[00:00:23] Speaker 00:
The final case for argument this morning is 151642, Macrosol, Inc.

[00:00:29] Speaker 00:
vs. Government Employees Insurance.

[00:00:52] Speaker 01:
Thank you, Your Honor.

[00:00:54] Speaker 01:
May it please the court?

[00:00:56] Speaker 01:
This is a case that should never have been brought.

[00:00:58] Speaker 01:
Macrosolve had no reasonable basis to accuse Newegg's mobile application of infringement.

[00:01:04] Speaker 01:
What Macrosolve accused as meeting the questionnaire and series of questions requirements in the claims was plainly no such thing.

[00:01:11] Speaker 01:
It is merely a listing of product categories.

[00:01:14] Speaker 01:
It is no more a questionnaire with a series of questions than a restaurant menu would be.

[00:01:19] Speaker 01:
This is a frivolous assertion.

[00:01:22] Speaker 01:
It should have been frivolous to Microsoft the moment that it looked at this patent and looked at what it was accusing.

[00:01:30] Speaker 00:
Well, the problem for you is that the Supreme Court has told us that we have a differential standard of review here.

[00:01:37] Speaker 00:
And the district court's got a standard under high market octane in which they get to assess, he or she in this instance gets to assess whether this case stands out among others.

[00:01:48] Speaker 00:
What is there under the highly deferential standard of review that gives us a basis for overturning the judge in this case?

[00:01:56] Speaker 01:
Well, I think perhaps the most important reason why little to no deference is owed in this case is because the district court gave very scant attention to the majority of the arguments that were made by New Egg in connection with its motion.

[00:02:09] Speaker 01:
The questionnaire and series of questions issues are not touched at all in a district court's analysis.

[00:02:16] Speaker 01:
So right there is not a single finding to which the district court should be given any deference, because there simply wasn't any analysis by the district court.

[00:02:25] Speaker 00:
He's presumed to have reviewed the arguments.

[00:02:29] Speaker 00:
It's not incumbent upon him to address every single argument that's made by your side.

[00:02:36] Speaker 01:
Well, I think it is incumbent upon him when Octane Fitness says that the totality of the circumstances are required to be addressed.

[00:02:42] Speaker 01:
specifically calls out that the parties litigating positions are part of that analysis.

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So when there are substantial arguments made by Newegg about litigating positions taken by Microsoft throughout this case, the district court not to expressly analyze and dispose of those arguments we think is error and requires at a minimum a remand to address those issues.

[00:03:06] Speaker 01:
In this case, we don't know that a remand would be required because the issues are very, very clear.

[00:03:11] Speaker 01:
Under governing law, as a matter of law, these issues must be resolved in New York's favor.

[00:03:17] Speaker 01:
It would be an abuse of discretion not to.

[00:03:19] Speaker 01:
The questionnaire series of questions issue being the most obvious one.

[00:03:24] Speaker 01:
This is a legal issue having to do with claim scope, and for whatever reason, the district court declined to actually resolve it.

[00:03:35] Speaker 01:
What the district court did resolve was a dispute over whether the term questionnaire standing alone requires the presence of both questions and statements.

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And in this case, the district court said, well, it doesn't have to have questions phrased with who, what, when, where, why, or with a question mark at the end.

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It can include certain kinds of statements, not any statements, but only certain kinds of statements that call for a response.

[00:04:01] Speaker 01:
The example that the district court gave.

[00:04:02] Speaker 02:
We have a page that has, I see, bullet points with different options.

[00:04:09] Speaker 02:
And so obviously you have to choose between those options.

[00:04:13] Speaker 02:
Would that be a questionnaire of sorts?

[00:04:16] Speaker 01:
I think depending on how the options were presented, it may be a questionnaire within the district court's construction.

[00:04:23] Speaker 02:
Let's say there's no question marks.

[00:04:24] Speaker 02:
All it says is select one and then there's five different options.

[00:04:29] Speaker 01:
I think that at most might be a single question, but the claims here require a series of questions.

[00:04:35] Speaker 01:
So that one select one and here are your options would be at most a single question, not a series of questions.

[00:04:41] Speaker 01:
But the claims do require, at least the asserted claims require, that there be not one but a series of questions involved.

[00:04:47] Speaker 00:
Well, one of the things that the magistrate judge relied on on the bad faith question is that the court adopted positions of Microsoft's proposed claim construction on disputed terms and rejected most of UX attempts to narrow claims through further construction.

[00:05:04] Speaker 00:
That's a finding.

[00:05:06] Speaker 00:
Is that reviewable under abuse of discretion?

[00:05:10] Speaker 00:
And how is that an abuse of discretion?

[00:05:12] Speaker 01:
Well, I think the mere finding that some of Microsoft's claim construction positions were accepted over new eggs is at best a preliminary finding along the way to the ultimate merits.

[00:05:24] Speaker 01:
Regardless of what the constructions were that the district court adopted, that does not make Microsoft's infringement case have merit or not.

[00:05:31] Speaker 01:
That's only one piece of it.

[00:05:32] Speaker 01:
And in fact here, even the term questionnaire, which Microsoft arguably won, still requires that

[00:05:38] Speaker 01:
the statements that are allowed to be present as part of that questionnaire be of a certain character, the kind that call for a response.

[00:05:46] Speaker 01:
We don't believe a list of product categories could meet that definition under any reasonable lens, but

[00:05:54] Speaker 01:
Here we don't even have to rely on that because the claims go much further and distinguish between mere questionnaires that might include things other than questions and actual question questionnaires like the asserted claims.

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So we happen to have a strong claim differentiation in this case where the asserted claims require a series of questions in the questionnaire.

[00:06:14] Speaker 01:
Other unasserted claims do not.

[00:06:16] Speaker 01:
The specification here is actually quite clear at distinguishing between a question and other kinds of statements or things that prompt for a response from a user.

[00:06:26] Speaker 01:
Column 8 includes reference.

[00:06:29] Speaker 00:
But all of your arguments, obviously, you're going to win the case on the merits.

[00:06:34] Speaker 00:
Although that support that conclusion, but nothing even the dialogue we're having this morning calls out to me

[00:06:42] Speaker 01:
Question the district court's evaluation of this case is not having stood out based on the totality of circumstances against all others as being Well again your honor I think the problem is the district court did not delve into the facts as presented to it and as required by octane fitness For example, I mean our case is about much more than just the position on questionnaire It's about the motivation and what we think is a bad faith motivation on macrosolves part

[00:07:10] Speaker 01:
It's about other issues where Microsoft could not have reasonably expected to get proof of infringement.

[00:07:16] Speaker 01:
And what the district court actually did to deal with those arguments was incredibly cursory.

[00:07:21] Speaker 01:
For example, despite a considerable amount of evidence of Microsoft's settlement history, Microsoft's inability to tie the settlements to exposure on the part of any of those defendants,

[00:07:32] Speaker 01:
The district court dismissed all of that evidence in a single sentence that just says that, Microsoft asserted the A16 patent against a wide variety of defendants and settled many of those for significantly less than litigation costs does not alone show bad faith.

[00:07:47] Speaker 01:
And that's at page A11 in the record.

[00:07:49] Speaker 01:
Well, that is a tiny fraction of the evidence that was presented to the district court.

[00:07:54] Speaker 02:
And under a code- I see various statements such as that in the district court opinion.

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And it got me to thinking about the totality of the circumstances.

[00:08:05] Speaker 02:
How do we determine what indicia do we look for that would indicate to us that the totality of the circumstances was considered by the district court, other than just maybe using the words?

[00:08:22] Speaker 02:
Are you saying that all of the theories that are advanced need to be addressed?

[00:08:28] Speaker 01:
Yes, I think that's exactly what it means.

[00:08:30] Speaker 01:
I think that if a party raises three different challenges to a plaintiff's infringement case, I think that those three challenges need to be addressed.

[00:08:39] Speaker 01:
Again, octane fitness goes beyond requiring a consideration of the totality, but specifically calls out an analysis of the party's litigating positions.

[00:08:49] Speaker 01:
So merely looking at one out of three or a portion of one or a portion of two is not enough.

[00:08:56] Speaker 00:
You don't like what she said or he said, but they addressed the evidence he put on settlements and large number of suits.

[00:09:04] Speaker 00:
They addressed that they thought there was some give in terms of the theories that were presented, why the theories weren't frivolous.

[00:09:11] Speaker 00:
Some of them were winners.

[00:09:13] Speaker 00:
New Ed kept changing its position.

[00:09:15] Speaker 00:
What more should they have addressed?

[00:09:17] Speaker 01:
Well, I think they should have addressed the evidence.

[00:09:20] Speaker 01:
I think that it's incumbent on a district court when asked to analyze the totality of the circumstances and the litigating positions that it's not enough to find one fact that cuts in a party's favor and decide that that disposes of the entire argument without accounting for the evidence and law that is on the losing side of that argument, as the district court found it.

[00:09:43] Speaker 01:
So in the settlement context, for example,

[00:09:46] Speaker 01:
the district court not addressing the fact that Macrosolve was unable to tie the five-figure nuisance value sums to any exposure by any defendant.

[00:09:57] Speaker 01:
And here we have, if you look at A1593-94 in the record, we have

[00:10:01] Speaker 01:
several dozen settlements, companies big and small, all round numbers, all within a range that we think is nuisance value, and as this court held in kilopass, if there was a good faith basis for why those numbers were the way they were, and if Microsoft was correct that it's just because this technology is used only in small

[00:10:22] Speaker 01:
one-off infringements, then that evidence would have been squarely in Microsoft's possession.

[00:10:28] Speaker 01:
And we should expect Microsoft to come forward with that.

[00:10:31] Speaker 01:
Microsoft did no such thing.

[00:10:33] Speaker 01:
And as a defendant trying to prove bad faith, this court has recognized in Killipass that we are at a disadvantage to get those smoking gun admissions.

[00:10:41] Speaker 01:
So what we have is a considerable amount of circumstantial evidence showing that Microsoft's story about why these settlements were paid

[00:10:51] Speaker 01:
why these settlements were paid, how the amounts were calculated, there's nothing that Microsoft can offer to substantiate that.

[00:11:01] Speaker 01:
But if I could just go back to

[00:11:05] Speaker 01:
to circle back on the settlements issue for a moment.

[00:11:10] Speaker 01:
So their position is that these are a bunch of small, one-off settlements, which would imply that Macrosolve does not believe the patents are valuable.

[00:11:20] Speaker 01:
And yet, they turn around and tell Newegg that Newegg owes $350,000 up to $32 million.

[00:11:27] Speaker 01:
And they tell GEICO at the same time that it owes $13.2 million.

[00:11:31] Speaker 01:
This is tremendously inconsistent with their story that these are just small, one-off inventions.

[00:11:37] Speaker 01:
This is just how their invention is valued and what it's worth in the marketplace.

[00:11:41] Speaker 01:
Now, that alone might not show bad faith, but at the same time that they're telling Newegg that they might owe these huge damages amounts, they're also telling Newegg at A3699 in the record

[00:11:53] Speaker 01:
that, hey, this case is about to get expensive, and you're aware of the average settlement, and we would hope for a counteroffer at least near that number.

[00:12:02] Speaker 01:
Now that, we think, is the best evidence of a smoking gun that we could hope to find in a case like this.

[00:12:08] Speaker 01:
Notably, Macrosolve is not

[00:12:11] Speaker 01:
Talking about the merits of the case against new egg.

[00:12:14] Speaker 01:
They're not talking about the merits of the cases against all those other defendants They're simply saying hey, we've asserted this patent a lot This is the average settlement you should pay it and again This is against the backdrop of demanding many orders of magnitude more from new egg in its expert report did did Microsoft initiate suit against other defendants through the course of this this matter

[00:12:38] Speaker 01:
Yes, your honor it did and it initiated 11 new lawsuits after the re-examination Petition was granted and so it had been instituted and And we think that's an important fact because it had there been a decision yet on the re-examination At the time those lawsuits were filed no there had not been a determination by the but it had already settled with with the other defendants and

[00:13:00] Speaker 01:
It had already settled with, I believe, the majority, if not all, of the other defendants at the time.

[00:13:10] Speaker 01:
I believe the total number is 63 as of the time that Microsoft represented that figure to the patent office.

[00:13:17] Speaker 01:
There may be a handful more.

[00:13:18] Speaker 01:
63?

[00:13:20] Speaker 01:
63 settlement licenses, averaging $75,000 each.

[00:13:27] Speaker 01:
So I see I'm into my rebuttal time, so I will reserve a second.

[00:13:30] Speaker 01:
Thank you.

[00:13:44] Speaker 03:
Good morning.

[00:13:45] Speaker 03:
May it please the court, Matt Antonelli for Macrosolve.

[00:13:48] Speaker 03:
I want to start with the series of questions issue that my friend started with.

[00:13:57] Speaker 03:
And Macrosolve was not surprised here when Newegg

[00:14:01] Speaker 03:
moved for fees.

[00:14:02] Speaker 03:
That was not a surprise.

[00:14:03] Speaker 03:
It's not a surprise that we're here on appeal.

[00:14:05] Speaker 03:
But what was a surprise?

[00:14:07] Speaker 03:
Yes, sir.

[00:14:08] Speaker 03:
It was not a surprise when New Egg moved for fees.

[00:14:11] Speaker 03:
That was not surprising to us.

[00:14:12] Speaker 03:
But what was a surprise was the nature of the arguments that were raised and what was alleged to have been an baseless position below, an unreasonable position below.

[00:14:24] Speaker 03:
And the reason those issues were surprises was they were both issues on which

[00:14:30] Speaker 03:
Newegg teed up the issue for Markman, tried to distinguish our infringement theory as a claim construction issue.

[00:14:38] Speaker 03:
And they were both issues on which Newegg either lost the issue or abandoned the issue.

[00:14:43] Speaker 03:
And this series of questions example that my friend focused on I think is, I'll focus on that one as well.

[00:14:51] Speaker 03:
There was a second one and the same kind of reasoning applies.

[00:14:55] Speaker 03:
My friend says that

[00:14:57] Speaker 03:
The district court abused its discretion.

[00:14:59] Speaker 03:
Judge Mitchell abused their discretion, and Judge Schneider then, in turn, abused his discretion in not accepting those arguments because they barely touched them.

[00:15:09] Speaker 03:
But the truth of the matter is that Newegg barely touched those arguments below.

[00:15:14] Speaker 03:
If you look at Newegg's opening brief, Seeking Fees, they were primarily focused on this other issue.

[00:15:22] Speaker 03:
It was a few sentences on this series of questions issue in the opening brief.

[00:15:27] Speaker 03:
And when it came time to file objections to the district court judge, Judge Schneider, Newegg dropped it.

[00:15:34] Speaker 03:
This was not a big issue below.

[00:15:36] Speaker 03:
And so when the district court did not give a lengthy discussion of that issue, but instead focused on the other example, that was purely in line with the way the issues were argued below.

[00:15:46] Speaker 03:
And that's the reason for that.

[00:15:47] Speaker 03:
But in any event, on the substance of those issues, on that issue, we do not lose.

[00:15:54] Speaker 02:
The district court actually ruled in our favor.

[00:15:58] Speaker 02:
Why did you settle them?

[00:16:00] Speaker 02:
Excuse me?

[00:16:01] Speaker 02:
Why did you settle and dismiss a lawsuit?

[00:16:03] Speaker 02:
For a completely orthogonal reason, Judge, right now.

[00:16:06] Speaker 02:
For what?

[00:16:07] Speaker 03:
Completely orthogonal reason, completely unrelated reason.

[00:16:10] Speaker 03:
What happened was the

[00:16:12] Speaker 02:
There was a re-examination.

[00:16:13] Speaker 02:
I think one of the reasons is that he didn't have the resources to continue the lawsuit, right?

[00:16:18] Speaker 02:
No, sir.

[00:16:18] Speaker 02:
That's not?

[00:16:19] Speaker 02:
It is not.

[00:16:20] Speaker 02:
Okay.

[00:16:20] Speaker 03:
The reason, so, Microsoft had a separate source of litigation funding.

[00:16:25] Speaker 03:
It wasn't costing Microsoft to continue these lawsuits.

[00:16:28] Speaker 03:
What did cost Microsoft was the Patent Office actions.

[00:16:33] Speaker 03:
And the reason why this lawsuit was dropped, the suit against New Egg was dropped, as well as every other lawsuit that was pending at the time, was because of what happened in the Patent Office.

[00:16:43] Speaker 03:
What happened in the Patent Office was there was a re-exam that had been separately filed by New Egg's co-defendant Geico.

[00:16:48] Speaker 03:
And it came a point where there was an office action, a final office action, rejecting the claims.

[00:16:54] Speaker 03:
And at that point, Microsoft decided that we are not going to spend more money in the patent office.

[00:16:59] Speaker 03:
The writing's on the wall.

[00:17:00] Speaker 03:
This patent's going to be invalidated.

[00:17:01] Speaker 03:
That was Microsoft's belief at that point.

[00:17:04] Speaker 03:
And for that reason, Microsoft said, we're going to do the right thing.

[00:17:07] Speaker 03:
We're not going to continue this lawsuit.

[00:17:09] Speaker 02:
And was it a day after or second day?

[00:17:12] Speaker 02:
You can infringe an invalidated pen, can't you?

[00:17:16] Speaker 02:
Excuse me?

[00:17:16] Speaker 02:
You can still infringe a pen that's been invalidated.

[00:17:20] Speaker 03:
The patent was going to be invalidated in front of the patent office before we ever got to a judgment in the district court, the decisions.

[00:17:27] Speaker 03:
And so you can't infringe a patent that's invalid.

[00:17:31] Speaker 03:
in the sense that the claims can be infringed, but you can't have liability for infringement at the end of the day if the patent's invalid.

[00:17:37] Speaker 03:
And it was clear that this patent was going to be invalidated at that point based on what was happening in the patent office.

[00:17:42] Speaker 03:
And Microsoft immediately, what the timing was interesting, there was a mediation with Newegg scheduled the day after or two days after.

[00:17:51] Speaker 03:
We came into that mediation and said, hey, something new has happened.

[00:17:54] Speaker 03:
here in the patent office.

[00:17:55] Speaker 03:
And based on that, we are not going to continue this lawsuit.

[00:17:57] Speaker 03:
And we didn't just dismiss against Newegg.

[00:17:58] Speaker 03:
We didn't just dismiss against Geico, who was also at the mediation.

[00:18:01] Speaker 03:
But we dismissed against every other case that was pending.

[00:18:04] Speaker 03:
And that was the end of this enforcement campaign.

[00:18:06] Speaker 02:
So a situation like, what happens to all your licenses?

[00:18:09] Speaker 02:
You settled that with 60 defendants.

[00:18:13] Speaker 02:
Do you know?

[00:18:14] Speaker 02:
They stay the way they are?

[00:18:16] Speaker 02:
In what sense?

[00:18:17] Speaker 02:
Well, do you return the money?

[00:18:19] Speaker 03:
No.

[00:18:20] Speaker 03:
So the settlements are, of course, negotiated so that the money is not returned.

[00:18:23] Speaker 03:
And they risk that.

[00:18:24] Speaker 03:
I mean, the settlements are actually obviously in compromise of issues like defenses of infidelity that could be raised.

[00:18:30] Speaker 02:
The patent might be invalidated.

[00:18:31] Speaker 02:
I say that because it seems to me that in the course of a lawsuit, there's many stages where the parties are re-evaluating their strengths and weaknesses.

[00:18:41] Speaker 02:
And some will settle on a perceived weakness, and others may continue on a perceived strength.

[00:18:49] Speaker 02:
You settled on a weakness, on a perceived weakness.

[00:18:54] Speaker 02:
But yet, you brought lawsuit.

[00:18:57] Speaker 02:
You were wrong, I mean, in bringing the lawsuit.

[00:19:01] Speaker 03:
We did not file a single lawsuit after the event in the Pat Office.

[00:19:05] Speaker 03:
So the timing was the adverse event that affected us, that affected Microsoft's ability to continue to go forward.

[00:19:13] Speaker 03:
Did you think the patent office was going to find in your favor?

[00:19:16] Speaker 03:
Yes, sir.

[00:19:18] Speaker 03:
The re-exam was instituted.

[00:19:20] Speaker 03:
It was instituted on prior that had nothing to do with our case.

[00:19:23] Speaker 03:
It was totally separate arguments.

[00:19:26] Speaker 03:
But at some point during that re-examination process, when we got to a final adverse action, we said, look, this is looking like it's an uphill battle.

[00:19:33] Speaker 03:
And not only that, but then an additional re-exam was filed, an IPR.

[00:19:37] Speaker 03:
And this was right contemporaneous with statements from former Chief Judge Rader calling these IPR processes death squads.

[00:19:46] Speaker 03:
Microsoft was scared of pushing more money into the Patent Office to fight this multi-front war.

[00:19:53] Speaker 03:
They wanted to focus on its continuation application with the funds it had available.

[00:19:57] Speaker 03:
But at that point, that was the first adverse action that happened in the entire history of this campaign.

[00:20:03] Speaker 03:
And that's the point at which we abandoned it and said we're not going to continue this.

[00:20:07] Speaker 03:
We could have.

[00:20:09] Speaker 03:
Spent money continued to appeal at that patent office and tried to get to a judgment first we didn't do that We had done that you should be hearing from new egg today that that was the wrong course of action that was the abuse of action What about the argument that the district court of the magistrate judge never addressed most the vast majority of the argument?

[00:20:27] Speaker 03:
So that's not true it the district court addressed everything that

[00:20:32] Speaker 03:
New Egg, Advance, Judge Prost.

[00:20:36] Speaker 03:
So there were essentially two arguments on the merits, the one having to do with questionnaire and the one having to do with the user causing the termination step.

[00:20:43] Speaker 03:
And on those two issues, Judge Mitchell said that the, not only, it wasn't even an issue where these were close, we had a debate about how close they were.

[00:20:55] Speaker 03:
The issue was that these were teed up as claim construction disputes.

[00:20:58] Speaker 03:
And it wasn't just that New Egg had shifting and inconsistent claim construction positions and were kind of bad actors for that reason and were not going to address these things.

[00:21:06] Speaker 03:
The point that was made in Judge Mitchell's decision was those shifting and inconsistent claim construction positions actually showed that the arguments that New Egg was making on its fee motion were not reasonable arguments.

[00:21:18] Speaker 03:
The word that the district court uses that Judge Mitchell uses was they refuted those arguments.

[00:21:24] Speaker 03:
And the reason that is is that New Egg

[00:21:27] Speaker 03:
either lost these arguments or gave them up.

[00:21:31] Speaker 03:
On the series of questions, New Lake has a whole argument.

[00:21:33] Speaker 03:
It doesn't agree that we won.

[00:21:34] Speaker 03:
We think we won.

[00:21:34] Speaker 03:
We lay that all out in our briefs, the reasons why we think we won on that issue.

[00:21:39] Speaker 03:
I think it's clear.

[00:21:40] Speaker 03:
And I think it's at least a reasonable reading of the district court's decision, Judge Mitchell's decision.

[00:21:45] Speaker 03:
But if you gave New Lake all the benefit of the doubt on those issues, if you assumed that we actually

[00:21:52] Speaker 03:
that the district court did not rule in our favor on that issue.

[00:21:54] Speaker 03:
And if you assume, like I think you would have to, to make Newegg's argument work, that we unreasonably construed the district court's decision.

[00:22:04] Speaker 03:
That still wouldn't get Newegg where it needs to be.

[00:22:06] Speaker 03:
Because the only place that would leave Newegg is that the issue was still left open.

[00:22:13] Speaker 03:
So the district court ruled that a questionnaire doesn't have to be, it's not just questions, but it's any kind of statement that calls for a response.

[00:22:19] Speaker 03:
And Newegg's whole argument is, well, we still have the series of questions to hang our hat on.

[00:22:24] Speaker 03:
By the way, that was a brand new argument raised for the first time at the marketing hearing.

[00:22:28] Speaker 03:
So Newegg did not do a good job of actually trying to get the court to rule on that issue, which it now says is the obvious day one issue that made Microsoft's case frivolous from the beginning.

[00:22:38] Speaker 03:
On that series of questions argument,

[00:22:42] Speaker 03:
If you accept everything that New Egg tells you, all it is is leaving the issue open.

[00:22:47] Speaker 03:
And so then the question becomes, was it outlandish, was it crazy for Microsoft to take the position that when a questionnaire can include statements calling for responses, was it outlandish for Microsoft to say, well, OK, when the claim says there's questions that comprise the questionnaire,

[00:23:02] Speaker 03:
Those questions that make up the questionnaire, those can also be statements calling for responses.

[00:23:07] Speaker 03:
They don't have to have jeopardy in the form of a question with a question mark.

[00:23:11] Speaker 03:
It doesn't have to be that.

[00:23:13] Speaker 03:
That was not an outlandish position.

[00:23:14] Speaker 03:
And there's certainly nothing.

[00:23:16] Speaker 03:
If it was such a crazy outlandish position, it's one that should have been raised earlier.

[00:23:20] Speaker 02:
What about the argument that your assertions of infringement were improbable?

[00:23:29] Speaker 02:
That it would have been, even in the most remote

[00:23:33] Speaker 03:
Situation that infringement could have occurred and with that also address the arguments with respect to the the inducement So those arguments center around this this termination You have to terminate the the the connection that we've discussed and we have a very similar history on

[00:24:00] Speaker 03:
Markman, and I won't go through all that, but it's right in the district court's decision.

[00:24:04] Speaker 02:
Well, let me see if I understood that correctly.

[00:24:08] Speaker 02:
In the claims that you assert, termination is part of the process, correct?

[00:24:15] Speaker 02:
Yes, sir.

[00:24:16] Speaker 02:
And in the accused methods, termination is not part of the process, but yet you argue, well, termination could occur if there's a weak signal, you walk into a basement.

[00:24:28] Speaker 02:
Something happens and then you reconnect so you can have termination under any circumstance Did I get that right?

[00:24:38] Speaker 03:
I do not agree with that judge right now that distinction is not accurate I do not believe okay, and here's why I do not agree with that But what the claims of this patent were about were exactly what we're accusing of infringement

[00:24:49] Speaker 03:
So there was a set of steps that had to do with creating the questionnaire, sending the questionnaire to the device, tokenizing the questionnaire.

[00:24:56] Speaker 03:
And that's an important feature for other reasons.

[00:24:59] Speaker 03:
Sending these questionnaires to the devices.

[00:25:01] Speaker 03:
And then in the course of filling out the devices, there are steps where you establish network connections and terminate network connections.

[00:25:09] Speaker 02:
So at every step, it seems like you would take a step and then you would terminate connection with respect to the preceding step.

[00:25:16] Speaker 02:
Not in every step.

[00:25:18] Speaker 03:
There was an establishing step and a terminating step, and they happened

[00:25:22] Speaker 02:
The timing of those steps was actually... But at least in two steps, right?

[00:25:25] Speaker 02:
Yes.

[00:25:25] Speaker 02:
Those two steps where that termination happened.

[00:25:27] Speaker 02:
Correct.

[00:25:28] Speaker 02:
But I never read that the accused method had any type of termination in it.

[00:25:34] Speaker 02:
It does.

[00:25:35] Speaker 03:
And so what was accused of infringement was in New Eggs Mobile app, for example, when a person is choosing options on some kind of questionnaire.

[00:25:44] Speaker 03:
So there are other questionnaires where they're filling out forms.

[00:25:47] Speaker 03:
We actually demonstrated this in our expert report by sort of

[00:25:51] Speaker 03:
creating an artificial network outage by using airplane mode.

[00:25:55] Speaker 03:
And we'd be in the middle of typing in some information.

[00:25:58] Speaker 03:
We'd create the artificial network outage using airplane mode.

[00:26:01] Speaker 03:
We'd see that the information was still there.

[00:26:03] Speaker 03:
You could fill in more information.

[00:26:06] Speaker 03:
We'd then flip the connection back on, turning the airplane mode off.

[00:26:10] Speaker 03:
And then you'd be able to continue.

[00:26:11] Speaker 03:
And that was exactly what was required by the claims.

[00:26:14] Speaker 03:
And that was the whole purpose of the patent.

[00:26:15] Speaker 03:
The patent was all about

[00:26:17] Speaker 03:
these mobile devices used to collect information in a situation where you have unreliable networks.

[00:26:23] Speaker 03:
And that's what the dispute about this terminating, the market dispute about this terminating connections was all about.

[00:26:30] Speaker 03:
The dispute that was teed up was Newegg said it's just not networks just going down sort of on their own.

[00:26:36] Speaker 03:
It's got to be a user terminating the connection.

[00:26:42] Speaker 03:
New Egg, eventually, during the Markman process, after we filed our Markman brief first, we explained why that was wrong, we explained that it's really about unreliable networks, that's what the whole patent's about, New Egg, in its response, abandoned that position.

[00:26:58] Speaker 03:
And they say they didn't really abandon it, that they were leaving it open somehow, but they abandoned any attempt to have the court actually construe that to require it to be a user-causing determination.

[00:27:10] Speaker 03:
So these terminations happen.

[00:27:12] Speaker 03:
Now, we get all kinds of arguments that had nothing to do with what was below, but like in the reply brief, we get arguments that the odds of this ever happening were effectively zero.

[00:27:22] Speaker 03:
And those kind of arguments are brand new.

[00:27:24] Speaker 03:
They don't have any evidentiary support.

[00:27:27] Speaker 03:
But in any event, they're just arguments.

[00:27:30] Speaker 03:
And we had evidence on our side.

[00:27:31] Speaker 03:
Our expert said these things would never happen.

[00:27:34] Speaker 03:
There were millions of circumstantial evidence.

[00:27:37] Speaker 03:
Obviously, we didn't know that with respect to John Doe, the network went down at 1230 on Tuesday, and one of these things happened.

[00:27:45] Speaker 03:
But what we had was the kind of circumstantial evidence about the nature of these networks, their unreliability, the fact that these kind of connections and Wi-Fi connections and cellular connections are always going down on a routine basis.

[00:27:56] Speaker 03:
And we had millions and millions

[00:27:59] Speaker 03:
and hundreds of millions of screen renderings through the use of the Newegg mobile app.

[00:28:06] Speaker 03:
And that was enough to be sure that this was happening, at least to some extent.

[00:28:10] Speaker 03:
So that was the basis of our infringement analysis.

[00:28:13] Speaker 03:
But let's be clear.

[00:28:14] Speaker 03:
Newegg is not saying that it's impossible to have proven this.

[00:28:20] Speaker 03:
So even if our indirect evidence wasn't enough, that doesn't mean our case was exceptional.

[00:28:24] Speaker 03:
And Newegg has not come forward with any evidence to show that this doesn't happen.

[00:28:30] Speaker 03:
So the idea that this was some case that from day one was obviously flawed and should have never been brought, that just doesn't fall from anything Newegg has argued here.

[00:28:42] Speaker ?:
Thank you.

[00:28:42] Speaker ?:
Thank you.

[00:28:47] Speaker 01:
A few brief points about the the idea that new egg lost or abandoned its arguments I think our briefing is clear about that the issue of whether a questionnaire was limited to questions was moot because the asserted claims require a series of questions And as far as what a series of questions means I think everybody understood I think the district court understood that by limiting or by not limiting questionnaire to questions that clearly

[00:29:12] Speaker 01:
A expressed statement in the claims that questions were required did require questions.

[00:29:17] Speaker 01:
The spec is consistent with that.

[00:29:18] Speaker 01:
At column 8, 12 through 14, you have series of questions or statements being referred to.

[00:29:24] Speaker 01:
At column 8, line 52, it refers to a quote, form that asks the user different questions, paren, are you a man or a woman, question mark.

[00:29:33] Speaker 01:
There's just nothing in the spec here that would say that series of questions means anything other than questions as we ordinarily understand the term.

[00:29:40] Speaker 01:
As far as the Newegg abandon, the user has to take action to disable the first connection.

[00:29:47] Speaker 01:
Again, that's sort of a moot point because the way Microsoft accused Newegg's app was requiring actions by a user.

[00:29:55] Speaker 01:
And that's the only way it ever could have accused New Egg because New Egg does not control customers' phones into airplane mode or not.

[00:30:02] Speaker 01:
New Egg does not control Wi-Fi networks and cellular networks.

[00:30:06] Speaker 01:
So it was inevitable, whether we got an express construction or not, that Microsoft could never have proven that New Egg controlled that step or that New Egg actively was able to encourage that step.

[00:30:17] Speaker 01:
My friend here says that Newegg never actually briefed the questionnaire issue at A31-14-15 and A31-20.

[00:30:25] Speaker 01:
We have Newegg arguing those issues to the district court in a very short 15 page opening brief and a 5 page reply brief.

[00:30:33] Speaker 01:
We've got about 3 pages of argument to that issue.

[00:30:36] Speaker 01:
The district court should not have been able to ignore that.

[00:30:40] Speaker 01:
also at A36, 89 through 90 in the reply brief, that is.

[00:30:44] Speaker 01:
As far as the re-exam, we really think the re-exam is largely a sideshow and is somewhat irrelevant because the premise of our exceptionality motion was that Microsoft brought a frivolous infringement case and did so in bad faith.

[00:30:58] Speaker 01:
The fact that Microsoft's patent was also invalid, which it doesn't disagree with because it never challenged the re-exam on that basis,

[00:31:04] Speaker 01:
certainly doesn't help macro-solve and doesn't excuse it from bringing frivolous claims in bad faith, as the record shows.

[00:31:12] Speaker 01:
The idea that it was inevitable to... Your Honor, may I finish my final point here?

[00:31:18] Speaker 01:
The idea that it was inevitable that this infringement would occur, that was never an acceptable theory under this court's precedent when this case was brought.

[00:31:26] Speaker 01:
If you look at the Takeda case, knowledge that infringement might possibly occur has never been enough for active inducement of infringement.

[00:31:34] Speaker 01:
And if it is so clear that infringement necessarily must have occurred, then this court in EPAS recognized, well, then, Microsoft should have had no trouble finding at least one instance where it did.

[00:31:46] Speaker 01:
But the precise context of these claims made it so unlikely as to be impossible.

[00:31:51] Speaker 01:
And that's why Microsoft came up empty-handed after two years of discovery.

[00:31:54] Speaker 01:
Thank you.

[00:31:55] Speaker 00:
We thank both counsel.

[00:31:56] Speaker 00:
The case is submitted, and that concludes our proceedings.

[00:32:05] Speaker 01:
The Honorable Court is adjourned until tomorrow morning at 10 o'clock.