[00:00:10] Speaker 04:
Our third case today is 2016-2641, Allied Mineral Products versus OFMI.

[00:00:39] Speaker 04:
Mr. Lyles, please proceed when you're ready.

[00:00:50] Speaker 03:
Thank you, Judge Moore, and may it please the Court.

[00:00:53] Speaker 03:
From Allied Minerals' perspective, this is obviously an important case read, but we also think it's an important case for the Court.

[00:01:00] Speaker 03:
We think it's an important case for the Court for at least three reasons.

[00:01:03] Speaker 03:
One is all these things do to the consequences of affirming the District Court's opinion.

[00:01:09] Speaker 03:
In our view, affirming the district court's opinion dramatically underlines the whole policy of medibune.

[00:01:17] Speaker 03:
Secondly, affirming the district court's opinion would essentially create a new jurisdictional rule which says you can't consider

[00:01:25] Speaker 03:
affirmative acts were declared toward judgment actions, which happened outside of the U.S.

[00:01:30] Speaker 02:
Or at least you would have to... Does your claim that MedImmune requires no acts whatsoever or... No.

[00:01:35] Speaker 02:
We believe it does require affirmative acts.

[00:01:37] Speaker 03:
We believe there are affirmative acts here.

[00:01:39] Speaker 03:
Affirmative acts did occur outside the United States.

[00:01:42] Speaker 03:
They occurred in Mexico.

[00:01:44] Speaker 04:
And affirmative acts... What affirmative acts occurred specifically towards your client?

[00:01:51] Speaker 03:
The filing of the lawsuit.

[00:01:53] Speaker 03:
The filing of the lawsuit

[00:01:54] Speaker 03:
was an allegation by Stellar, it offended in this DJI action, that our Mexican distributors were infringing the patent based on the sale of our product.

[00:02:06] Speaker 03:
It's also an allegation to us that our product falls within the parameters of this Mexican patent, which by the way is identical to the U.S.

[00:02:17] Speaker 03:
patent.

[00:02:18] Speaker 04:
Is Mexican patent law identical to U.S.

[00:02:21] Speaker 04:
patent law in all respects?

[00:02:24] Speaker 03:
The answer is no.

[00:02:26] Speaker 04:
But... Yeah, no, it's actually no in lots of respects.

[00:02:29] Speaker 03:
In many ways it isn't, but what they're saying by alleging that the product, which is manufactured in the U.S., what they're saying is that by asserting infringement in Mexico, what they're saying is our product has elements, let's call them A, B, C, and D, when it's in Mexico.

[00:02:50] Speaker 03:
And since the U.S.

[00:02:51] Speaker 03:
patent is identical to that in

[00:02:54] Speaker 03:
in the U.S., they now, you know, it necessarily implies that same product has elements A, B, C, and D. But when you say implies, I mean, you're inviting us to speculate.

[00:03:06] Speaker 02:
You're inviting us to speculate that despite the differences in Mexican law and U.S.

[00:03:12] Speaker 02:
law, that the finding of infringement in Mexico is going to imply that you have an invalid pen in the United States.

[00:03:22] Speaker 03:
We don't believe that the question of whether or not it actually infringes in Mexico is relevant.

[00:03:27] Speaker 03:
We believe that Mexican law is such that an allegation that the product comes within the scope of that claim, which is identical to the US, is at least in the same technology and at least close enough that it certainly implies that the product has those same characteristics when it crosses the border.

[00:03:46] Speaker 02:
So infringement in Mexico implies an invalid patent in the United States?

[00:03:50] Speaker 02:
We're not talking about invalidity at this point.

[00:03:52] Speaker 02:
We're just talking about whether or not there is an allegation that... Oh, that's the point.

[00:03:56] Speaker 02:
We don't know what we're talking about.

[00:03:58] Speaker 02:
We're speculating here.

[00:04:00] Speaker 02:
And I'm speculating along with you.

[00:04:03] Speaker 03:
We're not speculating that what the complaint says, and we have to take all the allegations that the complaint is true, the complaint says that the allegations infringe that this product manufactured in the U.S.

[00:04:15] Speaker 03:
in French, certain specific claims in Mexico.

[00:04:18] Speaker 03:
Okay.

[00:04:18] Speaker 03:
Those claims that they're allegedly infringing Mexico are identical to the U.S.

[00:04:22] Speaker 03:
claims and based on the same specification.

[00:04:24] Speaker 00:
So that is- The U.S.

[00:04:27] Speaker 00:
versus Mexico.

[00:04:29] Speaker 00:
Yes.

[00:04:29] Speaker 00:
Just setting that aside for a minute.

[00:04:31] Speaker 00:
How do you overcome ERIS?

[00:04:33] Speaker 00:
Even assuming that this had been a litigation that was filed perhaps in the U.S.

[00:04:37] Speaker 00:
against your distributors, how do you overcome ERIS?

[00:04:41] Speaker 03:
What are you talking about?

[00:04:44] Speaker 03:
Adverse legal interest, as we understand it, the only thing it requires is it is met fully whenever, as it says here, that there is a legitimate claim of action based on the same facts against the declaratory judgment action here because it's a product claim.

[00:05:03] Speaker 03:
This is not a case in which whether or not there is contributory infringement and whether or not it is possible that

[00:05:10] Speaker 03:
the Mexican distributors are infringing without... Yeah, that's not been alleged, right?

[00:05:16] Speaker 00:
It hasn't been alleged anywhere that there's been contributory or induced infringement by your client.

[00:05:24] Speaker 00:
By your client.

[00:05:25] Speaker 00:
It hasn't been alleged anywhere, right?

[00:05:28] Speaker 03:
I'm sorry, I hadn't alleged.

[00:05:29] Speaker 00:
I think you were saying that contributory and induced infringement against your client has not been alleged in the pleadings in the Mexican litigation.

[00:05:39] Speaker 00:
That's correct.

[00:05:39] Speaker 00:
Right?

[00:05:40] Speaker 00:
So that was one of the tests.

[00:05:41] Speaker 00:
The test is, there has to be either an indemnification agreement or a controversy involving induced or contributory infringement.

[00:05:51] Speaker 00:
And you don't see either of the facts here, so why?

[00:05:54] Speaker 03:
But Benares, that's only when there's not direct infringement of the product.

[00:05:58] Speaker 03:
Here we have an allegation of direct infringement of the product.

[00:06:02] Speaker 03:
And the reason that the allegations of contributory infringement come into play is because that means that there is independent

[00:06:09] Speaker 03:
potential liability on behalf of the product manufacturer.

[00:06:12] Speaker 00:
I understood Eris is saying that where there's an allegation of direct infringement against the customers in that litigation.

[00:06:22] Speaker 00:
The litigation in Eris was an allegation of direct infringement against customers and then there was something in the pleadings that suggested contributory induced infringement against the declaratory judgment plaintiff in the other case, the one who was the manufacturer.

[00:06:37] Speaker 00:
So why

[00:06:38] Speaker 00:
I don't understand why you're saying there's no allegation of direct infringement in ARIS.

[00:06:44] Speaker 03:
Because it doesn't come into play when there is a cause of action against the declaratory judgment plaintiff.

[00:06:52] Speaker 03:
Here, because it's a product, and it's a product claim, any allegation that the distributors are infringing is in itself an allegation that the supplier is also infringing.

[00:07:02] Speaker 03:
That's us.

[00:07:03] Speaker 03:
Okay.

[00:07:04] Speaker 03:
Okay.

[00:07:04] Speaker 03:
And that's the difference between ARIS.

[00:07:07] Speaker 03:
Okay.

[00:07:08] Speaker 03:
We already, it's clearly an allegation that they could have brought the claim against us, which meets the declaratory judgment standard.

[00:07:17] Speaker 00:
I understand.

[00:07:18] Speaker 00:
So we're in a situation where there's a direct infringement claim.

[00:07:20] Speaker 00:
You're saying ERIS does not include the situation where the manufacturer itself could be accused of direct infringement.

[00:07:28] Speaker 03:
Yes, it could come into play if there was something other than a product claim, or where they were doing something else with the product.

[00:07:34] Speaker 03:
But here, there's no allegation they're doing anything different than the product.

[00:07:37] Speaker 03:
And it's the product itself that is the claim.

[00:07:40] Speaker 03:
So that's why.

[00:07:41] Speaker 03:
That's always been the standard for it.

[00:07:44] Speaker 04:
I must have missed it.

[00:07:45] Speaker 04:
I see that you and Judge Stoll have sort of reconciled your understanding of heiress.

[00:07:50] Speaker 04:
But I don't think I yet have it.

[00:07:51] Speaker 04:
So why don't you repeat it again for me.

[00:07:53] Speaker 04:
Why is heiress different from this case?

[00:07:59] Speaker 03:
I believe what is always been the case with what we're talking about is having that adverse legal interest.

[00:08:06] Speaker 00:
I'm going to just add one thing here.

[00:08:08] Speaker 00:
It says BT has accused Cable 1 of infringing system and method claims.

[00:08:13] Speaker 00:
So if there's a system, why would there not be a direct infringement claim here?

[00:08:22] Speaker 00:
In heiress, it's talking about system claims and method claims.

[00:08:27] Speaker 04:
Yeah, I mean, it says system throughout, actually.

[00:08:31] Speaker 03:
Well, I think errors, if you read errors carefully, and I think it's briefly, quite frankly, I don't have adequate recall of it due to I think it was in the briefing, but I think the gist of it is that when you determine whether or not there's an adverse legal interest, you determine whether or not the underlying legal action that the D.J.

[00:08:50] Speaker 03:
defendant could have brought the same action against the plaintiff.

[00:08:52] Speaker 03:
Here, the answer is they could have.

[00:08:54] Speaker 03:
And so that's the only thing that's necessary for an adverse legal interest.

[00:08:58] Speaker 03:
And we believe that to adopt the district courts.

[00:09:02] Speaker 04:
But your view, it seems to me, even though they seem to have gone to great pains to avoid not only accusing you of infringement, but of having any contact with you at all by not even responding to your reaching out to them, your view would result in a scenario where every distributor

[00:09:24] Speaker 04:
and every manufacturer would have a DJ action in any jurisdiction they choose to file it in, if any one person anywhere in the chain gets sued by the patentee.

[00:09:36] Speaker 04:
How does that make sense?

[00:09:37] Speaker 04:
Wouldn't that subject patentees to enormous, broad, harassing litigation?

[00:09:45] Speaker 04:
I mean, that doesn't seem consistent with MedImmune, which still focused on affirmative acts against the party who brings the DJ action.

[00:09:52] Speaker 03:
I think they have an affirmative act against the DJ plaintiff's product.

[00:09:57] Speaker 03:
That's the key.

[00:09:57] Speaker 03:
It's the product that's being accused of infringement.

[00:10:00] Speaker 04:
Yes, but do you not see the problem with what you're asking for?

[00:10:03] Speaker 04:
A product is sold in a distribution chain.

[00:10:07] Speaker 04:
Suppose it's manufactured by company A and distributed by companies B, C, D, and E all over the United States.

[00:10:17] Speaker 04:
Your position, which you would like this court to adopt,

[00:10:20] Speaker 04:
is that if the patentee sues any one of those people, then all of the others can sue for a DJ action against the patentee, because it's the same product.

[00:10:29] Speaker 03:
I think that any time there is a underlying legal action that is applicable to the declaratory judgment plaintiff, then that establishes an adverse legal interest under the existing law.

[00:10:42] Speaker 02:
Tell us, sir, what's your concern here?

[00:10:44] Speaker 02:
The effect that this has on the Mexican market for your product or the effect it has on the U.S.

[00:10:49] Speaker 02:
market?

[00:10:49] Speaker 03:
No, from Alan's viewpoint, this is actually a brilliant but, quite frankly, sinister scheme.

[00:10:55] Speaker 03:
What they've done, these are both U.S.

[00:10:57] Speaker 03:
companies, and they have patents both in the U.S.

[00:11:01] Speaker 03:
Normally, since a product's been manufactured in the U.S., the logical thing to do is that they had some concern about it would be to sue an ally in the United States.

[00:11:11] Speaker 03:
They didn't do that.

[00:11:13] Speaker 02:
Instead, what they did is they picked a much... The judgment would be if the taequan is limited to Mexico.

[00:11:19] Speaker 02:
I'm sorry?

[00:11:20] Speaker 02:
If they take a judgment, then it's limited to the Mexican market.

[00:11:23] Speaker 03:
It's not the judgment that's the concern.

[00:11:26] Speaker 03:
It's the cloud of uncertainty that... Where does that cloud exist?

[00:11:32] Speaker 03:
The cloud exists both in Mexico and the United States.

[00:11:35] Speaker 03:
In our view, that's the

[00:11:37] Speaker 03:
Brigands, but the central nature.

[00:11:39] Speaker 02:
Do you have that cloud in the United States?

[00:11:41] Speaker 02:
Why don't you sue in the United States?

[00:11:44] Speaker 03:
We have sued in the United States.

[00:11:46] Speaker 03:
For the declaratory judgment.

[00:11:47] Speaker 03:
That's correct.

[00:11:49] Speaker 03:
And we sued to remove that cloud because we believe that, and this is a public record, they got identical patents with identical claims on the identical product.

[00:11:59] Speaker 02:
So show me a case where we said that casting a cloud or uncertainty in the market

[00:12:06] Speaker 02:
is enough to file for a declaratory judgment?

[00:12:11] Speaker 03:
I think the whole jurisprudence following.

[00:12:14] Speaker 03:
I think it talks more about an act, an affirmative act than a cloud.

[00:12:19] Speaker 03:
No, the affirmative act is two things.

[00:12:22] Speaker 03:
Number one, it's the accusations against the distributors, but even more importantly, the filing of the lawsuits against the distributors and accusing our product of infringement in Mexico.

[00:12:32] Speaker 03:
That's the affirmative act.

[00:12:34] Speaker 03:
We're not suggesting that there are

[00:12:36] Speaker 03:
that you don't need an affirmative act.

[00:12:38] Speaker 03:
We believe you do need an affirmative act.

[00:12:43] Speaker 03:
And maybe not all affirmative acts do, but here when you've got the identical patents and the identical claims against the identical product, the inference is undeniable that you're creating uncertainty with respect to whether or not the continued sale and manufacture of that in the United States is something that is permitted under the law.

[00:13:06] Speaker 03:
And what we believe that they're doing is they're using this to essentially extend the period of uncertainty.

[00:13:13] Speaker 03:
It's bad enough if we had sued in Mexico.

[00:13:14] Speaker 03:
And Mexico, by the way, we believe the reason they chose that particular market is much more than the US.

[00:13:20] Speaker 03:
But it moves, quite frankly, litigation there at sort of a glacial pace.

[00:13:25] Speaker 02:
They still are selling in the United States the product that they sell in Mexico that they're selling in the US?

[00:13:32] Speaker 03:
They are here.

[00:13:34] Speaker 03:
product is manufactured in the United States, and it's sold directly by Allied in the United States.

[00:13:39] Speaker 02:
Your concern is they can take a Mexican judgment and show up in the U.S.

[00:13:43] Speaker 02:
and say, we have the same problem here, and oh, by the way, look, we have a Mexican judgment dealing with essentially the same problem.

[00:13:52] Speaker 02:
That seems to me to be your concern.

[00:13:54] Speaker 03:
It strengthens their hand in the United States.

[00:13:57] Speaker 03:
The much bigger concern, quite frankly, is the uncertainty that that litigation, pending

[00:14:02] Speaker 02:
So now you're getting to the point that I'm really interested in, the cloud and now the uncertainty.

[00:14:11] Speaker 02:
The problem I'm having is whether this is actually a satisfying case of controversy doctrine.

[00:14:21] Speaker 02:
So let me ask you, in that regard, what's our standard of review here?

[00:14:26] Speaker 03:
Well, the standard of review basically is J-Novo.

[00:14:29] Speaker 03:
It is a legal question based upon the unquestioned allegations of the complaint.

[00:14:35] Speaker 03:
As Judge Moore said earlier, this is sort of an assessment.

[00:14:38] Speaker 02:
Just the ruling on the actual declaratory judgment, or are we looking at something before that, whether the court has jurisdiction over this case?

[00:14:48] Speaker 03:
The question of whether or not the court has jurisdiction is the question before the court.

[00:14:52] Speaker 03:
That was a question that was decided at the district court level, where they concluded they didn't.

[00:14:56] Speaker 03:
We believe that there is a jurisdiction.

[00:14:58] Speaker 03:
We believe that, under Metamune, basically you only need three things.

[00:15:02] Speaker 03:
Basically what you need is a genuine patent dispute.

[00:15:06] Speaker 03:
It has to be concrete, real and concrete, it has to be definite, and you have to have adverse legal interest.

[00:15:11] Speaker 03:
Judge Stoll's questions really relate to the adverse legal interest, and we believe that when a product that our client manufacturers is accused of having all the elements of a claim, which is existing both in the United States and in Mexico,

[00:15:26] Speaker 03:
That creates an adverse legal interest.

[00:15:29] Speaker 03:
And that is the entire thing.

[00:15:31] Speaker 03:
And we believe that it's bad enough to be in a jurisdiction in Mexico where things move out of hand.

[00:15:38] Speaker 02:
Has Stellar informed you that they're going to, if they win, they're going to bring the Mexican judgment and they're going to sue you in the United States?

[00:15:45] Speaker 03:
They have not.

[00:15:47] Speaker 03:
They haven't told us they won't.

[00:15:49] Speaker 03:
And if they told us they won't, that would resolve the issue, at least with respect to

[00:15:53] Speaker 03:
the declaratory judgment action with the patent act, not necessarily with respect to the unfair competition claim.

[00:15:59] Speaker 00:
They have not sued you in Mexico either, nor have they told you that they would, right?

[00:16:04] Speaker 03:
They have not.

[00:16:05] Speaker 00:
Do you have an indemnification agreement with the customers who have been sued or the distributors?

[00:16:10] Speaker 03:
The answer is, if you're asking, is that alleged in the complaint, the answer is no.

[00:16:14] Speaker 03:
If you're asking in the real world, the answer is yes.

[00:16:18] Speaker 03:
It's true.

[00:16:19] Speaker 03:
It's also true it was not alleged in the complaint.

[00:16:21] Speaker 00:
On the record, what is the fact finding?

[00:16:23] Speaker 00:
And what is the fact on the record?

[00:16:25] Speaker 00:
I don't want to go outside the record.

[00:16:27] Speaker 00:
OK.

[00:16:28] Speaker 03:
On the record, there's no allegation one way or the other about indemnification.

[00:16:32] Speaker 02:
Is the agreement in the record?

[00:16:35] Speaker 02:
Is what?

[00:16:36] Speaker 02:
Is the agreement in the record?

[00:16:38] Speaker 04:
No.

[00:16:39] Speaker 02:
No.

[00:16:39] Speaker 02:
No.

[00:16:41] Speaker 04:
OK.

[00:16:41] Speaker 04:
Well, let's hear from opposing counsel.

[00:16:43] Speaker 04:
Mr. Lincoln?

[00:16:46] Speaker 03:
I'm not sure if I used my time.

[00:16:48] Speaker 03:
I was hoping to have three minutes.

[00:16:50] Speaker 04:
I'll give you two minutes of rebuttal time.

[00:16:51] Speaker 04:
You used all of your time.

[00:16:52] Speaker 04:
But we'll restore two minutes.

[00:16:54] Speaker 04:
Mr. Lucan.

[00:16:56] Speaker 01:
Thank you, Judge Moore.

[00:16:58] Speaker 01:
John Lucan from Dinsmore for the defendant.

[00:17:02] Speaker 01:
Appellee, at the threshold, Your Honor, I would take the opposite approach from Mr. Lyles at the beginning.

[00:17:10] Speaker 01:
This case asks you to break new ground and to significantly undercut the whole approach of requiring a definitive case or controversy.

[00:17:20] Speaker 01:
There's been zero contact with my client versus their client relating to a U.S.

[00:17:27] Speaker 01:
patent here.

[00:17:27] Speaker 01:
There's been no act at all between the two clients relating to a U.S.

[00:17:31] Speaker 01:
patent here.

[00:17:33] Speaker 01:
Holding that pursuing patent rights under a foreign patent with its own

[00:17:40] Speaker 01:
prosecution history, separate law, separate enforcement mechanisms, separate cost of litigation, possibly different recoveries that are available.

[00:17:50] Speaker 01:
It's an entirely different calculus to sue under a patent there than it is a patent here, regardless of the similarities between the two.

[00:17:59] Speaker 01:
And this basically says to someone, if you've made a decision to enforce against a third party, a patent in a foreign country, and it has alleged similarities

[00:18:09] Speaker 01:
Someone could accuse you of being tantamount or implied, even though you've had absolutely no contact directly, no act directed to the DJ.

[00:18:19] Speaker 04:
Your points are very well taken.

[00:18:20] Speaker 04:
And I'm cutting you off only because I understand them completely.

[00:18:24] Speaker 04:
I don't want you to think that I don't.

[00:18:26] Speaker 04:
But I do want to ask you, what if this hadn't been in a foreign country?

[00:18:31] Speaker 04:
What if this had been a distributor and a manufacturer in the United States?

[00:18:37] Speaker 04:
with a single U.S.

[00:18:38] Speaker 04:
patent.

[00:18:40] Speaker 04:
How would you feel about his arguments about whether or not there are adverse legal interests under Med Immune if we were talking about distributors, you know, your patentee chose to sue distributors but not the manufacturer and the manufacturer wanted to bring a separate DJ action against you in the U.S.

[00:18:58] Speaker 04:
and it was all related to U.S.

[00:18:59] Speaker 04:
patent.

[00:19:00] Speaker 04:
You understand my hypothesis?

[00:19:01] Speaker 04:
Yes, Your Honor.

[00:19:01] Speaker 04:
I know it's not your case.

[00:19:02] Speaker 04:
I get that.

[00:19:04] Speaker 04:
But I'm just curious what your thoughts are or where your arguments go in terms of whether or not that would give rise to a case or controversy for declaratory judgment purposes.

[00:19:15] Speaker 01:
I concede at the outset it's a closer call.

[00:19:17] Speaker 01:
There's no question about that, and I won't act like there is.

[00:19:21] Speaker 01:
However, under the totality of the circumstances test, there's an awful lot that comes into play.

[00:19:28] Speaker 01:
I would offer, first of all, in heiress, as Judge Still pointed out,

[00:19:33] Speaker 01:
There's a requirement of one of two things, either an indemnity, which is not alleged, it's not in the record here, or an accusation of indirect infringement.

[00:19:43] Speaker 01:
And in Aramis, some of the system claims, the statement was that, I think the court said, in some of the system claims, all of the components were provided by

[00:19:55] Speaker 01:
the declaratory judgment plaintiff.

[00:19:56] Speaker 04:
But what Eris doesn't say, I think your opponent helped me to appreciate that Eris doesn't say, but if you effectively argued direct infringement against me, it wouldn't count.

[00:20:10] Speaker 04:
You understand?

[00:20:10] Speaker 04:
And his view is, look, they didn't induce infringement because they're accusing us of direct infringement, basically.

[00:20:16] Speaker 04:
You understand?

[00:20:16] Speaker 01:
I understand that, Judge.

[00:20:18] Speaker 01:
A couple thoughts.

[00:20:18] Speaker 04:
I don't see Eris, to me,

[00:20:21] Speaker 04:
I think that he probably has a pretty good reading of Eris in terms of it's at least confusing and doesn't totally answer this question.

[00:20:33] Speaker 01:
I would point out that Eris is also the same logic as Eris has been applied in the creative case that we cited in the brief that involved creatine, I think some kind of body building.

[00:20:45] Speaker 00:
Is that a direct infringement case?

[00:20:47] Speaker 01:
I believe it was, Your Honor.

[00:20:48] Speaker 01:
There were suits against

[00:20:50] Speaker 01:
There were lots of suits against other, and it's not a customer, but it's other people selling the same product under the same patent in the United States.

[00:21:00] Speaker 01:
No, I think, I'm sorry, I am confusing.

[00:21:02] Speaker 01:
That was a customer case.

[00:21:05] Speaker 01:
And there the court again found the absence of the two steps in heiress and therefore moved on.

[00:21:10] Speaker 01:
And similarly, when there are suits against host of competitors, so we're all in the market together doing all the same thing,

[00:21:19] Speaker 01:
And they're picking off one after the other under the same patent.

[00:21:23] Speaker 01:
So they haven't said anything directly to me yet.

[00:21:27] Speaker 01:
And even there, this court has required more.

[00:21:30] Speaker 01:
It's required something.

[00:21:31] Speaker 01:
For example, in Micron, Micron was last in line with the DRAM patents.

[00:21:38] Speaker 01:
And the plaintiff was going after people one after another.

[00:21:41] Speaker 01:
But there had been, albeit older, there had been communications directly to Micron.

[00:21:47] Speaker 01:
And there were multiple statements that they were going to enforce their rights against all infringers.

[00:21:52] Speaker 01:
So there's something else.

[00:21:53] Speaker 01:
So if one's going to, as Judge Ranit pointed out, the cases require an act.

[00:21:58] Speaker 01:
They require a communication.

[00:22:00] Speaker 01:
They require an act directed to the declaratory judgment plaintiff that indicates that there is an intent to enforce a patent right against the declaratory judgment plaintiff.

[00:22:14] Speaker 04:
I'm not sure MedImmune agrees with that.

[00:22:17] Speaker 04:
articulation.

[00:22:18] Speaker 04:
I mean, show me in MedImmune where you get that from, where there has to be an affirmative act directed at the declaratory judgment plaintiff.

[00:22:27] Speaker 04:
I just think it says case or controversy in adverse legal interests.

[00:22:31] Speaker 01:
MedImmune dealt extensively in the main text with the effect of not paying or having to give up your license before you could challenge.

[00:22:45] Speaker 01:
Put note 11 in MedImmune.

[00:22:46] Speaker 01:
which is relatively succinct, takes on this court's former reasonable apprehension test and says it's a fatality of the circumstances.

[00:22:56] Speaker 01:
I would submit, Your Honors, that in taking that direction for metamune from footnote 11 and metamune back into the patent arena, this court has in multiple cases, Sandisk coming back almost immediately, is looking for an action.

[00:23:13] Speaker 01:
It's looking for something that the

[00:23:15] Speaker 01:
that the patent owner has done.

[00:23:18] Speaker 01:
It no longer has to create a reasonable apprehension suit, but it has to be something.

[00:23:24] Speaker 01:
Judge Moore basically... I don't see anything.

[00:23:26] Speaker 04:
I'm looking at your footnote 11 now.

[00:23:27] Speaker 04:
I don't see anything in there which implies there has to be an act.

[00:23:29] Speaker 04:
It's just sort of, as unfortunately many of these Supreme Court cases do, just rejects our prior law out of hand.

[00:23:38] Speaker 01:
It certainly did that.

[00:23:39] Speaker 01:
And in the text, I think Justice Scalia

[00:23:42] Speaker 01:
turned around and admitted that the Supreme Court president is not a lawyer.

[00:23:46] Speaker 02:
Well, in many of them, the court did require something that's definite and concrete.

[00:23:50] Speaker 02:
It has to be real and substantial, admit a specific relief through a decree of conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.

[00:24:02] Speaker 01:
I think the real and substantial element is particularly pertinent to Judge Moore's hypothetical.

[00:24:10] Speaker 01:
The adverse legal interest is the additional kicker that makes the difference between Judge Moore's hypothetical and the fact that this is a suit in Mexico in this case makes the district court even more proper.

[00:24:22] Speaker 01:
So we start with real and substantial.

[00:24:24] Speaker 01:
The question of whether there's a sufficient cloud, as Your Honor said earlier, over the defendant's conduct that to use, I think, the phrase that Justice Scalia did in MedImmune about

[00:24:37] Speaker 01:
The plaintiff has eliminated the own threat to itself.

[00:24:39] Speaker 01:
It either has to face the threat or it has to quit doing the conduct.

[00:24:42] Speaker 01:
You don't have to bet the farm.

[00:24:44] Speaker 01:
You don't have to get arrested for a lot of criminal case analogies.

[00:24:49] Speaker 04:
But that would be true if we were totally in the U.S.

[00:24:52] Speaker 04:
and we've got a supplier manufacturer scenario and there's a lawsuit moving forward against the supplier and it's not looking good, you know, and the manufacturer

[00:25:02] Speaker 04:
is now in this sticky wicket of, oh, no, I'm going to be on the hook for willful infringement here.

[00:25:07] Speaker 04:
I need a resolution.

[00:25:09] Speaker 04:
I am producing these things.

[00:25:11] Speaker 01:
Your Honor, I would submit that under the totality of circumstances, that it's not an open and shut, and it's not an absolute rule.

[00:25:17] Speaker 01:
I mean, if there were multiple, multiple, multiple customers being sued, that certainly would weigh in favor of finding it.

[00:25:25] Speaker 04:
You have a very narrow case, and it needs to be decided narrowly.

[00:25:28] Speaker 04:
Because I think some of these other issues that I'm bringing up and we're discussing

[00:25:32] Speaker 04:
are troubling to me because, of course, if certainly a manufacturer and a supplier would allow for DJ jurisdiction because it is the same product, not an identical product, but the actual same physical product, then the question becomes what if two distributors or two manufacturers are making identical products?

[00:25:51] Speaker 04:
And then, of course, it comes a little further.

[00:25:52] Speaker 04:
Well, what if they're not identical in all respects, but they're identical insofar as the patent is concerned?

[00:25:58] Speaker 04:
where my concern goes as this plays itself out in terms of the potential number of lawsuits and difficult issues courts would be confronted with in a DJ context?

[00:26:12] Speaker 01:
Yes, Your Honor.

[00:26:13] Speaker 01:
And that's why my suggestion was initially in response to your hypothetical that I think it moves it closer.

[00:26:22] Speaker 01:
And depending upon the totality of the circumstances, it is possible that in that situation,

[00:26:28] Speaker 01:
I could see an argument being made that has a lot more supporting it than here, that that might give rise.

[00:26:35] Speaker 01:
Although it is a slippery slope that this court has not, I don't think, yet gone down.

[00:26:41] Speaker 01:
And it would be, I think, heavily dependent on the facts and the multitude of threats.

[00:26:45] Speaker 04:
And we don't need to go down that road in your case, because we've got this giant gaffe between that hypothetical in your case, because yours involves a whole different country, a whole different patent.

[00:26:57] Speaker 01:
Precisely, because in that case you would be invited to infer from actions against other American companies.

[00:27:04] Speaker 01:
It's not that they're American or not American.

[00:27:06] Speaker 01:
It's not where you pick up the phone.

[00:27:07] Speaker 01:
It's a U.S.

[00:27:08] Speaker 01:
patent and it's conducted in the U.S.

[00:27:10] Speaker 01:
That's the more pertinent way of phrasing it.

[00:27:12] Speaker 01:
But you would be offered facts that are closer

[00:27:17] Speaker 01:
and being urged the cumulative effect of those might be enough to tip in favor of jurisdiction.

[00:27:23] Speaker 01:
And while that's conceivable, I don't think that the court has to even wade into that at all in order to affirm the district court's decision here, since it was so clearly based on the lack of anything as to them other than action.

[00:27:37] Speaker 01:
The lack of anything as to them.

[00:27:38] Speaker 01:
It was actions in Mexico under Mexican law.

[00:27:41] Speaker 01:
So while I think your hypothetical gives sort of a slippery slope that you might have to go down when that case gets in front of you, ours is more of a cliff.

[00:27:50] Speaker 01:
I mean, it just says that a decision to sue someone else, even if the product is the same product, but to sue in Mexico under Mexican law where the procedures are different.

[00:28:01] Speaker 01:
I mean, Cozzo says that the difference between

[00:28:04] Speaker 01:
brought us reasonable interpretation, and Philip's construction can tip the difference here, even though everything else is the same.

[00:28:12] Speaker 01:
This court's decision earlier in the year, and I think it was Novartis says that, I think that was invalidity, not infringement, but just who has the burden between the preponderance of the PTAB and clear convincing in a district court case can make a whole world of difference about invalidity.

[00:28:30] Speaker 01:
So these tiny differences, even within our own law, can change the result.

[00:28:34] Speaker 01:
Holy cow, now we're going to Mexico under Mexican law where it's completely different.

[00:28:39] Speaker 01:
The complaint that's asserted against us here has a lot more than is supposedly even involved in the Mexican case.

[00:28:44] Speaker 01:
I mean, there's an inequitable conduct and forcibility argument.

[00:28:48] Speaker 01:
I'm not even sure that's available in Mexican law.

[00:28:50] Speaker 01:
So the complaint itself gives plenty of reasons why someone might sue under its rights in Mexico and not have made a decision as to whether they're going to do anything here and certainly not commit an affirmative act in that regard.

[00:29:05] Speaker 01:
I don't want to keep the court any longer than I need to.

[00:29:08] Speaker 04:
Okay, thank you, Mr. Lukin.

[00:29:10] Speaker 04:
Mr. Lyles, I said I'd restore two minutes of rebuttal time.

[00:29:14] Speaker 03:
Yes, Your Honor.

[00:29:15] Speaker 03:
First of all, with respect to areas, let me just direct the Court's attention to page 1374.

[00:29:21] Speaker 03:
And what it says there, it says an adverse legal interest requires a dispute as to a legal right as, for example, an underlying legal cause of action that the declaratory

[00:29:32] Speaker 03:
defendant could have brought or threatened to bring.

[00:29:35] Speaker 03:
We believe that that's exactly what happened here.

[00:29:37] Speaker 03:
We believe we met the adverse legal interest test.

[00:29:42] Speaker 03:
We also believe that the only thing that Metabuid, but my view of Metabuid, quite frankly, is that anytime there's affirmative act where a patent owner is using a patent to put uncertainty and to require a competitor

[00:30:00] Speaker 03:
to operate in an environment where there's uncertainty about whether or not there might be legal ability, and there is a real and concrete standard, then the underlying gist of a metamune, the whole philosophy of it, is that that invokes declaratory judgment action.

[00:30:17] Speaker 04:
Well, it would be kind of hard to get around our PRASCO case if that were the standard in metamune.

[00:30:21] Speaker 03:
Okay, PRASCO, let me address PRASCO.

[00:30:23] Speaker 03:
PRASCO, there was absolutely nothing.

[00:30:26] Speaker 03:
That was truly a self-induced fear and apprehension on the part of PRASCO.

[00:30:30] Speaker 03:
There's absolutely nothing that the patent owner did.

[00:30:32] Speaker 03:
There was never any contact.

[00:30:34] Speaker 03:
There was anything.

[00:30:35] Speaker 03:
Here we have an act, even though it's in a foreign country.

[00:30:38] Speaker 03:
But you know, as this court's cases in Arkema and Asia Vital, they all have recognized that European patents on similar technology is good enough to invoke declaratory judgment action.

[00:30:52] Speaker 03:
So here we have action.

[00:30:54] Speaker 03:
It's against, not against Ally, but against its product in a different country.

[00:30:59] Speaker 03:
And here we have an identical patent with identical claims.

[00:31:03] Speaker 03:
Okay.

[00:31:04] Speaker 03:
And in our view, you know, their, their allegation that they haven't decided what they're going to do.

[00:31:08] Speaker 03:
It's sort of like this.

[00:31:09] Speaker 03:
I would refer to as a magical border, uh, uh, uh, uh, analogy that, that, you know, they say our product has all its A, B, C, and D when it's in Mexico, when it comes to the United States, you know, all of a sudden they don't know whether it does or not.

[00:31:22] Speaker 03:
And they don't know whether they don't maybe they won't sue in us.

[00:31:25] Speaker 00:
I understand their argument is that they might not

[00:31:28] Speaker 00:
choose to file suit in the U.S.

[00:31:31] Speaker 00:
against customers or against the manufacturer or your client.

[00:31:35] Speaker 03:
If they don't, they would never give us a chance to correct the damage that's been done in the marketplace by the... The damage hasn't been done in the U.S.

[00:31:44] Speaker 04:
marketplace.

[00:31:44] Speaker 04:
It's been done in the Mexican marketplace.

[00:31:46] Speaker 04:
There is no legal impact of the Mexican judgment in the U.S.

[00:31:50] Speaker 04:
market.

[00:31:51] Speaker 03:
There's no legal impact, but there is a marketing impact because the claim... Then you bring an unfair competition claim in state law.

[00:32:00] Speaker 03:
Well, there is such a claim, but we also believe... It's not a patent case.

[00:32:03] Speaker 04:
That's an unfair competition claim.

[00:32:05] Speaker 03:
Well, we believe that we meet all the standards of metamune.

[00:32:08] Speaker 03:
We believe that it's definite and concrete.

[00:32:11] Speaker 03:
In fact, we're talking about not only the patent, we're talking about specific claims of the patent that were alleged to be infringed.

[00:32:16] Speaker 03:
We believe it touches the adverse ligamenters for the reasons I mentioned before from Eris and other cases.

[00:32:21] Speaker 03:
And we believe it's a real, substantial thing, and we believe that it's incumbent upon the court to find that the declaratory judgment and jurisdiction exist here.

[00:32:29] Speaker 00:
I have an unrelated question, which is, is there an IPR or any other kind of proceeding pending in the U.S.

[00:32:34] Speaker 00:
on the U.S.

[00:32:35] Speaker 00:
patent?

[00:32:36] Speaker 03:
Not to my knowledge.

[00:32:41] Speaker 00:
Okay.

[00:32:41] Speaker 00:
I thank both counsel.

[00:32:42] Speaker 04:
The case is taken under