[00:00:02] Speaker 01: We'll hear argument next in US Ethernet against Texas Instruments 15-1510. [00:00:34] Speaker 01: As soon as they're settled. [00:00:44] Speaker 01: Mr. Herman. [00:00:50] Speaker 04: Thank you, Your Honor. [00:00:51] Speaker 04: The Texas Instruments case, if this court were to reverse the summary judgment order in California, or if the court were to find the patents valid as a matter of law, [00:01:03] Speaker 04: we believe that the only live issue in this case would be the issue of willful infringement. [00:01:07] Speaker 01: But just, I think, to clear out underbrush, if, on the other hand, in the case we just heard argument in, we affirm the summary judgment of invalidity, the Texas case is over as well? [00:01:20] Speaker 04: I believe the collateral estoppel doctrine which we can talk to [00:01:24] Speaker 04: may not necessarily compel that result. [00:01:26] Speaker 04: Even after we've decided it, as opposed to another district court? [00:01:30] Speaker 04: The reason I would say that, Your Honor, is simply that Texas Instruments has waived its appeal. [00:01:39] Speaker 04: So there are no issues pending that Texas Instruments could complain about in the Texas court. [00:01:45] Speaker 02: I'm not sure I follow that. [00:01:49] Speaker 02: If we affirm Judge Wilkins' finding of invalidity, [00:01:53] Speaker 02: You think you can still get damages in the Texas case? [00:01:57] Speaker 04: Well, we believe that the judgment. [00:01:59] Speaker 02: On an invalid patent. [00:02:01] Speaker 02: You think the judgment's sufficiently final? [00:02:03] Speaker ?: Correct. [00:02:04] Speaker 04: That's right, Your Honor. [00:02:04] Speaker 02: Under Fifth Circuit. [00:02:05] Speaker 02: Don't you have some problems with some of our earlier cases, like E+, and Fresenius, and all that kind of stuff? [00:02:11] Speaker 04: The threshold question on collateral estoppel, Your Honor, is this a regional question such that the Fifth Circuit law would apply [00:02:20] Speaker 04: Or is it a substantive question of patent? [00:02:22] Speaker 02: Why is it a collateral stopple issue, though? [00:02:24] Speaker 02: I mean, if the case is still pending and the patent is invalidated, then there's no valid patent anymore. [00:02:34] Speaker 02: It's not really even a question of collateral stopple to another district court decision. [00:02:38] Speaker 02: It's we declare the patent invalid. [00:02:40] Speaker 02: And even if you'd won on appeal below and only appeal [00:02:47] Speaker 02: damages, I think under these other cases, he would get reverse and remand and say he can't have damages for an invalid patent. [00:02:56] Speaker 04: Well, if TI had not waived its appellate rights, I think your honor would be exactly right. [00:03:02] Speaker 04: But they have waived their appellate rights. [00:03:04] Speaker 01: So what's the waiver argument? [00:03:07] Speaker 04: They had a cross appeal and dropped it. [00:03:11] Speaker 04: So the judgment of the Texas court, the first final judgment, they appealed various issues and then they dropped their appeal. [00:03:17] Speaker 04: of that judgment. [00:03:19] Speaker 04: So if it goes back down, assuming this court doesn't find the patents valid as a matter of law, if it does go back down to Texas, we're not sure that that result will be compelled. [00:03:34] Speaker 01: You did, I think, want to talk about the willfulness question. [00:03:42] Speaker 01: What willfulness means and what role it plays in enhancement is currently pending in the Supreme Court. [00:03:50] Speaker 01: Some of the dispute in that pair of cases had to do or has to do with at what point in particular, at the time of the infringement or only later in preparing a defense, did the defendant come up with [00:04:11] Speaker 01: the, by assumption, reasonable defenses. [00:04:17] Speaker 01: On that question, that timing question, what does the record in this case say? [00:04:23] Speaker 04: Our understanding is that the Texas Instruments knew about the patent. [00:04:28] Speaker 04: They in fact prosecuted a similar patent and cited the 872 patent in that prosecution. [00:04:34] Speaker 04: So they knew about the patent. [00:04:37] Speaker 04: Two prior court cases, one was the Realtek decision where a very similar FIFO was rejected on summary judgment by Judge Walker out in San Francisco. [00:04:48] Speaker 04: And that went to the jury and resulted in a $70 million sum under the same exact patent. [00:04:54] Speaker 04: The fact that a very similar FIFO was rejected as prior art in that original Northern District of California case, we think compels the result that it was not an objective. [00:05:07] Speaker 04: reliance on the sonic reference. [00:05:10] Speaker 01: Let me try to clarify. [00:05:12] Speaker 01: Maybe I'm thinking too much in the halo terms. [00:05:16] Speaker 01: Let's assume for purposes of this question that the only invalidity argument is the one that Judge Wilkin agreed with. [00:05:26] Speaker 01: Is there record material in this case that says TI had in mind [00:05:35] Speaker 01: at the time of the alleged infringement that Judge Wilkins' theory of invalidity? [00:05:45] Speaker 04: There's nothing in this record to support that TI had an opinion of counsel or anything else at that point in time, at the time the lawsuit was filed. [00:05:55] Speaker 04: And I guess that would be, if we're looking at the subjective prong versus the objective prong, I think that would be our understanding of the record. [00:06:05] Speaker 04: We recognize that the Supreme Court may or may not change the test. [00:06:10] Speaker 04: And we would respectfully request that the court hold its decision in this case until the Supreme Court rules. [00:06:17] Speaker 04: And then if there is a change, reverse and remand and let the district court decide the issue on a more developed record. [00:06:26] Speaker 04: I do want to point out on the anticipation front that there are a few things in this record, given that it went through two trials, that [00:06:34] Speaker 04: weren't necessarily in the ACER record that we believe further compel the result that the patents are valid as a matter of law over the sonic reference. [00:06:44] Speaker 04: First, the expert for Texas Instruments in this case testified at length at trial that he understood reading the patent, reading the claim language, that the claim language required the ability to store the data of the frame. [00:07:01] Speaker 04: So he understood that his testimony at trial was that it had to store a maximum size ethernet frame, a 1500-byte ethernet frame. [00:07:11] Speaker 04: We disagreed. [00:07:12] Speaker 04: The jury came back on the infringement side in our favor. [00:07:15] Speaker 04: But the point is that he understood the claim language to require the storage of an ethernet frame. [00:07:23] Speaker 01: That record difference between the two cases, the California case and this case, would not [00:07:30] Speaker 01: right, make a difference if we affirm Judge Wilkins? [00:07:36] Speaker 01: Judge Wilkins. [00:07:37] Speaker 04: I would leave that to Your Honor. [00:07:39] Speaker 01: Well, I'm asking I guess, is there something about the law of issue preclusion that would allow us to say, even though you had a full and fair opportunity in the ACER case, and you lost, that's affirmed, and the patent is invalid, nevertheless, there's no issue preclusion because you had [00:08:00] Speaker 01: You put on a better case, including with help from the other side's witness in the Texas case. [00:08:08] Speaker 01: I'm not aware of such law. [00:08:10] Speaker 04: I'm not aware of such law either, although I think this is somewhat unique in our view of the case law. [00:08:17] Speaker 04: We have two different district courts, actually three different district courts reaching two different results. [00:08:23] Speaker 04: Two went our way, one did not. [00:08:25] Speaker 04: Under the two cases that are pending, we're looking at one going our way, one that did not. [00:08:32] Speaker 04: The record in the Texas Instruments case was cited to Judge Wilkin in the summary judgment briefing, although she didn't consider it in her opinion. [00:08:42] Speaker 04: She was advised of the fact both the defense and us, the plaintiff, cited various pieces of the Texas Instruments record to the court. [00:08:51] Speaker 04: Whether that played a part in her decision, it didn't appear in her order. [00:08:55] Speaker 04: That's all we know. [00:08:58] Speaker 04: But importantly, there were three other experts in that case for the defense who reached the same conclusion in the Texas Instruments case. [00:09:09] Speaker 04: It was Dr. August, Dr. Dickens, Dr. Bennett that cited in our brief. [00:09:13] Speaker 04: All three of these defense experts agreed with us that the [00:09:18] Speaker 04: claim language required the storage, the transmit data buffer storage element to be met. [00:09:25] Speaker 04: And again, I don't mean to belabor the point, but 10 out of 11 HACIDAs in this record agree with our reading of the claim language and the transmit data buffer element. [00:09:41] Speaker 04: Importantly, the designer of the Sonic, [00:09:44] Speaker 04: who was a sponsored witness by the defense, Dr. Wesley Lee came and testified. [00:09:49] Speaker 04: And he admitted a couple of things that we think are critical. [00:09:53] Speaker 04: First, he admitted that Sonic does not contain a transmit data buffer. [00:09:58] Speaker 04: And that's straight out of the summary of invention. [00:10:00] Speaker 04: If the shoe were on the other foot, if we were before you, we were all saying that the invention doesn't, the infringing product doesn't have to contain a transmit data buffer. [00:10:12] Speaker 04: you would properly be grilling me about the summary of invention, saying the summary of invention says transmit data buffer wherein the sonic has a transmit data buffer, and properly so. [00:10:22] Speaker 04: But the shoes on the foot here, Dr. Wesley Lee admits expressly the sonic cannot store the 64 bytes, doesn't contain a transmit data buffer. [00:10:33] Speaker 04: And importantly, he admitted that the way the sonic was described in the specification of the patent was accurate. [00:10:39] Speaker 04: He agreed. [00:10:41] Speaker 04: Whether the data sheet was before the patent examiner, we don't think it's material. [00:10:46] Speaker 04: The only material issue was the Sonic was a FIFO. [00:10:49] Speaker 04: That's described in the specification. [00:10:51] Speaker 04: A FIFO unloads data and doesn't store data locally. [00:10:56] Speaker 01: But this is really, I mean, I guess as I'm hearing it, a kind of merits argument from the earlier case. [00:11:05] Speaker 04: That's correct. [00:11:06] Speaker 04: I believe that supplements. [00:11:08] Speaker 04: Your Honors do have a plenary review of the validity issue. [00:11:12] Speaker 04: And we believe we should have been granted judgment as a matter of law on the validity issue in Texas as well. [00:11:18] Speaker 04: And if that had been granted, we wouldn't have been here. [00:11:22] Speaker 04: The last thing I'll say is this court has decided in several cases that the question of whether a judgment is final is a procedural question dictated by the law of the regional circuit, in this case, the Fifth Circuit. [00:11:38] Speaker 01: So on that question, to put aside, let's assume that in the Acer case, we have actually affirmed Judge Wilkin. [00:11:51] Speaker 01: Is there Fifth Circuit law that says, nevertheless, that is not issue preclusive on the Texas instrument case? [00:12:03] Speaker 01: I thought the cases that you discussed were all cases. [00:12:05] Speaker 01: There's a Fifth Circuit case that says, [00:12:08] Speaker 01: Excuse me. [00:12:09] Speaker 01: Another district judgment might not have preclusive effect, but an appellate court judgment? [00:12:18] Speaker 04: Our view is if we had just filed the Texas Instruments case and this court came down and said, no, the patents are invalid, unquestionably the issue of preclusion would apply. [00:12:30] Speaker 04: The distinction here is that the Texas court reached a final judgment, issued a final judgment in our favor. [00:12:37] Speaker 04: prior to the issue. [00:12:38] Speaker 01: Is this different from Mendenhall, or you just think Mendenhall doesn't govern because it's Fifth Circuit or something? [00:12:45] Speaker 04: It's different to the effect that this court hadn't issued a ruling at the time that Judge Schneider in Texas issued his collateral estoppel opinion. [00:12:57] Speaker 04: So we think that was the error at the time the collateral estoppel opinion was issued by the judge. [00:13:04] Speaker 04: What happens after that, that's really not [00:13:06] Speaker 04: That wasn't the subject of our briefing. [00:13:11] Speaker 04: If I may reserve the remaining time. [00:13:12] Speaker 04: Please. [00:13:13] Speaker 04: Thank you. [00:13:20] Speaker 01: Mr. Haslund? [00:13:21] Speaker 00: Haslund. [00:13:22] Speaker 00: Thank you. [00:13:23] Speaker 00: It pleases the court. [00:13:25] Speaker 00: If this court affirms the Acer judgment, I think the facts then fall squarely within Mendenhall and sovereign software. [00:13:33] Speaker 00: In Mendenhall with respect to the Barber Green judgment there was a judgment finding validity which was on appeal when this court decided the Cedar Rapids case and the same day it decided Cedar Rapids and held that patent invalid. [00:13:49] Speaker 00: It then in the Mendenhall case applied collateral estoppel to the Barber Green judgment. [00:13:55] Speaker 00: So in this case I think we are squarely within [00:14:00] Speaker 00: Sovereign Software, Mendenhall, and the cases which have said as long as a case is still proceeding, collateral estoppel can be raised. [00:14:10] Speaker 00: And I think footnote five in Mendenhall covers this where it says that the [00:14:16] Speaker 00: collateral estoppel rose on the district court's judgment and you would be in the same situation as you were in mendenhall where you do not now face the issue which you didn't face in mendenhall and you would not face now of what do you do about predicating collateral estoppel on a judgment which might be modified and as you said in footnote five in mendenhall you don't have that issue and if you affirm the acer case likewise you would not have that issue here it is the question of finality uh... [00:14:46] Speaker 03: question governed by Federal Circuit law or Fifth Circuit law? [00:14:50] Speaker 00: I think as this court said in Farmacia and in Sovereign, there is a dividing line between when the court applies its law and when you apply regional circuit law. [00:15:01] Speaker 00: And as Farmacia said in footnote four and as you said in Sovereign, you look to regional circuit law for the general principles of applying collateral estoppel. [00:15:12] Speaker 00: Was the issue identical? [00:15:14] Speaker 00: Was it necessary to the judgment? [00:15:18] Speaker 00: Was it actually litigated and are there special circumstances? [00:15:22] Speaker 00: Once you find that type of judgment, the court has said that the application that a blonder tongue, and I think this is the import of Mendenhall and Sovereign in those cases, then becomes a question for this court. [00:15:38] Speaker 00: The test that you would look to the Fifth Circuit for here would be is the ACER judgment [00:15:44] Speaker 00: sufficiently final, did it actually litigate the issue, is the issue identical, and are there special circumstances which USEI has not raised here. [00:15:55] Speaker 00: That would say, okay, the ACER judgment is one on which you can predicate collateral estoppel. [00:15:59] Speaker 00: Now, you look to your law, Mendenhall-Frazini is applying collateral estoppel fairly late in the process with district court litigation. [00:16:10] Speaker 00: But I think [00:16:11] Speaker 00: Your cases draw the dividing line and I think we're squarely within the application of blonder tongue given the ACER judgment meets the requirements for applying collateral stopper. [00:16:25] Speaker 00: If you were to reverse ACER, I think the action here would be to vacate the judgment and remand for this reason. [00:16:35] Speaker 00: There were pending JMAWs which have issues which we could not appeal [00:16:40] Speaker 00: by way of cross-appeal, because it would not have expanded the relief we would get. [00:16:45] Speaker 00: But such issues as marking. [00:16:47] Speaker 01: You might not have been able to cross-appeal them, but you could have argued about them as alternative grounds in defense of the judgment. [00:16:55] Speaker 00: It would not have been a defense on the validity issue. [00:16:58] Speaker 00: It was a damage issue, marking, which would be relevant if we go back. [00:17:04] Speaker 00: Anyway, that's my position as to what the court should do. [00:17:07] Speaker 00: And of course, we don't know if you were to reverse ACER on what grounds you would reverse ACER. [00:17:13] Speaker 00: There was also a new trial motion pending before the court. [00:17:16] Speaker 00: But our view is that you should vacate and remand if you were to reverse ACER for the court to take whatever steps are necessary in light of what this court would do and to reach the issues. [00:17:28] Speaker 01: Can you just clarify for me, what's the status of the 09 fork patent in this case? [00:17:36] Speaker 00: On the first day of the infringement trial, based on the judicial estoppel ruling, they withdrew the 874 patent and they dropped the 094 patent. [00:17:47] Speaker 00: They just withdrew it and it didn't go to the jury. [00:17:50] Speaker 01: And so is that patent out of this case regardless? [00:17:54] Speaker 01: Yes. [00:17:55] Speaker 01: And can you answer the question that I asked your colleague about [00:18:04] Speaker 01: what the record says about the timing of TI's generation of the defense, the invalidity theory that, in the ACER case, Judge Wilkin accepted? [00:18:22] Speaker 01: Was it at the time of infringement or later or what? [00:18:26] Speaker 00: It was later. [00:18:28] Speaker 00: I don't believe the precise timing of that. [00:18:31] Speaker 00: was really developed in the record given what the state of the case law was, but I believe it's accurate to say that there was no evidence that at the time of first infringement they had in mind the national semiconductor part. [00:18:44] Speaker 00: Now, on the claim construction issue, and I think Mr. Stevens adequately covered most of the points, but I would like to make one point about our record, which is different. [00:18:57] Speaker 00: In the opening brief here, [00:18:59] Speaker 00: USCI relied on the means for early transmission claim term to support its notion that the buffer memory had to be a minimum size ethernet frame. [00:19:10] Speaker 00: In their reply brief, they now rely on the buffer memory for the storage of data of frames for transmission to have this retainer retransmit. [00:19:23] Speaker 00: And to me, retainer retransmit or successfully transmitting, which is the same thing, [00:19:29] Speaker 00: They're trying to impress into the claim term in order to support the notion that it's got to be a minimum meter net rate. [00:19:35] Speaker 00: In our record, on the briefing on the summary judgment motion, which led to the claim construction, buffer memory is a memory for the temporary storage of data, USCI specifically told that court, the district court in Texas, that retain and transmit was not a requirement of the claim. [00:19:56] Speaker 00: And that is in Appendix 1079. [00:19:59] Speaker 00: and they were talking at 1079 about the district court's claim construction in the Acer case. [00:20:08] Speaker 00: And they say, this is at appendix 1079, in that case the court rejected the idea that the buffer memory was required to retain a frame of data after the frame had been transmitted in order to enable retransmission. [00:20:25] Speaker 00: They then [00:20:27] Speaker 00: I'm going to ellipse some of it. [00:20:29] Speaker 00: It said, in short, the California court found that the ability to retain a frame of data for retransmission is not a required element of the claims of the 872 and 094. [00:20:42] Speaker 00: This is supported by the specification, which states that this capability may be a benefit of the type of buffer claimed in the patents, but it is not a requirement. [00:20:57] Speaker 00: The entire thrust of the argument they have made to this court is that because successfully transmitting or retaining and retransmitting is a requirement of the claim, SONIC cannot anticipate. [00:21:10] Speaker 00: And they disclaimed that to the court below. [00:21:14] Speaker 00: On the issue of whether these claims are limited to Ethernet, I think if we look at the patent, particularly in the overview section of 3-5, [00:21:23] Speaker 00: There is no reference in describing the overview of the invention to Ethernet. [00:21:29] Speaker 00: The transmission medium 42 in figure 2 is described generically as a network transmission medium. [00:21:38] Speaker 00: This claim was drafted to cover not only Ethernet but other forms of transmission mediums which transmitted information over a network medium. [00:21:51] Speaker 00: And the proof of that is that the examiner saw it the same way. [00:21:54] Speaker 00: If you look at the Ferozman reference, it was a fiber optic reference. [00:21:59] Speaker 00: And if you look at the specification and figure two in that patent, remembering that a byte is eight bits, you will come to the conclusion that the examiner believed that the buffer memory in the claims was one that only had to store potentially on the order of 25 bytes of information if it was a fiber optic. [00:22:19] Speaker 00: USCI did not distinguish it on the basis of the size of the buffer memory. [00:22:23] Speaker 00: They distinguished Veruzman on other grounds. [00:22:25] Speaker 00: So when we look at the claim, the claim simply says buffer memory. [00:22:30] Speaker 00: There is no dispute in this record that the sonic reference has a buffer memory which meets the claim limitation, a memory for the temporary storage of data. [00:22:41] Speaker 00: And the sonic reference in the FIFO stores the data [00:22:46] Speaker 00: and then unloads it and transmits it. [00:22:50] Speaker 00: There is no dispute that it is a memory for the temporary storage of data. [00:22:55] Speaker 01: Nobody at trial disputed that. [00:23:11] Speaker 04: The first point would be any issue that TI is raising related to what happened in the Texas trial has obviously been waived. [00:23:18] Speaker 04: They have no cross appeal pending. [00:23:19] Speaker 04: They can't complain about any of the orders. [00:23:21] Speaker 04: But more importantly, they ignore the claim language. [00:23:26] Speaker 04: The claim language expressly requires storing data of frames for transmission. [00:23:32] Speaker 01: Do you want to say a word about what's at page 1079? [00:23:37] Speaker 04: That's the district court order? [00:23:39] Speaker 04: That is probably your filing, wasn't it? [00:23:42] Speaker 04: Yeah. [00:23:44] Speaker 04: So retain a transmit, we're not saying that's part of the claim. [00:23:47] Speaker 04: We're saying the claim language expressly requires storing data frames for transmission. [00:23:52] Speaker 04: Specification is very clear. [00:23:54] Speaker 04: Storage happens in transmit data buffers. [00:23:56] Speaker 04: Unloading happens in FIFO. [00:24:00] Speaker 04: Unloading requires the FIFO to go back to the host to redownload the data. [00:24:05] Speaker 04: That's an advantage. [00:24:08] Speaker 04: of the invention. [00:24:09] Speaker 04: But the invention, the claim limitation, is storing data. [00:24:13] Speaker 04: For instance, when I talk about the buffer memory element, we're not disputing the term. [00:24:17] Speaker 03: Is there any question that the sonic reference has the ability to store data? [00:24:23] Speaker 04: It does not store data in the patent sense. [00:24:25] Speaker 03: Well, not in what you're contending is the patent. [00:24:29] Speaker 03: So I'm just asking whether it has the ability to store data. [00:24:34] Speaker 03: It does not store data locally. [00:24:36] Speaker 04: the memory. [00:24:37] Speaker 03: Does it not store at least 32 bytes? [00:24:42] Speaker 04: It has a 32 byte, but it's not stored. [00:24:46] Speaker 04: If there is a transmission error, you can't go within the sonic to get the data. [00:24:52] Speaker 01: It's not there. [00:24:55] Speaker 01: Undisputedly, is this right? [00:24:56] Speaker 01: The feature that says it gets to specify how much of the data that's coming in the entrance should come in before we exit. [00:25:06] Speaker 01: before we send any of it out. [00:25:08] Speaker 01: Correct. [00:25:08] Speaker 01: So, I mean, let's say it does 13 bytes. [00:25:13] Speaker 01: Those 13 bytes are going to be in that buffer, right, in Sonic. [00:25:16] Speaker 04: It would be like a garden hose. [00:25:18] Speaker 04: They would go through the buffer. [00:25:20] Speaker 04: Yeah. [00:25:21] Speaker 04: Short storage, maybe, but better be storing. [00:25:24] Speaker 04: But the point is, once you start transmission, once the first byte leaves the Sonic, if there is an error, it's not there for retransmission. [00:25:34] Speaker 04: That's gone. [00:25:34] Speaker 04: It's not stored. [00:25:36] Speaker 04: That's the critical distinction the patent column one draws between the FIFO priority. [00:25:41] Speaker 01: But then the page 1079 becomes an issue for you, right? [00:25:45] Speaker 01: Where you said it doesn't have to be for claim one retained for retransmission. [00:25:52] Speaker 04: It's an advantage. [00:25:53] Speaker 04: It's not in the claim language. [00:25:55] Speaker 04: The claim language requires storing for transmission. [00:25:58] Speaker 04: And the point is, every posited with the one exception who's read this patent comes to the same conclusion. [00:26:05] Speaker 04: that has to be part of the transmit data buffer element of the invention. [00:26:09] Speaker 04: It stores during transmission, doesn't it? [00:26:14] Speaker 04: No, it's unloaded. [00:26:16] Speaker 04: So it's not there anymore. [00:26:17] Speaker 04: It's the copy and paste versus cut and paste argument. [00:26:20] Speaker 03: None of the data is sort of parked there temporarily on its way? [00:26:24] Speaker 04: Well, it's parked in the sense that it's within the buffer. [00:26:29] Speaker 04: It's not parked in the sense that it could be retrieved. [00:26:34] Speaker 04: from the device. [00:26:35] Speaker 04: The host has the memory where the data is, and that's the point of the invention. [00:26:41] Speaker 01: Thank you, Mr. Herman. [00:26:43] Speaker 01: Case is submitted.