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The first is number 16-2520, Finjin Inc.

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versus Blue Coat Systems Inc., Mr. Remley.

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Thank you, Your Honor, and may it please the Court.

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Let me begin with the 844 patent.

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Claim 1 of the 844 is extremely simple.

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An inspector receives a file and links a security profile to it that identifies anything suspicious.

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The claim does not require a computer or software to make the identification or create the profile.

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It doesn't offer any particular way of figuring out what code is suspicious, much less a new way.

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And it doesn't require any particular way of linking, except maybe that the linking happens before a web server makes the file available.

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Could I ask you a question based on the specifications?

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It seems to me, and I don't think the parties addressed this in the brief, but it seems to me that this includes

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a security profile, which is the result of applying a traditional virus scan to the downloadable.

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Is that correct?

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That's correct, Your Honor.

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There's absolutely nothing new about the security profile.

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The only claimed point of novelty is the idea that we attach it before the file is made available on the web server.

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And I think we think that's an abstract idea.

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Why is that abstract?

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You're attaching a file to a downloadable,

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and providing that to an end user.

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Well, Your Honor, I can imagine that a specific system for generating or identifying or attaching that downloadable might be patentable subject matter, but that's not what they claim.

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What the claim covers is the concept of identifying suspicious files before you make them available on the web server.

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That's an abstract idea.

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more than a dozen of this court's presidential opinions.

[00:01:53] Speaker 02:
Well, but you can have any kind of a process, say, a process of forming rails for a railroad where it's heating metal and extruding metal.

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You could say, well, that's an abstract idea, heating metal.

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Why is this any more abstract?

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Your honor, I think the answer is, if you claimed the idea of heating metal, this court should not allow a patent.

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What you could claim, what you would be permitted to claim, is a specific implementation that is novel and inventive.

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But there is no such claim here.

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The claim is to the idea.

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Why isn't it novel and inventive that you generate a security profile and attach it to something before it's downloaded?

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We don't believe that there's any sort of evidence to suggest that virus scanning didn't happen at the web server level.

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The argument wasn't.

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Let me ask you this.

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Is virus scanning an abstract idea?

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The concept itself, I think, might be an abstract idea.

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Absolutely.

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A particular implementation, a particular way of doing it, might be Patentable Subject Matter.

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This is the problem with step one of the ALICE test.

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It encourages the focus on overly reductionist thinking, because you can distill almost anything down to some abstract concept.

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I agree with that, Your Honor, but I think this case is not a particularly worrisome one for that question, right?

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Because this case is on all fours with intellectual ventures versus Symantec.

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with intellectual ventures versus Capital One, which I'm going to call Capital Two, because there are actually two different intellectual ventures versus Capital One cases in this case.

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Those cases involve precisely the same idea, and indeed, close to the same invention.

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Well, not quite.

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I mean, I guess there are two things going on here, which supposedly contribute to the novelty.

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One is that the virus scan in my

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example of a traditional virus scan is done at an earlier point in time, but that was something that was well known before the patent application here was filed.

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But then the second part of it, which I think wasn't involved in Intellectual Ventures, is attaching the security profile to the downloadable.

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In other words, the results of the virus scan.

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Am I correct that that's what's being done here, that they're attaching the results of the virus scan to the downloadable?

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That's the idea, or at least some sort of a flag, a profile that says warning virus, or identifies it doesn't have to be a virus, it could be some other file.

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I think that is the idea.

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Although, I guess if one were to do a virus scan at this web server and say there's a virus, it would be quite surprising to do anything other than alert people to the fact that there was a virus.

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So if that's the, if the inventive concept is just having done the scan at the server level, telling people about the results, I don't think that can satisfy, satisfy step two.

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I think it's worth noting when we come to the question of what is an inventive concept.

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But I don't think we're at step two on this case.

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This does not strike me as one of those typical software cases where you have some kind of business method or something done in the ordinary course of human conduct that is done faster or better or made possible by putting it on a computer.

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This is a problem endemic to computer security.

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And so it's a new way of doing it.

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It may not be particularly

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you know, non-obvious because it's combining a bunch of different steps, but that's not where we are at 101.

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It is definitely an invention that relates to computers, but that's not what this court has said the test is, right?

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It's not, it's not, this court has not simply... But I'm not saying it that broadly either.

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I get you.

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I'm with you.

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Most software patents that say do this on a computer are ineligible under ALIS.

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But this is not do this on a computer.

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This is

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Computers have specific problems with viruses, suspect files, all these kind of things.

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Here is a new way of solving security concerns specifically on a computer.

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This problem doesn't arise outside of the computer context.

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So why isn't this like in fish and DDR where it's improving computer functionality?

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Because there's no actual technological improvement to the computer functionality claim.

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So that is true, your honor, but the same thing.

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I don't think you're right.

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There is a technological improvement in this is a new way.

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of detecting viruses.

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We can argue about whether it's better or not, but it's certainly a different way of detecting computer viruses rather than having the virus scan done on your own computer.

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It's done before it gets to your computer.

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Well, I think, Your Honor, that there's nothing in the claims that identifies any new way of doing it.

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I thought it was well known to do virus scans before the downloadable got to your computer at the time that this was filed.

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What's different here

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is attaching the results of that to the downloadable.

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I think that's right, Your Honor.

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And there is nothing claimed in claim one that suggests that there's new method of virus scanning going on here.

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And that's why I think this case is like intellectual ventures versus Symantec, where exactly the same issue, albeit in email versus web pages, was at issue.

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Identify the viruses and the potentially problematic emails first and flag them before they come to the computer.

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But the problem is that the difference here is that the results of the virus scan are attached to the downloadable.

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That's what's different.

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That's what's not well known.

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That's what's arguably novel, right?

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Your Honor, even if you accept that that is true, and I don't think it's necessarily true, but I don't think that they can claim under Section 101 to own the idea of scanning files before downloading them.

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They might be able to claim a particular system.

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No, but that's not what I'm talking about.

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I'm saying it was well known to scan for viruses before it got to the user's computer.

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That seems to be the case.

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What's not well known is attaching the results of the virus scan to the downloadable.

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I would be surprised, Your Honor, if having done the scan in advance and found a virus, someone was not actually telling anyone about that.

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But I think that even if that were true, that is an idea.

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Why didn't you find some prior art that would anticipate or render it obvious?

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Well, Your Honor, it is the case that we argued prior art below, and we did not appeal the prior art decisions here.

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uh... i do think there's uh... no reason to believe that this is new but let me make another point but there are a couple of things that are that are different here it's not only scanning uh... at a time and attaching the profile to the downloadable but the fact that you're attaching something to a downloadable in it in and of itself has a a little different profile this is not just a file it's a downloadable it's

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So there's some programming that would run on a computer automatically.

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I don't think, Your Honor, that the claims require any such thing.

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All one need do is... It does require attaching a profile to the downloadable.

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That's correct, Your Honor.

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And it's attached to the downloadable before it's presented to a web user, correct?

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That's right, Your Honor.

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And so if they put a label on it that says, warning possible virus, if they put a label on it that says, be careful opening files from the internet, under Fingent's theory, there is infringement.

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And I'd like to point out that Fingent's theory of what makes this patentable subject matter, which is precisely this idea of the attachment before they make it available, is not the way blue coat system works.

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So Fingent has a problem either of patentable subject matter or of non-infringement.

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All of the arguments that they make for trying to suggest that this is patentable subject matter, they run away from when it comes to non-infringement, because our system simply doesn't work in the way that you just described it.

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You have a lot of issues here.

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We do.

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Can I, unless I'm interrupting my colleague, can I move you on to either the 968 patent or damages?

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I want to hear from you on both.

[00:10:22] Speaker 01:
Certainly, Your Honor.

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So let me say, let me start with the 968 patent.

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The idea here is to prevent a cached file from automatically being whitelisted.

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Different policies might allow some kinds of files, but not others to come into their system.

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So the idea of the patent is, once your content is cached, we're going to have an index of whether you allow it, whether you allow it, whether you allow it, and so forth.

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Policies not on the index won't just automatically grab the file.

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They'll have to go back and run another scan.

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And the claim accordingly requires the index to store a set of decisions that result from determining whether a given digital content is allowable relative to a given policy.

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Proxy SG doesn't work that way.

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Proxy SG stores only individual condition evaluations.

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Does this file pass this particular check?

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Does it have this characteristic?

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It doesn't.

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Let me see if I can understand what the difference is here.

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As I understand it, what your client system does is that it

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stores the result of the application of particular rules, but it doesn't store the overall result of whether the content is acceptable.

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That's correct.

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So the question is whether that satisfies the claim language is saving the results as entities, entries in the policy index, right?

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whether determining, reserving results from determining whether a given digital content is allowable relative to a given policy.

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So the question is whether it's satisfied by storing the results of the application of a single rule or whether it has to store the results of whether the content is accessible to the user.

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The ultimate judgment versus individual questions, individual checks.

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And the district court at claim construction

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made clear that there's no dispute that our system doesn't store the final results.

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The district court said, I would grant summary judgment to Blue Coat, but I want to give Finjin the possibility of showing at trial that there are some policies out there where there's one and only one intermediate question.

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And if there's only one intermediate question, the intermediate question and the final result would be the same thing.

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But Finjin didn't show that at trial.

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They didn't even make any effort to show that at trial.

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Their theory is that storing the results of the application of a single rule is sufficient even though it's not storing the results of whether the content is acceptable or not.

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That would be the theory under which they might have been able to show infringement.

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That's why the district court let them get to trial on it.

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I think their theory is a little bit different from the district court's.

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My understanding is that

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What they say is that Blue Coat stores the result of the application of a particular rule to the content, and they say that it's not necessary under the claim to store the results of the overall assessment.

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Correct?

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That's correct, Your Honor, but that's not what the claim requires.

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Your Honor, I understand the dispute.

[00:13:25] Speaker 01:
Well, except that it's not.

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There was a claim construction.

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They lost that claim construction.

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The district court said the claim does, in fact, require a final allowability determination.

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They did not appeal that decision.

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I don't think they can come here and now argue, we want a new claim construction.

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They got to go to trial on this patent solely in order to try to prove that there are some circumstances where the intermediate and the final are the same thing because there's one and only one test.

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And they didn't prove that.

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Well, how was the jury instructed on this?

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There was a claim construction which went beyond the language of the claim.

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Is that right?

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The jury's the claim construction involved the term policy index, which said that the term was a data structure indicating allowability of cached content relative to a plurality of policies.

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So what you're relying on is the notion that it has to

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stored the allowability result and not just the application of a single rule.

[00:14:19] Speaker 01:
That's correct, Your Honor.

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And that is the thing that was supposedly new about the invention.

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Let me say a few words about damages.

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And let me hear a highlight, too.

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Just to be clear, I wanted to hear about the 844.

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844 damages, certainly, Your Honor.

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So Finjen offered no expert testimony at all on the 844.

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Instead, it told the jury to award $24 million based on all worldwide users.

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It did engage in an analysis that parsed to the smallest saleable unit, DRTR.

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It said DRTR is 4% of sales, so let's do 4%.

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But it did not take the next required step and apportion between the infringing and the non-infringing portions of DRTR.

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There is no effort to apportion between the infringing and the non-infringing portions of DRTR.

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DRTR has 86 different functions in that Cookie 2 file.

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Maybe they accuse one of them.

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Maybe they accuse four of them.

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They certainly don't accuse all 86.

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And DRTR also does lots of other things besides parsing suspicious categories, as Finjen's own expert agreed at A 399.85.

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When there is a smallest salable unit, but that smallest salable unit has both infringing and non-infringing proportions, apportionment is required.

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Vernetics versus Cisco says, quote, Isn't the impinging part the most important part of the DRTR function?

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It might be, Your Honor.

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We don't know.

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We don't know because they presented no evidence on that question.

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But even if it were the most important, it can't be all of it.

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They do not make, either in the district court or on appeal, an entire market value rule argument.

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They don't argue that this is the only reason people bought this.

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And so we think at a minimum, remand is required.

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for a new trial on the damages question, because as Vernetix said, where the smallest saleable unit is in fact a multi-component product containing several non-infringing features, the patent team must do more to estimate what portion of the value of that product is attributable to the patentable technology.

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Here they did nothing.

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And I think that requires a new trial on damages.

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If I may make one final point on damages, I am over time.

[00:16:20] Speaker 01:
Go ahead.

[00:16:22] Speaker 01:
The other thing that's quite remarkable is that at closing argument on the other three patents that are at issue, counsel expressly asked the jury to double their own expert's number, and the jury did exactly that.

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So for the other three patents that counsel said, that's the floor.

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Reasonable royalty is the floor.

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Based on the facts, it can be higher than that.

[00:16:45] Speaker 01:
They asked you to double the number.

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The jury did double the number.

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We submit that that is flat-out reversible error.

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here we think are remitted or at least to no more than half of the damages for those patents is appropriate.

[00:16:57] Speaker 00:
Unless there are further questions, I think we're out of time.

[00:17:00] Speaker 00:
We'll give you two minutes for rebuttal.

[00:17:01] Speaker 00:
Thank you, Your Honor.

[00:17:04] Speaker 00:
Mr. Andre?

[00:17:08] Speaker 04:
Good morning, Your Honors.

[00:17:09] Speaker 04:
May it please the Court?

[00:17:12] Speaker 00:
On the one-on-one issue, could I see to what extent there's common ground here?

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If I understand

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claim correctly, it would cover the application of a traditional virus scan, right?

[00:17:27] Speaker 00:
That would be part of this.

[00:17:30] Speaker 00:
It could be part of the security profile.

[00:17:32] Speaker 04:
It could be, but what Fingen invented... No, no, but let's take this one step at a time.

[00:17:38] Speaker 04:
Okay, so a traditional virus scan, only scans for known viruses.

[00:17:43] Speaker 00:
Yes, it could be part of the security profile.

[00:17:45] Speaker 04:
It's generally not.

[00:17:47] Speaker 04:
I would say no, it's not.

[00:17:49] Speaker 00:
Because it's not?

[00:17:50] Speaker 00:
No.

[00:17:51] Speaker 00:
But there's reference in the specification to traditional virus scans.

[00:17:56] Speaker 04:
Traditional virus scanning was a known signature.

[00:17:59] Speaker 00:
No, don't misunderstand me.

[00:18:00] Speaker 00:
I'm not saying that this is limited to simply doing a traditional virus.

[00:18:04] Speaker 00:
OK.

[00:18:04] Speaker 00:
I'm not saying that.

[00:18:05] Speaker 00:
OK?

[00:18:06] Speaker 00:
So don't get concerned about that.

[00:18:09] Speaker 00:
I'm just saying that the security profile could be the results of a traditional virus scan.

[00:18:15] Speaker 04:
Hypothetically, it could.

[00:18:17] Speaker 00:
OK.

[00:18:17] Speaker 00:
All right.

[00:18:19] Speaker 00:
Then it was well known, wasn't it, to do a virus scan before it got to the user's computer?

[00:18:28] Speaker 04:
There was no prior art that was submitted at trial that we saw that did that.

[00:18:32] Speaker 04:
Because traditional virus scanning was of known viruses, and known viruses had to be attached to a host file.

[00:18:38] Speaker 04:
And that host file would then go down to the user's computer, and they would scan it at the user computer.

[00:18:43] Speaker 00:
OK, so you don't agree.

[00:18:45] Speaker 00:
that it was well known to scan before?

[00:18:48] Speaker 04:
No.

[00:18:50] Speaker 04:
I think the location of the scan was a novel idea.

[00:18:54] Speaker 04:
And the type of scan that was done there was also very novel.

[00:18:56] Speaker 00:
Let's assume that we were to disagree with you on that and find that scanning before it got to the user computer was a well-known feature.

[00:19:05] Speaker 00:
So then that would leave the idea of attaching the results of that virus scan to the downloadable.

[00:19:14] Speaker 00:
Could you address whether that's an abstract idea or not?

[00:19:18] Speaker 04:
No, it's not.

[00:19:18] Speaker 04:
This is an unconventional solution to a new technical problem.

[00:19:27] Speaker 04:
That's what this patent comes down to.

[00:19:30] Speaker 04:
The idea of, one, scanning at an intermediary computer was new.

[00:19:37] Speaker 04:
Because back in the day, back in 1996, we didn't have the computing power we have today.

[00:19:41] Speaker 04:
So that was new into itself.

[00:19:43] Speaker 04:
a new file that was generated, a brand new file that was not in creation to that downloadable and then sending it on, that would take away outside the bounds of the abstract idea.

[00:19:57] Speaker 04:
This is a, the secure profile generation is something that was never done in the prior art.

[00:20:06] Speaker 04:
It just, it was not done at an intermediate computer.

[00:20:11] Speaker 04:
So the idea that,

[00:20:14] Speaker 04:
this claim tells you how to actually do this process is key.

[00:20:21] Speaker 00:
It's just like the... Well, that sounds like the second step of Alex, right?

[00:20:25] Speaker 04:
Well, it's also, I think it goes towards Enfish as well, that it's also part of the first step.

[00:20:30] Speaker 04:
The idea of receiving by an inspector or downloadable, as Judge Lynn talked about, downloadable had a very specific meaning.

[00:20:36] Speaker 04:
It's a capital D, downloadable, who is defined.

[00:20:40] Speaker 04:
And it's defined as an executable application program.

[00:20:44] Speaker 04:
which is downloaded from a source computer and run on a destination computer.

[00:20:49] Speaker 04:
That's new to the internet at that same time, because that was just not done either.

[00:20:52] Speaker 04:
There was not automatic programs that came in, executable programs that came in and started running.

[00:20:57] Speaker 04:
That was an advent or a result of the Java computer programming language that was introduced in late 1995.

[00:21:06] Speaker 04:
So that new problems that resulted from Java

[00:21:12] Speaker 04:
And the solutions that this invention talks about makes it very, very different.

[00:21:17] Speaker 04:
So from the very first step, you know that it's rooted in computer technology with the definition of downloadable.

[00:21:23] Speaker 04:
Very first claim element.

[00:21:24] Speaker 04:
The second claim element, generating by the inspector at this intermediary a security profile, is something that was never done either.

[00:21:32] Speaker 04:
That takes it outside of the abstract realm as well.

[00:21:35] Speaker 04:
Because the security profile identifies suspicious code.

[00:21:38] Speaker 04:
If it was a traditional virus scan, that would be known, that would be a virus.

[00:21:42] Speaker 04:
This is supposed to identify code that no one's ever seen before.

[00:21:47] Speaker 04:
Brand new malware that was introduced, has never been seen.

[00:21:50] Speaker 00:
Well, no, but that's not true.

[00:21:52] Speaker 00:
I mean, you agreed that it could be scanning for traditional, using it to traditional virus scan.

[00:21:59] Speaker 04:
It can, but that's the reason I kind of qualified my answer.

[00:22:02] Speaker 04:
The idea here is to identify suspicious codes, code that you've never seen before.

[00:22:07] Speaker 04:
Now, traditional virus scanning could only identify known viruses.

[00:22:12] Speaker 04:
This was the purpose of these inventions.

[00:22:15] Speaker 00:
This includes scanning for known viruses.

[00:22:19] Speaker 00:
You agreed to that earlier.

[00:22:20] Speaker 04:
I said it could include that type of scanning, but also it scans for unknown.

[00:22:25] Speaker 00:
The fact that it also does something else isn't exactly relevant to the question of whether the broader concept is abstract.

[00:22:32] Speaker 00:
If you'd had a narrower claim which said this does not extend to traditional virus scanning,

[00:22:41] Speaker 00:
and includes checking the downloadable for certain other features.

[00:22:46] Speaker 00:
That would be a narrower claim and a quite different situation.

[00:22:50] Speaker 00:
But what we have is a situation in which you've chosen to write a claim, which is broad enough to include traditional virus scanning.

[00:22:58] Speaker 00:
Now, to be sure, you say you do two things differently about that.

[00:23:03] Speaker 00:
One, that you do it earlier before it gets to the user computer.

[00:23:07] Speaker 00:
And second, that the results of the scan are attached to the downloadable.

[00:23:11] Speaker 00:
The question is whether those two features take it out of the realm of the abstract.

[00:23:18] Speaker 00:
And as to the first of those, that is the location of the scan, seems to be somewhat difficult to distinguish intellectual ventures on that scope, right?

[00:23:30] Speaker 04:
Well, intellectual ventures was just doing a purely a email filter.

[00:23:35] Speaker 04:
And that was just filtering emails as it came through just based on... Yeah, but the locate that was said to be

[00:23:41] Speaker 00:
What was novel about it was the location of the scan, right?

[00:23:46] Speaker 04:
Well, here it's not only the location, it's also generating the profile at that location.

[00:23:51] Speaker 00:
That's attached to the downloadable.

[00:23:53] Speaker 04:
So, and I want to be very clear, traditional signature scanning, which was, that's how it was done before our inventions.

[00:24:02] Speaker 04:
Our inventions do not do traditional signature scanning.

[00:24:05] Speaker 04:
They could do, they could capture traditional viruses by looking at for suspicious operations.

[00:24:10] Speaker 04:
like the eval functions, doc rights, various other functions in computer science.

[00:24:15] Speaker 04:
It could do that.

[00:24:17] Speaker 04:
So it could catch traditional known viruses.

[00:24:20] Speaker 04:
But the purpose of these inventions is to identify unknown viruses.

[00:24:24] Speaker 04:
That's the key.

[00:24:24] Speaker 00:
You keep saying that, and yet the claim's not limited to that.

[00:24:28] Speaker 00:
So I don't understand where that gets you.

[00:24:30] Speaker 04:
It captures known and unknown.

[00:24:32] Speaker 04:
Before this invention, there was no method to capture unknown viruses.

[00:24:35] Speaker 00:
It would be infringed if you had a security profile that only captured known viruses, right?

[00:24:42] Speaker 04:
Well, the security profile itself is just a profile of the downloadable.

[00:24:47] Speaker 00:
So if your security profile... But the security profile would be infringed if the security profile just reflected the application of a known virus scan to the downloadable.

[00:25:01] Speaker 04:
I'm not sure I understand that question.

[00:25:03] Speaker 04:
If a known virus came into the infringing systems.

[00:25:06] Speaker 00:
If the infringing system had an approach of scanning for known viruses using traditional virus screens, and then that was done before it got to the user's computer, and that was attached, the results of that scan were attached to the downloadable, this would be infringed, right?

[00:25:31] Speaker 04:
I think, I don't know if that would be the case, if we can.

[00:25:35] Speaker 04:
I think because what we're talking about here is generating by the inspector a security profile of identified suspicious code.

[00:25:43] Speaker 04:
If a known virus comes into the system and it identifies the suspicious code, it would be infringed, yes.

[00:25:49] Speaker 04:
So a traditional virus scanning is a little bit mixing, we're mixing apples and oranges a little bit on the technology.

[00:25:56] Speaker 04:
But let me go back to the 101 context because

[00:25:59] Speaker 04:
Whether they infringe or not is something that is, you know, we had a very substantial record below.

[00:26:03] Speaker 00:
No, I'm not addressing it.

[00:26:06] Speaker 00:
I'm saying for 101 purposes, you have to be able to defend an application of this, which would be an infringement.

[00:26:17] Speaker 00:
And we have to look at the scope of the claim in order to determine the 101 question.

[00:26:25] Speaker 04:
So what we think for the 101, we think there are

[00:26:29] Speaker 04:
Each of the three elements takes outside the 101 analysis.

[00:26:35] Speaker 04:
One is the fact that you're receiving by the inspector a downloadable, which puts you in the computer realm, obviously, before they're generated by the inspector, this downloadable security profile, which was a new way of solving and told you how to solve this new problem.

[00:26:50] Speaker 04:
And then linking is an important element.

[00:26:52] Speaker 04:
That's a very important element to take outside the abstract as well.

[00:26:55] Speaker 00:
Linking the profile of the downloadable.

[00:26:58] Speaker 04:
Absolutely.

[00:26:59] Speaker 04:
And so in each one of those three, I think, take it outside of the abstract.

[00:27:02] Speaker 04:
And if you get to the step two, which you should not get to, but if you did, you'd also say this is an inventive concept.

[00:27:06] Speaker 04:
There's a reason that there was absolutely no prior art talking about this.

[00:27:10] Speaker 04:
This was a brand new way of doing something.

[00:27:13] Speaker 04:
This was a very, it could not be thought of to do a analysis like this because it just doesn't, it's unconventional to say the least.

[00:27:24] Speaker 04:
So I would like to remain time.

[00:27:27] Speaker 04:
I do want to talk about some of the other questions.

[00:27:29] Speaker 04:
I don't know if Judge Hughes has some questions about damages.

[00:27:33] Speaker 02:
Perhaps you could address quickly the 968 patent and the damages.

[00:27:37] Speaker 04:
OK.

[00:27:38] Speaker 04:
On the 968, this was an issue that was fought out over claim construction.

[00:27:45] Speaker 04:
You heard the court's claim construction here.

[00:27:47] Speaker 00:
Is my characterization of the difference between the parties correct?

[00:27:51] Speaker 04:
Yes.

[00:27:52] Speaker 04:
And what the jury heard.

[00:27:54] Speaker 04:
was factual evidence, very substantial evidence, and the judge who actually gave the language in the claim construction, she had a very fully developed record down below.

[00:28:05] Speaker 04:
She had her claim construction, summary judgment, she had a two-week trial and a bench trial thereafter.

[00:28:10] Speaker 04:
We have a very strong record here that they know works completely.

[00:28:13] Speaker 04:
They're trying to go back and revisit claim construction and make the claim language say something it doesn't.

[00:28:18] Speaker 00:
This is an instance where... But doesn't the jury instruction, which is

[00:28:24] Speaker 00:
on the claim language based on the claim construction, doesn't it seem to require that the results of the review be cashed as well as the results of the application of a particular rule?

[00:28:42] Speaker 04:
That's not how we saw it and it's not how the judge saw it and it's her claim instruction.

[00:28:47] Speaker 04:
I think we have substantial evidence to show, as the district court judge said, and she, like I said, she lived with these patents for three years.

[00:28:54] Speaker 04:
There was substantial evidence to show that they infringed based on the record below of storing in the cash what they stored.

[00:29:02] Speaker 04:
The final decision did not have to be stored per se.

[00:29:04] Speaker 04:
We gave that in chapter and verse.

[00:29:07] Speaker 04:
And the jury had a factual inquiry.

[00:29:10] Speaker 04:
They're trying to redo claim construction here today.

[00:29:13] Speaker 04:
But at the time, there was no dispute on the claim construction.

[00:29:16] Speaker 04:
It was just the application of the facts to that claim construction that was in dispute.

[00:29:20] Speaker 04:
The jury had a strong factual record.

[00:29:22] Speaker 00:
So, in that regard... Maybe you should address the 844 damages, both the apportionment question and the $8 world trade.

[00:29:32] Speaker 04:
Sure.

[00:29:33] Speaker 04:
On the apportionment, the thing that my friends keep ignoring here is that whenever a file gets to the DRTR, you get a DRTR response.

[00:29:46] Speaker 04:
every single time.

[00:29:48] Speaker 04:
And the DRTR response is the security profile we're talking about.

[00:29:50] Speaker 00:
Well, it's no question about that, but it does more than that, all right?

[00:29:54] Speaker 00:
What's that?

[00:29:54] Speaker 00:
It does more than that.

[00:29:56] Speaker 04:
Well, it does.

[00:29:58] Speaker 00:
The DRTR is not the... It's performing a function which isn't covered by the path, right?

[00:30:04] Speaker 00:
Which is, as I understand, this sort of categorization as to what type of downloadable it is.

[00:30:10] Speaker 04:
What we're saying is every single time... No, no, but just help me.

[00:30:15] Speaker 00:
Okay.

[00:30:16] Speaker 00:
that it's performing a function other than the patented function at the same time that it performs the patented function?

[00:30:25] Speaker 04:
It's inclusive with other function, yes.

[00:30:27] Speaker 00:
So why shouldn't there be an apportionment between the patented function and the other function?

[00:30:33] Speaker 04:
Because there was a massive apportionment already.

[00:30:36] Speaker 00:
Every time a file comes into the webinar.

[00:30:38] Speaker 00:
The apportionment that happened already is a different kind of apportionment between how many

[00:30:43] Speaker 00:
how much traffic there was and how many requests there are, which is the 4%, right?

[00:30:48] Speaker 04:
Well, the DRTR is not the smallest sellable unit.

[00:30:51] Speaker 04:
Let's take one step back from that.

[00:30:53] Speaker 04:
That is the footprint of the invention.

[00:30:54] Speaker 04:
That's the smallest aspect of the footprint of the invention.

[00:30:58] Speaker 04:
What the jury found, what the judge found, was that every time a file comes into the DRTR, there's a DRTR response, which is an infringing step.

[00:31:07] Speaker 04:
That's the infringing aspect.

[00:31:08] Speaker 04:
Every single time that is implicated,

[00:31:12] Speaker 04:
you get a DRTO response 100% of the time.

[00:31:14] Speaker 04:
It never doesn't get a DRTO response.

[00:31:16] Speaker 04:
It never does not infringe.

[00:31:18] Speaker 00:
I don't think anybody is contesting that with respect to the damages issue.

[00:31:23] Speaker 00:
It certainly does perform an infringing function.

[00:31:26] Speaker 00:
The problem is that it also performs a non-infringing function.

[00:31:31] Speaker 00:
And the question is whether there should be a portion between those two.

[00:31:35] Speaker 04:
What you would call the non-infringing function is not a separate function.

[00:31:40] Speaker 04:
They're inclusive into the DRTO response.

[00:31:43] Speaker 04:
The DRTR response is inclusive.

[00:31:45] Speaker 04:
You can't parse those out.

[00:31:47] Speaker 04:
So there's no way you can parse that out in any logical way.

[00:31:50] Speaker 00:
Why can't you parse it out?

[00:31:52] Speaker 04:
Because every single time a file comes into the DRTR, you get a DRTR response.

[00:31:56] Speaker 04:
And the response will be some of the infringement and some not infringing activity.

[00:32:00] Speaker 00:
Well, that would mean that any time something performed infringing in a non-infringing function, there wouldn't be any apportionment.

[00:32:07] Speaker 04:
Now, if you have part of the DRTR itself not performing the function, there's no part of the DRTR that does not perform a non-infringing function.

[00:32:18] Speaker 00:
How about the $8?

[00:32:18] Speaker 04:
$8 was uncontested.

[00:32:22] Speaker 04:
Uncontested?

[00:32:23] Speaker 04:
It was undisputed.

[00:32:24] Speaker 04:
They didn't cross-examine.

[00:32:25] Speaker 04:
They did not put their own witnesses up on damages.

[00:32:27] Speaker 00:
But that doesn't mean it's uncontested.

[00:32:29] Speaker 04:
It was undisputed at trial.

[00:32:31] Speaker 04:
The witness got up on the stand.

[00:32:33] Speaker 00:
They agreed that $8 was the right royalty?

[00:32:35] Speaker 04:
No, they didn't cross-examine it.

[00:32:38] Speaker 04:
So what?

[00:32:38] Speaker 04:
The jury had no other evidence.

[00:32:40] Speaker 00:
The question is whether you have the burden to prove.

[00:32:42] Speaker 00:
The question is whether you put on enough evidence.

[00:32:44] Speaker 00:
They don't lose their right to challenge the $8 figure because they didn't cross-examine your expert.

[00:32:50] Speaker 04:
And didn't put any other evidence for the jury to consider.

[00:32:53] Speaker 04:
But it doesn't matter.

[00:32:55] Speaker 03:
If your evidence is totally insufficient as a matter of law, the fact that they didn't cross-examine it doesn't somehow transform it into

[00:33:03] Speaker 03:
credible evidence.

[00:33:05] Speaker 03:
Why is the $8 credible evidence?

[00:33:08] Speaker 04:
Because as the district court found, as the jury found, the $8 is based on 8 and 16 percent royalty rate that was determined at the time of the hypothetical negotiation in 2008 by this court when they affirmed those numbers.

[00:33:21] Speaker 04:
So the 8 and 16 percent royalty rate was applied.

[00:33:23] Speaker 00:
In a case that involved other patents as well, right?

[00:33:26] Speaker 04:
It had some overlap patents and some of the related patents.

[00:33:29] Speaker 00:
But they didn't approve an $8 rate.

[00:33:32] Speaker 04:
Well, they approved the 8 and 16 percent rate.

[00:33:35] Speaker 04:
And so FinGEN has been using that 8 and 16 percent royalty rate since 2008 at the time of the hypothetical negotiation.

[00:33:40] Speaker 02:
How does that relate to $8?

[00:33:43] Speaker 04:
So then there's two methodology you use.

[00:33:45] Speaker 04:
You look at the industry average of price of software, you apply 8 and 16 percent to it, or 16 percent in this case, and get you to $8.

[00:33:50] Speaker 04:
So our witness got up and said since 2008 FinGEN has been using

[00:33:55] Speaker 04:
$8 per user fee or 8 and 16 percent.

[00:33:57] Speaker 00:
That's the starting point for negotiation.

[00:33:59] Speaker 00:
The starting point for negotiation.

[00:34:00] Speaker 00:
What is the fact that they use it for the starting point for negotiations say about whether that's a reasonable royalty?

[00:34:07] Speaker 00:
The question is not whether that's a starting point.

[00:34:09] Speaker 00:
The question is not whether your client seeks at the beginning of a negotiation to get an $8 rate.

[00:34:16] Speaker 00:
The question is whether at the end of the negotiation they've agreed to an $8 rate and you don't have any evidence of agreement to an $8 rate

[00:34:25] Speaker 00:
for a similar patent, do you?

[00:34:28] Speaker 04:
We have the 8% to 16%.

[00:34:30] Speaker 04:
We do.

[00:34:32] Speaker 04:
So that's what the evidence was put in.

[00:34:34] Speaker 04:
This is the evidence we use as our negotiation point.

[00:34:38] Speaker 04:
So it is a starting point.

[00:34:40] Speaker 04:
And that was the position we took at the trial, that it was based on a federal circuit affirmation of the rate applied to the facts of the case at the time of the hypothetical negotiation.

[00:34:51] Speaker 04:
So that's the evidence the jury heard for the $8.

[00:34:54] Speaker 04:
And there was sufficient backup for that.

[00:34:57] Speaker 04:
It wasn't just pulled out thin air.

[00:34:58] Speaker 04:
It was based on 8% to 16%.

[00:35:00] Speaker 02:
So your argument is that even though that was just proposed as a starting point, there was some reasonable basis for it.

[00:35:07] Speaker 02:
Yes.

[00:35:08] Speaker 04:
And that was the only evidence the jury received on the rate.

[00:35:13] Speaker 04:
There was no counter evidence at all to say that was unreasonable.

[00:35:17] Speaker 04:
Now, it was based on law.

[00:35:18] Speaker 04:
It was a factual basis for coming up with that number.

[00:35:21] Speaker 04:
And there was nothing to counter it.

[00:35:25] Speaker 04:
That's what we do at jury trials.

[00:35:26] Speaker 04:
They decide the facts.

[00:35:28] Speaker 04:
And the facts in this case were that was a starting point.

[00:35:31] Speaker 04:
That's what we would agree to.

[00:35:32] Speaker 04:
$8 would be what Finjian wanted.

[00:35:35] Speaker 04:
What they would agree to a license at the time of the hypothetical negotiations.

[00:35:38] Speaker 00:
Yeah, but was there any evidence that the accused infringer or the person seeking a license would agree to that rate?

[00:35:45] Speaker 04:
There was.

[00:35:45] Speaker 04:
There's OEM licenses that were higher.

[00:35:48] Speaker 04:
There were OEM agreements between FinGEN.

[00:35:51] Speaker 00:
Those were software licenses.

[00:35:52] Speaker 04:
They were software licenses, but it was a per user base license, once again, with FinGEN when they were partners, when they were OEMing our software, it was $14 to $16 per user.

[00:36:02] Speaker 04:
So the jury had that to look at, saying, well, when they were OEMing our technology instead of licensing our patent, they were much higher than $8.

[00:36:09] Speaker 04:
So there was evidence in the record to show that a per user

[00:36:14] Speaker 00:
Which of our cases has said that you look to a software license to determine what the patent royalty should be?

[00:36:23] Speaker 04:
If it's a comparable license, I don't think you can say a product license and a patent license are necessarily comparable one-for-one.

[00:36:30] Speaker 04:
I don't think I could cite you a case that says that.

[00:36:33] Speaker 04:
But there is a way you're looking at how they did business in 2008.

[00:36:37] Speaker 04:
When people wanted to acquire someone else's technology, in this case it's OEM technology, they paid a per-user base.

[00:36:44] Speaker 00:
Okay, unless there are further questions, I think we're out of time.

[00:36:47] Speaker 00:
Thank you.

[00:36:49] Speaker 00:
Mr. Lemley, you have two minutes here.

[00:36:51] Speaker 01:
Thank you, Your Honor.

[00:36:52] Speaker 01:
Let me just begin with the damages point.

[00:36:56] Speaker 01:
It is absolutely the case that DRTR does other things besides infringing.

[00:37:00] Speaker 01:
That is Finjin's own expert in the record, and that requires apportionment, even beyond the 4%.

[00:37:05] Speaker 01:
That alone is a sufficient grounds for reversal in the damages.

[00:37:08] Speaker 01:
On the 8% number, there was no expert witness who testified on the 844.

[00:37:14] Speaker 01:
The $8 number is what he told the jury in closing argument.

[00:37:20] Speaker 01:
What the witness said was 8% to 16%, not $8, is what we would like to get for our entire patent portfolio.

[00:37:30] Speaker 01:
Not for this patent, but for all the patents, including the others at issue here, including ones that were found not infringed here, and including ones they didn't even assert here.

[00:37:37] Speaker 01:
And that's A40409.

[00:37:39] Speaker 01:
So I think the damages awarded in the 844

[00:37:41] Speaker 01:
at a minimum is got to be reversed.

[00:37:44] Speaker 01:
It's hopeless.

[00:37:45] Speaker 01:
But I think you need not get to the damages question on the 844.

[00:37:48] Speaker 01:
Even if this court doesn't believe that the invention is invalid under section 101, if it's not invalid under section 101, it has to be because of these features that counsel identified.

[00:38:01] Speaker 01:
Those features aren't present in the claims.

[00:38:03] Speaker 01:
They are imported from the specification.

[00:38:04] Speaker 01:
But if we are going to read them as requirements to make it patentable subject matter, our system doesn't work that way.

[00:38:10] Speaker 01:
We do not, in fact, identify and attach profiles before you make a file downloadable available to a web server.

[00:38:18] Speaker 01:
We simply don't.

[00:38:19] Speaker 01:
We intercept them after it's made available on the web server at an intermediary stage, and we assess them then.

[00:38:26] Speaker 01:
The district court specifically found that our network gateway could not be a web server for purposes of the claims in claim construction.

[00:38:34] Speaker 01:
So if you believe that this is patentable subject matter because it attaches

[00:38:38] Speaker 01:
a file to a downloadable before it's made available on the web server, there is no infringement of the 844 patent in this case.

[00:38:47] Speaker 00:
Thank you.