[00:00:00] Speaker 00:
This is Evans versus Building Materials Corporation.

[00:00:23] Speaker 01:
Councilman Murnane, is that correct?

[00:00:25] Speaker 01:
Good morning.

[00:00:25] Speaker 01:
Yes, Your Honor.

[00:00:26] Speaker 01:
OK.

[00:00:27] Speaker 01:
And I see that you reserve four minutes, correct?

[00:00:29] Speaker 01:
That's correct, Your Honor.

[00:00:31] Speaker 01:
Thank you.

[00:00:32] Speaker 06:
Good morning, Your Honors, and may it please the Court.

[00:00:36] Speaker 06:
We are here today because the plaintiff's appellees filed a complaint last year with substantial allegations concerning a promotional agreement between the parties, between my client GAF and the plaintiff's appellees.

[00:00:54] Speaker 06:
As a result of those substantial allegations, the relief that they seek is based on those allegations and therefore arises under the agreement and relates to the performance of the contract, the performance of the parties under the contract.

[00:01:10] Speaker 05:
But the arbitration agreement in this case does not have that relates to phrase you just used.

[00:01:17] Speaker 05:
I thought there's quite a lot of law that actually does some meaningful distinguishing

[00:01:23] Speaker 05:
between different arbitration clauses, depending in part on whether they just say arising under or arising out of, on the one hand, versus arising under or relating to, on the other hand, and I'm sure there are other formulations too, but this is on the narrow end of that spectrum of language.

[00:01:41] Speaker 06:
Thank you, Your Honor.

[00:01:42] Speaker 06:
Yes, it does have the arising under language.

[00:01:45] Speaker 06:
And as I noted, Your Honor, these allegations arise under the agreement and the conduct of the parties under the agreement.

[00:01:53] Speaker 00:
Did the promotional agreement have any provisions that addressed the transfer of any type of trade secrets or trade design?

[00:02:04] Speaker 00:
Did it?

[00:02:06] Speaker 06:
The agreement says that the GAF information is confidential and that the plaintiffs agreed to maintain the confidentiality of the GAF confidential agreement.

[00:02:19] Speaker 06:
The agreement does say that, Your Honor.

[00:02:21] Speaker 06:
There's nothing that goes the other way.

[00:02:23] Speaker 06:
The specific language does not exist, Your Honor, though any other way.

[00:02:27] Speaker 06:
However, as the plaintiffs note in the complaint, the plaintiffs note that the parties entered into this agreement in 2009 and they entered into this agreement and the whereas clauses say why.

[00:02:42] Speaker 06:
The whereas clauses on the first page of the agreement note that the plaintiffs had a roof model.

[00:02:47] Speaker 06:
a model that people can use to look at different types of roofs if they're thinking of contemplating a new roof.

[00:02:54] Speaker 06:
It also says that my client is involved in roofing manufacturing and distribution and has roofing contractors.

[00:03:02] Speaker 06:
So the object of the exercise and the purpose of the agreement, this promotional agreement, was for the plaintiff's roof models to get in the hands of my client's roofing contractors so that people could then look at these particular items.

[00:03:17] Speaker 06:
And according to the complaint, the plaintiff's complaint, after entering into the agreement, the plaintiffs then sold roof models to the roofing contractors, went to the GAF convention, and brought promotional materials, and had confidential discussions with GAF where it gave information concerning the product, the making of the product, and

[00:03:45] Speaker 06:
the promotion of the product.

[00:03:47] Speaker 06:
The sales, the marketing, the promotion of the product.

[00:03:49] Speaker 06:
According to the complaint, confidential information was conveyed by the plaintiffs to JF and they agreed to maintain the confidence.

[00:03:59] Speaker 02:
But that understanding is separate from the agreement because the agreement doesn't either specify the exchange of confidential information or obligate

[00:04:14] Speaker 02:
roof and box to maintain any confidential information, or do it require GAF to maintain that information confidential?

[00:04:22] Speaker 06:
The words of the agreement itself don't say that, Your Honor.

[00:04:27] Speaker 06:
But the plaintiffs say that after entering into the agreement and the relationship, by the way, the very first page.

[00:04:35] Speaker 00:
Are we limited to what the actual words of the agreement?

[00:04:39] Speaker 00:
It doesn't say that, but are we limited to that?

[00:04:42] Speaker 06:
Forgive me, Your Honor.

[00:04:44] Speaker 06:
Go ahead, sir.

[00:04:46] Speaker 06:
We are informed by the agreement, and we're also informed by what the plaintiffs say the parties did under the agreement.

[00:04:55] Speaker 06:
Section 6D of the agreement is the commitment section.

[00:04:59] Speaker 06:
It's on appendix page 28.

[00:05:01] Speaker 06:
And it says, both roof and box and GAF are committed to the mutual benefits to be derived under the program.

[00:05:08] Speaker 06:
And as a result of that commitment, the plaintiffs say, after entering into the agreement,

[00:05:13] Speaker 06:
they did those things, including providing confidential information.

[00:05:17] Speaker 06:
That's what they say.

[00:05:18] Speaker 06:
They say they did that.

[00:05:19] Speaker 06:
And the reason they say they did that was because after they say they conveyed this information, they say in the next paragraph, 22 of the complaint, they say GAF terminated.

[00:05:31] Speaker 06:
And they say following termination, GAF started coming up with its own product.

[00:05:37] Speaker 06:
And they say in the subsequent paragraphs in the complaint,

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GAF used advertising, which was substantially the same as the promotional materials that the plaintiffs say they gave in confidence to GAF.

[00:05:52] Speaker 06:
They say that there.

[00:05:54] Speaker 06:
And they say it has the same look and feel.

[00:05:56] Speaker 06:
And as a result of these allegations, they then say that GAF in their accounts, they say in count four, that GAF has engaged in common law trade dress infringement.

[00:06:11] Speaker 06:
engaging in unfair competition by, quote, using plaintiff's confidential information and the fruits of plaintiff's time, labor, and expense to compete with plaintiffs.

[00:06:21] Speaker 06:
And they seek punitive damages.

[00:06:24] Speaker 05:
Well, that last bit before you got to punitive damages, what count of the complaint is that?

[00:06:28] Speaker 05:
Count four, Your Honor.

[00:06:29] Speaker 05:
Did you make an argument to the district court that count four should be treated any differently from any of the other counts in terms of arbitrability?

[00:06:38] Speaker 06:
not with those specific words your honor.

[00:06:40] Speaker 05:
But isn't that a problem?

[00:06:42] Speaker 05:
Because I think that you've begun talking about the one piece of the complaint that feels like it might have something to do with this agreement.

[00:06:55] Speaker 05:
I'm not entirely sure.

[00:06:56] Speaker 05:
But some of the others, the patent infringement, the trademark use, that I have a

[00:07:05] Speaker 05:
very hard time seeing how it could even reasonably be asserted that those claims arise under the agreement because there's no obligation of the agreement that is material to the proof or disproof of those claims.

[00:07:21] Speaker 06:
If I may, Your Honor.

[00:07:22] Speaker 06:
Please.

[00:07:23] Speaker 06:
I'll come back to this in a moment.

[00:07:24] Speaker 06:
I want to answer your question specifically.

[00:07:26] Speaker 06:
With respect to the trade dress claim, and this is common law trade dress, so we didn't use those specific words.

[00:07:35] Speaker 06:
But we did deal with it because this is a trade dress claim, count four.

[00:07:38] Speaker 06:
Count three is the Lanham Act trade dress claim, the Federal Lanham Act trade dress claim.

[00:07:44] Speaker 06:
And in both of these claims, they're seeking lost profits.

[00:07:48] Speaker 06:
And we did say to the district court, and the district court notes it in the opinion, in seeking lost profits here, in seeking lost profits, what the plaintiffs are really doing is saying, you breached the contract, and we want to be where we were had you not done that.

[00:08:03] Speaker 06:
And there's a reason for that.

[00:08:05] Speaker 06:
because the only sales here are the sales to the GAO.

[00:08:11] Speaker 05:
Why isn't the lost profits nothing more than a really pretty good source of evidence about what their profits would be?

[00:08:21] Speaker 06:
Excellent question.

[00:08:23] Speaker 05:
But not necessarily connecting the underlying wrong to any breach of the agreement.

[00:08:31] Speaker 05:
As if this thing happened to be sold earlier under an agreement, that tells you something about what kind of profits you could make.

[00:08:38] Speaker 05:
And so later when you commit the violations that they say you committed, that's a pretty good measurement to them of what they could have made if you hadn't done that.

[00:08:52] Speaker 06:
Thank you, Your Honor.

[00:08:53] Speaker 06:
The reason it's different is in this instance, this is a very unique instance.

[00:08:57] Speaker 06:
That's why I was talking about the agreement.

[00:09:00] Speaker 06:
Without this agreement, there were no sales.

[00:09:04] Speaker 06:
This agreement was to provide these models to the GAF contractors.

[00:09:11] Speaker 06:
The reason Evans made any money at all was he was making these sales to the GAF contractors.

[00:09:17] Speaker 06:
But as we've noted, he failed to deliver on time and the product didn't have the quality.

[00:09:22] Speaker 06:
Despite requests that he do better, he couldn't.

[00:09:26] Speaker 06:
So GAF terminated as provided for in the agreement.

[00:09:29] Speaker 06:
GAF terminated.

[00:09:31] Speaker 06:
And then GAF came up with its own different model, more durable on time and so forth.

[00:09:36] Speaker 06:
The sales that he says he lost profits from are the sales, the only sales he could have made under the agreement.

[00:09:43] Speaker 06:
He lost sales under the agreement.

[00:09:45] Speaker 06:
The GAF stepped into his shoes and did the job.

[00:09:52] Speaker 05:
I guess, clarify for me, is it any part of their complaint that to challenge your termination of the agreement?

[00:10:02] Speaker 06:
In the complaint?

[00:10:02] Speaker 05:
That's right.

[00:10:03] Speaker 06:
No, your honor.

[00:10:04] Speaker 05:
Yeah.

[00:10:04] Speaker 05:
So, so they, I mean, you legitimately terminated the agreement and now they're suing you for actions taken after that.

[00:10:13] Speaker 05:
They're not saying you're making money by having wrongfully terminated the agreement.

[00:10:19] Speaker 06:
They're not using those words, Your Honor.

[00:10:21] Speaker 06:
They're seeking the same result.

[00:10:22] Speaker 06:
And as we've noted in our papers, in our briefs, the law is that the words you use in your allegations should be controlled here, no matter what label, because they will have, if in fact they're permitted to proceed this way, they will be in the same exact situation as if they'd said breach of contract.

[00:10:41] Speaker 06:
Because as I said, the lost profits, which we talked about at the district court, and it's for count four as well as for count three, because they're both trade rest,

[00:10:49] Speaker 06:
one federal, the other common law.

[00:10:52] Speaker 06:
Those profits could only have been made if he was still operating under the contract because the only sales that GF made were to its own contractors.

[00:11:01] Speaker 02:
Just to follow up on Judge Toronto's question, it seems to me that the promotion agreement is all about the sale of roof and boxes products and the promotion thereof.

[00:11:17] Speaker 02:
The complaint

[00:11:18] Speaker 02:
is all about the sale of GAF's products.

[00:11:25] Speaker 02:
I don't see any relation between the two at all.

[00:11:29] Speaker 02:
The only reason... The contract, the promotion agreement relates to roof and boxes sales.

[00:11:35] Speaker 02:
That was terminated.

[00:11:36] Speaker 02:
There's no allegation of any breach relating to the termination.

[00:11:41] Speaker 02:
That's over and done with.

[00:11:43] Speaker 02:
Now you've got activities that are complained about

[00:11:47] Speaker 02:
with regard to GAF's activities.

[00:11:51] Speaker 02:
What did GAF sell?

[00:11:53] Speaker 02:
Does it infringe the patent?

[00:11:55] Speaker 02:
Does that product mislead, misrepresent?

[00:11:59] Speaker 02:
Is it unfair competition?

[00:12:01] Speaker 02:
I don't see anything in the complaint that connects the two.

[00:12:08] Speaker 02:
What am I missing?

[00:12:11] Speaker 06:
Everything in the complaint, Your Honor, has been written in order to make this case

[00:12:17] Speaker 06:
worth substantial sums.

[00:12:20] Speaker 06:
Everything that's been written in this complaint about that.

[00:12:22] Speaker 06:
There was no need, if one were only to answer again Judge Toronto's question and your question, Judge Lynn, if this was only about patent infringement, they just have to hold up the design patent drawing, show the GAF product, and say jury, because they want a jury over there in the Eastern District of Virginia.

[00:12:39] Speaker 02:
Jury, take a look.

[00:12:42] Speaker 02:
They've given background information relating to the counts that are set forth.

[00:12:47] Speaker 02:
in the complaint, but the counts are all specific to GAF's activities.

[00:12:53] Speaker 02:
What GAF did, why what they did is wrong and actionable and why it should be stopped and what the damages might be, all relating to what they're doing and nothing to do with

[00:13:08] Speaker 02:
the sale of any products by roof and box under the promotion agreement, or any failure thereof, or anything else to do with a promotion agreement.

[00:13:19] Speaker 02:
The history is there, of course, with the relationship between the companies.

[00:13:23] Speaker 02:
And certainly your arguments might have more gravitas if the arbitration clause was a broader variety, which included not only a rising under, but also related to.

[00:13:38] Speaker 02:
But the agreement is limited to things that arise under an agreement relating not to GAF sales, but to roof and boxes sales.

[00:13:50] Speaker 02:
And isn't that a problem?

[00:13:52] Speaker 06:
Your Honor, respectfully, I think it is not.

[00:13:54] Speaker 06:
The reason being because what they're seeking here.

[00:13:57] Speaker 06:
We've mentioned they're seeking punitive damages in count four.

[00:14:02] Speaker 06:
That can only be because of the story with respect to the agreement that they put in there.

[00:14:06] Speaker 06:
They say in count five where they have the New Jersey action, they say the conduct was unconscionable.

[00:14:13] Speaker 06:
They say there was misrepresentation.

[00:14:15] Speaker 06:
These things all supposedly took place as the parties acted under the promotional agreement.

[00:14:21] Speaker 06:
They're seeking here more than a million dollars.

[00:14:25] Speaker 04:
How do we know when the alleged misrepresentations took place?

[00:14:33] Speaker 06:
It's inferred by the way they've written the paragraphs in the complaint.

[00:14:37] Speaker 06:
They write the paragraphs saying that they gave this confidential information and then they say after we gave the confidential information GAEF terminated and then the very next paragraph GAEF started competing and the very next paragraph of the complaint they say GAEF was using promotional materials that had the same look and feel.

[00:14:56] Speaker 06:
If you went back two paragraphs above that, they say they taught you how to do the promotion.

[00:15:00] Speaker 06:
So everything that they say in order to get the big money that they're seeking here is based on the allegations in the complaint about the agreement.

[00:15:13] Speaker 00:
So what happens if we disagree with the position?

[00:15:16] Speaker 00:
This goes back to the district court and the trial continues?

[00:15:21] Speaker 06:
That would be right, Your Honor.

[00:15:22] Speaker 06:
We would respectfully say that here the standard here is

[00:15:29] Speaker 06:
It's what we're saying wholly groundless, and we believe it's not, Your Honor.

[00:15:33] Speaker 00:
Okay.

[00:15:34] Speaker 00:
You've run out of your time.

[00:15:35] Speaker 00:
I'll restore you three minutes for rebuttal when you get back up, okay?

[00:15:38] Speaker 00:
Thank you very much, Your Honor.

[00:15:39] Speaker 03:
Thank you.

[00:15:45] Speaker 03:
Mr. Steelman.

[00:15:46] Speaker 03:
Good morning.

[00:15:47] Speaker 03:
May it please the Court, I'm here on behalf of the Apple League.

[00:15:54] Speaker 03:
Let me say as a

[00:15:55] Speaker 03:
preliminary matter that I think Judge Lynn, you accurately characterized where the parties are separated in this case.

[00:16:05] Speaker 03:
This case is about the illegal, we contend, sale of products that impringe Rufenbrock's patents.

[00:16:17] Speaker 03:
It has nothing to do with

[00:16:19] Speaker 03:
this agreement.

[00:16:20] Speaker 03:
In fact, if you go back and you look at the four corners of this agreement, you'll see quite plainly that what this agreement relates to is a promotion of Rubinbox products with contractors that have relationships with GAF in this case.

[00:16:40] Speaker 03:
And whether one applies the full inquiry

[00:16:46] Speaker 03:
test or whether one applies the wholly groundless test.

[00:16:49] Speaker 03:
And I think for all intents and purposes, the district court did both.

[00:16:54] Speaker 03:
I think you'll see that the case law makes it clear that it's still appropriate for this court to look at and examine and construe the underlying agreement.

[00:17:04] Speaker 03:
And that was made clear in the interdigital case, which I might talk about in a moment.

[00:17:11] Speaker 03:
But in that case, the court said,

[00:17:13] Speaker 03:
Even when one does the wholly groundless test, it's still appropriate to look at and examine and construe the underlying agreement.

[00:17:22] Speaker 03:
So let's do that.

[00:17:24] Speaker 03:
The underlying agreement in this case was an agreement whereby GAF agreed to allow Roof and Box to promote its three-dimensional model with its customers.

[00:17:37] Speaker 03:
It did not give any permission to GAF, the appellant in this case, to sell roof and box products.

[00:17:48] Speaker 03:
It's merely obligated them to promote those products.

[00:17:53] Speaker 03:
And this agreement has nothing to do with that.

[00:17:56] Speaker 03:
And in fact, this lawsuit has nothing to do with that.

[00:18:00] Speaker 03:
And all of the allegations that are referenced in the complaint

[00:18:03] Speaker 03:
are wholly unnecessary, and I actually agree with what counsel has said, they're wholly unnecessary to an allegation of patent infringement.

[00:18:12] Speaker 03:
The contract has nothing to do with the claims of patent infringement.

[00:18:16] Speaker 05:
And so what they are essentially alleging... Well, I think they've really turned their focus away, this morning at least, away from the patent infringement to the other allegations, whether trade dress or things like that,

[00:18:32] Speaker 05:
Some of which they say the complaint makes clear enough have some of roots in the pre-termination relations of the parties.

[00:18:42] Speaker 03:
And you asked a very good question.

[00:18:44] Speaker 03:
And your question was, did you make any arguments to the district court as to whether or not those trade dress claims should be treated somehow separately or distinct from the patent claims that are alleged in the complaint?

[00:18:56] Speaker 03:
And the answer is no.

[00:18:58] Speaker 03:
That argument has never been made.

[00:18:59] Speaker 03:
There's never been a motion to sever the dependent trade rest state law claims that are asserted in the complaint along with the complaint for patent infringement.

[00:19:11] Speaker 03:
And so that's not an option anymore.

[00:19:13] Speaker 03:
There's never been any motion to do that.

[00:19:15] Speaker 03:
But even if it were, my answer to your question would be this.

[00:19:21] Speaker 03:
Once again, the underlying contract was for GAF to promote the sale

[00:19:28] Speaker 03:
of roof and box products, it did not allow them to sell a product which infringed roof and box patents.

[00:19:38] Speaker 03:
And that's the distinction.

[00:19:40] Speaker 03:
So to suggest that somehow it would be appropriate maybe to sever, which that motion has not been made, or to treat the trade rest claims differently is wrong for the simple reason that the underlying

[00:19:54] Speaker 03:
which as you've correctly pointed out the arbitration provision says that can't be arbitration uh... only relates to claims for rising out of the contract not related to under under under the contract exactly uh... and in this case uh... what we've got is a situation where uh... g f is essentially decided that it wants to market and sell a product which we alleged infringe the claims of uh...

[00:20:24] Speaker 03:
this patent.

[00:20:25] Speaker 03:
It's also worthwhile pointing out, and we've argued this in our brief.

[00:20:30] Speaker 05:
Can you focus on the non-patent?

[00:20:35] Speaker 05:
So patent infringement is what?

[00:20:36] Speaker 05:
Count one?

[00:20:37] Speaker 05:
I think that's right.

[00:20:38] Speaker 05:
And let's focus on the other counts, not patent infringement, both the federal and the state law.

[00:20:49] Speaker 05:
trade dress or other unfair competition.

[00:20:51] Speaker 05:
So I'm not that concerned about severing state law claims because there are some federal claims that seem to mirror the state law ones.

[00:20:59] Speaker 05:
And why aren't those at least closer to what the contract was about?

[00:21:06] Speaker 03:
Oh, I would completely agree that they are closer to they do not arise under

[00:21:12] Speaker 03:
And so if you had an arbitration agreement that said relating to, perhaps you would have an argument that those claims should be treated differently.

[00:21:23] Speaker 03:
Perhaps you would have an argument that those claims should be severed and submitted to arbitration separate and apart from the underlying patent, from the primary patent claim.

[00:21:34] Speaker 03:
But that argument hasn't been made.

[00:21:35] Speaker 03:
There's been no motion to do that.

[00:21:38] Speaker 03:
And I think the time for doing that is now

[00:21:41] Speaker 03:
long since expired, but I would also say that even if that motion were made, I would say to you that these claims are wholly separate and distinct from this contract.

[00:21:53] Speaker 03:
They did not arise, and this is very important, they did not arise, and the district court made this point in its decision, until the contract was terminated.

[00:22:03] Speaker 03:
They arose only when

[00:22:06] Speaker 03:
the defendant in this case made a decision to start selling products which we contend infringe the claims of this patent.

[00:22:15] Speaker 03:
And so for that reason and because of the language that's in the arbitration agreement itself and the contract, I would say to you that while I agree that they are closer to what is going on in the contract, they still do not arise under the contract because the contract

[00:22:33] Speaker 03:
as Judge Lynn has pointed out, related to the sale of our products.

[00:22:38] Speaker 03:
This complaint relates to the sale of GAF's products.

[00:22:46] Speaker 00:
What's the impact of the confidentiality provision that's contained in the agreement?

[00:22:51] Speaker 03:
I don't see any impact.

[00:22:54] Speaker 03:
Your Honor,

[00:22:55] Speaker 03:
I guess for the same reason that I've already argued and that is the contract itself again pertains to the promotion of our products.

[00:23:06] Speaker 03:
You know that it may have an impact on the other's claim.

[00:23:11] Speaker 00:
Let's say that there was a provision that took the confidentiality the other way and it applies to both parties to the agreement.

[00:23:23] Speaker 00:
Then would this

[00:23:25] Speaker 00:
with this complaint, would these allegations arise under the promotional agreement at that point?

[00:23:31] Speaker 03:
It's an interesting question.

[00:23:32] Speaker 03:
I hadn't thought about it until you posed it.

[00:23:36] Speaker 03:
But again, I obviously have to argue no.

[00:23:41] Speaker 03:
And the reason why is because, again, the contract pertains to the promotion of our products, not to the sale of theirs.

[00:23:48] Speaker 03:
And so we're two ships passing in the night here.

[00:23:52] Speaker 03:
These claims are wholly unrelated to what this contract was all about, which was an agreement on the part of the defendant to promote a three-dimensional model for use with their contractors.

[00:24:06] Speaker 05:
Just to be clear, do I understand right that the confidentiality provision paragraph eight of the agreement at appendix 83 runs one way only, that is they promised

[00:24:18] Speaker 05:
that they, I'm sorry, you promised you would keep confidential any of their confidential information, not the other way around.

[00:24:25] Speaker 03:
I went back and I looked at that after you asked the question earlier and that's my understanding.

[00:24:31] Speaker 03:
That's my understanding.

[00:24:34] Speaker 02:
Finally, I do want to point out... But in your complaint you talked about how in the course of the agreement

[00:24:44] Speaker 02:
that your client provided confidential information and there was an expectation that that would be maintained in confidence.

[00:24:55] Speaker 02:
Where is that obligation?

[00:24:59] Speaker 03:
In the contract?

[00:25:00] Speaker 03:
Yes.

[00:25:03] Speaker 03:
To be honest with you, it's my recollection that my client told me that they promised that they would do that.

[00:25:10] Speaker 03:
I do not believe there is a specific provision that says that in the agreement, but I do believe that there were oral discussions about that.

[00:25:21] Speaker 03:
Finally, I would like to remind you that I believe that this court's decision in the interdigital case is very instructive.

[00:25:32] Speaker 03:
because there it was argued that the arbitration clause applied because patents were subject to a licensing agreement and the district court applied the wholly groundless standard and compelled arbitration and this court looked at that and said whether you're doing a full-blown analysis or whether you're applying the wholly groundless standard it's still appropriate

[00:25:59] Speaker 03:
To look at the underlying agreement and look at what the underlying agreement says, and I go right back again to Judge Lynn, your point, the underlying agreement was not about

[00:26:09] Speaker 03:
their sale of their products which infringe our patent was about the sale of our products.

[00:26:15] Speaker 05:
Can I bring you back to this confidentiality business and never mind the written agreement at this point but the end of paragraph 21 of your complaint I think says Evans and GAF agreed that such roof and box and Evans confidential information would be kept confidential by GAF.

[00:26:35] Speaker 05:
Assuming for a moment that that sentence is true, what role does it play in your causes of action?

[00:26:45] Speaker 05:
Because it's easy enough to attach that oral agreement to this written agreement and then say, the complaint says this, it must be there for a reason, so now we seem to be maybe arising under the agreement.

[00:27:03] Speaker 03:
Right.

[00:27:05] Speaker 03:
I haven't thought about that as much as I should before you've answered the question.

[00:27:09] Speaker 03:
As I sit here thinking about it now, the answer is it probably is not relevant, notwithstanding the fact that it's in there.

[00:27:16] Speaker 03:
But I don't want to be bound by that because I haven't given it enough thought.

[00:27:20] Speaker 05:
But if you ask me... But your not being bound suggests maybe this is part of the case.

[00:27:27] Speaker 03:
Yeah, it's a fair point, but as a practical matter, I can tell you just sitting here standing at the podium, I don't see how there's anything to do with the claim for patent infringement.

[00:27:38] Speaker 05:
I mean, whether or not they, I mean, you could draw that conclusion as well as I. Putting aside the state law claims, did either side, did both sides here treat the question of arbitrability as all or nothing, as covering all the claims or none of the claims, or was there ever anything on the table or argued should be on the table about some claims go to arbitration and others not?

[00:28:08] Speaker 03:
No, and more importantly, and it's a point that we make in our brief, and I need to remind you of this, Mr. Edmonds is not even a party to that agreement.

[00:28:18] Speaker 03:
So to suggest that

[00:28:21] Speaker 05:
there was some meaning the minds about that uh... i think it's just unsupported by the evidence but no i'm not i have to say that that's the law relevant law tell us anything about what we should do if we concluded that one of these claims arises under the agreement but the other four don't no i have not seen i have not seen uh...

[00:28:47] Speaker 03:
Look, I got to believe that an Article 3 judge, if he wanted to, he or she wanted to, could in their discretion make a judgment to sever claims that they thought to be subjected to an arbitration provision.

[00:29:01] Speaker 03:
I have to believe that a judge has the ability to do that.

[00:29:05] Speaker 03:
Have I seen a case in which that's done?

[00:29:07] Speaker 03:
I have not.

[00:29:09] Speaker 03:
And I have looked, but I have not seen one.

[00:29:12] Speaker 03:
And more importantly,

[00:29:14] Speaker 03:
for the reasons that I've articulated, I don't think it would be appropriate because this lawsuit doesn't arise under that contract.

[00:29:23] Speaker 03:
I'm begging the underlying argument, I understand, but to answer your question as to whether I've seen cases that would allow an Article III or encourage an Article III judge to treat those claims differently, I have to believe they have the power to do that.

[00:29:42] Speaker 03:
If there are further questions, we would ask the court to affirm the findings of the district court in this case.

[00:29:48] Speaker 03:
Thank you very much.

[00:29:55] Speaker 06:
Thank you again, Your Honors.

[00:29:57] Speaker 06:
A few brief points.

[00:30:00] Speaker 06:
Again, I'd like to reiterate what we have in our papers, that the standard here for this analysis is the factual allegations in the pleading are of primary importance here.

[00:30:10] Speaker 06:
And as has been noted in the exchange between plaintiff's appellant, plaintiff's police counsel, and the court, we have significant allegations here in the complaint.

[00:30:24] Speaker 06:
One point that was made was the activity that's now complained of arose after the termination.

[00:30:31] Speaker 06:
But our response to that is, then why tell the jury all of this?

[00:30:36] Speaker 06:
There's a reason for it.

[00:30:37] Speaker 06:
There's a reason for saying,

[00:30:39] Speaker 06:
This is what happened under the agreement.

[00:30:42] Speaker 06:
GAF has behaved unconscionably.

[00:30:45] Speaker 06:
GAF has behaved with malice.

[00:30:47] Speaker 06:
You must give us punitive damages.

[00:30:49] Speaker 06:
There's a reason for them bringing that in, because without those allegations, it's a garden variety case.

[00:30:55] Speaker 06:
And it's not worth much, because there weren't many sales.

[00:30:58] Speaker 06:
And GAF didn't make any profits.

[00:31:00] Speaker 06:
And they're seeking lost profits here, punitive damages, severe relief against GAF.

[00:31:08] Speaker 02:
Let me ask you the same question that Judge Serrano asked your adversary, and that is the statement in paragraph 21 of the complaint that Evans and GAF agreed that such roof and box and Evans confidential information would be kept confidential by GAF.

[00:31:29] Speaker 02:
How does that relate, if at all, to the specific counts set forth

[00:31:38] Speaker 02:
in the complaint.

[00:31:39] Speaker 02:
And let's ignore patent infringement for the moment because I don't think it relates to that at all.

[00:31:43] Speaker 02:
So we're talking about counts three, four, and five.

[00:31:52] Speaker 06:
Thank you, Your Honor.

[00:31:53] Speaker 06:
It's the basis.

[00:31:55] Speaker 06:
It's the basis.

[00:31:56] Speaker 06:
What they say there, paragraph 20 before the antecedent and then paragraph 21, we had a promotional agreement relationship.

[00:32:04] Speaker 06:
And pursuant to that relationship, there was a confidentiality requirement.

[00:32:08] Speaker 06:
And they're saying GAF breached it.

[00:32:10] Speaker 06:
We disagree.

[00:32:11] Speaker 06:
They say GAF breached it.

[00:32:12] Speaker 06:
And that's the basis.

[00:32:13] Speaker 06:
They're saying that confidential information taught you what to do and how to do and how to do it.

[00:32:19] Speaker 06:
And then you did it.

[00:32:20] Speaker 02:
Where in those counts do they say that that confidentiality was breached?

[00:32:29] Speaker 06:
In, if I may, Your Honor, in the complaint, if we look at

[00:32:37] Speaker 06:
Appendix 33, page 9 of the complaint, paragraph 66.

[00:32:43] Speaker 06:
Defendant has violated plaintiff's common law trade dress rights and otherwise engaged in unfair competition with plaintiffs under the laws of the Commonwealth of Virginia and other applicable state laws such as Texas and New Jersey, including by using plaintiffs' confidential information and the fruits of plaintiffs' time, labor, and expense to compete with plaintiffs.

[00:33:03] Speaker 06:
And the antecedent for that is the paragraph Your Honor noted in that before and after it.

[00:33:08] Speaker 06:
And then in the next count, on Appendix 34, they cite the New Jersey statute, which talks about unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, with the intent others will rely on it, in connection with the sale of any merchandise.

[00:33:28] Speaker 06:
So clearly, this narrative that they have in the complaint is there for a purpose.

[00:33:33] Speaker 06:
The narrative is there so that they can get from the garden variety

[00:33:38] Speaker 06:
Design patent infringement case to the big opportunity for money here.

[00:33:44] Speaker 06:
Punitive damages, treble damages, lost profits, and even with respect to the patents, your honor, even with respect to the patent claims, exceptional case.

[00:33:53] Speaker 06:
With these allegations in this complaint, we are confident they want to tell the jury.

[00:33:56] Speaker 06:
They did all that.

[00:33:57] Speaker 06:
That's why this case is exceptional, and that's why the patent damages should be what they are.

[00:34:03] Speaker 06:
They should be trebled.

[00:34:04] Speaker 06:
That's why you should grant attorney's fees.

[00:34:06] Speaker 06:
because it's an exceptional case, because of the stuff they did under the agreement.

[00:34:11] Speaker 06:
It's all tied together.

[00:34:15] Speaker 00:
OK.

[00:34:16] Speaker 00:
We thank you for your arguments.

[00:34:17] Speaker 00:
And that's the conclusion of today's arguments.

[00:34:19] Speaker 00:
This court now stands to recess.

[00:34:21] Speaker 00:
Thank you very much, Your Honor.