[00:00:02] Speaker 00:
Our final case today is 2 0 1 7 dash 1 4 7 5.

[00:00:08] Speaker 00:
Arctic Cat versus Bombardier Recreational.

[00:00:41] Speaker 00:
Mr. Lee, please proceed.

[00:00:43] Speaker 01:
Thank you, Your Honor.

[00:00:44] Speaker 01:
May it please the Court.

[00:00:45] Speaker 01:
My name is Bill Lee, and together with my colleagues, Louis Tompros and Michelle Sandoz, we represent the RP.

[00:00:52] Speaker 01:
If time permits, and with the panel's permission, I would like to focus my argument on three issues today.

[00:00:58] Speaker 00:
First.

[00:00:58] Speaker 00:
Three.

[00:00:59] Speaker 00:
Go ahead, Mr. Lee.

[00:01:02] Speaker 01:
The three are obviousness, marking, and images.

[00:01:04] Speaker 02:
You have a minute and a half, and then we start.

[00:01:09] Speaker 01:
So the first of the three.

[00:01:10] Speaker 01:
would be our contingent that the asserted claims are obvious.

[00:01:14] Speaker 01:
There is no dispute on this record that the combination of the challenger throttle reapplication system and the prior art personal watercraft disclosed each and every element of the claims.

[00:01:26] Speaker 01:
There is also no dispute that that same prior art expressly and precisely disclosed this combination and suggested this combination to solve the very problem identified in the text.

[00:01:38] Speaker 01:
That would render these claims obvious under KSI.

[00:01:42] Speaker 01:
The second issue is the marking issue, where the district court imposed upon the defendant the burden of proving marking compliance.

[00:01:51] Speaker 01:
That error alone is significant.

[00:01:54] Speaker 01:
It has the $30 million effect on the judgment by itself.

[00:01:58] Speaker 01:
And lastly, on the issue of damages, Mr. Braddock was permitted to offer an opinion based upon a different product introduced

[00:02:08] Speaker 01:
different time with a different value.

[00:02:11] Speaker 01:
It was economically, technologically, and temporally not comparable to the accused's feature.

[00:02:18] Speaker 01:
So let me go directly to obviousness.

[00:02:21] Speaker 01:
This case is the unusual case where the prior art identifies the problem to be solved.

[00:02:28] Speaker 01:
The same prior art discloses each and every element of the claims.

[00:02:32] Speaker 01:
And the same prior art expressly states that you should combine these two pieces of prior art

[00:02:38] Speaker 01:
to solve that problem.

[00:02:40] Speaker 01:
So let me go to the first part.

[00:02:42] Speaker 01:
There are multiple combinations that would render these claims fully disclosed and invalid.

[00:02:49] Speaker 01:
But there was no disputed trial that the combination of the GTX personal watercraft and Challenger's jet boat throttle reapplication system satisfied all the elements of the asserted claims, with two exceptions of dependent claims

[00:03:07] Speaker 01:
which are really not in dispute on this appeal.

[00:03:10] Speaker 01:
In fact, the parties stipulated that the GTX disclosed virtually every element of the asserted claims.

[00:03:18] Speaker 00:
Is it your view that the law requires a conclusion of obviousness if there is some reference that suggests the combination?

[00:03:30] Speaker 01:
Your Honor, I don't think that I would go that far and have that

[00:03:36] Speaker 01:
black and white of proposition.

[00:03:37] Speaker 01:
I think in a context where there is prior art that identifies a problem, which suggests the combination of two prior art references in this particular case, and suggests that you actually combine them to solve that purpose, it would render it obvious.

[00:03:55] Speaker 00:
Even if that prior art suggests that there might be all kinds of problems, what if that prior art discloses a lot of different combinations?

[00:04:05] Speaker 00:
not one say discloses fifty different combinations because see Mr. Lee the concern I have is that the rule of law you're asking for in the chemical arts in particular could be disastrous because the chemical arts disclosed lists of possible chemicals and excipients and suggests that maybe you could pick something from column A with something from column B now I know we're not in the chemical arts we're on jet skis you know everybody gets this technology but

[00:04:34] Speaker 00:
the rule of law for obvious with this would nonetheless be applicable across different areas.

[00:04:39] Speaker 00:
And I feel like you're asking me to conclude that because a piece of art says there is a motivation, the inquiry is at an end.

[00:04:47] Speaker 01:
No.

[00:04:48] Speaker 01:
And Your Honor, that's why I would not go as far as to make the principle that dispositive for all purposes.

[00:04:53] Speaker 00:
Well, that's good.

[00:04:54] Speaker 01:
And I agree.

[00:04:55] Speaker 00:
I'm glad you went quite that far.

[00:04:57] Speaker 01:
And I don't think we need to even go close to that far, because in this specific case,

[00:05:02] Speaker 01:
The SAE reports, which are prior art, which the jury was instructed disclose each and every element except for that disclosed by the Challenger Reapplication System, those reports actually say three critical things.

[00:05:19] Speaker 01:
They say first, combine the reapplication system with personal watercraft.

[00:05:26] Speaker 01:
But they also say, after having examined the question, the problem that we're trying to solve

[00:05:32] Speaker 01:
There are four possible solutions.

[00:05:35] Speaker 01:
So you're correct in the life sciences area or in the chemical area where you would take a chemical formula and change a radical in literally hundreds of different ways.

[00:05:44] Speaker 01:
This is a circumstance where someone has identified the problem.

[00:05:49] Speaker 01:
There is a request for a proposal from the Coast Guard.

[00:05:52] Speaker 01:
The Society of Automotive Engineers and the specific subcommittee of the Society of Automotive Engineers dealing with watercraft says there are four solutions.

[00:06:03] Speaker 01:
And actually, in the interim report, it was rudders, scoops, throttle reapplication, and one other.

[00:06:10] Speaker 01:
By the time you get to the final report, it's three different types of rudders and throttle reapplication.

[00:06:16] Speaker 01:
So that would make it very different from the life sciences context, where you could have multiple rudders.

[00:06:21] Speaker 02:
So do I understand, Mr. Lee, that you're suggesting there should be one rule for obviousness in the chemical arts, and perhaps other life science arts,

[00:06:33] Speaker 02:
and a different rule for ski dos.

[00:06:36] Speaker 02:
Is that your position?

[00:06:37] Speaker 01:
No, I won't go that far either, Your Honor.

[00:06:40] Speaker 01:
I don't think there is a single rule.

[00:06:42] Speaker 01:
And it can be applied in the different arts, having in mind the different imperatives of the different arts.

[00:06:50] Speaker 01:
So to take Judge Moore's hypothetical, when you have a complicated chemical formula, and you're talking about whether it's obvious to synthesize a new compound, there are an infinite number of different radicals you could choose.

[00:07:03] Speaker 01:
And there was a great deal of unpredictability.

[00:07:06] Speaker 02:
I take your point.

[00:07:07] Speaker 02:
That was sort of a teasing question.

[00:07:08] Speaker 02:
Let me follow up, however, on the presiding judge's implicit or explicit point.

[00:07:16] Speaker 02:
Can I give you a hypothetical?

[00:07:17] Speaker 01:
Yes, Your Honor.

[00:07:18] Speaker 02:
This was a 10-day jury trial, right?

[00:07:22] Speaker 02:
Yes.

[00:07:22] Speaker 02:
Went on for 10 days.

[00:07:24] Speaker 02:
Your lawyers were up there, and their lawyers were up there, and they were going on for 10 days.

[00:07:31] Speaker 02:
My hypothetical is the following.

[00:07:33] Speaker 02:
Let's assume there's an appellate judge who willingly spends 10 days reading all the record in this case and reading all the briefs and comes to the conclusion that, you know, if I were on the jury, I'd probably have gone the other way and said, this looks like it could have been

[00:08:01] Speaker 02:
obvious to a posada at that point.

[00:08:06] Speaker 02:
And then the appellate judge is called upon to make a decision as to whether the jury verdict should be upheld.

[00:08:16] Speaker 02:
What advice would you give that appellate judge?

[00:08:20] Speaker 01:
Your Honor, I would give this advice to the appellate judge if I was asked.

[00:08:26] Speaker 01:
So the first thing is

[00:08:28] Speaker 01:
The fact that the appellate judge might have reached a different decision than any of the eight jurors or the eight jurors collectively is not enough to overturn the verdict.

[00:08:38] Speaker 01:
And we're not suggesting that it is.

[00:08:39] Speaker 01:
It's really irrelevant.

[00:08:40] Speaker 01:
It's irrelevant in the sense that it's not a basis for overturning the verdict.

[00:08:45] Speaker 02:
What is the basis then for overturning a jury verdict in this kind of a case after the jury had spent 10 days

[00:08:55] Speaker 02:
hopefully not too painfully, listening to the description of how these machines work, and you turn the knobs, and the wheels, and all the rest of it.

[00:09:04] Speaker 01:
Your Honor, it's the reason that we have JMOL in appeal.

[00:09:08] Speaker 02:
And there are two bases... Oh, and by the way, the judge was there too, right?

[00:09:11] Speaker 01:
Yes.

[00:09:12] Speaker 01:
Yes.

[00:09:13] Speaker 02:
And how did the judge come out?

[00:09:15] Speaker 01:
The judge actually denied the JMOL, which is exactly my answer to your question, which is there are two questions, or two different questions on appeal that results from

[00:09:24] Speaker 01:
the verdict and the judge's ruling.

[00:09:27] Speaker 01:
And the first is whether there is substantial evidence to support the verdict of non-obviousness.

[00:09:34] Speaker 01:
And the second is, under KSR, the independent evaluation as a matter of law that the court undertakes.

[00:09:40] Speaker 01:
Both the district court judge would undertake and this court would undertake de novo.

[00:09:45] Speaker 01:
And not withstanding the 10 days, respectfully, this is the advice I would give to the district court judge.

[00:09:53] Speaker 01:
If you focus on just five pages.

[00:09:55] Speaker 02:
You're not talking about district court.

[00:09:56] Speaker 01:
The court of appeals judge.

[00:09:57] Speaker 02:
You're talking about a tele-court judge who has also listened to the district court judge, as you did.

[00:10:03] Speaker 01:
And I would, in this particular case, say the following.

[00:10:08] Speaker 01:
If you focus on no more than five pages in this record, 83539 to 40, which is the jury instruction where the district court judge who was there instructed the jury that

[00:10:22] Speaker 01:
in four different pieces of prior art, virtually every element of the claims was disclosed.

[00:10:28] Speaker 01:
The second is A8849, which is the challenger manual, which says in a single paragraph what's missing.

[00:10:36] Speaker 02:
Well, there's no doubt that the appellate judge would have voted for you.

[00:10:40] Speaker 02:
There's no doubt about that.

[00:10:41] Speaker 02:
But Your Honor, I think that's not the issue.

[00:10:43] Speaker 02:
You yourself said that's not the issue.

[00:10:45] Speaker 01:
But Your Honor, if the appellate judge would have voted for us as a juror,

[00:10:51] Speaker 01:
I think that that's irrelevant.

[00:10:52] Speaker 01:
On the other hand, if the appellate judge focuses on the undisputed facts that compel, we suggest, a determination of non-obviousness, that then says there's not substantial evidence or independent lady.

[00:11:06] Speaker 00:
This is a problem.

[00:11:06] Speaker 00:
You want us to focus only on the facts that help your case.

[00:11:11] Speaker 00:
But on appeal, there are presumably a lot of jury fact findings in favor of obviousness here.

[00:11:18] Speaker 00:
that I have to review for substantial evidence.

[00:11:21] Speaker 00:
And so that's not a matter of just looking at the facts that you point to that are the strongest for your case.

[00:11:27] Speaker 00:
It's looking at the facts that go the other way and saying they don't rise to the level of substantial evidence.

[00:11:34] Speaker 01:
Your Honor, I couldn't agree more.

[00:11:35] Speaker 00:
You started your conversation with Mr. Pleger with you only have to look at five pages of this record.

[00:11:40] Speaker 00:
That's what you said to him.

[00:11:41] Speaker 00:
That is a

[00:11:42] Speaker 00:
radically improper way for an appellate court to review a jury verdict.

[00:11:47] Speaker 01:
Your honor, I wasn't suggesting that you would look at any of the remaining portions of the record that were cited to you.

[00:11:54] Speaker 01:
But given that the obligation of the district court judge was to decide as a matter of review whether there was substantial evidence, given also that the district court judge had the obligation to determine de novo whether it was obvious as a matter of law

[00:12:11] Speaker 01:
We can focus first on what the undisputed facts are.

[00:12:14] Speaker 01:
And then you can put in context anything else that they would like to offer.

[00:12:19] Speaker 01:
And if you focus on these, there is a jury charge that says virtually every element is satisfied.

[00:12:26] Speaker 01:
There is the undisputed evidence, the challenger satisfies remaining limitation.

[00:12:31] Speaker 01:
And your honor, the challenger on the remaining limitation operates exactly the same as the accused feature.

[00:12:38] Speaker 05:
How do you respond to some of the other evidence that was raised in the red brief?

[00:12:44] Speaker 05:
Like, for example, that the chief of the Coast Guard said it was one of the most impressive innovations, or some of the testimony from your own witness saying that the prototype was quite a surprise, and things like that.

[00:12:58] Speaker 05:
Those are the kind of things that concern me, because I think it's a really hard issue, to be honest with you.

[00:13:05] Speaker 05:
But at the same time, there is some evidence here, including the fact that the SAE draft final report itself has some language that says, oh, there could be problems here.

[00:13:15] Speaker 01:
So let me answer that question.

[00:13:17] Speaker 01:
I know in my rebuttal time, and I'd like to give two sentences on each of the other two issues before, and then reserve the remaining time if I could.

[00:13:24] Speaker 01:
On the statement by the Coast Guard, it's in a press release when the product was introduced.

[00:13:31] Speaker 01:
for the court, whether it's de novo or reviewing substantial evidence, is this on secondary considerations.

[00:13:37] Speaker 01:
There's no proof of copying.

[00:13:38] Speaker 01:
There was no proof of commercial success.

[00:13:42] Speaker 01:
There was a single license for $315,000.

[00:13:44] Speaker 00:
Well, you've got, wait, you've got long felt lead and you've got praise.

[00:13:49] Speaker 00:
So don't tell me what you don't have.

[00:13:50] Speaker 00:
Deal with what you do have.

[00:13:51] Speaker 00:
This is your problem.

[00:13:52] Speaker 00:
Mr. Lee, you stand here all morning and you're trying to tell me what helps your case.

[00:13:56] Speaker 00:
But in a substantial evidence standard, you've got to dispute what they actually had evidence of.

[00:14:01] Speaker 01:
And I was just about to dispute.

[00:14:02] Speaker 00:
Yeah, but with your time running out, don't start with all the things that help you.

[00:14:05] Speaker 00:
Go to the heart of what hurts you.

[00:14:06] Speaker 01:
There are only two things.

[00:14:08] Speaker 01:
A press release that they issue, which is not the type of praise that would be a secondary consideration overcoming the obviousness case we presented.

[00:14:16] Speaker 01:
And the second thing is long felt need.

[00:14:19] Speaker 01:
But as I said, in response to Judge Cleggers' question, the challenger operates exactly the same as the

[00:14:24] Speaker 01:
swagger reapplication system of OTAS.

[00:14:28] Speaker 01:
This solution to the problem had actually been developed 10 years before.

[00:14:34] Speaker 01:
So if I could just let me say two things.

[00:14:36] Speaker 00:
No, you can't.

[00:14:38] Speaker 00:
I would like you to talk about marking.

[00:14:40] Speaker 00:
That's the only other issue that I want to hear anything about from you right now, since you're totally out of time.

[00:14:45] Speaker 00:
But I do want to hear about marking, because that is a case of first impression for the court if we are to reach it.

[00:14:50] Speaker 01:
I think there is a small set of discrete facts that we think are largely undisputed.

[00:14:55] Speaker 01:
So there is no dispute that no products were sold by the plaintiff marked with the path.

[00:15:02] Speaker 01:
There's no discreet that there was a license that was entered into with conduct.

[00:15:08] Speaker 00:
We read your facts.

[00:15:09] Speaker 00:
You're testing my patience.

[00:15:12] Speaker 00:
So get to the exact point of which of the two standards, minority or majority view, I'll call them, we ought to adopt, and whether the district court adopted either of them or erred and sort of came up with a third, and then tell me which one I should choose.

[00:15:27] Speaker 01:
The answer is we believe the majority

[00:15:30] Speaker 01:
view is the correct view, but it doesn't matter here.

[00:15:33] Speaker 01:
If you adopt the majority view or the majority view, we identified 14 Honda personal water crafts.

[00:15:39] Speaker 01:
We offered testimony that if Otis infringed, so did those.

[00:15:44] Speaker 01:
There was no evidence in response.

[00:15:46] Speaker 00:
But here's your problem.

[00:15:47] Speaker 00:
You've asked me.

[00:15:48] Speaker 00:
OK, say I agree with everything you just said.

[00:15:50] Speaker 00:
You've asked me for a reversal.

[00:15:51] Speaker 00:
I don't know how you get to a reversal when the district court adopted the rule of law.

[00:15:56] Speaker 00:
It did adopt, in summary judgment,

[00:15:59] Speaker 00:
Therefore, a trial goes forward with the expectation that the burden of proof is on you all.

[00:16:03] Speaker 00:
Whether that's correct or not, probably not correct.

[00:16:06] Speaker 00:
But whether it's correct or not, the burden was placed on you all.

[00:16:09] Speaker 00:
You may be met your burden of production even if we do adopt that particular view by identifying these 14 things.

[00:16:16] Speaker 00:
But my problem is they were never on notice since the court adopted the rule of law.

[00:16:21] Speaker 00:
It was choosing its summary judgment.

[00:16:23] Speaker 00:
And therefore, they were never given an opportunity

[00:16:25] Speaker 00:
to put on evidence at trial.

[00:16:27] Speaker 00:
Why should they?

[00:16:28] Speaker 00:
If they don't have the burden of proof, but you do, why in the world should they put in claim charts?

[00:16:33] Speaker 00:
So you've asked for a reversal, but I don't see how you can get anything more than a vacate and remand, even if I agree with everything you've argued about the law.

[00:16:41] Speaker 01:
So Your Honor, just two points since I'm past my rebuttal time.

[00:16:45] Speaker 01:
First is this.

[00:16:47] Speaker 01:
Whether you adopt a minority view or the majority view, we suggest that we satisfied our burden of production or persuasion.

[00:16:53] Speaker 01:
On your point.

[00:16:55] Speaker 01:
There was an issue at summary judgment.

[00:16:57] Speaker 01:
The jury charged did not charge on this issue at all.

[00:17:02] Speaker 00:
Yes, but this has nothing to do with the jury charge.

[00:17:03] Speaker 00:
This has to do with whether they were put on notice that they would have the obligation to put forward evidence.

[00:17:09] Speaker 00:
If the judge has already announced in summary judgment, which he did very clearly, that you had the burden of producing claim charts on infringement if you were going to try to allege that the Honda models, the 14 models that you identified,

[00:17:23] Speaker 00:
actually fell within the claims, once the judge has put that burden on you, how would it be fair to them for me to reverse in your favor saying, well, you didn't put on the evidence to the jury?

[00:17:34] Speaker 00:
I mean, they were clearly of the belief, and I think rightly so, that you had the burden.

[00:17:39] Speaker 01:
Well, Your Honor, let me say two things.

[00:17:43] Speaker 01:
If it was that clear that we had the burden of proving both that there were personal water crests sold and that they were covered by the claims, then

[00:17:52] Speaker 01:
that is inconsistent with both the majority view and the minority view.

[00:17:55] Speaker 01:
And so the legal standard is wrong.

[00:17:57] Speaker 00:
Yes, but I accept that.

[00:18:00] Speaker 00:
My question is, if that is how I view what the court nonetheless did, then how could I possibly?

[00:18:05] Speaker 00:
And you've said that's what the court did, by the way.

[00:18:09] Speaker 00:
I agree.

[00:18:10] Speaker 00:
That's what the court did.

[00:18:11] Speaker 00:
So if I agree with that legal argument by you, how in the world can I give you the result you want, which is a reversal, when they never had an opportunity to put on evidence

[00:18:20] Speaker 00:
that for the first time in this litigation, I'm going to make clear is there a burden to do.

[00:18:25] Speaker 01:
Right.

[00:18:26] Speaker 01:
Your Honor, what you say has logic to it.

[00:18:29] Speaker 01:
And at a minimum, we require a vacatur.

[00:18:32] Speaker 01:
We would suggest this question of who had the burden was a live issue right up until the charging conference, which occurs after the evidence is in.

[00:18:41] Speaker 01:
Both of us had a chance to prove what we're going to prove as a matter of evidence.

[00:18:46] Speaker 01:
Under the logic your honor just articulated, what you would do is you would vacate and remain for determination of whether they satisfied the burden.

[00:18:53] Speaker 00:
No, for a new trial on this issue, and possibly even the opening of discovery, if it's my view, which you argued to me.

[00:19:01] Speaker 00:
that the summary judgment motion makes it clear that the district court put the entire burden of proof, not even just the burden of production, on you all improperly.

[00:19:10] Speaker 00:
So if you win on that legal argument which you made to me, the only result that I can see that is proper is to vacate and remand and to order the court not only to conduct a new trial on marking, but also to possibly allow the introduction of evidence since this plaintiff

[00:19:26] Speaker 00:
was unaware that they would have this burden of producing evidence.

[00:19:29] Speaker 01:
So let me break down my answer into two parts.

[00:19:32] Speaker 01:
The first part of the answer to your question is, yes, as a matter of logic, that's what you would do.

[00:19:39] Speaker 01:
I think the question of whether there was an opportunity to discover and make contention about this issue for summary judgment is something that we would address with this report.

[00:19:49] Speaker 01:
And at that point, she would decide whether there was new discovery or not.

[00:19:53] Speaker 01:
But if the legal standards incorrect,

[00:19:56] Speaker 01:
At a minimum, there should be a new trial.

[00:19:58] Speaker 01:
Whether there would be new discovery, new evidence would be something the district court would decide in light of your arms ruling.

[00:20:03] Speaker 00:
OK.

[00:20:03] Speaker 00:
Thank you, Mr. Lee.

[00:20:05] Speaker 02:
I think Mr. Lee said he'd be happy with your result.

[00:20:09] Speaker 00:
I don't think he suggested that, actually.

[00:20:13] Speaker 00:
But we will restore your rebuttal time.

[00:20:15] Speaker 00:
Thank you for answering our questions.

[00:20:17] Speaker 00:
Mr. Dragstaff.

[00:20:18] Speaker 03:
May it please the court to avoid switching too many times.

[00:20:20] Speaker 03:
I will start with marking where we've left off.

[00:20:23] Speaker 03:
And maybe I'll take that in reverse.

[00:20:25] Speaker 03:
I'll assume for a moment that they have the burden properly and address what they put in.

[00:20:30] Speaker 00:
What burden do you think they have?

[00:20:32] Speaker 03:
The original burden of production.

[00:20:34] Speaker 00:
See, that part gets a little fuzzy in that district court summary judgment motion where he seems, he or she, she seems to sometimes refer to it as a burden of production, sometimes burden of proof.

[00:20:47] Speaker 00:
It's my understanding.

[00:20:48] Speaker 00:
The burden of proof is the persuasion burden that ultimately stays at all times with you all.

[00:20:53] Speaker 00:
Is that your understanding as well?

[00:20:54] Speaker 00:
I think so.

[00:20:55] Speaker 00:
Okay.

[00:20:55] Speaker 00:
And so the only question is who has the burden of initially coming forward?

[00:20:59] Speaker 00:
Is it the patentee under one view, some district court judges, or is it the petitioner or the infringer who's challenging?

[00:21:08] Speaker 00:
That's right.

[00:21:09] Speaker 03:
That's my understanding.

[00:21:10] Speaker 03:
So let me try it backwards, because I think it's easier to talk about what they provided, and then we'll talk about why we think they should have the burden of production.

[00:21:19] Speaker 03:
So what they provided, they cite four places.

[00:21:22] Speaker 03:
One of them is the license, so that wasn't really what's provided.

[00:21:25] Speaker 03:
But one is A2447 to 48.

[00:21:29] Speaker 03:
And the question was, to their expert, were you asked to opine on whether the patents covered the Honda products?

[00:21:35] Speaker 03:
He says yes.

[00:21:36] Speaker 03:
And they say, what's your opinion?

[00:21:38] Speaker 03:
So we're waiting for him to say, yes, the patents cover the Honda products.

[00:21:41] Speaker 03:
And he says, well, I, the Honda system is very similar to OTAS.

[00:21:48] Speaker 03:
OK, so they had a chance to meet their burden.

[00:21:52] Speaker 03:
The guy said he was asked, do the patents cover Honda?

[00:21:57] Speaker 03:
And he says, no, it's similar to OTAS.

[00:21:58] Speaker 03:
In other words, Honda's similar, not the same as, but similar to BRP.

[00:22:04] Speaker 03:
So when they had a chance to get the opinion to meet that burden, they didn't meet it.

[00:22:09] Speaker 05:
Didn't they identify, I understand there was maybe 14 Honda sales that they identified?

[00:22:16] Speaker 05:
And you're saying that's not enough.

[00:22:19] Speaker 05:
It doesn't then shift the burden to you.

[00:22:21] Speaker 03:
The stipulation, as I understand it, said Honda sold these 14 products.

[00:22:29] Speaker 03:
Not those products were covered by the patents or anything like that.

[00:22:34] Speaker 03:
Okay.

[00:22:35] Speaker 03:
So it has to be more than just saying there's a third party that's selling products.

[00:22:39] Speaker 03:
They have to at least make an assertion.

[00:22:41] Speaker 03:
In our view is they have to make a prima facie case.

[00:22:43] Speaker 03:
They have to come forward, you know, to show where the elements are met.

[00:22:47] Speaker 03:
But they didn't even come forward.

[00:22:48] Speaker 05:
They have to prepare the claim chart.

[00:22:50] Speaker 03:
Not necessarily a claim chart.

[00:22:51] Speaker 05:
I think it... Then what would it have to be?

[00:22:53] Speaker 03:
It would have to be an assertion that all elements were met, but it doesn't have to be as formal as a claim chart.

[00:22:58] Speaker 03:
It could be that the parties don't dispute.

[00:23:01] Speaker 03:
You know, in a lot of cases, the parties don't dispute what is

[00:23:04] Speaker 05:
address and so it might be one element that they deal with.

[00:23:09] Speaker 03:
They might have to come forward with a chart would be one way to do it but they would have to come forward with allegations sufficient to show if they're believed.

[00:23:18] Speaker 03:
They don't have to be believed.

[00:23:20] Speaker 03:
They don't have to win on it obviously.

[00:23:21] Speaker 03:
We have to win at the end of the day.

[00:23:23] Speaker 05:
Why would they have to be the ones to show whether Honda was selling patented products when, in fact, you are the ones who would more likely to have that information about how the Honda products work, given that it was your licensee?

[00:23:39] Speaker 03:
OK, two points.

[00:23:41] Speaker 03:
Nobody's ever said, and there is no evidence, that we would be more likely.

[00:23:44] Speaker 03:
What Dunlap says is that the patentee would be more likely to know about its own products.

[00:23:50] Speaker 03:
The reality is that a patentee does not necessarily know anything about what its licensee is doing.

[00:23:55] Speaker 03:
You see parties all the time where the patentee and the licensee are not friendly.

[00:24:00] Speaker 03:
I don't think anybody's ever, if you hear somebody talk about licensees as an opportunity, that's not the licensee saying it.

[00:24:07] Speaker 03:
Licensees are not best friends with the people that they're paying money to.

[00:24:11] Speaker 05:
And in fact- It's a little different in this situation, isn't it?

[00:24:13] Speaker 05:
Since your client, as I understand it, isn't making the products.

[00:24:18] Speaker 03:
It may be different, but we're not partnering anyway.

[00:24:21] Speaker 03:
There's not a joint venture.

[00:24:22] Speaker 03:
And in fact, if they actually would be practicing and having to pay, or if you have an ongoing royalty, the licensee would actually be friendlier with the defendant, because the defendant is trying to kill the patent, and then the licensee wouldn't have to pay anymore.

[00:24:36] Speaker 03:
So I think that the assumption that the Dunlap rule should control in the licensee context is off.

[00:24:43] Speaker 03:
There are points on both sides for it, but I don't think it controls it.

[00:24:46] Speaker 00:
I don't think I.

[00:24:48] Speaker 00:
agree at all, and I don't know if what Judge Stoll was posing was a question or sort of a statement, but I think that she has the better of it with Dunlap.

[00:24:59] Speaker 00:
Very seldom do we see these upfront paid, fully paid licensing agreement that for such a small amount of money give a license to all of these patents and any other family patents, which is the ones that are at issue here, and say, and by the way, you have no obligation to mark anything.

[00:25:15] Speaker 00:
I would say this is not the normal licensing agreement that I've been exposed to in my history as a judge.

[00:25:22] Speaker 00:
But nonetheless, in the normal licensing agreement where the patentee is having an accounting by the licensee because most licensing agreements are a pay to play kind of scenario, of course the patentee is better situated to know whether the product comes within the claims because every single one they sell

[00:25:43] Speaker 00:
is going to result in direct money to the patentee.

[00:25:45] Speaker 00:
And what we do see here are a lot of disputes between licensees and patentees over whether particular models do or don't fall within claims and therefore require payment.

[00:25:54] Speaker 00:
So I mean, I don't think this licensing agreement is the norm.

[00:25:58] Speaker 00:
But if we're being asked to make a rule of law that applies in all patentee licensing arrangements, I think that what Judge Stoll suggested is probably the better rule of law because I think I shouldn't create a special rule of law because you've got a weird license.

[00:26:12] Speaker 03:
So let me take that point, because I think that is a good point, that you're being asked to apply a rule that works in all cases.

[00:26:18] Speaker 03:
And it's the countervailing factor that I think trumps any Dunlap concern.

[00:26:22] Speaker 03:
And the countervailing factor is there's an asymmetry in proof of marking.

[00:26:28] Speaker 03:
I would have to prove marking across the board.

[00:26:31] Speaker 03:
I say across all products.

[00:26:32] Speaker 03:
They say, well, you'd only have to prove it for certain PWCs that have certain features.

[00:26:38] Speaker 03:
But if you're trying to do a rule across the board,

[00:26:40] Speaker 03:
a company like Intel with chips would have to identify everything.

[00:26:44] Speaker 05:
I'm sorry to interrupt you, but in this case, that doesn't make sense.

[00:26:48] Speaker 05:
I understand your point, but at some point, the accused infringer should have to do something like identify 14 products, identify some limited universe that might not be marked, and then the burden shifts.

[00:27:06] Speaker 05:
Why wouldn't that work?

[00:27:07] Speaker 05:
It allays your concern, for sure.

[00:27:10] Speaker 03:
I think they have to at least identify products that aren't marked with an allegation that they actually infringe.

[00:27:17] Speaker 03:
And the identification of the 14 products did not have that allegation in them.

[00:27:21] Speaker 03:
And the question I read you from their expert does not have that allegation in it.

[00:27:25] Speaker 03:
There's another.

[00:27:26] Speaker 05:
It's not fair to place the burden on the patent owner because there's such a large universe.

[00:27:32] Speaker 05:
But what if that universe has been narrowed?

[00:27:36] Speaker 05:
And here it has been narrowed, right?

[00:27:38] Speaker 03:
I would disagree that it has been narrowed.

[00:27:40] Speaker 03:
The list, there is no context for that list.

[00:27:43] Speaker 03:
The list says, here's 14 things that Honda generated.

[00:27:47] Speaker 03:
There's no agreement that that's all we have to come back on.

[00:27:51] Speaker 03:
They can say that here, but even in this case, there is no agreement that we've met our burden by just dealing with those 14.

[00:27:59] Speaker 03:
If you put the burden on us initially, there is no narrowing.

[00:28:04] Speaker 03:
What you have here is somebody who thought they had the burden, they made a list of 14.

[00:28:08] Speaker 03:
We say they didn't do enough because they never even asserted that those were infringing.

[00:28:13] Speaker 03:
They asserted that they were similar to their product.

[00:28:16] Speaker 03:
But if you don't have this rule, if you don't have a party that feels they have to put a list in, then they don't have to do anything.

[00:28:23] Speaker 03:
And there is no narrowing.

[00:28:24] Speaker 00:
And that's our point.

[00:28:25] Speaker 00:
But let's assume that we agree with your view of what the legal standard should be.

[00:28:31] Speaker 00:
They have a burden of production to come forward.

[00:28:34] Speaker 00:
why haven't they met it?

[00:28:35] Speaker 00:
I mean they identified 14 Honda jet skis that are all within the same general line that I mean I don't know what to possibly use this list for but for a claim because it follows directly afterwards with and they didn't mark any of these with either of these patent numbers.

[00:28:57] Speaker 00:
You're right that it doesn't say and we have concluded

[00:29:01] Speaker 00:
after expert testimony that they infringe, it doesn't say that last little part, but it says here are 14, and these 14 aren't marked with either of these patent numbers in suit.

[00:29:12] Speaker 03:
I would say they actually testified that they don't infringe.

[00:29:16] Speaker 03:
If you go to 2482, which Mr. Lee cited, they start with saying that there is no infringement, and then they say, but if we infringe, then they infringe.

[00:29:27] Speaker 03:
But the testimony was the Honda products don't infringe.

[00:29:31] Speaker 00:
And what they had here was they were trying to- No, that's such an alternative argument.

[00:29:35] Speaker 00:
That doesn't help you.

[00:29:36] Speaker 00:
I mean, the fact that they might say, look, what we actually think we're doing is like what Honda's doing.

[00:29:41] Speaker 00:
And since we say we don't infringe, we're also going to say they don't infringe.

[00:29:44] Speaker 00:
No, you can't have it both ways.

[00:29:46] Speaker 00:
If he loses on infringement, then you can't say, oh, therefore he also hasn't met his burden on marking because he didn't assert they infringed.

[00:29:53] Speaker 00:
He doesn't have to give up on infringement in order to assert that you failed to mark.

[00:29:57] Speaker 00:
That would not make any sense.

[00:30:00] Speaker 00:
that can't be the rule.

[00:30:01] Speaker 03:
So if you look at the testimony he also ends by saying, but I don't know.

[00:30:04] Speaker 05:
He admitted a lack of knowledge.

[00:30:07] Speaker 05:
They said our products are like theirs, then they're found to infringe.

[00:30:13] Speaker 03:
That's it.

[00:30:14] Speaker 03:
Our products are like theirs.

[00:30:15] Speaker 03:
Not our products would infringe for the same reason or anything.

[00:30:18] Speaker 05:
I don't think it's fair to hold that statement against them when they were later found to infringe.

[00:30:26] Speaker 03:
But their statement isn't

[00:30:29] Speaker 03:
that the products are the same.

[00:30:31] Speaker 03:
They say our products are like theirs.

[00:30:33] Speaker 03:
And so they're hedging.

[00:30:35] Speaker 03:
They're trying to not admit they were hedging.

[00:30:39] Speaker 03:
If they had said, listen, these products by Honda do exactly what we're doing,

[00:30:45] Speaker 03:
So if we infringe, it's in.

[00:30:46] Speaker 03:
But what they're saying is they're similar.

[00:30:48] Speaker 03:
So they're hedging on it.

[00:30:49] Speaker 00:
I need to move you to obviousness, because we have a limited number of minutes together.

[00:30:53] Speaker 00:
And I think it's really important.

[00:30:55] Speaker 00:
I understand your arguments on marking from the briefs.

[00:30:58] Speaker 00:
And if my colleagues want to return to that subject, they certainly can.

[00:31:01] Speaker 00:
But I personally would really like to see you move on to obviousness.

[00:31:05] Speaker 03:
Sure.

[00:31:05] Speaker 05:
I have a question for you on obviousness, actually.

[00:31:10] Speaker 05:
Understand, you know, we have to look and see whether substantial evidence support the jury verdict, assuming that the jury has found all facts that are possible in your favor.

[00:31:19] Speaker 05:
But there's one part of KSR that has been troubling me, and so I want to read it to you and get your response to it.

[00:31:25] Speaker 05:
And KSR says, when there is a design need or market pressure to solve a problem,

[00:31:30] Speaker 05:
And there are a finite number of identified predictable solutions.

[00:31:34] Speaker 05:
A person of ordinary skill has good reason to pursue the known options within his or her technical grasp.

[00:31:40] Speaker 05:
If this leads to the anticipated success, it is likely the product not of innovation, but of ordinary skill and common sense.

[00:31:48] Speaker 05:
And so I just wonder whether that makes it so the jury verdict here

[00:31:55] Speaker 05:
is not a reasonable one given these kinds of statements in KSR because here there is a finite you've got that SAE report that has a finite number of solutions I believe there's four and then you get a patent on one of them and so how do you respond to that?

[00:32:12] Speaker 03:
Okay so first it says likely we don't have to go too far with that it says likely okay so that's the easiest response number two

[00:32:20] Speaker 03:
We disagree on the finite.

[00:32:22] Speaker 03:
I mean, all solutions are finite.

[00:32:24] Speaker 03:
But we disagree on the four.

[00:32:26] Speaker 03:
Number one, the jury could find there were more than four.

[00:32:29] Speaker 03:
They could find that maybe there were four categories with many solutions under them.

[00:32:33] Speaker 03:
That's up to the jury to decide.

[00:32:35] Speaker 00:
That's a fact question.

[00:32:36] Speaker 00:
Well, in fact, didn't BRP's Mr. Plant testify that there were 17 separate off-throttle steering prototypes using various approaches?

[00:32:43] Speaker 03:
And they worked on them for years.

[00:32:45] Speaker 03:
long time that they worked on them and worked out each one suggests that each one was a distinct solution and not that they're all just one solution.

[00:32:56] Speaker 00:
Well, whether I agree whether they're distinct or all one or not isn't really even the answer, right?

[00:33:02] Speaker 00:
It's just whether the jury could have possibly come to that conclusion.

[00:33:05] Speaker 03:
I don't know if we're on three or four.

[00:33:07] Speaker 03:
There was never testimony that there was a finite number of solutions.

[00:33:11] Speaker 03:
Nobody said this is it.

[00:33:13] Speaker 03:
And in fact,

[00:33:14] Speaker 03:
If you look in our patent, examples one, two, three, and maybe four don't fit any of those solutions.

[00:33:22] Speaker 03:
They are throttle reapplication, but they don't practice our patent.

[00:33:25] Speaker 03:
The examples are you have the throttle and maybe you put some foam in.

[00:33:28] Speaker 03:
So when you let go of the throttle, it takes a little longer down at the bottom.

[00:33:32] Speaker 03:
And then they graph how it kind of slows down more slowly.

[00:33:36] Speaker 03:
That doesn't infringe our patent.

[00:33:37] Speaker 03:
That's throttle reapplication.

[00:33:39] Speaker 03:
So a lot of their obvious in this case is to generalize our invention out to throttle reapplication.

[00:33:45] Speaker 03:
We're not all throttle reapplication.

[00:33:47] Speaker 00:
Not all off-throttle steering would infringe your patent.

[00:33:50] Speaker 03:
Exactly.

[00:33:51] Speaker 00:
And wasn't there also an internal BRP memo that was part of this file record before the jury that actually called itself a brainstorming memo and identified 32 separate ways to achieve off-throttle steering in this art?

[00:34:08] Speaker 03:
Yes.

[00:34:09] Speaker 03:
And then further on the KSR point, they say predictable.

[00:34:13] Speaker 03:
We think there is

[00:34:14] Speaker 03:
Substantial evidence that the result here was not predictable.

[00:34:17] Speaker 03:
Because if you look at what was facing these people, both Breen, we haven't even gotten to whether Breen can be testifying at all or provide any evidence for them.

[00:34:26] Speaker 03:
But if you look at Breen.

[00:34:27] Speaker 00:
Just so I know for timing purposes.

[00:34:29] Speaker 00:
Is Mr. Breen the one who said he was surprised?

[00:34:32] Speaker 03:
No.

[00:34:32] Speaker 03:
That's Samard.

[00:34:33] Speaker 03:
It's their guy.

[00:34:34] Speaker 03:
Both teams said surprised.

[00:34:36] Speaker 03:
He uses the word surprised.

[00:34:37] Speaker 03:
Our team said surprised.

[00:34:38] Speaker 03:
Their team said surprised.

[00:34:39] Speaker 03:
And I would say that they are super skilled.

[00:34:41] Speaker 03:
They had Sam Spade on their team who

[00:34:44] Speaker 03:
who Samard said knows everything about watercraft and was a racer of personal watercraft.

[00:34:51] Speaker 03:
So you have super skilled teams that are saying they were surprised.

[00:34:55] Speaker 00:
Can I just ask a timing question?

[00:34:58] Speaker 00:
The SAE report, I don't remember the date of it, but like is the BRP brainstorming memo after the SAE report to your knowledge or before?

[00:35:08] Speaker 00:
Do you remember chronologically?

[00:35:10] Speaker 00:
I don't, that's why I'm asking.

[00:35:11] Speaker 03:
Before.

[00:35:12] Speaker 00:
The BRP memo is before.

[00:35:14] Speaker 00:
So if that's the case though, maybe there were 32 things on the table, but then when SAE comes along, isn't it possible those 32 get narrowed down to four?

[00:35:25] Speaker 00:
Or do you think any of these 32 would fit within option four of the SAE memo?

[00:35:30] Speaker 03:
Okay, so let me hit that as well as I can.

[00:35:33] Speaker 03:
If you look at the SAE memo, they said we sent out questionnaires to folks and we're reporting on what we got back.

[00:35:40] Speaker 03:
Okay, so they're not saying

[00:35:42] Speaker 03:
that there's only four or that we've narrowed down to four, they're saying in response to the, I think, 30-some letters we sent out, we got these four back.

[00:35:51] Speaker 03:
And so that's the context of the SAE.

[00:35:53] Speaker 03:
There's no context in there to say these are your solutions or this is your exhaustive list of solutions.

[00:36:00] Speaker 02:
Of course, we don't know whether the jury thought there were two, four, or 30, do we?

[00:36:05] Speaker 03:
Right.

[00:36:05] Speaker 03:
And there were plenty in front of them.

[00:36:07] Speaker 03:
There are more out there that I just identified from our patent.

[00:36:10] Speaker 00:
And I guess, ultimately, if I understand your point, it would be that even within those four identified by the SAE report, there were lots of formulations within each of those four, some of which would infringe, some of which would not.

[00:36:24] Speaker 03:
Right.

[00:36:24] Speaker 00:
Like you can put the rudder under the boat.

[00:36:25] Speaker 00:
You can put the rudder on the back of the boat.

[00:36:27] Speaker 00:
Right?

[00:36:27] Speaker 00:
Right.

[00:36:29] Speaker 03:
And that was up to the jury.

[00:36:30] Speaker 03:
OK.

[00:36:30] Speaker 03:
And this is an area that involves safety.

[00:36:33] Speaker 03:
OK.

[00:36:34] Speaker 03:
You're putting something on a big boat, onto a small boat.

[00:36:37] Speaker 03:
Everybody, the dynamics of the small boat

[00:36:39] Speaker 03:
every factor that differs makes that small boat less safe.

[00:36:43] Speaker 03:
And then what you're doing is putting thrust onto that small boat without telling the driver.

[00:36:47] Speaker 03:
And I say that because it brings it closer to some of these pharma cases where you're trying to make a drug that doesn't kill people and there's teachings away or there's dissuasion because of dangers and this is why the people, the low skilled people in this field relative to pharma would be

[00:37:06] Speaker 00:
dissuaded whether that's a key cheating way whether you say that's not a motivation to combine or whether you say that's not a reasonable and just going back to that finite point for just one more second not not trying to beat a dead horse but I also remember testimony somewhere in the record and I want to know if this is correct and if you can explain it to me

[00:37:25] Speaker 00:
that you said they sent out letters and 30 or so people responded and contributed to this SAE report.

[00:37:31] Speaker 00:
Weren't there a bunch of companies that said, we're not going to respond?

[00:37:33] Speaker 00:
And the rationale given was, we're not going to reveal our technology.

[00:37:38] Speaker 03:
I think that's accurate.

[00:37:38] Speaker 03:
And if you actually take that one step further, you look at the two parties here.

[00:37:42] Speaker 03:
This is a little bit like an interference if you want to bring in the Proto 14, which we think doesn't have to be brought in.

[00:37:47] Speaker 03:
But if it is brought in, their team was surprised that it succeeded, too.

[00:37:51] Speaker 03:
But they made the Proto 14.

[00:37:53] Speaker 03:
covered their documents with confidential.

[00:37:55] Speaker 03:
Look in the report of the Proto 14, which we say doesn't say much, covered it in confidential.

[00:38:00] Speaker 03:
We invited the Coast Guard to come and look at it.

[00:38:04] Speaker 03:
We invited our competitors to come and look at it.

[00:38:06] Speaker 03:
We disclosed it in a patent application.

[00:38:10] Speaker 03:
If you're looking for a parallel to interference, we win the interference.

[00:38:14] Speaker 03:
We got the patent.

[00:38:15] Speaker 03:
Their work should not hurt us.

[00:38:17] Speaker 03:
It helps us.

[00:38:19] Speaker 02:
The PWCs typically are pretty similar in size.

[00:38:24] Speaker 02:
To each other.

[00:38:24] Speaker 02:
To each other.

[00:38:26] Speaker 02:
Do jet boats come in different sizes?

[00:38:30] Speaker 03:
They do, but I think all of them, or at least the evidence was that there is a big difference between the smallest jet boat and a PWC.

[00:38:39] Speaker 02:
What's the size of a small jet boat?

[00:38:42] Speaker 03:
I think, I'm going to say 12, 14 feet probably.

[00:38:47] Speaker 03:
Now, there are differences other than just size.

[00:38:49] Speaker 03:
Seating position, whether you're high or low, whether you're down in the boat,

[00:38:53] Speaker 03:
how wide the boat is, whether it's going to wobble, the throttle, whether you have to reach down for the throttle, or whether it acts automatically.

[00:39:01] Speaker 03:
So there were numerous.

[00:39:02] Speaker 03:
The statement of the challenger boat had everything is just not accurate.

[00:39:07] Speaker 00:
Mr. Dragseth, I think our time is at an end.

[00:39:09] Speaker 00:
But I would like to ask you, if we were to reach the question of marking, can you just and suppose that we were to adopt the view that the

[00:39:22] Speaker 00:
plaintiff for the burden of coming forward or some burden, some important burden.

[00:39:28] Speaker 00:
Suppose we were to adopt that view.

[00:39:30] Speaker 00:
What do you think the correct result would be?

[00:39:33] Speaker 00:
You heard the discussion I had with Mr. Lee.

[00:39:36] Speaker 00:
Should it be vacate and remand, a new trial?

[00:39:39] Speaker 00:
What do you think the right result should be under those circumstances?

[00:39:42] Speaker 03:
I was taking some notes, but I think he said vacate and let the district court deal with it.

[00:39:47] Speaker 03:
And I think that's probably the best result.

[00:39:50] Speaker 03:
If he didn't say that, that's still what I'd say.

[00:39:52] Speaker 00:
OK, very good.

[00:39:52] Speaker 00:
Thank you, Mr. Dragset.

[00:39:54] Speaker 00:
Mr. Lee, you have three minutes of rebuttal time.

[00:40:00] Speaker 01:
Your Honor, three quick points.

[00:40:03] Speaker 01:
On the question of marking, whether you adopt the minority view or the majority view, as articulated by the district courts, none of them impose on the defendant the burden of coming up with claim charts.

[00:40:16] Speaker 01:
The minority view says it's the plaintiff's burden to prove that there are no

[00:40:20] Speaker 01:
licensed products out there that are not marked.

[00:40:23] Speaker 01:
The minority view says the defendant has to identify products that may be covered by the claims.

[00:40:31] Speaker 01:
Then the burden after that shifts to the patentee.

[00:40:36] Speaker 00:
well let me let me ask you about that because this is it if we end up in that space that I want to know whether you've done enough here to satisfy that initial burden of production and in fact I want to kind of crystallize in my mind what that burden would even look like for cases in general because it can't just be that you say well for example suppose Honda had a hundred different models of ski do's and you said

[00:41:01] Speaker 00:
We identify all 100 models of ski do's.

[00:41:04] Speaker 00:
Now, you go prove that every one of them doesn't fall within the claim.

[00:41:07] Speaker 00:
That's not what you did.

[00:41:08] Speaker 00:
But I'm trying to think about, again, a rule of law that is going to make good sense in lots of cases.

[00:41:15] Speaker 00:
So you can tell me, if you don't mind, how you complied in this case and how exactly you think that rule should look so that it doesn't allow what I just suggested, which is the defendant to just point and say all of their products.

[00:41:28] Speaker 01:
Your Honor, I think there are four critical facts that- Four?

[00:41:32] Speaker 00:
That's a new number for you.

[00:41:33] Speaker 00:
All right, go ahead.

[00:41:34] Speaker 00:
Four.

[00:41:35] Speaker 01:
I'm trying to get better with age, at least.

[00:41:36] Speaker 01:
But I think there are four critical facts here.

[00:41:39] Speaker 01:
The fact that you have a license agreement that says you don't have to mark.

[00:41:43] Speaker 01:
the fact that you have a licensor who is affirmatively stipulated that they didn't mark.

[00:41:49] Speaker 01:
And then you have a defendant saying, here are 14 personal watercrafts.

[00:41:54] Speaker 01:
And as Your Honor said, if you look at the stipulation and then the manner in which the stipulation was incorporated in the jury instructions, it basically says, license agreement, no obligation to mark, here are 1,400 watercrafts.

[00:42:11] Speaker 01:
Next paragraph, there have been no steps taken

[00:42:14] Speaker 01:
to determine whether there are any licensed products out there.

[00:42:17] Speaker 01:
In that context, I think, under the minority view, the burden shifts back to them to say, no, those aren't covered by the pen.

[00:42:26] Speaker 00:
The burden... Is that in part because you think you identified a sufficiently limited number of products?

[00:42:32] Speaker 01:
Yes.

[00:42:32] Speaker 00:
As opposed to all models and what if they had a gazillion... You understand?

[00:42:36] Speaker 00:
I do.

[00:42:37] Speaker 01:
I do.

[00:42:38] Speaker 00:
If we were to adopt the minority view, I don't want to effectively make it the majority view by saying all you need to do is point at the licensee and say all his products.

[00:42:47] Speaker 01:
Your Honor, I understand exactly the issue.

[00:42:50] Speaker 01:
I think there are circumstances where a licensor could enter into a license agreement that

[00:42:56] Speaker 01:
You have an obligation to mark.

[00:42:58] Speaker 01:
I have an audit right to determine whether you have.

[00:43:01] Speaker 01:
And they've taken steps to do that.

[00:43:03] Speaker 01:
There are cases that suggest that that may be enough to discharge your obligation.

[00:43:08] Speaker 00:
That's why I start with the- But here, your stipulation, what you've submitted never expressly says that you all hold the belief that any of these 14 likely infringe.

[00:43:22] Speaker 00:
You didn't even say likely infringe or may well infringe.

[00:43:25] Speaker 00:
You know, I think, unless I'm mistaken, I'm looking on pages 3540 and 3541.

[00:43:31] Speaker 00:
That's the assertion, isn't it?

[00:43:35] Speaker 00:
I mean, isn't that?

[00:43:36] Speaker 00:
I don't even know.

[00:43:37] Speaker 01:
Yeah.

[00:43:37] Speaker 01:
Your Honor, that's correct.

[00:43:38] Speaker 01:
That's the instruction.

[00:43:39] Speaker 01:
And then at 2482, the portion that wasn't quoted to you.

[00:43:43] Speaker 00:
But 3540 and 41, you see just this 14 products.

[00:43:47] Speaker 00:
It doesn't say anything at all about these products potentially falling within the claims of this patent.

[00:43:52] Speaker 00:
Right.

[00:43:53] Speaker 01:
Your Honor.

[00:43:54] Speaker 01:
The purpose of that stipulation, which is a fact that everybody agreed upon, and then at 2482, our infringement expert says... 2482?

[00:44:03] Speaker 00:
2482.

[00:44:04] Speaker 01:
Our infringement expert testified at line 9.

[00:44:10] Speaker 01:
If you're going to find that, in fact, OTAS does infringe on the 545, then it looks to me like you would also say that the features of the Honda PWC also would infringe.

[00:44:20] Speaker 01:
So there was... You're correct.

[00:44:22] Speaker 01:
there is an additional piece of proof that was needed that wasn't stipulated to because the parties weren't going to agree to it.

[00:44:29] Speaker 00:
But it's in the evidence.

[00:44:30] Speaker 00:
I get it.

[00:44:31] Speaker 00:
It's in the evidence.

[00:44:31] Speaker 00:
So just so I know, so in formulating a test, if I were to adopt the minority view, do you think it would be right for the test to say you have to identify with some particularity products?

[00:44:45] Speaker 00:
and at least assert that they likely, it's your view, they likely infringed.

[00:44:50] Speaker 00:
Something like that.

[00:44:51] Speaker 01:
I think there's an obligation not just to point to a thousand products and say, go find it.

[00:44:55] Speaker 01:
I think you have to make some good faith representation that here are the products that may be covered by the license.

[00:45:03] Speaker 01:
We believe they are the burden shifts of them to prove.

[00:45:06] Speaker 01:
Now, I do think it's important that

[00:45:08] Speaker 01:
The license agreement here didn't impose an obligation to mark, and there was no effort to mark.

[00:45:12] Speaker 00:
Right.

[00:45:12] Speaker 00:
No, I get it.

[00:45:12] Speaker 00:
That's all part of the facts.

[00:45:13] Speaker 00:
Do you want to say anything about obviousness?

[00:45:15] Speaker 02:
Yes.

[00:45:15] Speaker 02:
One last.

[00:45:16] Speaker 02:
Before we leave the mark, let me ask you, does the fact that the license had a provision in it saying no obligation to mark, does that make this a special case to which whatever our general rule may be, that this is a potential exception area?

[00:45:38] Speaker 01:
That provision, the license agreement, is unusual.

[00:45:42] Speaker 01:
And I think in the marking context, the fact that you affirmatively contract not to have an obligation to mark, and then you have a licensor who affirmatively takes no effort to determine whether they're licensed products makes it a special case.

[00:45:56] Speaker 01:
I can imagine articulating a rule, as Judge Moore did, that would cover that situation.

[00:46:03] Speaker 01:
I can imagine describing it as a specific circumstance that would require

[00:46:08] Speaker 01:
the shifting burdens we've just described.

[00:46:10] Speaker 01:
It could be either.

[00:46:12] Speaker 01:
Last but not least, let's go to Judge Sol's question.

[00:46:17] Speaker 01:
On this question of obvious to try and finite alternatives, and I don't disagree with what Judge Moore said about what's in the record, just two points.

[00:46:26] Speaker 01:
The SAE reports were not talking about just any total reapplication system.

[00:46:31] Speaker 01:
They were talking about the Challenger system, which is identical to the OTAS system.

[00:46:37] Speaker 01:
This wasn't a question of lots of alternatives out there.

[00:46:41] Speaker 01:
Yes, there were prototypes that were required to make it work.

[00:46:44] Speaker 01:
It's identical.

[00:46:45] Speaker 01:
It's identical in every material respect.

[00:46:49] Speaker 01:
And so there were a finite set of opportunities.

[00:46:53] Speaker 01:
Second point is to the chronology which Judge Stoll and Judge Moore asked about.

[00:46:58] Speaker 01:
The SAE report comes out on August of 1999.

[00:47:04] Speaker 01:
The patent application is filed on November 1999.

[00:47:07] Speaker 01:
It's not a coincidence.

[00:47:12] Speaker 01:
There was no prototype from Articat till next year.

[00:47:15] Speaker 01:
The SAE report, which they're now suggesting, doesn't suggest all of the elements and suggests the precise combination is what led to this patent application two months later.

[00:47:25] Speaker 01:
Thank you.

[00:47:26] Speaker 00:
Thank you, Mr. Lee.

[00:47:27] Speaker 00:
I thank both counsel.

[00:47:28] Speaker 00:
The case is taken under submission.

[00:47:33] Speaker 04:
All rise.

[00:47:36] Speaker 04:
The honorable court is adjourned until tomorrow morning at 10 o'clock a.m.