[00:00:00] Speaker 05:
The first case for argument this morning is 171070, Honeywell International versus Fuji Film.

[00:00:11] Speaker 05:
You're splitting the time.

[00:00:14] Speaker 05:
So is it Mr. Siegel or Mr. Fuji?

[00:00:17] Speaker 02:
Mr. Kornitsky, I'll be taking 10 minutes in the opening.

[00:00:20] Speaker 02:
And then the Fuji Council and Mr. Siegel will take three.

[00:00:23] Speaker 02:
In the opening, not as many.

[00:00:24] Speaker 02:
In the opening, correct.

[00:00:25] Speaker 02:
OK.

[00:00:25] Speaker 02:
Now there's two minutes for rebuttal.

[00:00:27] Speaker 02:
It's OK.

[00:00:28] Speaker 02:
OK, fine.

[00:00:28] Speaker 02:
Please proceed.

[00:00:33] Speaker 02:
Good morning, Your Honor.

[00:00:34] Speaker 02:
There's really one primary question in this appeal, and that's whether the district court abused its discretion in failing to find a case exceptional.

[00:00:45] Speaker 02:
And it's appellant's position that this case stands out from others, and that Judge Stark abused his discretion in concluding this was an ordinary case.

[00:00:53] Speaker 04:
Now, he missed a hard round.

[00:00:55] Speaker 04:
Well, probably I was going to ask for particulars because he went into

[00:01:02] Speaker 04:
a good deal of objective analysis as to why he reached the conclusion that he did.

[00:01:10] Speaker 04:
So is there anything in particular you can point to, or is it just a conclusion?

[00:01:15] Speaker 02:
Yes, Your Honor.

[00:01:17] Speaker 02:
What he did, he certainly said he reviewed the totality of the circumstances.

[00:01:23] Speaker 02:
But in fact, what he did is go through the facts

[00:01:25] Speaker 02:
and look for a colorable basis to support Honeywell's position.

[00:01:29] Speaker 02:
But what he failed to do was to look at the facts that Judge Farnan had relied on, volumes three and volumes four, and the explicit testimony of the inventors and a rule 30b6 witness.

[00:01:41] Speaker 04:
Specifically, there are three things that- Is this the distinction between colorable and reasonable that you want us to draw?

[00:01:49] Speaker 02:
Yes, Your Honor.

[00:01:51] Speaker 02:
The objective reasonableness test

[00:01:53] Speaker 02:
is supposed to be giving substantial weight.

[00:01:56] Speaker 02:
There's a significant difference between looking at something that's objective, the objective arguments that are being made, and the colorable or subjective good faith belief.

[00:02:06] Speaker 02:
And if you look at the facts in this case objectively, there are two things we need to establish.

[00:02:12] Speaker 02:
The first, though, the three things that we needed to establish.

[00:02:15] Speaker 02:
The first was ready for patentee.

[00:02:17] Speaker 02:
It had already been conceded with Honeywell's argument of reduction to practice.

[00:02:23] Speaker 02:
The only two things that we had to prove was that there was a commercial offer for sale, and that what was in that commercial offer for sale was a two-lens array, the invention.

[00:02:34] Speaker 02:
This is volume four.

[00:02:35] Speaker 02:
Okay, volume four is what the Judge Deshfarnan relied on to find a commercial offer for sale.

[00:02:42] Speaker 04:
It's a hundred and... That's... Yeah, this starts at appendix... I had visions of some big fat compilation of pricing and so on.

[00:02:52] Speaker 02:
No, this starts at Appendix 11-7-2-3.

[00:02:55] Speaker 02:
Oh, OK.

[00:02:55] Speaker 02:
And there's a 125-page document written by Honeywell.

[00:03:01] Speaker 02:
OK, the title that Honeywell gave to the document is Volume 4, Price Offering and Contractual Terms and Conditions.

[00:03:09] Speaker 04:
But it included prices and terms for some eventualities that were not as, at least according to the briefs, covered by the claims.

[00:03:21] Speaker 04:
say that here in their argument position that this was a project still in development, and it wasn't that clear what was going to be the eventually sold, ordered product.

[00:03:39] Speaker 04:
Is that a fair statement?

[00:03:41] Speaker 02:
I'd say that it's not a fair statement.

[00:03:43] Speaker 02:
The contract or the airplanes and parts may still have been in development.

[00:03:49] Speaker 02:
But there's no question that this document constituted a commercial offer.

[00:03:54] Speaker 02:
On section one, page one, it says, the price offering and contractual terms and condition is submitted by Honeywell in response to Boeing's request for proposal.

[00:04:08] Speaker 02:
This complete proposal is provided at no cost.

[00:04:11] Speaker 02:
Firm fixed prices are provided in section two.

[00:04:15] Speaker 04:
But it was an offering, and this is where I had my problem.

[00:04:18] Speaker 04:
I'm sorry.

[00:04:19] Speaker 04:
An offering of alternatives that it wasn't saying this is what we're negotiating to buy and sell.

[00:04:30] Speaker 02:
Well, volume.

[00:04:31] Speaker 04:
I'm sorry.

[00:04:31] Speaker 04:
Possibilities included within volume four.

[00:04:35] Speaker 02:
Yeah, volume four itself is the commercial offer for sale.

[00:04:40] Speaker 02:
If you want to go to what was being offered, that would go to volume three.

[00:04:46] Speaker 02:
OK, and what Judge Farnan relied on for what was in the Ames proposal, he relied on volume three, which identifies a two-lens array, refers to display units like number nine.

[00:05:02] Speaker 02:
And then he looks at all of the documents and testimony from the inventors.

[00:05:07] Speaker 02:
So for example, all of the documents that he relied on and cites in his decision refer to the inventors congratulating each other,

[00:05:16] Speaker 02:
on solving the problem using the two lens array, quickly send this to the manufacturer and get these three display units built with the two lens array.

[00:05:25] Speaker 02:
And we're going to send these to Boeing.

[00:05:28] Speaker 02:
Then in volume three, it refers to a directional diffuser with a horizontal and vertical component, which can only be accomplished with a two lens array.

[00:05:41] Speaker 02:
It expressly offered a directional display

[00:05:46] Speaker 02:
like DU number 9, and there's no dispute that DU number 9 has a two lens array.

[00:05:51] Speaker 02:
It's referred to as a deliverable by August 1990.

[00:05:56] Speaker 02:
And Judge Farnan concluded that all the inventors, all the technical people knew exactly what was being offered.

[00:06:03] Speaker 02:
It was untenable to argue that the two lens array wasn't being offered.

[00:06:07] Speaker 02:
So what does Honeywell argue?

[00:06:09] Speaker 02:
Honeywell first argues that the two lens array wasn't offered at all.

[00:06:13] Speaker 02:
And then when you look at the language in all of the documents that were going back and forth between the inventors, the fact that inventor McCartney wrote the directional diffuser section and a reference to specifically display unit number nine, which had the two lens array, it was untenable to argue.

[00:06:32] Speaker 03:
Your argument sounds as if you're asking us to look at all the facts and decide de novo whether this case was exceptional.

[00:06:40] Speaker 03:
And don't we have to look at whether

[00:06:42] Speaker 03:
Judge Stark abused his discretion.

[00:06:45] Speaker 02:
That's correct, Your Honor.

[00:06:46] Speaker 02:
And it's our position that when you look at these documents, again, Judge Farnham's conclusion that it was untenable, display unit number two was not offered, and that in fact it was offered.

[00:07:01] Speaker 02:
And then when you look at the language of the commercial proposal, this is probably the most detailed and complete

[00:07:09] Speaker 02:
offer for sale to have ever been contested.

[00:07:10] Speaker 02:
Sotomayor.

[00:07:11] Speaker 03:
I'm sure it makes sense for saying that Judge Stark did not look at the materials that you're presenting to us right now.

[00:07:18] Speaker 02:
My, Judge Stark states that I recognize, of course, that Judge Farnan made a statement to the effect that Honeywell knew it had made an offer for sale, but this is not in the Court's view the same as the finding

[00:07:35] Speaker 02:
that there was no reasonable basis at any point pre-litigation or during the litigation for Honeywell and or its attorneys to believe to the contrary.

[00:07:44] Speaker 02:
It's our position that if you have knowledge of a commercial offer for sale, then there is no reasonable basis to argue against the specific document and the Rule 30B6 witness who was designated by Honeywell to testify about the Ames proposal, Darcelle Aioli.

[00:08:05] Speaker 02:
And she testified that it was, in fact, an offer.

[00:08:10] Speaker 02:
And in fact, Honeywell wanted Boeing to accept it.

[00:08:13] Speaker 02:
So between the actual document, which identifies display unit number nine with a two lens array, the language of the offer, the rule 30B6 witnessed.

[00:08:23] Speaker 03:
That's one of the elements of the on-sell bar.

[00:08:25] Speaker 03:
And the other element of the on-sell bar that you were talking about was whether the commercial environment had all the limitations of the claim.

[00:08:32] Speaker 02:
Correct.

[00:08:33] Speaker 02:
And that was undisputed, Your Honor.

[00:08:37] Speaker 03:
That was undisputed?

[00:08:38] Speaker 02:
Correct.

[00:08:39] Speaker 03:
On summary judgment, there was no dispute at all?

[00:08:41] Speaker 02:
Well, they had argued that the invention had been reduced to practice.

[00:08:47] Speaker 02:
So there was no dispute as that when we were talking about the two lens array, that that was, in fact, the claimed invention.

[00:08:56] Speaker 02:
So ready for patenting, reduction to practice were undisputed.

[00:09:02] Speaker 02:
And that this was covered in display unit number nine is also, the court found it was untenable to argue otherwise.

[00:09:16] Speaker 05:
Which court found that it was untenable to argue otherwise?

[00:09:20] Speaker 02:
Judge Farnan.

[00:09:22] Speaker 05:
Well, Judge Farnan's statements that you cite where he uses the word knew twice, they weren't in his

[00:09:33] Speaker 05:
section that addressed whether there was a commercial offer.

[00:09:37] Speaker 05:
And he never sort of made a legal conclusion on the commercial offer that says that they knew at all times that this offer qualified legally as a commercial offer for on sale.

[00:09:51] Speaker 05:
It seems to me his findings that you're pointing to

[00:09:55] Speaker 05:
are a little less conclusory or final than one might expect, than you portray.

[00:10:02] Speaker 02:
Your Honor, I would submit that when you look at this document, volume four, it's incontestable that this was, in fact, a commercial offering.

[00:10:11] Speaker 02:
It's incomprehensible that you could find that it's not.

[00:10:15] Speaker 02:
What Judge Farnan said was that

[00:10:19] Speaker 05:
It is clear from the evidence, as set forth by the court above, that Honeywell knew that the double lens array was the assembly that provided the best results, that these double lens embodiments were offered to Boeing and tested by Boeing, et cetera, et cetera, right?

[00:10:35] Speaker 02:
That's what he said.

[00:10:36] Speaker 02:
Correct.

[00:10:36] Speaker 02:
And he also went on to say that it's clear from the evidence that we have a definite offer capable of acceptance in the contract sense, and such offers have always been sufficient to invoke the on-sale bar.

[00:10:49] Speaker 02:
The fact that you have Honeywell's own Rule 30B6 witness saying this is a commercial offer.

[00:10:55] Speaker 02:
The fact that the document itself is called Price Offering Contractual Terms and Conditions sets forth the price, sets forth deliverables, sets forth an FOB in Phoenix, Arizona, has a billing schedule, talks about deliverables and invoices.

[00:11:13] Speaker 02:
There's just no way that anyone could argue that they didn't know this was a commercial offer, Your Honor.

[00:11:18] Speaker 02:
Okay.

[00:11:18] Speaker 05:
Your time is up, so why don't we hear from your colleague.

[00:11:30] Speaker 01:
Thank you.

[00:11:30] Speaker 01:
Good morning, Your Honor.

[00:11:31] Speaker 01:
It's Matthew Siegel.

[00:11:34] Speaker 01:
If patent litigations like this one are becoming quite ordinary, then I really think the Federal Circuit ought to do something about it, because an affirmance here would be saying that it's okay

[00:11:47] Speaker 01:
for a patent attorney to ignore clear evidence of an on-sale bar or infelidity before filing the patent application.

[00:11:56] Speaker 01:
It's OK.

[00:11:56] Speaker 05:
So you're talking about the non-inequitable conduct assertion here, right?

[00:12:02] Speaker 05:
I mean, the concern I have about this case and others is something that I think former Judge Sue Robinson said in an opinion once, is we're getting a case on summary judgment or whatever.

[00:12:12] Speaker 05:
And in order to overturn a district court judge on an abuse of discretion,

[00:12:17] Speaker 05:
We have to re-litigate all of the facts and understand the record.

[00:12:21] Speaker 05:
Now, you all had an opportunity to assert an inequitable conduct, plain and correct.

[00:12:27] Speaker 01:
We had the opportunity after summary judgment was granted to have a full-blown trial on every single issue.

[00:12:33] Speaker 01:
And we offered to have just a hearing on the inequitable conduct.

[00:12:40] Speaker 01:
We couldn't come to an agreement on that.

[00:12:42] Speaker 01:
So I would submit that it would have been a terrible waste

[00:12:45] Speaker 01:
of judicial resources to have a full-blown hearing on all the issues that had already been decided on summary judgment.

[00:12:52] Speaker 05:
But now you want us as an appellate body to do fact finding and reach conclusions with regard to allegations that the court didn't opine on because you all decided fine not to press forward on your inequitable conduct.

[00:13:06] Speaker 01:
We're not asking for a finding of inequitable conduct.

[00:13:09] Speaker 01:
What we're saying is that when an attorney has a three-year-old file

[00:13:15] Speaker 01:
when he knows that the invention was developed for the purpose of selling the product, when he considers for himself, he admits he thought about, is this an on-sale bar?

[00:13:28] Speaker 01:
And then doesn't do any investigation at all that that's extraordinary.

[00:13:33] Speaker 01:
We're not saying that it was inequitable conduct.

[00:13:35] Speaker 01:
It doesn't matter if it was inequitable conduct.

[00:13:37] Speaker 01:
We're saying that that was extraordinary.

[00:13:39] Speaker 01:
We're saying that when you bring a lawsuit over a product

[00:13:43] Speaker 01:
that you know is developed with the intent to sell it, when, pre-suit, you collect a document that identifies Volume 4, price offer and contractual terms and conditions, but you don't look at those documents and bring the lawsuit anyway without doing any kind of a validity investigation, that that's exceptional conduct.

[00:14:07] Speaker 01:
And that also when you start a lawsuit and abuse the discovery process to hide that evidence of invalidity, that that's exceptional conduct.

[00:14:16] Speaker 01:
They did a pre-suit collection, and then we specifically asked them for Volume 4.

[00:14:22] Speaker 01:
They never went back to Honeywell documents.

[00:14:27] Speaker 01:
They never went back to Honeywell files and searched for Volume 4.

[00:14:30] Speaker 04:
They searched the records.

[00:14:34] Speaker 01:
Well, no, the record says we searched what we had already collected.

[00:14:38] Speaker 01:
They searched where they knew it wouldn't be, the pre-suit collection where the collector says, if I had come across Volume 4, I would not have pulled it.

[00:14:48] Speaker 04:
I think so.

[00:14:48] Speaker 04:
I think it says, I think they said they searched and couldn't find it.

[00:14:53] Speaker 01:
They searched the documents that they had already collected, pre-suit.

[00:14:59] Speaker 01:
And

[00:14:59] Speaker 01:
documents of ex-employees who couldn't possibly have it.

[00:15:03] Speaker 01:
If you look at the correspondence I submitted, it's very clear that no one at Honeywell ever testified that they searched documents.

[00:15:14] Speaker 01:
In fact, it's the opposite.

[00:15:15] Speaker 01:
Mr. Luther, the 30B6 witness and document collection, said no one asked me to search for it.

[00:15:22] Speaker 05:
Thank you.

[00:15:36] Speaker 00:
Good morning.

[00:15:36] Speaker 00:
May it please the Court?

[00:15:39] Speaker 00:
I'll just start with that last point to tie it up.

[00:15:42] Speaker 00:
Your Honor, the reference to where we searched is at Appendix 231, pages 90 to 91, and that was Mr. Wood's statement to the Court the first time we had a hearing on this issue before the Court, and I believe 2012 or

[00:16:02] Speaker 00:
13 and the reference to mr. Luther's testimony that testimony was in June of 2007 the letters that council was referring to Took place after that in July and August and the search that mr. Woods was referring to took place after mr. Luther's deposition, but you had access to volume 3

[00:16:27] Speaker 00:
We did.

[00:16:28] Speaker 05:
And Volume 3 makes reference to Volume 4, right?

[00:16:32] Speaker 00:
It does.

[00:16:33] Speaker 05:
Okay.

[00:16:34] Speaker 05:
Did you ever request Volume 4 from Boeing?

[00:16:37] Speaker 05:
I mean, you know some volume existed.

[00:16:39] Speaker 05:
If you didn't have it or you didn't have easy access to it, did you go to Boeing and say, do you have it?

[00:16:45] Speaker 00:
We did not.

[00:16:46] Speaker 05:
Why not?

[00:16:47] Speaker 00:
Well, we looked.

[00:16:48] Speaker 00:
They asked for it from us.

[00:16:52] Speaker 00:
We looked.

[00:16:53] Speaker 00:
We didn't have it.

[00:16:54] Speaker 00:
Nearly simultaneously they were asking for it from Boeing and we were in communication with Boeing.

[00:17:01] Speaker 00:
Boeing said they had it and that they were going to produce it.

[00:17:06] Speaker 05:
Prior to that time... Wasn't there some delay in getting it?

[00:17:10] Speaker 00:
Only a delay of a... This whole volume four issue took place over a matter of a couple of months and Boeing produced the

[00:17:22] Speaker 00:
volume four, I believe, in September.

[00:17:24] Speaker 05:
But Boeing wasn't a party to this lawsuit, right?

[00:17:27] Speaker 00:
That's correct.

[00:17:28] Speaker 05:
So when the other side asks you for information, and you have knowledge of it, and you have the ability to get it, why does that?

[00:17:38] Speaker 05:
And so your answer to the fact that you didn't produce it is that you knew they had asked Boeing for it, and they were going to get it anyway?

[00:17:45] Speaker 00:
Well, my answer to that question is, Your Honor, that we did not have it.

[00:17:51] Speaker 00:
We were being asked for many, many documents.

[00:17:54] Speaker 00:
We didn't go to Boeing.

[00:17:56] Speaker 00:
We learned relatively quickly that they had subpoenaed Boeing and that Boeing was going to produce it.

[00:18:02] Speaker 00:
And, you know, when you look at the sequence of events, Boeing produced this in about September of 2007.

[00:18:10] Speaker 00:
It was two years after that before the motion for summary judgment for on-sale bar was brought.

[00:18:17] Speaker 00:
And the on-sale bar issue was already in the case.

[00:18:20] Speaker 00:
through Optrex's answers to contention interrogatories.

[00:18:28] Speaker 05:
And your evidence that you had some reasonable belief that there was no commercial offer of sale is?

[00:18:35] Speaker 00:
Well, two things, Your Honor.

[00:18:37] Speaker 00:
First, there was no commercial offer for sale that had the power of acceptance.

[00:18:43] Speaker 00:
I'll go into that in a moment and I'll show some of the objective evidence that we relied on in our argument and also the court relied on

[00:18:50] Speaker 00:
But secondly, we do not believe that that two lens array was ever presented to Boeing prior to the critical date of the invention.

[00:19:05] Speaker 00:
And I can show Your Honor evidence of that as well.

[00:19:08] Speaker 00:
But if we just step back and look at what this contract was, they were going to create an entirely new cockpit for the Boeing 777 aircraft.

[00:19:17] Speaker 00:
And this specific piece of technology that they were looking at,

[00:19:21] Speaker 00:
One of the aims of this contract was to reduce the number of pilots in the cockpit from three to two.

[00:19:29] Speaker 00:
And this flat panel display was going to sit between the two pilots so that the captain on the left could see the display and the first officer on the right could see the display and it would have equal clarity and resolution for both.

[00:19:46] Speaker 00:
And what Honeywell was doing here with these display units

[00:19:50] Speaker 00:
was trying to find a way to achieve that.

[00:19:53] Speaker 00:
Now, ultimately, none of this technology is what ended up in the cockpit.

[00:19:58] Speaker 00:
There was no directional diffuser.

[00:20:01] Speaker 00:
But where we believe, and what our theory of the case was, was that these were given to Boeing so that Boeing and Honeywell engineers could evaluate whether this technology would actually work.

[00:20:16] Speaker 00:
And yes, there was this overarching

[00:20:18] Speaker 00:
contract in Volumes 3 and Volumes 4, but the specific technologies that would be a part of it had to be developed as part of this new cockpit.

[00:20:32] Speaker 00:
So the evidence that the and, you know, the district court used the word reasonable basis at several points in the opinion, and this is one of them where the district court looked specifically at this evidence.

[00:20:46] Speaker 00:
And I would point the court to

[00:20:48] Speaker 00:
couple of places, not to belabor it because this has been litigated several times, but at appendix 12958 and 59, we have the technical coordination meeting minutes of number 93.

[00:21:07] Speaker 00:
These were produced after the critical date of the patent.

[00:21:11] Speaker 00:
And this is where the two lens array

[00:21:16] Speaker 00:
was submitted to Boeing, and we submitted a single lens array, a double lens array, and a triple lens array.

[00:21:25] Speaker 00:
And if we look specifically at that page, what those technical coordination meeting minutes say is they are there for evaluation by the Boeing and Honeywell engineers.

[00:21:43] Speaker 00:
Then we have, at appendix 11984, that these units were consigned to Boeing, not delivered, it doesn't say not delivered for sale, it says consigned, but a consignment is a transaction where you give something to someone.

[00:22:03] Speaker 05:
But let me ask you, it's a little, because you're arguing as if there were numerous factual disputes about what happened or what this document said.

[00:22:11] Speaker 05:
And at the end of the day, you lost on summary judgment.

[00:22:14] Speaker 05:
That's correct.

[00:22:15] Speaker 05:
The judge concluded that no reasonable person could conclude that you were right, and that there was no material factual dispute.

[00:22:24] Speaker 00:
He concluded that, and we came to appeal before Your Honor.

[00:22:29] Speaker 00:
But we continue to believe we were right.

[00:22:32] Speaker 00:
We're not relitigating the issue.

[00:22:34] Speaker 00:
But the simple fact that we lost on summary judgment does not convert a case to an exceptional case.

[00:22:41] Speaker 00:
We, you know, we disagreed with Judge Farman.

[00:22:44] Speaker 00:
We disagreed with the panel based on this evidence.

[00:22:47] Speaker 00:
The real point here is, is the case exceptional under Octane and Highmark?

[00:22:54] Speaker 03:
And... Isn't the real question whether the court below used its discretion in making that determination?

[00:23:02] Speaker 00:
Yes.

[00:23:03] Speaker 00:
On the issue of exceptional case it is.

[00:23:06] Speaker 00:
And I believe, and I was referring to his initial finding,

[00:23:10] Speaker 00:
in his order, that is, before the court, he reviewed this evidence and found that we had a colorable, reasonable basis to assert the argument that we had.

[00:23:22] Speaker 00:
And therefore, that particular position did not make the case exceptional.

[00:23:29] Speaker 00:
And if we continue from that, Judge Stark reviewed, you know, he had before him 8,000 pages of record.

[00:23:36] Speaker 00:
He had 100 and some attachments.

[00:23:40] Speaker 00:
He heard nearly five hours of argument in two hearings.

[00:23:44] Speaker 00:
He asked all of the counsel for the litigants difficult questions.

[00:23:50] Speaker 00:
And I think if the court simply tracks through his order at appendix 20 through 2 through 24, when we were before the court the first time on the exceptional case issue, the court, in the intervening time between his first order

[00:24:10] Speaker 00:
And the second order, the Supreme Court came out with its octane fitness decision.

[00:24:17] Speaker 00:
And this Court sent it back specifically to reevaluate the case in accordance with the standards set forth in Highmark and octane fitness.

[00:24:29] Speaker 00:
And if we look at appendix page 22, at transcript page 71, starting at line 14,

[00:24:38] Speaker 00:
Judge Stark makes reference to this and he says specifically in the remand opinion the Federal Circuit said we vacate the district court's decision on this issue and remand for further consideration of whether the case should be deemed exceptional under 35 USC section 285 in light of the Supreme Court's guidance from Highmark and Octane Thickness and that is precisely what I have done.

[00:25:03] Speaker 00:
And then he goes on to look at

[00:25:05] Speaker 00:
and takes out the very plain statement that the Supreme Court made.

[00:25:11] Speaker 00:
An exceptional case is simply one that stands out from the rest.

[00:25:15] Speaker 00:
And he concludes, after noting that it's important to guard against the application of hindsight, that this was really a quite ordinary, complex, hard-fought, high-stakes piece of litigation.

[00:25:32] Speaker 00:
And later, in his opinion, says it's very typical of the type of litigation

[00:25:36] Speaker 00:
we see in this district and one that does not stand up.

[00:25:40] Speaker 05:
One comment that Judge Stark also made was he said, and noteworthy here, of course, is that patents are presumed to be valid and plaintiff and their counsel were allowed to rely on the presumption of validity.

[00:25:52] Speaker 05:
Of course, he's right about the presumption of validity.

[00:25:57] Speaker 05:
But if that were a noteworthy factor in every exceptional case,

[00:26:03] Speaker 05:
then seems like the scales are strongly tipped in the patent owner's favor, because obviously there's a presumption validity for every issued patent.

[00:26:13] Speaker 05:
So to what extent does that factor appropriately play a role in this determination?

[00:26:18] Speaker 00:
Well, I think that ultimate question is one for the Court.

[00:26:22] Speaker 00:
It has its nautilus and its Q Pharma decisions that say that.

[00:26:26] Speaker 00:
But here, there is much more on the pre-suit investigation.

[00:26:31] Speaker 00:
Judge Stark specifically found that there was no evidence that we had failed to make an adequate investigation on either invalidity or infringement.

[00:26:43] Speaker 00:
And I'll just go into some of that.

[00:26:46] Speaker 00:
It was acknowledged that that pre-suit we hired all three inventors and the prosecuting attorney.

[00:26:53] Speaker 00:
If the court looks to the substantive evidence that was produced, the 1989

[00:26:59] Speaker 00:
The 1999, excuse me, 1989 invention disclosure statement shows that they did not believe this to be an offer for sale.

[00:27:10] Speaker 00:
In fact, the prosecuting attorney testified in his deposition that he analyzed it and did not believe it was an offer for sale.

[00:27:20] Speaker 00:
That went unchallenged.

[00:27:21] Speaker 00:
There was no follow-up.

[00:27:23] Speaker 00:
We had all of the evidence that I've already

[00:27:27] Speaker 00:
discussed about our theory of the case.

[00:27:30] Speaker 00:
That went to validity.

[00:27:32] Speaker 00:
On infringement, we tore down literally hundreds of these devices.

[00:27:39] Speaker 00:
And the complaint they made on our infringement analysis is that we did not test for elimination of moray effect.

[00:27:49] Speaker 00:
But that was not an express limitation of the claim.

[00:27:53] Speaker 00:
And so

[00:27:54] Speaker 00:
But based on that evidence, Judge Stark found that there was no failure to make an adequate investigation before the suit was brought.

[00:28:05] Speaker 00:
Now, he also said we could have done more.

[00:28:08] Speaker 00:
We acknowledge that.

[00:28:09] Speaker 00:
You can always do more.

[00:28:10] Speaker 00:
But what we did was adequate, and it didn't rely and depend simply upon the presumption of validity.

[00:28:22] Speaker 00:
I'm not going to belabor it any longer.

[00:28:26] Speaker 00:
I'll simply direct the Court to the final portion of Judge Stark's order on page 80 of Appendix 24, where he says that he has specifically considered the question of hindsight in evaluating this evidence.

[00:28:45] Speaker 00:
He considered every single one of the

[00:28:50] Speaker 00:
arguments that have been made throughout the seven years that this issue has been alive.

[00:28:56] Speaker 00:
And he found that this is a complex, multifaceted, ordinary case, and the arguments don't transform it into one that is simple and exceptional.

[00:29:08] Speaker 00:
And I'll simply note that this comes from a court and a district that sees a lot of this.

[00:29:15] Speaker 00:
And if the court were to look at Judge Start's opinion,

[00:29:18] Speaker 00:
opinions.

[00:29:19] Speaker 00:
He has found exceptional cases in some situations and not in others.

[00:29:23] Speaker 05:
Can I ask you, your friend talked about, and you're kind of reaching to now, the district court's determination that the Supreme Court called out, whether this stands out from others?

[00:29:36] Speaker 05:
Do you know the quote from the Supreme Court opinion, whether this case stands out?

[00:29:41] Speaker 00:
I don't have it written down, but I believe what the Supreme Court said was

[00:29:45] Speaker 00:
An exceptional case is simply one that stands out from others.

[00:29:49] Speaker 05:
I think it's from the rest.

[00:29:50] Speaker 05:
From the rest.

[00:29:51] Speaker 00:
I'm sorry.

[00:29:52] Speaker 05:
Well, your friend noted that it would be unfortunate if we were to conclude that this is not the kind of case that stands out from the rest.

[00:30:02] Speaker 05:
Leaving that aside for a moment, how are we supposed to do an appellate review with an abusive discretion review standard?

[00:30:09] Speaker 05:
How do you think we evaluate whether or not the question of whether or not this appropriately stands out for the rest of the cases?

[00:30:16] Speaker 05:
Are we supposed to look at our experience in the cases we've seen?

[00:30:21] Speaker 05:
Are we supposed to try to put ourselves in the shoes of Judge Stark in the district of Delaware?

[00:30:26] Speaker 05:
How do you think we should review that issue?

[00:30:29] Speaker 00:
I think I understand your question, and I think it's an excellent one.

[00:30:32] Speaker 00:
I think the way you do it, at least insofar as this case,

[00:30:37] Speaker 00:
And then in others, it may be more difficult.

[00:30:40] Speaker 00:
But you look at what the judge considered.

[00:30:43] Speaker 00:
You look at did the judge take the remand statement, which this court made in its remand, and apply it.

[00:30:53] Speaker 00:
You can look here at three pages of Judge Stark discussing the elements of octane fitness and then going through and track through his order

[00:31:05] Speaker 00:
where he applied each of those statements of standard.

[00:31:09] Speaker 00:
He made the determination.

[00:31:12] Speaker 00:
I think you look at, did the court appropriately determine and apply the burden of proof?

[00:31:18] Speaker 00:
Judge Stark here made a clear distinction between the clear and convincing evidence that applied in Brooks furniture and the preponderance.

[00:31:27] Speaker 00:
And then look for evidence in the court's analysis.

[00:31:31] Speaker 00:
Did the court actually consider the evidence

[00:31:34] Speaker 00:
that was presented.

[00:31:35] Speaker 00:
He took each of the issues in turn.

[00:31:39] Speaker 00:
You can even look back farther in the transcript and see where the judge asked difficult questions of both sides in his evaluation of the evidence.

[00:31:50] Speaker 00:
And in my view, you conclude there is no abuse of discretion based upon the quality and clarity of the analysis presented, because with 8,000 pages of record and hundreds of

[00:32:02] Speaker 00:
attachments and hours of argument, I don't see any other way for Appellate Court to get visibility into that.

[00:32:10] Speaker 05:
Thank you.

[00:32:11] Speaker 00:
Thank you.

[00:32:15] Speaker 02:
Your Honor, I'd like to start with the question that you just asked, because the 8,000 pages is not what's at issue.

[00:32:23] Speaker 02:
It's these two documents, the Aims proposal, which set forth the commercial offer and what was being offered.

[00:32:30] Speaker 02:
You asked, how does the court look at this?

[00:32:33] Speaker 02:
And how do you decide whether it's an abuse of discretion?

[00:32:37] Speaker 02:
And I'd like to point the court to Kurt Sang, a Supreme Court case that instructs us that it sets forth the due process requirement that like cases should be treated alike as a restraint on a district court's discretion to deny fees.

[00:32:52] Speaker 02:
And so between Fuji and Samsung, we identified, I think, a dozen cases where there was knowledge

[00:32:58] Speaker 02:
and knowledge of pre-suit knowledge of the on-sale bar and a reduction to practice.

[00:33:05] Speaker 02:
And in every one of those cases, the courts awarded fees.

[00:33:09] Speaker 02:
And I think this case falls within those cases, number one.

[00:33:13] Speaker 02:
Number two, the idea about the presumption of validity and relying on that for a pre-suit investigation.

[00:33:18] Speaker 02:
The presumption of validity says that, you know, presumes that the examiner had an opportunity to review the information prior art or whatever.

[00:33:28] Speaker 02:
In this particular case, the examiner never reviewed the on-sale bar.

[00:33:33] Speaker 02:
Yet the real testimony of the Jepson, the patent attorney, he said, I suspected there was an on-sale bar problem because his file was three years old.

[00:33:44] Speaker 02:
But he also said he did not do an investigation.

[00:33:46] Speaker 02:
He said, I didn't investigate it and I didn't talk to anybody.

[00:33:50] Speaker 02:
Then he said, I just concluded that there was an on-sale bar.

[00:33:54] Speaker 02:
But then, counsel objected, based on attorney-client privilege, going any further into that issue.

[00:34:00] Speaker 02:
So you can't use that argument as a shield and a sword.

[00:34:02] Speaker 02:
And then what did Judge Stark do?

[00:34:04] Speaker 02:
I think it was clearly erroneous for him to conclude that Honeywell relied on an opinion of counsel.

[00:34:11] Speaker 02:
That was something he came up with on his own, and Honeywell never presented that argument anywhere, anytime.

[00:34:17] Speaker 02:
So that was clear error.

[00:34:19] Speaker 02:
The second point I'd like to address are the arguments of all of these documents that were brought up, whether it was the reduction to practice documents, the consignment documents, or the statement of work documents.

[00:34:32] Speaker 02:
Those are not the aims proposal, which is what we keep arguing.

[00:34:35] Speaker 02:
You can come up with a million documents that don't show an offer for sale.

[00:34:40] Speaker 02:
But this case, you know, the octane court was looking for how do you define exceptional?

[00:34:46] Speaker 02:
And they used words like not common, unusual, rare.

[00:34:53] Speaker 02:
The fact that a company like Honeywell says, I didn't have the smoking gun document.

[00:35:01] Speaker 02:
And even if I did, I wouldn't understand this to be a commercial offer.

[00:35:04] Speaker 02:
That's unusual.

[00:35:06] Speaker 02:
That's rare.

[00:35:07] Speaker 02:
And that's not common.

[00:35:08] Speaker 02:
And then for Mr. Lewick to say that, well, Honeywell didn't produce it because Boeing was going to produce it.

[00:35:15] Speaker 02:
Honeywell, the Stacey Obert's letter said, so there, we know you tried to get the document from Boeing, and they didn't have it.

[00:35:24] Speaker 02:
I trust we're not going to hear from you about this issue anymore.

[00:35:27] Speaker 02:
Well, lo and behold, they ultimately did produce it.

[00:35:30] Speaker 02:
And then what Honeywell had tried to slow that production down when it said, hey, before you produce this to the defendant, send it to us first.

[00:35:42] Speaker 02:
So again, this is a document that Honeywell wrote.

[00:35:45] Speaker 02:
This is a document that they undisputedly presented to Boeing.

[00:35:49] Speaker 02:
They represented in requests for admissions that this doesn't exist.

[00:35:53] Speaker 02:
There's no evidence it exists, even though it's cited in Volume 3, okay?

[00:35:59] Speaker 02:
They testified before Judge Stark at the last hearing.

[00:36:03] Speaker 02:
And he specifically asked, finally, yeah, but did Honeywell's employee search for the document?

[00:36:09] Speaker 02:
Can you tell me that Honeywell, not the lawyers, that Honeywell searched for the document?

[00:36:14] Speaker 02:
And Mr. Lewick testified that no, he actually can't tell us one way or the other if Honeywell looked for it.

[00:36:21] Speaker 05:
Thank you, Your Honor.