[00:00:02] Speaker 02: Okay, the next argued case is number 16-2647, AIA America Incorporated Against Avid Radiopharmaceuticals. [00:00:11] Speaker 02: Mr. Buckley. [00:00:16] Speaker 01: Thank you and good morning. [00:00:17] Speaker 01: May it please the Court? [00:00:19] Speaker 01: This is a case about the exceptional case sanctions that were levied against Alzheimer's Institute of America. [00:00:25] Speaker 01: I'd like to take a minute at the outset to just focus us on a narrow aspect of this case. [00:00:31] Speaker 01: I think in the briefing, what got lost a little bit was that this is not about all of the different reasons why a court might find a case exceptional. [00:00:41] Speaker 01: And I can see that there are many, and that many of them are discretionary and don't present the issue that's being presented here. [00:00:48] Speaker 04: You said what got lost in the briefing. [00:00:52] Speaker 04: You did two-thirds of the brief, and I understand the issue. [00:00:57] Speaker 04: to be whether a jury should have decided this issue. [00:01:02] Speaker 01: Right. [00:01:02] Speaker 01: And I think that's what certainly was one of the points that I was attempting to make. [00:01:06] Speaker 04: That didn't get lost. [00:01:07] Speaker 01: OK. [00:01:08] Speaker 01: Well, that's good then. [00:01:11] Speaker 01: So this is not about litigation misconduct or objective unreasonableness, presuit investigation, or the substantive strength of a party's position, all of which the court can determine from things that it sees. [00:01:26] Speaker 01: judge Savage finding that AI knew that when it brought the action that it was not the legal owner of the patents. [00:01:34] Speaker 01: And that, in my view, is different, not only because it's not equitable, it's not based on an observation of conduct in the Court's presence or the strength of a legal position asserted before the Court, but rather it's a finding of fact, a specific finding that when [00:01:51] Speaker 03: So is your position that some findings of fact for a 285 determination can be made by a judge and some have to be made by a jury? [00:02:00] Speaker 01: I think that's what highlights the doormaster. [00:02:03] Speaker 03: Where in 285 does it say that? [00:02:05] Speaker 01: It doesn't say that in 285, certainly, Your Honor. [00:02:09] Speaker 01: I think that's where the doormaster case is important. [00:02:12] Speaker 01: And that's where the court said, look, the judge can make findings about issues [00:02:19] Speaker 01: that are subsumed within what the jury decides, so long as they're not inconsistent with what the jury decides. [00:02:26] Speaker 01: Excuse me, so long as they're consistent, not inconsistent. [00:02:30] Speaker 03: But this- That doesn't say anything about the fact that the judge can't make factual findings altogether on a certain issue. [00:02:38] Speaker 03: right in the seventh amendment is the reason the judge can make these findings because your support for the notion that an attorney fee statute that gives the discretion to a district court to award fees means that certain factual issues still have to be tried by a jury. [00:02:53] Speaker 03: That's not like any attorney fee statute I've ever heard of. [00:02:56] Speaker 01: Well, so the factual, and that's why it's a narrow issue. [00:03:00] Speaker 01: It's not every exceptional case determination. [00:03:03] Speaker 01: But it's a narrow issue because there's this other body. [00:03:05] Speaker 03: I don't know what narrow issue it is. [00:03:07] Speaker 03: Are we going to get into a case by case basis of, well, this kind of factual issue has to go to the jury, but this one doesn't? [00:03:13] Speaker 03: I mean, that seems completely unworkable. [00:03:15] Speaker 01: No, it's very specific. [00:03:17] Speaker 01: And the National Presto case is one that I would point to that says knowledge and intent findings are issues for the jury. [00:03:24] Speaker 01: They're for the trier of fact. [00:03:26] Speaker 03: In an infringement suit, but not in an attorney fees action. [00:03:31] Speaker 01: Well, so the issue in many of these cases is willful infringement, where the jury actually decides the issue of knowledge and intent. [00:03:40] Speaker 01: This is the converse, where it's the plaintiff's knowledge and intent, which is not tried to the jury, not presented to any trier of fact. [00:03:48] Speaker 01: And that's why it's a bit of an exception to the otherwise broad rule, where a willful infringer's knowledge and intent is presented to the jury. [00:03:59] Speaker 01: Here, the court decided, after a bifurcated trial that had nothing to do with my client's knowledge and intent when it filed suit, it deserved. [00:04:08] Speaker 03: But you were allowed on the attorney fees motions to introduce any kind of affidavit or evidence or the like that you wanted to oppose the field war to. [00:04:18] Speaker 01: Certainly. [00:04:19] Speaker 03: And you did. [00:04:20] Speaker 01: Certainly. [00:04:21] Speaker 03: And that was a question for the district court. [00:04:23] Speaker 03: I mean, I know you're trying to leverage Doormaster in all those cases, but we have Octane Fitness from a couple years ago, which very emphatically said it is the province of the district court to determine whether a case is exceptional or not. [00:04:37] Speaker 01: Right, and to the extent that the court determines it's exceptional based on anything other than a knowledge and intent finding that was never tried, [00:04:46] Speaker 03: and never presented any fact to be tried you can present evidence to the district court the other side can rebut it the district court can make a factual finding on that for purposes of the attorney fee award because the seventh amendment requires that a jury decide those issues and i think it's important where does the seventh amendment can you cite me any precedent that requires the seventh amendment jury trial for a factual finding to support an attorney's fee award only where that factual finding [00:05:15] Speaker 01: relates to knowledge and intent, and only where that issue was never decided by the finder of fact. [00:05:22] Speaker 03: Where? [00:05:23] Speaker 01: Well, the National Presto case makes clear that not- That's not in an attorney's fees case. [00:05:28] Speaker 01: No, certainly. [00:05:29] Speaker 01: But I mean, the Constitution finds its way into various different parts of our law. [00:05:34] Speaker 01: Knowledge and intent. [00:05:35] Speaker 03: Where has a court held that certain factual issues in an attorney fee award have to be decided by a jury? [00:05:44] Speaker 01: Well, the doormaster case, I mean, this court... No, the doormaster case did not hold that at all. [00:05:49] Speaker 03: The doormaster case just said if the jury has already made factual findings on a certain point, the court can't make inconsistent findings. [00:05:58] Speaker 03: Correct. [00:05:58] Speaker 03: It says nothing about whether the court isn't capable of making its own factual findings in an attorney fee award. [00:06:06] Speaker 01: Well, what it says is that once the jury has examined an issue, the court can't do something inconsistent with that. [00:06:13] Speaker 01: But this issue hasn't been presented that way before. [00:06:16] Speaker 01: I mean, what was unique about that case, or not unique, what was important about that case is that the issues were presented to the jury, and then the court, on the basis of a trial that considered those issues, found that it was a close call. [00:06:29] Speaker 01: This was a bifurcated trial on standing. [00:06:33] Speaker 01: Evidence about my client's knowledge and intent was excluded. [00:06:37] Speaker 01: And therefore, when my client was before the court on this exceptional case motion, [00:06:43] Speaker 01: You know, the court could have decided on any number of issues, but it decided it specifically about making a factual finding that my client knew when it filed suit that it was not the lawful owner of those patents. [00:06:56] Speaker 01: And, you know, just from a factual perspective, I think there's some compelling reasons to take a look at this and to say, you know, laypeople should decide this. [00:07:04] Speaker 01: These are complex scientific discoveries. [00:07:07] Speaker 01: My client is not a scientist. [00:07:09] Speaker 01: He had nothing to do with the discoveries. [00:07:11] Speaker 01: These are complex legal issues involving waiver. [00:07:14] Speaker 01: He was represented by counsel at every step of the way, both in the underlying patent. [00:07:19] Speaker 03: But you had the opportunity to make all of those arguments to the district court in the context of the 285 proceedings. [00:07:26] Speaker 03: And the district court didn't believe you. [00:07:29] Speaker 01: Well, what the district court did is it made its own findings based on a limited record. [00:07:34] Speaker 01: And my contention [00:07:36] Speaker 03: Wait. [00:07:36] Speaker 03: Quit saying limited record. [00:07:37] Speaker 03: You had the opportunity to put in anything you wanted in the context of the fee proceedings. [00:07:42] Speaker 01: Well, and that's where the Seventh Amendment comes in, Your Honor. [00:07:45] Speaker 03: The district court didn't rely solely on the trial. [00:07:48] Speaker 03: It took in other evidence, as it's supposed to do in an exceptional case determination, and decided that it was exceptional. [00:07:55] Speaker 01: Right. [00:07:55] Speaker 01: It made a factual finding, a specific factual finding, that my client brought suit knowing that its patents were invalid. [00:08:03] Speaker 01: And that was an issue that was never presented to the jury. [00:08:06] Speaker 03: And on which I understand, I just it seems to me you have failed to cite me a single case that says you have a Seventh Amendment right to jury trials on attorney fee issues. [00:08:17] Speaker 01: No, that's not my contention, your honor. [00:08:19] Speaker 01: My contention is I have a Seventh Amendment right to a jury trial when the factual finding is about someone's knowledge or intent. [00:08:29] Speaker 03: What case have you cited me for that in the context of an attorney fees case? [00:08:35] Speaker 01: Well, I don't think it matters that it's in the context of an attorney's fees case. [00:08:39] Speaker 01: In other words, if there's going to be a factual finding about our knowledge and intent, and this is where there's a distinction between the legal and the equitable and between things that are before the court already and things that are not. [00:08:52] Speaker 03: I don't see how we hold up that line. [00:08:54] Speaker 03: There are all kinds of factual determinations a district court makes in the context of a 285 proceeding. [00:09:00] Speaker 03: And if we adopt your reasoning, we're going to have to start parsing and saying, [00:09:03] Speaker 03: this is more factual, this is more equitable, blah, blah, blah, down the line. [00:09:07] Speaker 03: Even the basic timeline of what happened is factual. [00:09:11] Speaker 03: So we have to have another mini jury trial on every single 285 case? [00:09:15] Speaker 01: No, Your Honor, not at all. [00:09:18] Speaker 01: Only when someone says to a plaintiff that you knowingly filed suit in bad faith. [00:09:25] Speaker 03: What's your basis for limiting it to that question? [00:09:28] Speaker 03: Well, because that is a... The basis is that factual questions have to be submitted to a jury. [00:09:33] Speaker 01: No, Your Honor. [00:09:34] Speaker 01: Factual questions about a plaintiff's intent in bringing suit. [00:09:38] Speaker 03: Why limit it to that factual question? [00:09:40] Speaker 03: Because that's... The Seventh Amendment doesn't limit it to certain questions. [00:09:43] Speaker 03: It requires that factual questions be submitted to a jury if the plaintiffs are left. [00:09:53] Speaker 01: Well, what's interesting about that question is it's never a question that's presented to the jury in the first instance. [00:10:00] Speaker 01: Because it would put the plaintiff in a strategic conundrum, where at the same time that they're trying to justify the fact that they filed suit, they're defending against an as yet unfiled exceptional case motion. [00:10:13] Speaker 01: And it would basically say to the plaintiff. [00:10:15] Speaker 03: If we reject your Seventh Amendment argument, do you have anything else? [00:10:20] Speaker 01: Well, yes. [00:10:21] Speaker 01: I mean, there's the due process argument, which is that the judge went through this entire trial [00:10:27] Speaker 01: saying that this was a limited trial on standing. [00:10:30] Speaker 03: But that's tied up with your Seventh Amendment argument in it, because didn't you concede to me that you had the opportunity during the 285 proceedings to present any evidence you wanted? [00:10:41] Speaker 01: We certainly had an opportunity to present the evidence, but it's a markedly different setting than it is in an oral argument than it is in a trial where we can put... But in the briefing, you were entitled to submit declarations and the like, weren't you? [00:10:55] Speaker 01: Certainly we were, but we were not entailed to cross-examine those that were confronting us, saying that, you know, that we were not, you know, that we didn't, that we brought suit and bad faith. [00:11:11] Speaker 01: So, look, my client is a, is not a scientist. [00:11:18] Speaker 01: He was relying on what the scientists who then turned on him and said, [00:11:23] Speaker 01: that this guy, Hardy, turned on him and said that what he said for years that he was not the inventor was not true. [00:11:34] Speaker 01: My client is not a lawyer. [00:11:36] Speaker 04: Now you're arguing the merits have already been decided, right? [00:11:40] Speaker 01: Well, no. [00:11:41] Speaker 01: These are issues that were never presented to any finder of fact. [00:11:46] Speaker 01: Judge Savage just decided them on his own. [00:11:50] Speaker 01: And that's the issue here. [00:11:52] Speaker 03: You keep saying they weren't presented to a finder of fact. [00:11:55] Speaker 03: But if we determine there's no Seventh Amendment right to a jury, then the district court is the appropriate finder of fact in a 285 case. [00:12:04] Speaker 03: And these issues were certainly presented to the district court to make findings. [00:12:08] Speaker 03: And he did. [00:12:10] Speaker 01: Well, he did. [00:12:12] Speaker 01: I think it was clear that his decision, and if you read his decision, it's very clear that his decision is based on the trial record. [00:12:18] Speaker 01: And that's a situation where he's saying, this trial that we had on standing is what convinced me that this suit was brought in bad faith, but the trial on standing had nothing to do with the bringing of the suit. [00:12:32] Speaker 01: And indeed, evidence about bringing of the suit, such as the fact that it was done on a contingency basis and that there had been prior settlements with other companies, never came into that trial. [00:12:47] Speaker 03: At least the evidence of the other settlements is in the record, so it came in somehow. [00:12:53] Speaker 03: You submitted it during the course of the 285 proceeding. [00:12:56] Speaker 01: Well, I don't know that evidence of the other settlements was submitted during the 285 proceeding. [00:13:01] Speaker 03: I mean, you would have a far different case if the district court had said somebody files a motion for attorney fees, and you attempt to respond to it with affidavits or declarations or the like. [00:13:14] Speaker 03: And they said, no, I'm going to base it solely on the trial. [00:13:17] Speaker 01: Well, I guess it's sort of unclear what, you know, you get into this 285 proceeding and it's unclear what the judge is going to do. [00:13:25] Speaker 01: If the judge makes his decision based on litigation misconduct, I've got no case. [00:13:31] Speaker 01: It was unclear what basis he was going to make his decision until it came out. [00:13:36] Speaker 01: And then when we get it, he makes a factual finding about our intent on an issue that was never presented to any finder of fact, even in the 285 context. [00:13:47] Speaker 01: And in that way, he denied us due process and violated our Seventh Amendment right. [00:13:56] Speaker 02: Okay. [00:13:57] Speaker 02: Let's hear from the other side, and we'll save your rebuttal time, Mr. Buckley. [00:14:05] Speaker 00: Mr. Burwell. [00:14:07] Speaker 00: Thank you, Your Honor. [00:14:07] Speaker 00: May it please the Court? [00:14:09] Speaker 00: The position advocated by AIA is wholly without support in the statute or the case law. [00:14:15] Speaker 00: AIA is seeking something that is simply unprecedented and would contradict what courts have been doing for decades. [00:14:22] Speaker 00: AIA previously acknowledged at the oral hearing before the district court judge that he could make factual findings regarding the issues of intent and bad faith. [00:14:32] Speaker 00: At that hearing, the judge asked AIA's counsel about evidence regarding AIA's effort to deceive the University of South Florida. [00:14:40] Speaker 00: And AIA's counsel told the judge, [00:14:43] Speaker 00: The jury didn't make that factual finding. [00:14:44] Speaker 00: So if anybody is going to have to make that factual finding, it would have to be you, effectively inviting the district court judge to make factual findings. [00:14:53] Speaker 00: Now, for the first time in the entirety of this litigation, AIA is invoking before this court a Seventh Amendment right that simply does not exist. [00:15:04] Speaker 00: Even in its briefing before this court, AIA acknowledges that in appropriate circumstances, the district court may make factual findings [00:15:12] Speaker 00: including on the issue of subjective bad faith in support of its determination of an exceptional case. [00:15:19] Speaker 00: So again, AIA acknowledges that the district court has the power to make factual findings in support of the Section 285 determination. [00:15:28] Speaker 02: But what's your answer to the position that until the district court found subjective bad faith, there was really no basis on which to submit evidence of subjective good faith? [00:15:42] Speaker 00: There was that opportunity, and AIA took full advantage of that opportunity in the briefing and especially in the oral argument with respect to the 285 motion. [00:15:53] Speaker 00: AIA argued in its brief that it was acting in good faith. [00:15:57] Speaker 00: And as the transcript of the attorney's fee argument indicates, AIA went on and on about evidence that it argued showed its good faith. [00:16:08] Speaker 00: The pre-filing investigation that it purportedly [00:16:11] Speaker 00: engaged in its purported reliance on letters that Dr. Hardy had written. [00:16:19] Speaker 00: It went on and on about evidence that it argued showed good faith that evidence was rejected. [00:16:26] Speaker 00: So it was before the court and the court certainly had the opportunity. [00:16:29] Speaker 00: AIA was never deprived of any opportunity to present whatever evidence it chose during the Section 285 phase of this case. [00:16:39] Speaker 00: As Judge Hughes raised in one of his questions, obtained fitness and the language of Section 285 and Highmark as well really settle the issue. [00:16:51] Speaker 00: Section 285 states that the court in exceptional cases may award reasonable attorney's fees to the prevailing party. [00:16:57] Speaker 00: Highmark states that the Section 285 inquiry is generally at heart rooted in factual determinations [00:17:07] Speaker 00: And Highmark, along with Octane, state that the district court is the one that needs to make those findings. [00:17:14] Speaker 00: The decision is indisputably committed to the destruction of the district court, as this court has acknowledged in the Lumenvue case. [00:17:22] Speaker 04: That basically means district court rather than us. [00:17:27] Speaker 00: Well, that suggests great deference to the determination of the district court. [00:17:31] Speaker 00: And that was Highmark. [00:17:32] Speaker 04: That doesn't say anything about a jury. [00:17:34] Speaker 00: It does not specifically say anything about a jury, but it does commit the determination to the district court. [00:17:41] Speaker 00: There's no authority that addresses any role that the jury has in making the exceptional case determination or the factual findings that underlie that determination. [00:17:53] Speaker 00: And in fact, we cited the cases in our brief, not in the 285 context, but in other fee-shifting statutes that expressly reject the argument that AIAA propounds [00:18:04] Speaker 00: that the subsidiary factual issues should go to the jury. [00:18:10] Speaker 00: And that is the Columbus Mills case cited in our brief out of the Eleventh Circuit, in which the court rejected the argument that the preliminary questions of whether a defendant acted arbitrarily, vexatiously, or otherwise in bad faith should have been submitted to a jury. [00:18:28] Speaker 00: So there's no authority in support of AIA's position [00:18:31] Speaker 00: And we've cited in our brief authorities that specifically reject that proposition and further state that there is no Seventh Amendment right to a jury determination of factual issues regarding the exceptional case analysis. [00:18:48] Speaker 00: I'd also point out that there was discussion about how there was not a full trial in this case. [00:18:56] Speaker 00: There was a trial on specific issues. [00:19:00] Speaker 00: affirmed findings of an exceptional case where there has been no trial at all, where summary judgment has been granted, a jury has never been impaneled, and the court, after finding summary judgment of non-infringement, for example, then determines whether the case was exceptional under Section 285, and the court considers factors such as the plaintiff's knowledge of its weak case and its improper motivation in bringing suit. [00:19:28] Speaker 00: That's what happened in Octane Fitness after it was remanded from the Supreme Court. [00:19:33] Speaker 00: Similarly, after remand in Highmark, the district court found the plaintiff's conduct deceitful and based on positions it knew to be frivolous, again, looking at knowledge and issues of bad faith. [00:19:46] Speaker 00: This court, in cases we cited our brief, Lumenview, Gabriel, and Marktet, all affirmed Section 285 determinations of an exceptional case. [00:19:57] Speaker 00: where the district court had found facts regarding a plaintiff's bad faith and motivation, or its knowledge that it lacked evidence and decided to proceed in its lawsuit nonetheless, or in cases where the district court found that the plaintiff brought suit in subjective bad faith. [00:20:13] Speaker 00: So there's no need for jury determination of these issues, and there's certainly no right under the Seventh Amendment for a jury to address these issues. [00:20:28] Speaker 00: If there are no other questions, I'm prepared to yield the rest of my time. [00:20:33] Speaker 02: Any more questions? [00:20:35] Speaker 02: More questions? [00:20:36] Speaker 02: Okay. [00:20:36] Speaker 02: Thank you, Mr. Burwell. [00:20:39] Speaker 02: Mr. Buckley. [00:20:45] Speaker 01: Judge Newman, I'd like to return to the question that you asked, which was why would we come forward with affirmative evidence during the briefing about the exceptional case, about our bona fides and actually filing suits [00:20:58] Speaker 01: when that issue was our subject of bad faith in filing suit was never before the court. [00:21:04] Speaker 01: The issues focused on the underlying facts that were tried, and that was the debate that was being had. [00:21:10] Speaker 01: Judge Savage then took that debate and made a finding on an issue that was not present, that we brought suit in bad faith. [00:21:19] Speaker 01: And I think that putting a plaintiff [00:21:21] Speaker 01: to the position of defending against that issue before the accusation has ever been made that we brought suit in bad faith puts us in a very difficult position and that's why in this unique circumstance where the issue was never presented to any finder of fact you know a lot of these cases that they cite involve cases where the court heard evidence about subjective bad faith in bringing the suit lack of pre-suit investigation or [00:21:50] Speaker 01: you know, motive and intent to extract settlements. [00:21:54] Speaker 01: Those issues were never before Judge Savage. [00:21:56] Speaker 01: Yet on the basis of the record from the underlying trial, he reached conclusions about AIA's state of mind when it brought suit. [00:22:04] Speaker 01: And that's important because the conclusions, and if you read his opinion, it's very clear that he's oftentimes imputing Mullen and Hardy, who are not AIA, and their intent. [00:22:16] Speaker 01: Those are the scientists. [00:22:19] Speaker 01: He's imputing their intent to AIA's intent when it brought suit. [00:22:24] Speaker 01: And that's where this error manifests itself. [00:22:27] Speaker 01: And Judge Savage covered the error by using Doormaster, saying, I can make findings so long as they're not inconsistent with the jury's findings. [00:22:36] Speaker 01: But that's different than saying, you have to be consistent. [00:22:40] Speaker 01: It was clear that he jumped outside of what Doormaster allowed him to do, and he made findings that exceeded the scope of the issues that were tried [00:22:49] Speaker 01: to him. [00:22:50] Speaker 01: And that's where it presented a problem, both from a due process perspective, because AIA was decided that we brought suit in bad faith when the accusation that the suit was brought in bad faith had never been made, and B, when the issues of AIA's knowledge and intent must be submitted to a jury. [00:23:12] Speaker 01: In the same way, the reference to cases where there's no trial at all or summary judgment [00:23:17] Speaker 01: Often those exceptional case determinations are made because the court determines that the party's position lacked substantive legal strength. [00:23:26] Speaker 01: We had a valid position here. [00:23:27] Speaker 01: It's just that the facts were determined against us. [00:23:30] Speaker 01: Recognize that there was evidence on both sides. [00:23:33] Speaker 01: There was evidence that USF waived and evidence that it was not an informed waiver, including evidence from USF. [00:23:41] Speaker 01: There was evidence that Hardy was a co-inventor. [00:23:44] Speaker 01: And there was evidence that he was not a co-inventor, including his own admissions. [00:23:49] Speaker 01: My client, as the layperson guided by lawyers the entire time and not savvy in all the complexities of the science, he brought his case and he wanted his day in court. [00:23:59] Speaker 01: The issues were decided against him. [00:24:01] Speaker 01: But it was not as though there was no basis at all. [00:24:04] Speaker 01: If the jury had found factually for the other side, which was possible, summary judgment was denied, there was evidence on both sides, then we'd be in a different position. [00:24:14] Speaker 01: What's happening here is 285 is being turned into a penalty for anyone that loses a case that's decided by a jury. [00:24:22] Speaker 01: Now, this jury decided the case on standing. [00:24:25] Speaker 01: It did not decide the case on our knowledge and intent when we brought suit. [00:24:30] Speaker 01: And I think that's an important distinction that I'd encourage the court to take a close look at. [00:24:33] Speaker 02: OK. [00:24:38] Speaker 02: Thank you. [00:24:38] Speaker 02: So this case is taken under submission.