimony [00:30:03] Speaker 01: meant that he dealt with the industry representatives looking for things that needed to be done. [00:30:12] Speaker 01: And there was nothing more important than getting rid of this bullet, which the government people had been unable to do for 13 years at that point. [00:30:24] Speaker 01: And that's a lot of casualties, American casualties, using a bullet that people don't have confidence in, and maybe a lot of [00:30:32] Speaker 01: people staying a little bit longer behind the protection because they didn't trust the ammunition they were firing. [00:30:40] Speaker 01: So he met with these people and his job was to find out not only what can I buy from the shelf and what can I buy now, but he was asking these companies for what's on the planning boards. [00:30:56] Speaker 01: What do you have come along here? [00:30:59] Speaker 01: that maybe we should expedite or we can use to solve our problems. [00:31:03] Speaker 01: That was his job to find out what was coming as well as what was, and that's uncontradicted testimony in here. [00:31:13] Speaker 01: This Tucker Campion was doing the same job for SOCOM, Special Operations Command. [00:31:22] Speaker 01: He was asked again and again was his testimony by [00:31:28] Speaker 01: potential vendors of things that he might be interested in, the government might be interested. [00:31:36] Speaker 01: And he said that happened in almost every meeting, and I signed any time I was asked. [00:31:42] Speaker 01: I mean, basically, if there was a contract agent, which was a standard that the judge had bought, he couldn't sign an NDA because [00:31:57] Speaker 01: The A in FAR is for acquisition contracts. [00:32:01] Speaker 01: It requires a payment of money. [00:32:03] Speaker 01: It requires a purchase or sale of a service or equipment. [00:32:07] Speaker 01: None of which is fine. [00:32:08] Speaker 02: Would you agree that he testified that he had signed NDAs fewer than five times during his time that he had this position? [00:32:16] Speaker 01: That's what Dean testified to. [00:32:19] Speaker 01: Fewer than five. [00:32:21] Speaker 01: I'm not sure what that means. [00:32:24] Speaker 01: And he signed this one, and he signed this one because there was an important hole in what he was supposed to find, which was this replacement ammunition. [00:32:34] Speaker 04: Okay. [00:32:35] Speaker 04: Well, we'll wait beyond time. [00:32:36] Speaker 04: Will we store a minute for rebuttal, and let's hear from the other side. [00:32:40] Speaker 01: Thank you. [00:32:51] Speaker 00: Your Honor, let me address the non-disclosure agreement since we did not discuss that earlier. [00:32:57] Speaker 00: First of all, the Campion NDA was mentioned. [00:33:00] Speaker 00: I think it's important to know what has actually been appealed here. [00:33:03] Speaker 00: Two NDAs were not appealed, the Campion and the MARS. [00:33:08] Speaker 00: The only NDA on appeal that's subject to the cross-appeal is the one signed by Lieutenant Colonel Dean. [00:33:14] Speaker 00: They're also not challenging the authority of the contractor who also signed it. [00:33:19] Speaker 00: They're also not challenging the fact that Lieutenant Colonel Dean had no express authority. [00:33:24] Speaker 00: They're simply challenging whether Lieutenant Colonel Dean had. [00:33:27] Speaker 04: So who had the authority, in your view? [00:33:28] Speaker 04: If a manufacturer wants to come in and demonstrate his wares, and he obviously, for practical reasons, needs an NDA, who has the authority? [00:33:38] Speaker 00: Well, I think that's one of the flawed assumptions of their arguments in their brief, is that they assume that someone within this small arms branch has to have the authority. [00:33:47] Speaker 00: I think what the court essentially found, at least with regard to Colonel Dean, is that he didn't need authority to interact with industry. [00:33:56] Speaker 00: He didn't need the authority to assign NDAs to do that. [00:33:59] Speaker 00: And there's no evidence of anybody else. [00:34:01] Speaker 04: Well, that sounds a little weird to me. [00:34:02] Speaker 04: I mean, I think you're right. [00:34:03] Speaker 04: But the district court, the court of claim says that his job required him to write requirements and to facilitate discussions with the industry. [00:34:12] Speaker 04: Well, how are you supposed to have discussions about stuff that industry has come up with [00:34:18] Speaker 04: that may or may not be good for the government without sort of getting an NDA. [00:34:23] Speaker 00: I think what Lieutenant Colonel Dean testified to is people would come in and tell them that this was proprietary and he would say, I understand. [00:34:31] Speaker 00: And they would show the stuff or the materials or whatever to him anyway under the goodwill that that was how they would do it. [00:34:42] Speaker 04: there was never there was never a time and other than what would happen has it ever happened that he said they said we need you to sign an NDA and he says I'm not going to do it and then what happens? [00:34:53] Speaker 04: Does he send them to somebody else? [00:34:55] Speaker 00: Well they can decide you know what I really want to sell to the Army I'm going to go ahead and give you a presentation of what I can share with you. [00:35:02] Speaker 00: It may be that they have to go back to the Army and say we want to have somebody who has authority to sign an NDA before we can share with you something. [00:35:11] Speaker 00: Let's say there's [00:35:12] Speaker 04: So it's odd, because as Judge still mentioned, the record before us looks like he signed fewer than five. [00:35:18] Speaker 04: Correct. [00:35:18] Speaker 04: Now you can look at that as a very small number, or you can look at it as a quite robust number, because five times he at least thought he had the authority. [00:35:27] Speaker 04: Nobody's suggesting that he was trying to pull something over on the people. [00:35:31] Speaker 04: So he thought he had the authority to sign MBAs. [00:35:35] Speaker 00: Right. [00:35:35] Speaker 00: Well, I think I would say this. [00:35:37] Speaker 00: I think it's a relative small number when you consider that he said he spent a large portion of his time meeting weekly with industry over two years. [00:35:45] Speaker 04: Well, did he say and did he identify instances, a large number of instances, where people requested that he sign an NDA and he refused and declined? [00:35:54] Speaker 00: I don't know if that question was ever asked, which raises the point that this was Liberty's burden of proof. [00:35:59] Speaker 00: And it's also to go further. [00:36:01] Speaker 00: When Mr. Marks came to visit Lieutenant Colonel Dean, the law is well settled that it's your duty to ascertain that you're dealing with somebody who has authority. [00:36:13] Speaker 00: Obviously, that is the well stated law. [00:36:16] Speaker 00: Otherwise, you could have people binding the government who have zero authority to do so. [00:36:22] Speaker 04: Well, we operate in all of our cases, and we have a lot of government cases, and we operate under the assumption that unless proven otherwise, the government is assumed to and presumed to operate in good faith. [00:36:35] Speaker 04: Doesn't that good faith extend to, this was not just some, nothing wrong with being a GS3, but this was not a GS3 sitting behind a reception desk, this was [00:36:45] Speaker 04: a person of some weight who is doing clearly, the government had given him the job to evaluate this stuff. [00:36:53] Speaker 04: So it doesn't seem kind of outrageous of out of line to accept that he thinks he has the authority, and he does. [00:37:02] Speaker 04: And to take that at face value when he's willing to sign it, right? [00:37:05] Speaker 00: Well, I think that, again, [00:37:09] Speaker 00: Just because some individual, no matter what their rank, thinks they have the authority, that's really not the determination. [00:37:15] Speaker 00: It has to be an objective view of what's integral to their duties. [00:37:19] Speaker 00: And that is a very big fact question that was ruled on by the lower court. [00:37:25] Speaker 00: So you have to say, was it clearly erroneous to think that Lieutenant Colonel Dean didn't have authority? [00:37:31] Speaker 00: I sense that what bothers your honor is like, well, if he can't sign it, who can? [00:37:35] Speaker 00: How can you? [00:37:36] Speaker 00: navigate through the government if nobody has authority. [00:37:40] Speaker 00: I don't know if that question's really been presented here in the sense that I'm sure it's possible in other parts of the Department of Defense or in other situations with research and development agreements that someone does have express authority to enter into these types of arrangements. [00:37:55] Speaker 04: No, but really, I appreciate your trying to get to what's bothering me. [00:37:58] Speaker 04: But what's really bothering me is I think if it's a perfectly reasonable assumption from the outsider [00:38:05] Speaker 04: to assume that this person, who he's supposed to go see about telling him what his wares are, is willing to sign the agreement. [00:38:13] Speaker 04: I don't think, and I know there's no detrimental reliance suggested here as far as I know, but it seems to me that if one actually relied on that and lost something, that's pretty problematic. [00:38:28] Speaker 04: I don't know that you can say that it's unreasonable for a person to assume [00:38:31] Speaker 04: that if this fairly high level person who's got the responsibilities to look at this stuff on behalf of the government is willing to sign an NDA, I can rely on that. [00:38:41] Speaker 00: Well, as harsh as it may seem in certain instances, the rule is that you have to ascertain that you're dealing with somebody with the proper authority. [00:38:49] Speaker 00: That is the law on that point. [00:38:53] Speaker 00: I would also add that, you know, [00:38:58] Speaker 00: Again, it's not so much whether you relied on your detriment or from the perspective of Mr. Marks, what he has lost. [00:39:04] Speaker 00: Legally, it's a question of, with regard to this specific individual, regardless of his title, there is no apparent authority. [00:39:13] Speaker 00: Apparent authority is not permitted. [00:39:16] Speaker 00: When you look at his duties, was it integral to his duties? [00:39:19] Speaker 00: That is the legal standard. [00:39:20] Speaker 00: I think you properly stated that to Mr. Judlow. [00:39:24] Speaker 00: So then the question becomes a factual determination. [00:39:27] Speaker 00: Did Liberty meet its burden to prove that this was integral to the Lieutenant Colonel Dean's duties? [00:39:34] Speaker 00: You have a very thin record. [00:39:36] Speaker 00: I think most of the testimony was elicited by us. [00:39:39] Speaker 00: And I would submit that it's their burden to prove it was integral, and they didn't do so. [00:39:44] Speaker 04: Anything else? [00:39:46] Speaker 00: Unless you have further questions, Your Honor. [00:39:48] Speaker 00: No, thank you. [00:39:49] Speaker 00: All right. [00:39:51] Speaker 04: We're way beyond on time, so I'm going to try to hold you to that extra minute that I gave you if that's necessary. [00:39:58] Speaker 01: Well, the sequence of events which led to this NDA signed by Colonel Dean was he contacted Dean in November of 2004 and say, the government put out a, does anybody have a bullet? [00:40:19] Speaker 01: We need one valid. [00:40:21] Speaker 01: And Marks, on his own, undertook a design for it, was successful, contacted Dean and said, I think you'll be interested in this. [00:40:34] Speaker 01: Send me your form of NDA. [00:40:38] Speaker 01: Dean said, we don't have one. [00:40:39] Speaker 01: Why don't you send me your form, which happened the very next day. [00:40:43] Speaker 01: And then between November 5 and the meeting itself, which I think was February 17, [00:40:49] Speaker 01: Dean had the NDA. [00:40:51] Speaker 01: And I think that under the circumstances of his title and his surroundings, that the meeting was held at Fort Benning. [00:41:02] Speaker 01: And in fact, the result that happened here, the government could not make this bullet themselves. [00:41:08] Speaker 01: An outsider could and did present it to the government. [00:41:12] Speaker 01: The government made the bullet. [00:41:14] Speaker 01: They were very proud of themselves. [00:41:16] Speaker 01: They filed a patent application, never mind [00:41:19] Speaker 01: that they derived it from Marx. [00:41:25] Speaker 01: And at the beginning of the meeting, the first thing that happened was the NDA was signed because Marx wouldn't talk to him unless it was signed. [00:41:36] Speaker 01: And he had every right, as far as we're saying here, to believe that [00:41:46] Speaker 01: everything happened as it should have happened from the standpoint of logic and what any layman under these circumstances would be taken to have. [00:41:58] Speaker 01: To say that nobody in the government has authority to execute an NDA and nobody can receive a pitch on or an explanation of something that was of great value would be very distressing. [00:42:14] Speaker 01: And in fact, this one worked. [00:42:16] Speaker 01: This one solved a problem that had been vexing the government for 17 years. [00:42:21] Speaker 01: And from the standpoint of Marx, it happened the way it should. [00:42:29] Speaker 01: There's also the civil arrangement where [00:42:39] Speaker 01: The proposal for Marx was read by the people who were running this effort to come up with a design. [00:42:51] Speaker 01: And in fact, where they couldn't do it for 17 years before, they managed to do it in two months adopting the design. [00:43:00] Speaker 01: There is an uncontested finding in this case that they copied the Marx design, which has consequences. [00:43:08] Speaker 01: as far as any validity or validity issue is apparent. [00:43:15] Speaker 01: Anybody who approaches obviousness by saying I'm going to take every element of the claims, I'm going to find that element somewhere, and then I'm going to say it's obvious to combine these ten references that they used is [00:43:39] Speaker 01: It's wrong by an uncontested line of cases that go back probably, forever is a long word, but for a century at least. [00:43:50] Speaker 04: OK. [00:43:50] Speaker 04: Well, I'm going to bring this to a close here. [00:43:52] Speaker 04: We're beyond time. [00:43:53] Speaker 04: Do you have one final thought that you think is imperative? [00:43:56] Speaker 01: Just one final thought, if I may. [00:43:59] Speaker 01: And that has to do with the reduction of the royalty rate. [00:44:05] Speaker 01: The judge's opinion wanted this over. [00:44:09] Speaker 01: He came up with the parties were 20 cents around and one cent around. [00:44:15] Speaker 01: He said under all the circumstances, a baseline rate is 5%. [00:44:20] Speaker 01: And then he cited something from Learn at Hand. [00:44:25] Speaker 01: No, that's not Learn at Hand. [00:44:28] Speaker 01: He cited something that said that because all this work has to get done. [00:44:33] Speaker 01: And this was [00:44:39] Speaker 01: This is against a hypothetical negotiation date, which is mandatory to be at the beginning of infringement, which is when this patent issued at June 6. [00:44:48] Speaker 01: This design was finished. [00:44:52] Speaker 01: It had been given to war fighters in the preceding months. [00:44:57] Speaker 01: It had been the subject of awards because the government was very proud of themselves. [00:45:01] Speaker 01: It had been the subject of their patenting. [00:45:04] Speaker 01: It had been subject to the PR that said that this is the best [00:45:07] Speaker 01: rifle round ever made. [00:45:10] Speaker 01: And against all of that to say that it required much more refinement and therefore I'm going to reduce it under that section in Chisholm relying on factor eight of the Georgia Pacific case was just plain wrong. [00:45:30] Speaker 01: He got the date wrong. [00:45:33] Speaker 01: I think that's important. [00:45:35] Speaker 01: Nobody can test the date, the hypothetical negotiation date. [00:45:40] Speaker 01: Nobody can test the fact that zero had to be done at that date. [00:45:45] Speaker 01: Nobody can test the date that the government was very proud of its end quote quote. [00:45:53] Speaker 01: And therefore, we think the 5% should be resurrected because the judge made a clear error. [00:46:00] Speaker 04: Thank you. [00:46:00] Speaker 04: Thank you.