[00:00:16] Speaker 04: The next case for argument is 151598, Smart Metric versus MasterCard International. [00:00:46] Speaker 04: Mr. Franklin. [00:00:48] Speaker 04: Good morning. [00:00:49] Speaker 04: May it please. [00:00:49] Speaker 04: Why don't we hold off a minute while your friend gets settled here. [00:01:00] Speaker 03: Good morning, and may it please the court. [00:01:03] Speaker 03: I would like to convince you of two points today. [00:01:06] Speaker 03: First, if there was ever a case that should be found exceptional, this is it. [00:01:11] Speaker 03: From the lack of a pre-suit investigation [00:01:14] Speaker 03: to Smartmetric's unreasonable arguments regarding the local access number limitation in the claims. [00:01:21] Speaker 03: Second, not only was it an abuse of discretion not to find this an exceptional case, but the district court made several clear errors of law in its ruling, unfairly faulting MasterCard for not bringing a dispositive motion early in the case, and wrongly relying upon the mistaken proposition that a patentee may continue litigating [00:01:44] Speaker 03: even after receiving a determinative claim construction. [00:01:49] Speaker 03: In OPLUS Technologies versus Vizio, this court indicated that where a patentee no longer has an argument for infringement, it should stipulate to non-infringement. [00:02:02] Speaker 03: This rule is correct, and it is in conflict with the law cited in the district court's order. [00:02:08] Speaker 04: Why don't you show us what you're talking about in the district court's order? [00:02:11] Speaker 04: It's on page five. [00:02:16] Speaker 04: Is it the Conneka case? [00:02:17] Speaker 04: It's the Conneka case. [00:02:20] Speaker 04: I'm having a problem with that case, and I was going to ask your friend about it too. [00:02:24] Speaker 04: I've seen it cited before. [00:02:28] Speaker 04: What is your read of that case? [00:02:31] Speaker 03: My read of that case is that the honorable Judge Felser found that a patentee has a right to continue litigating [00:02:40] Speaker 03: even after receiving a claim construction that is determinative of the issue of infringement. [00:02:46] Speaker 03: And the reasoning that Judge Felser gave in the case was that without at least one party filing a motion for summary judgment, there isn't a sufficient record for the losing party, the patentee, to take an appeal. [00:03:01] Speaker 03: And that reasoning is wrong. [00:03:04] Speaker 03: As the court found, this court found, [00:03:10] Speaker 03: It was the Jang case. [00:03:14] Speaker 03: Even after a determinant of claim construction, the parties may enter into a stipulated judgment that may explain the basis for an infringement determination. [00:03:25] Speaker 03: MasterCard submits that that is what should have happened here. [00:03:30] Speaker 03: After Judge Fitzgerald, in this case, issued his claim construction regarding local access number, the patentee smart metric [00:03:39] Speaker 03: no longer had an objectively reasonable basis for continuing its infringement claim. [00:03:44] Speaker 03: Well, did the district court find that? [00:03:46] Speaker 04: I mean, the district court suggested that they want part of their claim construction. [00:03:54] Speaker 04: I mean, you're making an assertion that there was no [00:04:02] Speaker 04: non-frivolous argument that could be made on summary, with respect to summary judgment. [00:04:06] Speaker 04: Does the district court conclude that and just therefore rely on Canneca because they can get away with it under Canneca? [00:04:13] Speaker 03: Well, the district court doesn't say that. [00:04:15] Speaker 03: What the district court says is that it was not implausible on its face for SMARTMEC to have continued. [00:04:24] Speaker 03: But not implausible on its face is different from objective reasonableness [00:04:29] Speaker 03: which is the factor that the Supreme Court considered in the Octane Fitness case. [00:04:34] Speaker 03: Plausible on its face is the Twombly Iqbal standard for pleadings. [00:04:39] Speaker 03: Objective reasonableness demands more. [00:04:42] Speaker 03: It demands an inquiry into the evidence that Smart Metric was eventually able to present on summary judgment. [00:04:49] Speaker 03: And that evidence showed that Smart Metric lacked an objectively reasonable infringement position after claim construction. [00:04:56] Speaker 04: So let me ask you. [00:04:58] Speaker 04: So you're hinging your argument, your entitlement to attorney's fees, based on the fact that they didn't cave in after claim construction. [00:05:06] Speaker 04: So it's just that one portion of the case, right? [00:05:10] Speaker 04: I mean, are you taking issue? [00:05:11] Speaker 04: I mean, the district court concluded that they did have objectively reasonable arguments at the claim construction piece of it. [00:05:19] Speaker 04: But you're seeking attorney's fees for everything. [00:05:22] Speaker 04: You're not saying we should get attorney's fees for just this piece of time we spend [00:05:26] Speaker 04: having to press the motion for summary judgment, right? [00:05:31] Speaker 03: Well, we respectfully request the Federal Circuit to reverse the finding of a lack of exceptional case. [00:05:37] Speaker 03: And under octane thickness, we're supposed to take a holistic totality of the circumstances approach. [00:05:44] Speaker 03: One piece of the totality of the circumstances was the failure to stop the infringement case after claim construction. [00:05:53] Speaker 03: But there's other reasons as well. [00:05:55] Speaker 03: We don't think the claim construction that was offered by Smart Metric on local access number was objectively reasonable from the get-go. [00:06:03] Speaker 03: And the reason why is because it read out the limitation of there being any locality to it. [00:06:11] Speaker 02: But the district court disagreed with you, right? [00:06:14] Speaker 02: And in any event, why are you talking about objective reasonableness, given that the standard is totality of circumstances for attorney fees? [00:06:21] Speaker 03: Because objective reasonableness is one of the factors that the Supreme Court picked out of the Fogarty copyright case from the Supreme Court in judging the totality of the circumstances. [00:06:32] Speaker 02: So it's one factor. [00:06:33] Speaker 02: It's one factor. [00:06:33] Speaker 02: And the district court considered it, right? [00:06:36] Speaker 02: I mean, here, one of the problems I'm seeing with your argument is that, look, I might agree with you if I were the original fact finder. [00:06:45] Speaker 02: But I look at everything you're arguing, and I see it discussed in the district court's opinion. [00:06:51] Speaker 02: But yet, the district court comes to a different conclusion. [00:06:55] Speaker 02: So I'm having a hard time understanding. [00:06:57] Speaker 02: You're saying the district court applied the wrong law. [00:06:59] Speaker 02: But I don't see where the district court concluded that any claim constructions or infringement arguments following claim constructions were objectively unreasonable. [00:07:10] Speaker 03: The district court appears to have judged [00:07:14] Speaker 03: the post-claim construction arguments on a plausibility on its face standard, which we think was an error of law. [00:07:20] Speaker 03: Where is that? [00:07:23] Speaker 03: That is on page six, the bottom of the first paragraph on page six. [00:07:31] Speaker 03: The district court says, well, this is a closer case than Biax Corp. [00:07:35] Speaker 03: The court concludes that ultimately, plaintiff in this case believed in its litigating position and presented a case that was not implausible on its face. [00:07:46] Speaker 03: That was an error of law. [00:07:48] Speaker 03: It was an error of law for the district court to have relied upon Konecka. [00:07:51] Speaker 04: Wait, so you think using the term not implausible on its face? [00:07:57] Speaker 04: I mean, the term's used in octane-sided vulgarity. [00:08:03] Speaker 04: Yes. [00:08:03] Speaker 04: And the terms used there were frivolous, objectively unreasonable. [00:08:08] Speaker 04: I don't know. [00:08:12] Speaker 04: Are you saying that not implausible on its face is a different standard than frivolous or objectively unreasonable, both in fact or in law? [00:08:22] Speaker 03: Well, implausible on its face is the equal Twombly standard for pleadings. [00:08:27] Speaker 03: And it would not make sense to say that whenever you're able to get past the pleading stage, you meet the plausible, honest face test, that there could not be an award of attorney's fees. [00:08:38] Speaker 03: So I think octane fitness demands more. [00:08:41] Speaker 03: It was an error for the district court to rely upon Kineka. [00:08:44] Speaker 03: It was also an error for the district court to have faulted MasterCard for not filing an early motion for summary judgment at the outset of the case. [00:08:53] Speaker 03: And under the Highmark case, [00:08:55] Speaker 03: And what do they say about that? [00:08:56] Speaker 04: Why don't you point me to where the criticism on not filing an earlier motion for summary judgment? [00:09:03] Speaker 03: That is at the top of page five of the district court's order. [00:09:09] Speaker 03: Second line, defendants never brought a motion asserting these deficiencies at that stage of the litigation. [00:09:14] Speaker 02: Now, before that, it says the court did not find that smart metrics infringement case lacked any legal or factual basis. [00:09:21] Speaker 02: And moreover, defendants never brought a motion. [00:09:23] Speaker 02: Yes. [00:09:24] Speaker 02: I mean, it's not like the fact that you didn't bring a motion is the sole basis for the decision, let alone even just for the sole basis for the conclusion in this paragraph, right? [00:09:33] Speaker 03: That is true. [00:09:34] Speaker 03: But it is one of the factors in the totality of the circumstances that the district court concluded. [00:09:39] Speaker 03: It was an error of law for the district court to have relied upon that. [00:09:43] Speaker 03: And in the Highmark case... Why? [00:09:45] Speaker 03: Why? [00:09:46] Speaker 03: Because it doesn't, as this court stated in Opolis, an accused infringer is not expected to file an early motion for summary judgment. [00:09:56] Speaker 03: And it would not have made sense for SmartMetric to have filed one here. [00:10:00] Speaker 03: All it would have done was educate the plaintiff on MasterCard's non-infringement arguments, and it would have drawn a Rule 56D motion from the plaintiff. [00:10:11] Speaker 03: It would have been futile. [00:10:14] Speaker 03: But in the Highmark case, the Supreme Court said a district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law. [00:10:23] Speaker 03: And MasterCard has cited at least three erroneous views of the law that are in this order, faulting MasterCard for not filing the early summary judgment motion, relying on Conneka, and appearing to judge the post-claim construction case based upon the not implausible on its face standard. [00:10:41] Speaker 03: And this is on top of all the other evidence the MasterCard has cited for why this case, in our view, is indisputably an exceptional case. [00:10:51] Speaker 03: And that goes to the lack of a pre-filing investigation. [00:10:55] Speaker 04: Well, would we not have to, at best, if we accept even the arguments that you've made, it would require a vacate and remand, right? [00:11:05] Speaker 04: Because we don't know. [00:11:07] Speaker 04: I mean, you have to acknowledge that you've identified [00:11:10] Speaker 04: three things, which one can arguably say was part of the totality of circumstances upon which the district court relied. [00:11:16] Speaker 04: But there's plenty of other stuff. [00:11:18] Speaker 04: And so we would, at best, by your argument, we would send it back to the district court saying, you shouldn't have relied on CNECA. [00:11:27] Speaker 04: You shouldn't have relied on the early motions. [00:11:29] Speaker 04: Now revisit whether you still adhere to your view. [00:11:34] Speaker 04: And what do you think the likelihood is that the district court is going to change its view, even if it agrees that those three pieces may have misspoken on those three areas? [00:11:45] Speaker 03: I see them until my rebuttal time. [00:11:47] Speaker 03: But at the very least, we think the order should be vacated and remanded. [00:11:51] Speaker 03: We think it should be reversed and found to be an exceptional case for reasons stated in our briefs. [00:11:57] Speaker 03: But it isn't for this court to prejudge how Judge Fitzgerald would [00:12:02] Speaker 03: look at the totality of the circumstances once the errors of law in its order are corrected. [00:12:07] Speaker 03: That's for Judge Fitzgerald to decide. [00:12:10] Speaker 04: Okay, thank you. [00:12:32] Speaker 01: Good morning, may I please the court. [00:12:33] Speaker 01: I'm Pat Bright and I represent Smart Metro, the appellee in this case. [00:12:38] Speaker 01: My opponent has not mentioned the first point on our appeal, which is a jurisdictional point. [00:12:44] Speaker 01: And I wanted to spend a moment on that point because it is a standard review as de novo, which means this panel gets to decide the question without any deference to what the district court had to say on the subject. [00:12:58] Speaker 01: This is a case about 285 fees. [00:13:01] Speaker 01: an 18 USC 1927 case, and it's not an inherent powers case either. [00:13:06] Speaker 01: There was no request for fees under either one of those standard provisions for fee shifting. [00:13:12] Speaker 01: This is just a 285 case. [00:13:15] Speaker 01: And in the central district of California where this case originated, there is a rule that says you have 14 days to file a motion for a fee after entry of judgment. [00:13:26] Speaker 01: My opponents filed such a motion. [00:13:29] Speaker 01: And then they asked the court to sit on it awaiting the Supreme's decision in Octane and the other case. [00:13:37] Speaker 01: His name escapes me. [00:13:39] Speaker 01: So if you look at JA 2524, this is the court's ruling which follows upon these events. [00:13:49] Speaker 01: And the court says there that defendants MasterCard and Visa filed a motion for fees. [00:13:56] Speaker 01: Visa isn't on this appeal. [00:13:58] Speaker 01: forego appealing it after reading Judge Fitzgerald's opinion. [00:14:03] Speaker 01: And in that first paragraph, the judge capitalizes the word motion, you'll notice, because he uses it over and over in this order. [00:14:11] Speaker 01: He says first that the court granted the application to continue the hearing. [00:14:16] Speaker 01: That was defendant's application. [00:14:17] Speaker 04: I'm sorry. [00:14:18] Speaker 04: Are we looking at JA 2524? [00:14:19] Speaker 04: JA 2524. [00:14:19] Speaker 01: OK. [00:14:26] Speaker 01: It's just the one page. [00:14:31] Speaker 04: OK, and your point is? [00:14:33] Speaker 01: My point is that the court refers to the motion, the motion, the motion. [00:14:37] Speaker 01: He's talking about the motion filed timely in the fall of 2013. [00:14:42] Speaker 01: And at the end of this order, he says in the last paragraph, the motion, meaning that motion and no other, is denied without prejudice. [00:14:52] Speaker 01: Now, denied without prejudice has specific meaning in the law. [00:14:54] Speaker 01: It means that as of the date of this order, there was no motion pending in the district court, period. [00:15:02] Speaker 01: And I pointed this out in my brief. [00:15:05] Speaker 01: My opponent doesn't even take issue with that point. [00:15:09] Speaker 01: They agree that as of the date of this order, August of 2014, there was no motion for a fee pending. [00:15:17] Speaker 01: So then my friends at MasterCard filed what they called a renewed motion. [00:15:24] Speaker 01: That motion was filed months and months after the 14-day deadline. [00:15:29] Speaker 01: Now, if you look at their reply brief, you will see that they raise all kinds of arguments about why it is plausible that the district court intended to waive the application of the 14-day rule. [00:15:41] Speaker 02: But the district court certainly ruled on their later motion. [00:15:43] Speaker 01: Well, later he did. [00:15:44] Speaker 01: I'm going to come to that in just a second. [00:15:46] Speaker 01: But I've called to this court's attention that if you look at the reply briefing, you will see arguments raised that were never presented in the district court and therefore waived and not before this court. [00:15:57] Speaker 00: How do you explain that it was denied without prejudice? [00:16:01] Speaker 01: I don't have to explain it. [00:16:02] Speaker 01: Your Honor, it's a simple analysis. [00:16:04] Speaker 01: If I file a complaint against defendant Smith, and at the time I file the complaint, my cause of action is within the statute of limitations. [00:16:14] Speaker 01: And the trial court then dismisses my complaint without prejudice. [00:16:18] Speaker 01: And I refile after the statute has run. [00:16:22] Speaker 01: My opponent may plead and prove the statute to defeat the amended complaint. [00:16:27] Speaker 01: There is no relation back to defeat the statute of limitations. [00:16:32] Speaker 02: This is a local rule, right? [00:16:34] Speaker 01: It's a local rule, that's right. [00:16:36] Speaker 01: We ask for the benefit of that rule, Your Honor, because we play by the rules. [00:16:42] Speaker 02: Did you ask the district court for that benefit of that rule? [00:16:45] Speaker 01: Of course I did. [00:16:46] Speaker 01: In my briefing, I did. [00:16:47] Speaker 01: You bet I did. [00:16:47] Speaker 02: And the district court went ahead and ruled on it anyway. [00:16:48] Speaker 01: And here's what the judge said when he got around to ruling on it, which was in his order, which is JA1 and followed on the papers by my opponents. [00:16:56] Speaker 01: At page JA2, the judge says he recites what happens at 2524. [00:17:04] Speaker 01: And he gets down to the end of that paragraph on the bottom of page 2 and he says, he says, [00:17:13] Speaker 01: The court continued the hearing on this motion from the original motion until after the Supremes issued its decision in octane, and then again until after the Federal Circuit decided our appeal on the merits. [00:17:25] Speaker 01: Once those decisions were issued, the court requested further briefing through a renewed motion, thereby adjusting the deadlines by court order. [00:17:33] Speaker 01: Look at his order. [00:17:34] Speaker 01: It doesn't adjust any deadlines at all. [00:17:36] Speaker 01: Not at all. [00:17:38] Speaker 01: That's an inference he makes about his order after the fact. [00:17:41] Speaker 02: Are you taking issue with his own interpretation of his own order? [00:17:45] Speaker 01: I submit, Your Honor, that we were severely prejudiced. [00:17:48] Speaker 01: We are entitled to rely upon a written record, not what's in his head and not expressed on the paper. [00:17:52] Speaker 04: Can I suggest that we move on to the merits? [00:17:54] Speaker 01: Yes, ma'am. [00:17:55] Speaker 04: I'll do so. [00:17:55] Speaker 04: OK. [00:17:55] Speaker 04: Well, let me move on to the merits. [00:17:57] Speaker 04: You heard your friend's argument, and there are three places where he does arguably identify [00:18:04] Speaker 04: problems with what the district court said. [00:18:06] Speaker 04: So why don't we take easy terms? [00:18:08] Speaker 04: Yes, I'm fine with that. [00:18:09] Speaker 01: OK. [00:18:10] Speaker 01: Well, first of all, my opponents say that the trial court didn't apply the octane cases. [00:18:14] Speaker 01: But if you look at the first three pages here. [00:18:16] Speaker 04: Well, I'm asking a specific question. [00:18:19] Speaker 04: I'm sorry. [00:18:20] Speaker 04: He identified, if I understood him correctly, three portions, three sections of the district court opinion where he says the district court aired as a matter of law in terms of the standard the district court applied. [00:18:31] Speaker 04: One is relies on Kenneka. [00:18:32] Speaker 04: Why don't we walk through them? [00:18:35] Speaker 04: The first is the top of JA5, where the district court says he doesn't find that the case lacked any factual or legal basis. [00:18:46] Speaker 04: And moreover, defendants never brought a motion asserting these deficiencies at that stage of the litigation. [00:18:53] Speaker 04: You heard what he had to say, and you've read his brief, about why that criticism is not proper. [00:19:00] Speaker 01: What say you? [00:19:01] Speaker 01: And here's the answer. [00:19:02] Speaker 01: In our briefing, we said, and this is in the trial court on the 285 motion, my opponent said that no reasonable attorney representing the plaintiff in this case could have thought that MasterCard controlled the claimed elements of claim one. [00:19:21] Speaker 01: And I said, if that was true at the outset of the case, if that was true as MasterCard asserted it to be, then MasterCard could have [00:19:30] Speaker 01: and perhaps even should have filed a motion to walk right out of the case at that point. [00:19:35] Speaker 01: Now, that's my response to their assertion that nobody in his right mind could think that they control the elements of the claim from the beginning of the case. [00:19:44] Speaker 01: That's all I argued. [00:19:46] Speaker 04: I said the inference to be drawn from- Well, except it's not relevant, for my purposes at least, what you argued. [00:19:53] Speaker 04: What's relevant is the standard that the district court applied in assessing the case. [00:19:57] Speaker 01: Right. [00:19:57] Speaker 01: The Opus case is distinguishable because there, [00:20:00] Speaker 01: the trial court found the case to be exceptional. [00:20:04] Speaker 01: That's what happened in Opalist. [00:20:05] Speaker 01: In our case, the trial court found the case to be not exceptional. [00:20:10] Speaker 01: Not exceptional. [00:20:11] Speaker 01: So the cases really aren't on all fours. [00:20:14] Speaker 01: But the point about Opalist is the trial court's reliance upon it was solely my argument that if the other side was right in saying that nobody reasonable person could think they had control, master part had control of the claimed elements, [00:20:30] Speaker 01: at the very beginning of the case, then why didn't they file a motion to get out? [00:20:34] Speaker 01: That's all I said. [00:20:35] Speaker 01: And the judge said, that makes sense to me. [00:20:38] Speaker 01: That's what he said. [00:20:39] Speaker 01: He didn't say they lose for that reason. [00:20:41] Speaker 01: He said, the argument that you made in response to their point makes sense to me. [00:20:45] Speaker 01: That's what he said. [00:20:48] Speaker 01: All right. [00:20:49] Speaker 01: Why don't we move on? [00:20:49] Speaker 01: That's the answer. [00:20:50] Speaker 01: That's the correct answer. [00:20:51] Speaker 01: If you look at my brief, you'll see that's what we point out to the court. [00:20:54] Speaker 01: But remember, Opus was a case where the trial court found the case to be exceptional. [00:20:58] Speaker 01: and then didn't give a fee. [00:20:59] Speaker 01: And this court reversed it and said, yeah, you've got to give him something. [00:21:02] Speaker 01: So it went back. [00:21:03] Speaker 01: And unfortunately, Judge Felser has died. [00:21:05] Speaker 01: You may know. [00:21:07] Speaker 01: OK. [00:21:07] Speaker 01: The second poem is about Kenneka, right? [00:21:09] Speaker 01: Kenneka. [00:21:10] Speaker 01: OK. [00:21:11] Speaker 01: Kenneka has been cited over and over and over again. [00:21:14] Speaker 01: I cite Judge Forrest's decision from New York. [00:21:17] Speaker 04: But is it your view that the correct interpretation of this is a correct view of the law, that somehow the reason you can and should and must continue to fight [00:21:28] Speaker 04: after an adverse claim construction is because that's the only way this case can get up on appeal? [00:21:33] Speaker 01: Is that right? [00:21:33] Speaker 01: No, of course not. [00:21:35] Speaker 01: No. [00:21:35] Speaker 01: What I argued to Judge Fitzgerald and what I've argued in my briefs on this appeal is that we thought at the end of the claim interpretation exercise that we still had a colorable shot at a finding of infringement. [00:21:48] Speaker 01: That's what we thought. [00:21:49] Speaker 01: We didn't think the case was hopeless. [00:21:51] Speaker 04: So how is Kenneka relevant? [00:21:53] Speaker 01: What does he mean? [00:21:54] Speaker 01: Kenneka says, if you have a claim interpretation that gives you a colorful shot of a finding of infringement, you have a right to file a motion for summary judgment. [00:22:02] Speaker 01: So did Judge Forrest in following Kenneka. [00:22:04] Speaker 01: And there are several other cases, by the way, that follow Kenneka in district courts around this country, because it makes sense. [00:22:10] Speaker 02: So the point here, if I understand it correctly, your point here is not that the district court is saying you can continue to press on even though you don't have an infringement defense at all, but rather that you thought you had a decent defense. [00:22:24] Speaker 01: That's right. [00:22:25] Speaker 01: And the court finds in his order that we still had, he says the court disagrees [00:22:33] Speaker 01: on page 5, he says, we disagree with their finding that they didn't have a shot at a finding of infringement. [00:22:37] Speaker 01: He said, in fact, my claim interpretation ruling supports that in some part. [00:22:43] Speaker 00: Where does he say that? [00:22:45] Speaker 01: Now, he says, on page 5, there's no indication that Smart Metric took an unreasonable position, litigation position. [00:22:54] Speaker 01: Defendants focused significant attention on their flawed local access number proposal as a key indication that this entire litigation was without merit. [00:23:04] Speaker 01: However, the courts reviewed this briefing and disagrees that Smart Metrics proposed language was patently inappropriate. [00:23:10] Speaker 01: Moreover, more importantly, the court rejects defendants' arguments, the continuation of litigation, and so on. [00:23:15] Speaker 01: Stop. [00:23:15] Speaker 04: So we looked at it. [00:23:17] Speaker 04: Stop. [00:23:18] Speaker 04: What the court says, and I understood what you said about Kenneka, and it may, in my view, it would be the right view, because it's not necessary to go to summary judgment if you have a frivolous, if you don't have any infringement conditions. [00:23:32] Speaker 04: I agree, Your Honor. [00:23:33] Speaker 04: But the district court [00:23:34] Speaker 04: quoted Kanika as saying, although in this case, claim construction was indeed determinative of the issue of infringement. [00:23:44] Speaker 01: He's quoting from Kanika there. [00:23:46] Speaker 01: Remember, Kanika is a very different fact situation. [00:23:48] Speaker 01: In Kanika, Your Honor, the patentee had lost three cases [00:23:53] Speaker 01: before Judge Felcer got to it. [00:23:55] Speaker 01: Three cases. [00:23:56] Speaker 01: Nothing like that happened here. [00:23:57] Speaker 04: I want to know, can you point to me what the... The question I have is whether or not after you got your adverse claim construction, whether or not the district court concluded that you should have, would have, or were okay in pursuing a case after some litigation before summary judgment because you needed to proceed to summary judgment by doing that. [00:24:19] Speaker 04: Or whether their view was that even if claim construction was determinative of the issue of infringement, you still were required to proceed to get it undisputed. [00:24:30] Speaker 01: It was required to proceed. [00:24:32] Speaker 01: The decision of the district court on claim interpretation wasn't adverse and it wasn't determinative of the case. [00:24:37] Speaker 01: That's the fact of the matter. [00:24:39] Speaker 01: That's why I went on with the summary judgment motion. [00:24:42] Speaker 01: But I followed Kenneka and all the cases that cite it with approval. [00:24:46] Speaker 01: So I followed the law, Your Honor. [00:24:49] Speaker 01: And the judge found that I followed the law. [00:24:51] Speaker 01: That's within his discretion, it seems to me, to say he looked at the claim interpretation that he wrote. [00:24:59] Speaker 01: Then he looked at the motion for summary judgment. [00:25:01] Speaker 01: And he said, I finally decided to define no infringement as a fact after I looked at the briefing. [00:25:10] Speaker 01: Because we move for a finding of infringement, then we move for a finding of non-infringement. [00:25:13] Speaker 01: He said, I finally decided, as a fact matter, the case couldn't go forward. [00:25:17] Speaker 01: That's a second step of the infringement analysis. [00:25:20] Speaker 01: But in so doing, he didn't say that the claim interpretation was so adverse that my case was hopeless, as my opponent was saying. [00:25:28] Speaker 01: He never said that, not in his ruling on the merits, not in his ruling on a fee petition. [00:25:35] Speaker 01: That's why I'm trying to lie in Kenneka. [00:25:37] Speaker 04: In the short time we have left, why don't we turn to the final question? [00:25:40] Speaker 04: What's the third one? [00:25:41] Speaker 04: The third one was at the end of the first paragraph on JA6, the reference to the standard applied by the court, which was their litigating position and their case was not implausible on its face. [00:25:56] Speaker 04: Is that, in your view, the correct legal standard? [00:25:59] Speaker 01: Well, I didn't write the words he did, but I think it is the correct standard. [00:26:03] Speaker 01: It echoes language in many of the other district court cases that I cite in my brief. [00:26:08] Speaker 01: There's many, many cases that they cite from the district court that follow the Octane case. [00:26:13] Speaker 01: And this kind of language appears in many of those cases. [00:26:16] Speaker 01: If you just look at my brief, I only had the one brief, I go through those cases and point out that this is language that basically Judge Fitzgerald's echoing from those cases. [00:26:25] Speaker 04: Anything beyond district court cases that you rely on that? [00:26:30] Speaker 01: There is no Fed Circuit case, it says otherwise. [00:26:32] Speaker 01: Not to my knowledge. [00:26:34] Speaker 01: Not a one. [00:26:35] Speaker 04: Well, I'm not looking for one that says otherwise. [00:26:37] Speaker 04: I'm looking at one that embraces the state. [00:26:39] Speaker 01: Well, Biax supports me. [00:26:40] Speaker 01: I said that Biax is in support of my case. [00:26:42] Speaker 04: Does Biax use the standard not implausible on its face? [00:26:46] Speaker 01: No, but Biax was a tough, closed case. [00:26:48] Speaker 01: That's all. [00:26:50] Speaker 01: It was a tough, closed case. [00:26:51] Speaker 01: And this court said, affirmed the finding of the district court, that there was no abuse of discretion. [00:26:57] Speaker 04: If you understand the point, the district court, we've got an abusive discussion standard, but the district court has to apply the correct legal analysis. [00:27:07] Speaker 04: And if the correct legal analysis does not include a standard of whether or not it's implausible on its face, then there's a problem, right? [00:27:16] Speaker 01: No. [00:27:18] Speaker 01: It's just another way of saying the same thing that Octane requires him to look for. [00:27:23] Speaker 01: He was supposed to consider the totality of the circumstances [00:27:26] Speaker 01: And on page four of his opinion, that's JA4, he lists all the assertions my opponents made about, which basically covers every single thing I did in the case. [00:27:36] Speaker 01: And they say that everything I did was wrong. [00:27:39] Speaker 01: And he said, at the bottom of JA4, he said, after reviewing the docket, my own prior orders, and the declarations made on both sides of this litigation, this court doesn't believe it was undertaken in bad faith or that the case stands out under the octane standard. [00:27:56] Speaker 01: That's a clear application of the Outland Standard to all the circumstances my opponents say bear on the issue. [00:28:05] Speaker 01: So I'm entitled to the abuse of discretion, Your Honor. [00:28:07] Speaker 01: I think. [00:28:10] Speaker 04: Your time has expired. [00:28:12] Speaker 04: Thank you. [00:28:20] Speaker 03: Thank you, Your Honor. [00:28:21] Speaker 03: The district court said, certainly, [00:28:23] Speaker 03: this was not a case that Smart Metric was going to win. [00:28:26] Speaker 03: The district court relied heavily on the Conneka case and its statement regarding when a claim construction is indeed determinative of the issue of infringement. [00:28:38] Speaker 04: Do you think Conneka really should stand for or does stand for the proposition that the only way you've got to go for summary judgment, you've got to deal with summary judgment in order to get a [00:28:51] Speaker 04: If you have an adverse claim construction, you still have to dispute this claim construction? [00:28:56] Speaker 04: This summary judgment motion? [00:28:58] Speaker 03: I think that's definitely how district court judge Fitzgerald read it. [00:29:02] Speaker 03: And I think that is a fair reading of the opinion itself. [00:29:06] Speaker 03: If you look at the opinion, there's a heading that says, granting attorney's fees for a motion for summary judgment following an adverse claim construction. [00:29:14] Speaker 03: Can you tell me where in the opinion? [00:29:17] Speaker 03: I'm at page, this is the Lexis site. [00:29:20] Speaker 03: Me too. [00:29:21] Speaker 03: star 12. [00:29:24] Speaker 03: So this is heading B under discussion. [00:29:29] Speaker 03: There's a whole section titled granting attorney's fees for a motion for summary judgment following an adverse claim construction would unfairly preclude parties from appealing claim construction issues. [00:29:44] Speaker 03: And then there's a whole discussion about basically as to [00:29:49] Speaker 03: why Judge Felzer believed that you needed to have a motion for summary judgment in order for a patentee to be able to appeal. [00:29:57] Speaker 03: That if a patentee gave up the case after a determined of claim construction, that there wouldn't be a record for appeal. [00:30:05] Speaker 03: But as this court found in the Jane case and in other cases, that's not true. [00:30:12] Speaker 03: You can enter into a stipulation for non-infringement. [00:30:16] Speaker 03: and in that stipulation provide enough of a record for the Court of Appeals to provide that review. [00:30:21] Speaker 03: And in fact, in some pre-Octane cases, which are cited in our briefs, the Federal Circuit has denied attorney's fees and found no exceptional case where a patentee did exactly that, stipulated to non-infringement after receiving a claim construction under which they could no longer win. [00:30:40] Speaker 03: SmartMetric received a claim destruction under which it undoubtedly could not win. [00:30:45] Speaker 03: And that's shown by the fact that it relied upon what MasterCode would say was a frivolous argument regarding stand-in processing. [00:30:53] Speaker 03: The record was that stand-in processing was centralized in St. [00:30:57] Speaker 03: Louis. [00:30:58] Speaker 03: That's where it was done. [00:30:59] Speaker 03: And SmartMetric's own expert in his deposition could not say how the stand-in processing at all depends on location. [00:31:08] Speaker 03: Standard processing is what MasterCard does when they can't reach the cardholder's bank. [00:31:14] Speaker 03: It reroutes the transaction to standard processing in order to authorize the transaction. [00:31:20] Speaker 03: But that standard processing is done in St. [00:31:22] Speaker 03: Louis, regardless of whether the cardholder's in Seattle, in San Diego, in Miami, or in Maine. [00:31:30] Speaker 03: And for that reason, the arguments were frivolous. [00:31:34] Speaker 03: Judge Fitzgerald, I think, spent too high a bar here. [00:31:38] Speaker 03: And that's shown by the errors that we've pointed out. [00:31:40] Speaker 03: It's also shown by the fact that the very end of the opinion says that a lot of what was going on here relates to disparity of resources between the parties. [00:31:52] Speaker 03: Yes, MasterCard is a big company, but that should not have been a factor here. [00:31:56] Speaker 03: And for all these reasons, we submit that the order should be reversed, or at least vacated. [00:32:00] Speaker 03: Thank you. [00:32:01] Speaker 03: We thank both sides in the case.