[00:00:01] Speaker 04: Okay. [00:00:02] Speaker 04: The first argued case this morning is number 16, 1856, EMC Corporation against Zertel Incorporated. [00:00:12] Speaker 04: Mr. Lauer. [00:00:22] Speaker 01: Thank you, Your Honor. [00:00:23] Speaker 01: We'd like to reserve five minutes for rebuttal. [00:00:25] Speaker 01: Okay. [00:00:28] Speaker 01: There's a lot of issues in the case. [00:00:31] Speaker 01: I thought I'd begin with the validity of the 460 patent as in the briefing. [00:00:37] Speaker 01: And for the validity of the 460 patent, that's the one that's mirroring using the internet rather than a dedicated line. [00:00:43] Speaker 02: Is this the one that focuses on the Ani and the Zarrow references? [00:00:47] Speaker 02: Yes, Your Honor. [00:00:48] Speaker 01: in the first challenge on validity and what I think I'd like to talk about today. [00:00:52] Speaker 01: There's no question that the issue is whether it would be obvious to use the internet for data communication in UNI, where it had a dedicated line. [00:01:01] Speaker 01: The experts agreed on appeal. [00:01:03] Speaker 01: We all agree. [00:01:04] Speaker 01: There's also no question that the 460 patent teaches virtually nothing new, for sure, about using the internet in the particular context. [00:01:14] Speaker 01: The entire disclosure is [00:01:17] Speaker 01: Column six, for the most part, column six, lines six through 22 or 21. [00:01:23] Speaker 04: What page are you at? [00:01:25] Speaker 01: I'm in the 460 patent. [00:01:27] Speaker 01: Column six, lines six through 21. [00:01:30] Speaker 01: And it's a single paragraph. [00:01:33] Speaker 01: And all it says is, you can use the internet. [00:01:37] Speaker 01: And since most user sites and target storage systems are located here. [00:01:41] Speaker 02: And this is at 162, the joint appendix, right? [00:01:44] Speaker 01: Yes. [00:01:44] Speaker 01: Yes, exactly. [00:01:46] Speaker 01: And that paragraph is the disclosure of use of the internet. [00:01:48] Speaker 01: And all it says, really, throughout the paragraph, is that no significant costs will be incurred because everyone has easy access to the internet. [00:01:55] Speaker 01: It's not how to use the internet. [00:01:57] Speaker 01: It's simply noting that it's there. [00:01:59] Speaker 01: In the next paragraph, it talks about using an intranet or private network. [00:02:04] Speaker 01: And at lines 36 through 38, they note, well, actually at the beginning, it says it's at line 24 to 5, an intranet is similar [00:02:16] Speaker 01: to the internet. [00:02:17] Speaker 01: And then at 35 to 38, it says, it's inexpensive using an existing network requiring little or no changes to the network configuration. [00:02:25] Speaker 01: You can just use it. [00:02:27] Speaker 01: And if you want to know what kind of interface you use, in column seven, lines 55 to 61, standard PC modes. [00:02:34] Speaker 01: If you want to know about load balancing or encryption, conventional techniques. [00:02:38] Speaker 01: So there's no question that the 4.6.0 pad doesn't solve any problem using the internet. [00:02:44] Speaker 01: It just says you can use the internet for data communication in this context. [00:02:49] Speaker 03: In the yellow brief at 43, you argue that to rely on the testimony in Zerto's opening brief, one must first make the unsupported assumption that Rapid Parts was running Microsoft Exchange when the testimony was only that it used email by Microsoft. [00:03:12] Speaker 03: At that time, I had a scribble note [00:03:14] Speaker 03: At that time, did Microsoft offer email services other than Microsoft Exchange? [00:03:20] Speaker 01: Outlook. [00:03:22] Speaker 01: Yes, sir. [00:03:24] Speaker 01: And returning to the 4.6.0 patent, and I believe that was in the record, by the way, that there were alternative emails, including Outlook. [00:03:33] Speaker 01: I didn't just make that up, although I don't have a record site. [00:03:38] Speaker 01: The Xero patent also unquestionably teaches [00:03:44] Speaker 01: Use of the internet. [00:03:45] Speaker 01: Again, not disputed. [00:03:46] Speaker 01: Use of the internet in the context of mirroring for storage. [00:03:50] Speaker 04: And so... So all of this was presented to the jury who didn't agree? [00:03:54] Speaker 01: This was presented to the jury who didn't agree. [00:03:58] Speaker 01: There's some significant questions about how much it... Well, Your Honor, it's not clear whether they agreed. [00:04:03] Speaker 01: Because it was a verdict where they found... No, no, I'm sorry. [00:04:06] Speaker 01: It is clear. [00:04:07] Speaker 01: They did not find anything. [00:04:08] Speaker 02: That's on the 395 and the 091. [00:04:10] Speaker 01: The 395 and the 091... That's where the... [00:04:13] Speaker 02: you have the inconsistent intellectual issue. [00:04:16] Speaker 01: Actually, it's for all of them. [00:04:19] Speaker 01: So the 395 and 091, there was a dependent claim infringed without the independent. [00:04:25] Speaker 01: For the 867 patent, they found contributory infringement but no inducement. [00:04:31] Speaker 01: They found the customers did not directly infringe, while Zerto US did, except that the supposed infringing act would have to be putting the code onto the customer's computer. [00:04:44] Speaker 01: no way that you could have both of those things. [00:04:45] Speaker 01: And for the 460 patent, they found three of the independent claims not infringed and one infringed. [00:04:52] Speaker 01: And the district court called that logically incomprehensible. [00:04:55] Speaker 01: And it was actually logically incomprehensible for all of the patents. [00:05:04] Speaker 04: But the judge did find that there was enough evidence on the side of the final judgment. [00:05:12] Speaker 04: to find substantial evidence, and isn't that the question before us that needs to be overcome? [00:05:21] Speaker 01: Yes, Your Honor, although it depends on the issues. [00:05:23] Speaker 01: So, for example, for the 460, obviousness is a question of law. [00:05:27] Speaker 04: With underlying facts? [00:05:30] Speaker 01: With underlying facts. [00:05:31] Speaker 01: But I would suggest that if one takes KSR at its face, that the predictable application of the known technology is obvious. [00:05:38] Speaker 01: That's it, because there's no underlying fact dispute. [00:05:41] Speaker 01: The internet [00:05:42] Speaker 01: the 460 patent teaches nothing about how to use the internet other than what's already known. [00:05:47] Speaker 01: Xero teaches it in this specific context. [00:05:50] Speaker 01: There's really nothing left but the legal question. [00:05:54] Speaker 02: Did you have the teaching though of using the network cloud to mirror storage systems? [00:05:59] Speaker 02: Yes. [00:06:00] Speaker 02: Where is that shown in the prior art? [00:06:02] Speaker 01: That is the Xero reference. [00:06:04] Speaker 01: Xero is a mirroring system where the internet is used for the data communication and that's not disputed. [00:06:10] Speaker 01: What EMCR argues is that [00:06:12] Speaker 01: Well, Xero has host computers, and Xero has host computers, whereas... Was Xero between the storage systems? [00:06:21] Speaker 01: Whereas the Patent and Unite is between storage systems. [00:06:25] Speaker 02: And isn't that a significant factor, though? [00:06:27] Speaker 01: No, Your Honor, actually it's not, because there's nothing about use of, it teaches it in the field of mirroring. [00:06:34] Speaker 01: And we know from the 4.6.0 patent, among other things, that there's nothing special about using the internet for mirroring between storage controllers, and it's already taught for mirroring between host computers. [00:06:44] Speaker 01: And so there really is nothing left. [00:06:46] Speaker 01: And in fact, the Muni auction kind of rejected this notion that we're going to narrow it down. [00:06:49] Speaker 01: If one can narrow it down to require, for example, storage controllers, [00:06:53] Speaker 01: That's to require an anticipation, because the only way you could actually have a teaching would be in the exact context of the patent, in which case it's anticipation. [00:07:02] Speaker 01: That's not required, I respectfully submit. [00:07:05] Speaker 01: Really all that's required is what we have, is Xero teaches the internet. [00:07:08] Speaker 01: I don't even know, honestly, if you need Xero, because people knew about the internet, but Xero is icing on the cake. [00:07:14] Speaker 01: It says, for mirroring of data, worries about data loss, whatever, in this context of mirroring backups, you have [00:07:23] Speaker 01: a teaching of use of the internet, and nothing surprising about its application. [00:07:31] Speaker 01: In connection with, well, it's not clear to me that a motivation to combine is required after KSR, because this is a predictable application of a known technology. [00:07:44] Speaker 01: It's undisputed at trial that it's cheaper to use the internet than to set up an existing line, and there's no surprise there, that's not something that was discovered in the 4.6.0 [00:07:53] Speaker 01: I might move on, unless there are further questions, to the contributory infringement point, because I think it, well, it doesn't matter what I think, but it's of interest in the case. [00:08:05] Speaker 01: The only evidence here that was certainly presented to the jury that Zerto knew about the patents was the complaint. [00:08:12] Speaker 01: There's no contention on this appeal that they were aware of any of these patents before they got sued on them. [00:08:18] Speaker 01: And so then the question is, is that sufficient? [00:08:23] Speaker 01: to prove contributory infringement the intent. [00:08:26] Speaker 01: And again, this is another inconsistency because for indirect infringement, the jury found contributory but not inducement. [00:08:34] Speaker 01: But I would suggest here there's sufficient evidence of intent because under this court's decision in the Warsaw case, [00:08:44] Speaker 01: And more recently, it's Connichi Clay Phillips versus Zoll Medical. [00:08:49] Speaker 01: If there is a reasonable non-infringement position, then one can't find intent. [00:08:54] Speaker 01: And here, if you look at EMC's briefing, there's no suggestion that there's not a reasonable position for non-infringement, nor could they really. [00:09:03] Speaker 01: For each of the patents, the jury did not find infringement more often than it actually found infringement. [00:09:13] Speaker 01: And so what Judge Sleat did with that is he said, look, the jury could have found infringement or found no infringement on these same issues, which is to say, right or wrong, the belief was reasonable, right? [00:09:25] Speaker 01: The defense was reasonable. [00:09:27] Speaker 01: Judge Sleat actually says so by saying the jury could have found either one. [00:09:30] Speaker 01: And in fact, in this case, found both. [00:09:33] Speaker 01: And that should be, we think, now not all of the non-infringement defenses are involved in this appeal to some extent, but I thought I might move to the non-infringement one for the 460 patent, just so that the court has a better understanding. [00:09:48] Speaker 01: I was looking at the briefing and I thought it was a little hard. [00:09:50] Speaker 01: So to explain the Zerto system, again, this isn't in dispute. [00:09:54] Speaker 01: You could think of it like an artist making a painting, and you have the current painting as the production side. [00:09:59] Speaker 01: In Zerto, you have a recovery disk, [00:10:02] Speaker 01: which is the painting as it existed four hours ago. [00:10:05] Speaker 01: So it's deliberately old. [00:10:07] Speaker 01: And then you have a journal that is each of the brushstrokes that have been made in the last four hours. [00:10:12] Speaker 01: So that's each of the computer write transactions. [00:10:15] Speaker 01: So in the Zerto system, if you want to know what this looks like, you can roll your four hour old painting forward, do all those brushstrokes to it, [00:10:23] Speaker 01: and you end up with the current thing. [00:10:25] Speaker 01: If you want something two hours old, you can roll it forward two hours of brushstrokes, and you get something that's two hours old. [00:10:31] Speaker 01: So when we're talking about whether it mirrors, the recovery disk is a four hour old painting. [00:10:37] Speaker 01: It's not a mirror because it's too old. [00:10:39] Speaker 01: The journal is the rights, the brushstrokes. [00:10:42] Speaker 01: It's not a mirror because it doesn't look like a painting. [00:10:45] Speaker 01: So what AMC has argued is that any sending of an individual brushstroke [00:10:52] Speaker 01: is sufficient for there to be mirroring. [00:10:54] Speaker 01: It's quite explicit on page 44 of their brief. [00:10:57] Speaker 01: But the patent says when you do something for backup, you write and mirror. [00:11:03] Speaker 01: Writing alone is insufficient. [00:11:05] Speaker 01: And that is the only evidence at issue. [00:11:08] Speaker 01: And it's not substantial evidence. [00:11:09] Speaker 01: And the reason I say it's the only evidence at page 44 of the brief, that's their argument. [00:11:16] Speaker 01: I think I'd like to just jump quickly to the H67 and maybe the pseudo snapshot patents because I'm running low on time. [00:11:23] Speaker 01: For the H67 patent, the question there is the claim requires that you cause the host controller to halt processing. [00:11:34] Speaker 01: It goes on to say you can halt and you can resume. [00:11:37] Speaker 01: EMC's theory, again, not disputed, if you shut off all the sources to the host, [00:11:42] Speaker 01: It would still process anything that arrived, but nothing's arriving, therefore you have... Isn't that effectively closing it off though? [00:11:49] Speaker 01: It is effectively. [00:11:50] Speaker 01: It is effectively, Your Honor, and if this were a Doctrine of Equivalence case, we'd have an argument, but they stipulated to no equivalence. [00:11:56] Speaker 02: What they do, they close down the application. [00:11:59] Speaker 01: They close down the generation of rights. [00:12:02] Speaker 01: And the problem there is under HP versus Musetech, among others, that's not literal infringement. [00:12:08] Speaker 01: So in the Musetech case, [00:12:10] Speaker 01: It involved the claim required selecting a scan speed. [00:12:14] Speaker 02: The accused infringing device, you selected a resolution which resulted in... You're saying the problem here is the controller isn't the one shutting it down. [00:12:22] Speaker 01: It's different to shut down the controller than it is to shut down what's feeding the controller. [00:12:27] Speaker 02: Wasn't this kind of a factual issue for the jury to decide? [00:12:31] Speaker 01: I don't think so, Your Honor, because it was actually no dispute as to what's happening in the system, only a dispute as to [00:12:39] Speaker 01: what it means. [00:12:40] Speaker 01: And so to literally meet it, that claim language is a matter of claim construction. [00:12:44] Speaker 01: Do you need to actually cause the host controller to do it so it can't hold it? [00:12:51] Speaker 02: We have a big record here, as you indicated, at the start. [00:12:54] Speaker 02: But was there a claim construction on this issue about what meant to be shut down? [00:13:00] Speaker 02: It had to be the controller. [00:13:03] Speaker 02: It wouldn't be enough if the right wasn't coming in. [00:13:07] Speaker 01: There was not a claim construction on that particular issue. [00:13:11] Speaker 01: We didn't think the claim construction as it was provided would permit the theory that was ultimately argued by EMC. [00:13:16] Speaker 01: And I only have a little bit of time left if I could reserve some more questions. [00:13:20] Speaker 01: Okay. [00:13:20] Speaker 04: Yes, we'll save the rest of your time, Mr. Lowery. [00:13:23] Speaker 04: Thank you, Your Honor. [00:13:28] Speaker 04: Mr. Rader. [00:13:30] Speaker 00: Thank you, Your Honors, and may it please the court. [00:13:33] Speaker 00: I'd like to do two things with my time. [00:13:35] Speaker 00: I'd like to briefly address the verdict form. [00:13:37] Speaker 00: And then I'd like to explain why we are asking this court to reverse on the injunction issue in order that the district court enter an injunction, just as this court did in both the Robert Bosch case and the Douglas Dynamics case. [00:13:51] Speaker 00: I'll start briefly by addressing the verdict form. [00:13:54] Speaker 02: If you could maybe, I'm sorry, Mr. Rader, to change your plans here a little bit. [00:14:00] Speaker 02: What do you have to say about opposing counsel's argument with respect to the 460, Patton? [00:14:05] Speaker 02: You heard the arguments that he was making on that. [00:14:08] Speaker 00: With regard to Marion, Your Honor? [00:14:10] Speaker 02: Yes. [00:14:11] Speaker 00: With regard to Marion, it's very clear. [00:14:12] Speaker 00: The district court's construction was a two-part construction. [00:14:16] Speaker 00: with the word buy in the middle of it, that essentially said what you need to do is to keep a copy, a full copy of the data by copying each right and sending it over to the other side. [00:14:27] Speaker 00: That's exactly the way that Cerdo... No, I'm sorry. [00:14:31] Speaker 02: I was thinking about the validity issue with respect to Yunai and Xero. [00:14:37] Speaker 02: Okay, absolutely. [00:14:38] Speaker 02: He says that it wasn't enough that what you have here is using the cloud [00:14:46] Speaker 02: to transfer or to mirror between storage systems. [00:14:51] Speaker 00: So the issue was whether it would be obvious to take the network cloud as disclosed in Xero, which was only between host computers, and use it to replace the dedicated link of UNI. [00:15:04] Speaker 00: And this argument was based on those two references that Dr. Zadek, who is [00:15:11] Speaker 00: respectfully very unprepared for trial and therefore the jury was entitled to disregard his testimony. [00:15:18] Speaker 00: It was based solely on his testimony that there would have been a reason or a motivation to do that based on either the internet being cheaper or the notion of redundancy. [00:15:27] Speaker 00: This is exactly the combination that the Board of Appeals of the Patent Office had expressly rejected on appeal from prosecution, from a 13-year prosecution. [00:15:39] Speaker 00: And the Patent Office [00:15:41] Speaker 00: credited the conclusion that even if, and this is all on the record and the jury had the final street, even if you combine those two references, you wouldn't get what was claimed. [00:15:49] Speaker 00: You would keep the dedicated link of E&I for the reasons that E&I says. [00:15:53] Speaker 00: If you look in column one of E&I, it talks about protecting the data from banks, stock exchanges, critical data that cannot be lost and that you have to know for sure it's been received by the other side by getting an acknowledgement over a high-speed line. [00:16:07] Speaker 00: So there were clear reasons in the references themselves [00:16:11] Speaker 00: why you would never do that. [00:16:12] Speaker 00: And Mr. Justice, EMC's expert, explained two things. [00:16:18] Speaker 00: One, that in his extensive experience working with these dedicated lines in the prior art, which Dr. Zapp didn't have, there would have been a very clear reason not to substitute the network cloud because of, as he characterized it, the very scary risk of losing data. [00:16:34] Speaker 00: OK, I detoured you. [00:16:36] Speaker 00: I'll let you get back now to what you wanted to start with. [00:16:39] Speaker 00: Thank you. [00:16:40] Speaker 00: All right, thank you, Your Honor. [00:16:41] Speaker 00: So very briefly on the verdict form, I'd just like to put the verdict into context. [00:16:45] Speaker 00: So we had a two-week trial. [00:16:47] Speaker 00: The jury returned a verdict that in one respect that nobody disputes, there is infringement of four EMC patents. [00:16:53] Speaker 00: We know that because at the beginning of each section of the verdict form, it says check yes or no as to whether there's infringement, and they checked yes. [00:17:02] Speaker 00: There was a jury instruction that said it was sufficient for them [00:17:05] Speaker 00: to hold Zerto liable for infringement if they found infringement of, quote, one or more claims. [00:17:11] Speaker 00: And for each one, they checked one claim. [00:17:13] Speaker 00: So they clearly found infringement of four patents. [00:17:16] Speaker 00: They rejected all of Zerto's invalidity arguments. [00:17:18] Speaker 00: They awarded EMC 72% of the damages that EMC had asked for. [00:17:23] Speaker 00: All of this after Zerto presented a technical expert on infringement and validity who had never installed Zerto's own product on which he offered an opinion, had never used it, and had never looked at the source code for it. [00:17:35] Speaker 00: He learned about the product in a one-hour telephone conversation on the day his expert report was due. [00:17:42] Speaker 03: I couldn't find the foundation for that in the record. [00:17:45] Speaker 03: I have the discussion of the call, but there's no actual foundation for it. [00:17:51] Speaker 03: Who, what, when, where. [00:17:53] Speaker 03: Who was on the call, when did it take place, and so on. [00:17:57] Speaker 00: I believe it's Appendix 2004, Your Honor. [00:18:12] Speaker 03: I'll highlight it in. [00:18:18] Speaker 00: On Appendix 2004. [00:18:19] Speaker 03: January 9, 2015. [00:18:31] Speaker 03: I really don't see enough to establish a foundation. [00:18:36] Speaker 00: Well, starting at line 16, he was asked about the conversation with Mr. Oded Kedem, who's the CTO of Zerto, that had occurred on January 9th, 2015, which was the day he submitted his report. [00:18:46] Speaker 00: And then he was asked whether that conversation about how the system functions was before or after he signed his report on that day. [00:18:53] Speaker 02: But then I don't get an answer, because I go to page 2012. [00:18:56] Speaker 02: And apparently page 2005 is not in the appendix. [00:19:01] Speaker 02: It's always helpful to make sure we have what we need when there's a [00:19:05] Speaker 02: A specific point. [00:19:06] Speaker 04: It's difficult because we have rules about not putting things in the appendix that aren't expressly cited. [00:19:13] Speaker 04: Would you want some additional pages provided? [00:19:17] Speaker 00: Is it there? [00:19:18] Speaker 03: We're happy to provide it, Your Honor, if that would be helpful to the Court. [00:19:23] Speaker 03: I'm happy to take counsel's word, Your Honor, to the Court. [00:19:26] Speaker 03: Is the rest of it there? [00:19:27] Speaker 04: Send us a few more pages. [00:19:29] Speaker 00: Okay, we'll be happy to do that. [00:19:32] Speaker 00: I'd like to just [00:19:33] Speaker 00: segue back to what the point is. [00:19:35] Speaker 00: The point is, at the time the jury rendered its verdict, and when the court entered its judgment 13 days later on May 21st, there was no doubt about who the victor was. [00:19:47] Speaker 00: In fact, the court, when it entered judgment, and this is Docket. [00:19:52] Speaker 03: I'll give you, by the way, the expert is useless. [00:19:55] Speaker 00: Thank you. [00:19:57] Speaker 00: The district court's judgment [00:20:00] Speaker 00: which was entered on May 21st, which I believe is DI 213, entered judgment for EMC and against Zerdo, and importantly did not enter judgment for Zerdo on any of the unchecked claims. [00:20:13] Speaker 00: So the judgment itself is completely consistent with EMC's view of the verdict form. [00:20:18] Speaker 00: What the district court did not do was make any effort to read, when this is a violation of law, did not make any effort to read the verdict [00:20:25] Speaker 00: in a light that would be consistent with the jury instruction. [00:20:28] Speaker 02: You're relying there on that third circuit law that says one of the rules I guess the circuit has is that when, if at all possible, we should read a jury verdict consistently. [00:20:39] Speaker 00: That's correct. [00:20:40] Speaker 00: That's the law on the third circuit and I think it's the law on every circuit, Your Honor. [00:20:43] Speaker 00: I think that comes ultimately from the Supreme Court. [00:20:46] Speaker 00: The jury instructions here said if you find, to find a dependent claim infringed, you must also find the independent claim infringed. [00:20:53] Speaker 00: So by checking off a dependent claim in the 091 and 395 patents, the jurors, if they follow the instructions, which they must be presumed to have done, were necessarily finding infringement of the independent claim as well. [00:21:05] Speaker 00: There's no inconsistency there. [00:21:08] Speaker 00: Now, Your Honors, I'd like to quickly move on to the injunction, because that's critically important to EMC. [00:21:15] Speaker 00: I'll start very briefly with irreparable harm. [00:21:18] Speaker 00: Although the district court found the irreparable harm factor weighed in favor of EMC, I think it's important to pause on it for a second because the district court used, I think, an oxymoron when it described the irreparable harm factor as weighing only, quote, slightly in favor of EMC. [00:21:35] Speaker 00: This, in fact, is the prototypical case of irreparable harm as the district court's actual factual findings show. [00:21:45] Speaker 00: As the district court found, Zerto aggressively competes with EMC. [00:21:49] Speaker 00: Two, Zerto has taken customers from EMC. [00:21:52] Speaker 00: The record shows that at that early time, they had already taken 20% of the customers that EMC had attempted to get. [00:22:00] Speaker 00: Three, EMC, quote, does suffer competitive harm. [00:22:04] Speaker 00: Four, a causal nexus exists. [00:22:07] Speaker 00: between the infringement and EMC's harm, and moreover, that EMC was losing downstream revenue as well. [00:22:15] Speaker 00: On Appendix 28, the district court recognized that and posited without any foundation that the parties could somehow add to a financial arrangement that would account for it. [00:22:26] Speaker 00: Your Honor, to the extent that the characterization of the reparable harm factor as weighing only, quote, slightly in favor of EMC, played any role in the denial of the injunction, [00:22:36] Speaker 00: That would be a clear error in judgment that this court should reverse, just as it reversed in the Robert Bosch case when the district court didn't even find irreparable harm. [00:22:46] Speaker 00: This court said, no, there was irreparable harm. [00:22:48] Speaker 00: It was a clear error of judgment. [00:22:50] Speaker 00: We're unaware of any precedent in which an irreparably harmed patentee in a competitive environment was denied an injunction except when there was a lack of causal nexus. [00:23:02] Speaker 00: Here, the district court found causal nexus [00:23:04] Speaker 00: And Zerdo does not challenge that finding on appeal. [00:23:10] Speaker 03: The district court also found that monetary compensation would adequately compensate. [00:23:16] Speaker 03: So can it be irreparable if it can be adequately compensated? [00:23:22] Speaker 00: And I would turn around and say, can it be adequately compensated if it's irreparable? [00:23:26] Speaker 00: Your Honor, that's the next thing I wanted to do is to address factor two, the adequacy of money damages. [00:23:31] Speaker 00: Under this court's decision in Apple III, which is 735F1352, the 2003 Apple, 2013 Apple decision, it's directly on point. [00:23:41] Speaker 00: The only factor that the district court cited for the adequacy of money damages were three licenses that EMC signed with three of the largest companies in the world, IBM, Hewlett-Packard, and Hitachi. [00:23:53] Speaker 00: The district court did not even consider the context of those licenses, which is absolutely critical. [00:23:58] Speaker 00: It was legal error not to consider the context. [00:24:01] Speaker 00: And what we're going to suggest is that you don't need to send it back to the district court to consider the context because it's so clear from the face of those licenses. [00:24:08] Speaker 00: All three of those licenses were portfolio-wide licenses in which EMC and these three huge companies cross-license each other under tens of thousands of patents to get what? [00:24:19] Speaker 00: To get operational freedom to run their entire businesses. [00:24:23] Speaker 00: That is completely unquantifiable. [00:24:26] Speaker 00: and doesn't suggest for one moment that EMC licensed any of these patents, quote, for money, or that money would be an adequate measure of the value of the patents. [00:24:36] Speaker 02: Exactly. [00:24:36] Speaker 02: So I'll make sure I understand exactly what would you want the injunction to say. [00:24:41] Speaker 00: What we asked for before the district court was a standard injunction that prohibits the further importation sale, et cetera, of the products that were found to infringe. [00:24:52] Speaker 00: And of course, it would include any products not colorfully distinct. [00:24:57] Speaker 00: that relates to, well, I just want to make one more point about the licenses. [00:25:01] Speaker 00: In addition to the critical fact that they were portfolio wide and don't reflect the adequacy of money damages, there's only one license that covered all four patents. [00:25:10] Speaker 00: The IBM and Hitachi licenses covered only the 460 patent. [00:25:14] Speaker 00: And by the way, only because of a capture period, it's not as if the 460 patent was named, it didn't exist. [00:25:19] Speaker 00: There was a capture period that for applications filed within a certain time period, [00:25:23] Speaker 00: they'd be included in this cross license. [00:25:25] Speaker 03: I'm uncomfortable with your argument to the extent that if we reverse the district court, I'm uncomfortable with fashioning an equitable remedy as opposed to letting a district court do it. [00:25:42] Speaker 00: I hope I didn't misspeak. [00:25:44] Speaker 00: What we're asking this court to do is to reverse and tell the district court to fashion the injunction in the first instance. [00:25:52] Speaker 00: The last point on the injunction before I have to get to the balance of the harms is that the only license that covered all four patents was the Hewlett-Packard license. [00:26:00] Speaker 00: And that license resulted from a settlement. [00:26:03] Speaker 00: And that's reflected at page 4673 of the appendix. [00:26:08] Speaker 00: And this court has stated on multiple occasions, perhaps most recently in Apple 5, 809 F3 656, it was Judge Raina concurring, [00:26:19] Speaker 00: that a license that results from settlement of litigation does not reflect the adequacy of money in exchange for a license to that patent. [00:26:29] Speaker 00: So the only patent that covered the four was a settlement. [00:26:31] Speaker 00: And that's an additional reason why, when you just look at these licenses and their terms de novo, you should find that factor number two weighs in favor of granting an injunction. [00:26:46] Speaker 00: Lastly, because I have less than two minutes, on the balance of hardship, [00:26:50] Speaker 00: The only factor that the district court considered was the size of Zerto and the fact that, to them, it's a core product and that EMC's competing product is a non-core product. [00:27:01] Speaker 00: The district court also mentioned the fact that there were other competitors in the market, such that EMC can't definitively prove that every sale Zerto makes is a lawsuit. [00:27:12] Speaker 00: Those were exactly the facts of Robert Bosch. [00:27:15] Speaker 00: And Robert Bosch said, where the parties are direct competitors, quote, a party cannot escape an injunction simply because it is smaller than the patentee or because its primary product is an infringing one. [00:27:25] Speaker 00: That's the age-old rule that Chief Justice Roberts was referring to in his concurrence in the eBay case of the Supreme Court. [00:27:32] Speaker 03: I don't want to eat up all the rest of the time, but I want to know where on the record it says that that phone call we discussed before is the first time he learned of the ZVR software. [00:27:44] Speaker 00: So I didn't memorize the pages not included in the appendix. [00:27:48] Speaker 00: I can tell you that I took his deposition and I asked that question. [00:27:51] Speaker 00: And so as an officer of the court, I can tell you I know for sure that that's true. [00:27:56] Speaker 03: So then you're going to include those pages as well. [00:27:58] Speaker 04: Yes, send us some of those deposition pages. [00:28:01] Speaker 00: And there's one last point here, if I may, on the balance of hardships, which is in addition to the core versus non-core distinction, which is an improper reason for finding the balance of hardships to tip for the infringer under Bach, there's another critical factor under the Douglas Dynamics decision, in which this court also reversed and ordered the district court to enter an injunction. [00:28:23] Speaker 00: The critical fact there [00:28:25] Speaker 00: was that the infringer said it had a non-infringing alternative ready, which it could easily deliver to the market. [00:28:32] Speaker 00: And it's the same thing here. [00:28:33] Speaker 00: Zerto has told the court that these patents are of minimal value, that only 1% of their customers use the Rokiki and H67 patents, and has also represented to the district court in DI 327 that it's designed around the 460 patent, just like the defendant [00:28:55] Speaker 00: in Douglas Dynamics, Your Honor. [00:28:57] Speaker 00: And this court found that where there was irreparable harm to the patentee on the one side, and on the other side you had an infringer that claims it's designed around and the patents are of minimal value. [00:29:07] Speaker 00: Quote, if indeed Byers, which was the defendant, had a non-infringing alternative which could easily deliver to the market, then the balance of hardships would suggest that Byers should halt infringement and pursue a lawful course of conduct. [00:29:19] Speaker 00: Here, the district court inexplicably found the bounce of hardships to weigh, quote, strongly in favor of Zerda. [00:29:25] Speaker 00: And it's, as a matter of law, it's the opposite on these facts under Douglas Dynamics. [00:29:30] Speaker 00: So we asked the court, under the Bosch and Douglas Dynamics decisions, to actually reverse the district court and order the district court to fashion an appropriate injunctive remedy. [00:29:41] Speaker 04: OK. [00:29:41] Speaker 04: Thank you, Mr. Mayor. [00:29:45] Speaker 04: OK. [00:29:45] Speaker 04: Will you add another minute to? [00:29:47] Speaker 04: the rebuttal time. [00:29:54] Speaker 04: Then we make it four. [00:29:55] Speaker 01: Thank you, Your Honor. [00:29:59] Speaker 01: I can say to a certainty that Dr. Zadok was familiar with the software before, the day before his expert report was due. [00:30:06] Speaker 01: I don't know when he talked to Zerto, but he was certainly looking at the materials. [00:30:10] Speaker 01: I want to go to just really briefly on the... You want to submit anything from the record for that purpose? [00:30:17] Speaker 03: Well, perhaps, Your Honor. [00:30:19] Speaker 04: If there's anything more that should be added to the record, would both of you, based on our discussion today, just send it in within a week at the most? [00:30:29] Speaker 01: We'll do, Your Honor. [00:30:30] Speaker 01: But I think the more important point is that we're not really relying on what Dr. Zadok said anyway. [00:30:34] Speaker 01: We're relying on undisputed facts, like the internet was known, the internet was known in the context of mirroring and whatnot. [00:30:42] Speaker 01: In connection with [00:30:44] Speaker 01: the argument that there's no doubt who won, the district court called the verdict logically incomprehensible, and it doesn't withstand scrutiny. [00:30:53] Speaker 01: It said, check off every box where you find infringement, and they check dependent claims and not independent claims when the instructions say you can't do that. [00:30:59] Speaker 02: I mean... But isn't it possible to reconcile it? [00:31:03] Speaker 02: I mean, you had jury instructions that were very clear, and the jury sat there and it specifically... Is it unreasonable, given the Third Circuit [00:31:12] Speaker 02: admonition to try and reconcile inconsistencies to say, well, they checked, I guess it's claim two in the 395 and claim five in the 091. [00:31:24] Speaker 02: So they necessarily concluded that the requisite independent claim was infringed. [00:31:34] Speaker 02: And that's what Mr. Rader's basically saying. [00:31:37] Speaker 01: Well, yes, except they didn't actually indicate that they found that it was infringed, which is why the district court looked at this issue and found it to be inconsistent. [00:31:46] Speaker 01: I'd like to get to the injunction if I could, since that's obviously a critical import. [00:31:49] Speaker 01: The only thing EMC asked for was an injunction against all sales. [00:31:53] Speaker 01: When they come in and say, we say there's a design around and we have designed around, if they agree, we're virtually done here in connection with the future royalty or an injunction. [00:32:01] Speaker 01: The problem is they don't agree. [00:32:03] Speaker 01: And we will just have more litigation over whether it can be designed around. [00:32:06] Speaker 02: Is there a problem with an injunction that says you can't import infringing items? [00:32:13] Speaker 01: Yes, that one would actually be overly broad. [00:32:17] Speaker 01: The injunction needs to be clear as to what's prohibited. [00:32:20] Speaker 01: And indeed, as EMC argues, this would put us out of business. [00:32:25] Speaker 01: And the design around is not for all of the patents in any event. [00:32:30] Speaker 01: But when EMC says that we argue that there's only 1% that's infringing with respect to the 867 and the pseudo snapshot patents, that's part of why in a request for, which is the only thing they presented to the district court, a request for a full injunction on all of the products is grossly overbought. [00:32:49] Speaker 01: In connection with the balance of the harm ships, EMC argues that size is not dispositive. [00:32:55] Speaker 01: The district court didn't treat it as dispositive, and it wasn't even looking at size. [00:33:00] Speaker 01: It said, [00:33:01] Speaker 01: This is the factor that tips the scales heavily, and it's said it's 100% of Zerto's products. [00:33:08] Speaker 01: It doesn't matter how big. [00:33:09] Speaker 01: Zerto could be very large or very small. [00:33:11] Speaker 01: It puts them out of business, and it doesn't do that or even really materially affect EMC's business, and that's why the balance of the hardships weighs heavily in favor of no injunction. [00:33:22] Speaker 01: In connection with irreparable harm, [00:33:25] Speaker 01: EMC likes to argue this market segment, virtual machines and whatnot. [00:33:29] Speaker 01: I think it's worth noting that not only did the district court decide that that was too narrow, the district court further found, I mean, there was evidence in the record that there were eight competitors within the virtual replication space, that's appendix 58, 27 to 33, eight in addition to EMC and Zerto. [00:33:51] Speaker 01: So an injunction against Zerto would remove one of the 10, [00:33:55] Speaker 01: And so the district court reasonably concluded that EMC had not shown any particular lost sales, or that if Zerto were not in the market, EMC could make a sale, given differences of price points and other people in the market. [00:34:09] Speaker 01: In connection, actually, I'm almost out of time. [00:34:12] Speaker 04: OK, one last sentence. [00:34:14] Speaker 01: Well, thank you, Your Honor, for your attention. [00:34:16] Speaker 01: And I think that's enough, and we'll serve for the questions from the audience. [00:34:22] Speaker 04: Okay, thank you both. [00:34:23] Speaker 04: The case is taken under submission.