[00:00:00] Speaker 04:
Your Honors, again, Pentair respectfully submits that this is a case that stood out from others first in terms of the merits on the issue of infringement of claim 46.

[00:00:16] Speaker 04:
The court basically found that there was no adequate pre-filing investigation with respect to Hayward's original infringement contentions.

[00:00:26] Speaker 04:
Hayward asserted that

[00:00:28] Speaker 04:
Pentair's heaters had, in fact, a stainless steel tube sheet.

[00:00:34] Speaker 04:
It was pointed out during the course of discovery in the case that that wasn't true.

[00:00:41] Speaker 04:
We asked Hayward to drop that claim.

[00:00:43] Speaker 04:
They persisted.

[00:00:45] Speaker 04:
Claim 46 was litigated throughout expert discovery and the summary judgment briefing.

[00:00:53] Speaker 04:
Towards the end, in summary judgment, Hayward shifted its theories

[00:00:57] Speaker 04:
Hayward didn't seek leave to amend its contentions.

[00:01:02] Speaker 04:
It argued that, well, Pentair's carbon steel functions as intended despite the... Yes, Your Honor.

[00:01:11] Speaker 00:
Clearly, the Supreme Court sent a message that district courts should not be second-guessed every time they award fees and that we should be more flexible with respect to our review and the nature of our review.

[00:01:26] Speaker 00:
And there was a whole series of cases where we remanded because the octane standard had not been applied.

[00:01:34] Speaker 00:
But having said that, once the district court applies the octane standard and does so in at least a thoughtful way, as the court did here, I think the message is also that we're not supposed to second-guess district courts who deny fees.

[00:01:49] Speaker 04:
Your Honor, I understand your position.

[00:01:53] Speaker 04:
It's a case where if you look at the totality of the circumstances that Octane tells the litigants to do and tells the court to do, we feel, for example, on the... But Octane doesn't tell us to do that.

[00:02:08] Speaker 05:
It tells the district court to do that.

[00:02:10] Speaker 05:
And it tells us to review that for abuse of discretion.

[00:02:13] Speaker 05:
And you're not arguing... I mean, you're trying to argue abuse of discretion, but really you're just arguing the various factors and telling us to weigh them differently.

[00:02:21] Speaker 05:
And I don't see how we can do that under

[00:02:23] Speaker 04:
Octane.

[00:02:25] Speaker 04:
And if I just may respond briefly, Your Honor.

[00:02:28] Speaker 04:
With respect to infringement, for example, the court quoted the objective baselessness standard.

[00:02:35] Speaker 04:
And that's no longer the standard.

[00:02:38] Speaker 04:
And we had cited a number of post-Octane precedents where failure to conduct a pre-filing investigation and shifting theories was enough to make the case stand out.

[00:02:50] Speaker 04:
And on the written description issue, the court

[00:02:54] Speaker 04:
found the defense to be essentially compelling on the claims it invalidated.

[00:03:00] Speaker 00:
But the court wasn't completely thrilled with all of your litigation strategy and activities.

[00:03:06] Speaker 00:
And why isn't the court allowed to consider that in its totality of the circumstances analysis?

[00:03:12] Speaker 04:
The court is permitted to consider that, Your Honor.

[00:03:16] Speaker 04:
But when the big picture is looked at, I'd like to just note the reasons why the district court

[00:03:23] Speaker 04:
seem to back off from its summary judgment findings when it made its fee findings.

[00:03:29] Speaker 04:
For example, the court is here.

[00:03:32] Speaker 01:
It doesn't matter if you're right about that, because the district court still has the discretion to award fees or not award fees at the end of the day.

[00:03:40] Speaker 01:
And it expressly held that Pentair's own manner of litigating weighs against an exceptional case finding.

[00:03:48] Speaker 01:
I don't understand why you're here.

[00:03:53] Speaker 01:
see this appeal as very close to frivolous.

[00:03:56] Speaker 04:
Well, Your Honor, in terms of Pentair's conduct, look at precisely what the court castigated us for, and we think unfairly.

[00:04:04] Speaker 04:
The court said, well, Pentair didn't move for sanctions, and that's a factor.

[00:04:09] Speaker 04:
That's true.

[00:04:10] Speaker 04:
Sanctions would have only added to an already overburdened record in court in this case.

[00:04:16] Speaker 04:
And Octane specifically said that sanctionable conduct is not the benchmark.

[00:04:22] Speaker 01:
No, that's not what the court said.

[00:04:25] Speaker 01:
Right after the sentence I read you, the court goes through and explains that in the attorney's fees motion, you tried to make this look like a very, very simple issue, and that that's why Hayward never should have brought this case.

[00:04:37] Speaker 01:
But it said that you yourself litigated it in a very complex manner, filing five separate summary judgment motions, going into a complex detail, saying particularly complex in the way you treated them.

[00:04:51] Speaker 01:
But you want me to go behind the district court on that sort of fact finding on a discretionary issue.

[00:04:57] Speaker 01:
And you're telling this court on appeal that we should overturn that sort of fact finding on a discretionary issue.

[00:05:07] Speaker 04:
Your Honor, if I could submit that where the district court applied the wrong standards, yes, it's an abuse of discretion.

[00:05:16] Speaker 04:
But this court can look under GAMAR, its precedent from last summer,

[00:05:21] Speaker 04:
as to whether the proper standard was in fact applied by the court.

[00:05:25] Speaker 00:
Of course we can.

[00:05:27] Speaker 00:
Yes.

[00:05:27] Speaker 00:
But in this particular case, this is a very careful step-by-step analysis that the district court applied.

[00:05:35] Speaker 00:
And even on the question of the strength of your litigating position, as we just discussed, this is a difficult analysis when you're talking about a disclaimer for purposes of written description.

[00:05:51] Speaker 00:
It would have been a lot easier analysis if you said that their position was wrong on claim construction.

[00:05:58] Speaker 00:
But you never argued that, either below or here.

[00:06:02] Speaker 04:
Well, Your Honor, we couldn't argue it here because it wasn't argued below, obviously.

[00:06:06] Speaker 04:
But in terms of, say, for example, multiple summary judgment motions, that's because the record was right for them.

[00:06:13] Speaker 04:
And we won on substantially everything.

[00:06:17] Speaker 04:
We won on every claim that was asserted against us on the substantive merits.

[00:06:21] Speaker 04:
We won on limiting the pre-suit damages.

[00:06:23] Speaker 01:
You may have won on every claim that was asserted against you, but the district court goes through and shows how you lost a lot of particular arguments, that a lot of the arguments you made weren't strong.

[00:06:35] Speaker 01:
Even though there might have been one strong argument for each claim, you, by virtue of taking a larger approach, which nobody could blame you, in a litigation you've got to zealously defend your client and raise every position,

[00:06:47] Speaker 01:
that you think is at all reasonable, but the court said that that added to the unnecessary complexity of the case, and that you lost lots of those little issues.

[00:06:57] Speaker 04:
And your honor, on that point, losing means, in most instances, an issue of fact was found for trial.

[00:07:10] Speaker 04:
We tried to limit, for example, pre-suit damages based on latches because there wasn't

[00:07:16] Speaker 01:
Yes, but under your logic, we won on every claim, then every winner of every case has an exceptional case on their hands.

[00:07:23] Speaker 01:
The fact that you actually won eventually on at least one issue on every claim and therefore prevailed makes you the prevailing party.

[00:07:31] Speaker 01:
It doesn't make this an exceptional case.

[00:07:34] Speaker 01:
And the district court thoughtfully and thoroughly went through the reasons why not.

[00:07:37] Speaker 04:
OK, and Your Honor, so in response, where

[00:07:45] Speaker 04:
We've got the claim 46 non-infringed and the court found that the Hayward had shifted his theories and other cases and didn't do a proper... But we're not just talking about claim 46.

[00:07:58] Speaker 05:
I mean, if this was just about claim 46, you know, you might have gotten fees and you might be on the other side up here now.

[00:08:07] Speaker 05:
This is the whole case and he looked at the whole case.

[00:08:09] Speaker 05:
And frankly, we just haven't heard the last of you.

[00:08:12] Speaker 05:
Description and claim construction stuff is very complicated.

[00:08:15] Speaker 05:
And you did win, but the way it went about is kind of a very unusual way.

[00:08:21] Speaker 05:
I don't find it very useful for you to single out claim 46 as making this exceptional, because this case wasn't just about claim 46.

[00:08:30] Speaker 04:
I agree, Your Honor, and I was about to go on to other issues beyond that.

[00:08:36] Speaker 04:
At this point, I've used up most of my preliminary a lot of time, and unless the court has further questions on my direct, I'll save a few.

[00:08:43] Speaker 02:
Thank you, Mr. Boland.

[00:08:44] Speaker 02:
Thank you.

[00:08:47] Speaker 02:
Mr. Bromberg.

[00:08:57] Speaker 03:
Thank you, Your Honors.

[00:08:58] Speaker 03:
We believe that the district court did engage in an exercise of its discretion below in denying the fee request,

[00:09:05] Speaker 03:
and that there was no abuse of discretion.

[00:09:08] Speaker 03:
Hayward, at the outset of the case, had a reasonable basis to believe that it had an infringement claim.

[00:09:16] Speaker 03:
And that's proven by the fact that the district court found infringement of claim 47 by all of the accused products and infringement of claim 43 by some of the accused products.

[00:09:28] Speaker 03:
Hayward also was entitled to rely upon the presumption of validity

[00:09:33] Speaker 03:
in thinking that its patent would survive validity challenges.

[00:09:36] Speaker 03:
And indeed, Hayward had more than that because Pentair put the case into ex parte re-exam, the patent.

[00:09:45] Speaker 03:
And the patent came out with those same claims that are asserted here, all affirmed after the ex parte process.

[00:09:54] Speaker 03:
So that adds to the soundness, we believe, of Hayward pursuing this case on both infringement and validity grounds.

[00:10:03] Speaker 03:
And so we believe the court correctly exercised its discretion under the Octane Fitness Standard, which it explicitly referenced in a footnote, to deny the fee request here.

[00:10:22] Speaker 03:
If you look at the totality of the circumstances, notwithstanding some of the issues that Mr. Boland raised,

[00:10:31] Speaker 03:
The court found there was actually aggressive behavior on both sides.

[00:10:35] Speaker 03:
There were things that perhaps were zealous taken to an extreme, but they kind of balanced each other out and they did not make the case exceptional.

[00:10:47] Speaker 03:
Patent cases are often hard fought.

[00:10:50] Speaker 03:
There were a bunch of tricky issues in this case and in the event Hayward did prevail on a number of issues in the case,

[00:11:00] Speaker 03:
It prevailed on its claim construction positions.

[00:11:04] Speaker 03:
It got dismissal of the inequitable conduct claim.

[00:11:08] Speaker 03:
It prevailed in the ex parte re-exam.

[00:11:10] Speaker 03:
It defeated Pentair's motion to stay proceedings pending the ex parte re-exam.

[00:11:17] Speaker 03:
And it proved infringement of claim 47 on the undisputed facts.

[00:11:22] Speaker 03:
And the payward litigation positions, we believe, were appropriate.

[00:11:28] Speaker 03:
did not meet the exceptional standard.

[00:11:31] Speaker 03:
The basic arguments that Pentair made about an improper settlement position or using this case as leverage simply don't bear weight.

[00:11:42] Speaker 03:
Hayward was within its rights to bring this suit and it was actually Pentair's doing

[00:11:47] Speaker 03:
that kicked it out of North Carolina to Los Angeles, so we had a bi-coastal war.

[00:11:52] Speaker 03:
That wasn't our idea, not their idea, but we had it litigated where the court said it would be litigated after they had filed their declaratory judgment action out there.

[00:12:04] Speaker 03:
So we believe, Your Honor, that Hayward's litigation conduct was on the whole not exceptional, and that there was certainly some behavior by Pentair that the court cited as

[00:12:16] Speaker 03:
complicating the case as well so it was a proper exercise of discretion.

[00:12:21] Speaker 03:
The briefs but not this argument also mentioned section 1927 and inherent powers and on those we respectfully submit that's a higher bar for Pentair to meet and since it didn't meet the exceptional case according to the district court in the exercise of its discretion it could not meet that higher bar which requires some kind of finding of bad faith.

[00:12:46] Speaker 03:
So with those remarks, Your Honor, I'll conclude my argument there, unless you have any further questions.

[00:12:51] Speaker 01:
No.

[00:12:51] Speaker 01:
Thank you, Mr. Brownberg.

[00:12:53] Speaker 01:
Mr. Boland?

[00:12:54] Speaker 04:
Unless the court had any further questions, we'll rest.

[00:12:57] Speaker 01:
OK.

[00:12:57] Speaker 01:
I thank both counsel for their argument today.

[00:12:59] Speaker 01:
The cases are both taken under submission.

[00:13:02] Speaker 01:
Let's move on to our final case for today, 2015-1837.