[00:00:04] Speaker 05:
Okay, our final case this afternoon is number 17-1172, Industrial Models Inc.

[00:00:25] Speaker 05:
versus SNF Inc., Mr. Jansen.

[00:00:33] Speaker 01:
Good afternoon, Your Honors.

[00:00:33] Speaker 01:
May it please the Court?

[00:00:36] Speaker 01:
This is a special and important case involving sham litigation in which the district court dismissed under Rule 12b6 three antitrust counts and one related tortious interference count.

[00:00:56] Speaker 05:
Industrial model submits- Could I, before you get into that- Yes.

[00:01:00] Speaker 05:
We're going to allow you some extra time here.

[00:01:04] Speaker 05:
There would seem to be a jurisdictional issue as to whether this appeal should come to this court or to a regional circuit because there has to be jurisdiction under the patent laws in the district court for the case to come here.

[00:01:23] Speaker 05:
And the question is, under MedImmune, was there jurisdiction over the patent declaratory judgment?

[00:01:33] Speaker 05:
claim in the district court.

[00:01:36] Speaker 05:
My understanding is that you alleged a fairly specific thing that you wanted to do, so let's assume that the specificity requirement is satisfied, but there seems to be some lack of concreteness about what patents are involved, because they didn't allege a specific patent, and

[00:02:03] Speaker 05:
There is a reference in your motion for summary judgment, I guess, to four patents.

[00:02:10] Speaker 05:
And the district court gave this very broad declaratory judgment about sort of there's no patent rights anywhere, which seems a little odd.

[00:02:18] Speaker 05:
But how do we know that these four patents are what's involved here?

[00:02:24] Speaker 05:
How is this sufficiently concrete?

[00:02:28] Speaker 01:
It is sufficiently concrete, but Your Honor's question certainly points to an interesting and very unusual wrinkle in the case.

[00:02:35] Speaker 01:
It is a patent declaratory judgment case for non-infringement in one of its aspects.

[00:02:42] Speaker 01:
There was, of course, a count for that.

[00:02:44] Speaker 01:
And it actually relates specifically to the nature of the sham litigation, which was alleged in the antitrust and torturous interference counts, because there were specific

[00:02:57] Speaker 01:
as I'm sure you're aware, allegations of patent infringement.

[00:03:00] Speaker 00:
Well, specific is the word here.

[00:03:02] Speaker 00:
There were older allegations of patent infringement, where they said, you infringed our patents and our trade dress and a variety of other things.

[00:03:12] Speaker 00:
But did they ever identify a patent that they thought you infringed?

[00:03:16] Speaker 00:
I know you asked repeatedly, and I thought that they did not.

[00:03:22] Speaker 01:
The closest that they came to it was, you can look up a patent yourself.

[00:03:26] Speaker 01:
which industrial models did indeed do, to try to ascertain whether or not there was anything relevant to industrial models' business.

[00:03:37] Speaker 01:
Industrial models, in doing so, found that these were not relevant to its business and said so, but the requests which were repeated for the infringement allegations to be pulled back, to be retracted,

[00:03:52] Speaker 01:
were never resulted in a retraction.

[00:03:55] Speaker 00:
Let me ask you about the timeline here.

[00:03:57] Speaker 00:
So as I understand it, all of that exchange occurred before the March 19, 2013 lawsuit, correct?

[00:04:07] Speaker 00:
Exchange about the patents.

[00:04:09] Speaker 01:
That was not the only exchange about patents.

[00:04:12] Speaker 00:
That was one exchange about patents, yes.

[00:04:14] Speaker 00:
So March 19, 2013, they file a lawsuit, but it doesn't mention patents anywhere.

[00:04:18] Speaker 00:
That's correct.

[00:04:20] Speaker 00:
Then August.

[00:04:23] Speaker 00:
2013.

[00:04:25] Speaker 00:
Well, forget about August, because the lawsuit goes up on appeal.

[00:04:28] Speaker 00:
But July 2014, the Court of Appeals knocks out the judgment on that lawsuit.

[00:04:35] Speaker 00:
Yes.

[00:04:36] Speaker 00:
You don't file a DJ action until a full year later.

[00:04:41] Speaker 01:
Your Honor, that's incorrect.

[00:04:43] Speaker 01:
And I think it would be helpful to describe some of the procedural reality.

[00:04:47] Speaker 01:
And if I may, I would like to first address one point.

[00:04:52] Speaker 01:
Relating to Judge Dyke's question, and then I would like to follow up by addressing your question, Judge Amali, because I think both of them are important here.

[00:05:00] Speaker 01:
First of all, with respect to this appeal, Industrial Model's appeal was initially taken to the Fifth Circuit, and there was then a motion to move it to the Federal Circuit.

[00:05:12] Speaker 01:
And industrial models stipulated to that motion.

[00:05:16] Speaker 01:
We decided not to oppose it, and it was transferred to the Federal Circuit.

[00:05:21] Speaker 00:
But the Fifth Circuit never ruled on that?

[00:05:23] Speaker 01:
The Fifth Circuit transferred it, yeah.

[00:05:26] Speaker 00:
The Fifth Circuit transferred it, or just did you refile it?

[00:05:32] Speaker 01:
The Fifth Circuit transferred it.

[00:05:36] Speaker 01:
All right.

[00:05:36] Speaker 05:
So what I guess you're implying is that we have to defer to the Fifth Circuit's judgment that the jurisdiction belonged here.

[00:05:46] Speaker 01:
It isn't a question that we... That's what the Supreme Court has said.

[00:05:51] Speaker 05:
When one circuit transfers to another on the theory that the other circuit properly has jurisdiction, we're supposed to defer to the first circuit that makes the transfer.

[00:06:02] Speaker 01:
Well, when industrial models made its appeal, of course, it was with respect to counts one, two, three, and seven, which were antitrust and torsious interference.

[00:06:11] Speaker 01:
And so the Fifth Circuit was an absolutely unquestionably appropriate place for the appeal to land.

[00:06:17] Speaker 05:
Well, no, no, no.

[00:06:18] Speaker 05:
It's not, wait.

[00:06:19] Speaker 05:
It's not an appropriate place for the appeal to land if there's a patent claim in the case, right, which your declaratory judgment action.

[00:06:27] Speaker 05:
It doesn't matter what you appeal.

[00:06:29] Speaker 05:
Was the declaratory judgment

[00:06:31] Speaker 05:
issue in the case when it went to the Fifth Circuit?

[00:06:37] Speaker 01:
The declaratory judgment issues were in the case, but there was no appeal with respect to the declaratory judgment.

[00:06:43] Speaker 05:
Well, that doesn't make any difference.

[00:06:45] Speaker 05:
Our jurisdiction is determined by the original situation in the district court.

[00:06:50] Speaker 05:
If the district court had jurisdiction under the patent laws, then the case comes here.

[00:06:56] Speaker 05:
So the Fifth Circuit, by transferring the case, at least this is news to us, must have made a determination that this court had jurisdiction because the case rested on the patent laws.

[00:07:10] Speaker 01:
The motion to transfer was unopposed and it was then transferred.

[00:07:14] Speaker 01:
There was no comment from the Fifth Circuit to the extent I'm aware of.

[00:07:16] Speaker 00:
This was all one complaint, right?

[00:07:19] Speaker 00:
Yes.

[00:07:20] Speaker 00:
OK.

[00:07:20] Speaker 00:
So when you say there was no ruling on the declaratory judgment, there was a ruling on your complaint.

[00:07:26] Speaker 01:
There most certainly were rulings on declaratory judgment.

[00:07:28] Speaker 01:
What I mean is that industrial models did not appeal with respect to the declaratory judgment counts.

[00:07:34] Speaker 01:
That's in the cross appeal.

[00:07:36] Speaker 00:
OK.

[00:07:36] Speaker 00:
But it was in the case originally.

[00:07:37] Speaker 01:
It was in the case, certainly, yes.

[00:07:39] Speaker 00:
So can I go back to my timeline?

[00:07:41] Speaker 00:
Absolutely.

[00:07:41] Speaker 00:
I understand that you filed an earlier lawsuit that was dismissed for improper venue.

[00:07:46] Speaker 00:
That's right.

[00:07:47] Speaker 00:
But having said that, there's still a year gap between when the trade dress that you say is part of the threats

[00:07:56] Speaker 00:
and your new lawsuits filed.

[00:07:59] Speaker 00:
And there's a two-year gap between the transfer of the ownership rights and your filing of your new lawsuit.

[00:08:07] Speaker 00:
So what threats occurred between July of 2014 or August even of 2013 and July of 2015?

[00:08:15] Speaker 00:
What additional threats of patent infringement or any kind of infringement occurred in that time frame?

[00:08:23] Speaker 00:
You don't allege any even in your DJ.

[00:08:26] Speaker 00:
You just alleged this stuff generally that all appears to have occurred earlier in 2013.

[00:08:35] Speaker 01:
Well, of course, first of all, let me make a distinction between precisely what is alleged in the complaint in terms of the volume and the repetition of infringement allegations made by the police and the

[00:08:51] Speaker 01:
sufficiency of a pleading.

[00:08:53] Speaker 01:
Those are two different things.

[00:08:54] Speaker 00:
That's not my point.

[00:08:55] Speaker 00:
Did anything occur between any threats between even August of 2013 and July of 2015?

[00:09:06] Speaker 01:
Yes.

[00:09:07] Speaker 01:
Are you asking specifically with respect to patents, Your Honor?

[00:09:11] Speaker 00:
Or are you generally?

[00:09:13] Speaker 00:
With respect to patents.

[00:09:18] Speaker 01:
I hate to defer to our brief, if I may.

[00:09:23] Speaker 01:
We laid out a great number.

[00:09:25] Speaker 05:
Was there some rate in which you asked them to identify the patents?

[00:09:28] Speaker 05:
Am I mistaken about that?

[00:09:30] Speaker 01:
There were constant, first of all, the litigation continued.

[00:09:37] Speaker 00:
You keep saying that, constant, constant, constant.

[00:09:40] Speaker 00:
Can you point to me anywhere where there is a point in time between

[00:09:46] Speaker 00:
the transfer of the patent and the filing of your lawsuit in July of 2015, where there was another threat as it relates to patents.

[00:09:54] Speaker 00:
Because you keep talking about threats, but all I can tell from the record is all those threats occurred before the trade dress lawsuit.

[00:10:07] Speaker 01:
If you're asking specifically and exclusively about patents.

[00:10:10] Speaker 00:
Anything that included patents.

[00:10:12] Speaker 00:
It doesn't have to be exclusively.

[00:10:14] Speaker 01:
Okay.

[00:10:14] Speaker 00:
A patent.

[00:10:15] Speaker 00:
They said any time in that two-year time frame that you infringe a patent.

[00:10:21] Speaker 00:
I think that's a pretty easy question.

[00:10:22] Speaker 01:
Well, the answer is that the answer is that industrial models ask them to make sure that to make a statement that there was they were free and clear to go forward given the absence of a... When did that request get made?

[00:10:35] Speaker 01:
As recently as 2015 just prior to the filing of this lawsuit and also

[00:10:44] Speaker 01:
When, to industrial model surprise, there was a motion for 12b1 dismissal for alleged lack of subject matter jurisdiction in 2016, very right at the summary judgment deadline.

[00:10:55] Speaker 00:
Are those requests or any responses to those requests in the record?

[00:11:02] Speaker 01:
Yes.

[00:11:03] Speaker 01:
The requests are in the record.

[00:11:05] Speaker 00:
Can you point me to them?

[00:11:06] Speaker 00:
Because I don't see them being referenced in your brief.

[00:11:08] Speaker 01:
Yes, I certainly will.

[00:11:14] Speaker 01:
I will need a moment to find the correct place in our brief where we reference them.

[00:11:20] Speaker 01:
But it will be in the section.

[00:11:21] Speaker 05:
I think on May 22, 2015, you asked them to say that you didn't infringe any patents.

[00:11:36] Speaker 05:
Perhaps that's at 1371?

[00:11:38] Speaker 01:
What occurred, I need to find it.

[00:11:41] Speaker 01:
There's a letter that was sent to a lawyer

[00:11:43] Speaker 01:
in Chicago representing SNF, Inc., and we believed all of the parties, in May 2015, it was sent because, and it actually expressly stated that there was, I need to find the date here, if you look in the appendix, in appendix 2717 and 2718, that's an email

[00:12:12] Speaker 01:
which was sent by Industrial Models, our firm on behalf of Industrial Models.

[00:12:16] Speaker 01:
And the email had an attached letter which specifically reads, brand effects has made trade dress patent and copyright infringement allegations against Industrial Models.

[00:12:26] Speaker 05:
What page is this at?

[00:12:27] Speaker 01:
This is on appendix 2718.

[00:12:28] Speaker 01:
2718.

[00:12:34] Speaker 00:
Okay, and what's the response?

[00:12:37] Speaker 01:
There was no response and it was admitted that there was no response in the answer.

[00:12:42] Speaker 01:
I would add, though, after May 22, 2015, because, well, Mr. Collins responded actually by saying, I no longer represent them, please contact their counsel in Texas, which we then did.

[00:12:56] Speaker 01:
And that is shown in the next pages of the appendix.

[00:13:02] Speaker 01:
And we forwarded the same letter to our opposing counsel on June 3, 2015.

[00:13:11] Speaker 01:
And we asked them to respond to it.

[00:13:14] Speaker 01:
And that letter specifically said that the litigation could be narrowed and streamlined by a statement from Brandefex finally acknowledging the non-existence of any trade dress patent or copyright infringed or potentially infringed by industrial models.

[00:13:28] Speaker 01:
Perhaps Brandefex is willing now to make such a statement.

[00:13:31] Speaker 01:
They did not respond.

[00:13:32] Speaker 00:
So was there any evidence between the

[00:13:40] Speaker 00:
August 2013 transfer and this exchange in May 22, 2015 that you had a basis to ask this question.

[00:13:49] Speaker 00:
In other words, there were continuing threats against you?

[00:13:52] Speaker 01:
Oh, absolutely.

[00:13:53] Speaker 01:
First of all, I would say that the trade dress patent and copyright allegations were made together.

[00:14:00] Speaker 01:
And then there was the litigation which began in the Texas State Court.

[00:14:04] Speaker 00:
Right.

[00:14:04] Speaker 00:
And that's over in July of 2014.

[00:14:07] Speaker 01:
Well, it's not over, because the first step of the plaintiff, which was called SNF Inc.

[00:14:13] Speaker 01:
DBA, Brandefex Body Company, and we understand that at that point, after August 30, 2013, to have been the shared enterprise, the common enterprise of the three employees.

[00:14:25] Speaker 01:
Rather, now the employees have said in their briefing that after the reversal of the default judgment in the Texas State Court, they did nothing more with their lawsuit.

[00:14:35] Speaker 01:
that is inaccurate, they filed an emergency motion expressly saying that their intellectual property rights would be infringed if industrial models went forward in its intended business.

[00:14:47] Speaker 00:
Which intellectual property rights?

[00:14:48] Speaker 00:
Did they specify which?

[00:14:50] Speaker 01:
Well, it was the trade dress case, so they said trade dress.

[00:14:53] Speaker 03:
So clarify something for me.

[00:14:57] Speaker 03:
My understanding is that someone over on the other side was manufacturing an insert

[00:15:05] Speaker 03:
for trucks.

[00:15:07] Speaker 03:
Is that correct?

[00:15:08] Speaker 03:
That's correct.

[00:15:09] Speaker 03:
And someone over on your side purchased one of those models and I think the word was addicted.

[00:15:19] Speaker 01:
The word that the appellees have used is splash but that's inaccurate.

[00:15:22] Speaker 01:
Actually in the deposition there's no evidence whatsoever that that occurred and even the allegation made is not of industrial models having done that.

[00:15:33] Speaker 01:
industrial models bought some molds that were available on the marketplace and was proceeding.

[00:15:39] Speaker 01:
It had fully geared up to produce.

[00:15:42] Speaker 01:
And it had nothing to do with the creation of the molds.

[00:15:43] Speaker 03:
No, no, listen when I talk.

[00:15:45] Speaker 01:
I'll try.

[00:15:45] Speaker 03:
And from whence did that mold come?

[00:15:48] Speaker 03:
It came from a company called Badger Truck in Wisconsin.

[00:15:50] Speaker 03:
Right.

[00:15:50] Speaker 03:
And Badger in Wisconsin is alleged to have splashed it.

[00:15:56] Speaker 03:
Is that correct?

[00:15:57] Speaker 01:
They are alleged to have done so, yes.

[00:15:59] Speaker 01:
Is there any denial of that?

[00:16:03] Speaker 01:
Industrial models had nothing to do whatsoever with what Badger Truck may or may not have done.

[00:16:09] Speaker 01:
The evidence that was presented for that allegation by the appellees at the district court was found to be hearsay evidence and inadmissible.

[00:16:19] Speaker 00:
Did Badger Truck refuse to deal with you during this time period or anything?

[00:16:28] Speaker 01:
What happened was that Badger Truck was

[00:16:33] Speaker 01:
didn't have an opportunity ultimately to deal with industrial models because industrial models was coerced, frightened out of proceeding in its business, which it was intending to do, including with Badger Truck.

[00:16:44] Speaker 05:
Well, so there's no resolution one way or the other of this allegation of copying, right?

[00:16:53] Speaker 05:
Well, there's no evidence for it.

[00:16:55] Speaker 05:
Well, I understand, but it's not before us.

[00:16:57] Speaker 05:
Whether there was copying or not copying

[00:17:02] Speaker 05:
is not before us, right?

[00:17:05] Speaker 01:
Whether there was copying or not is not before you.

[00:17:07] Speaker 05:
That's correct.

[00:17:11] Speaker 03:
My concern is, and I'm going to ask your opposing counsel for details on this, but is the trade dress claims.

[00:17:21] Speaker 03:
And obviously, in some fashion, if hypothetically someone takes someone else's product, makes a mold that exactly copies it,

[00:17:33] Speaker 03:
And it does have trade dress to it, then that person has a problem.

[00:17:40] Speaker 03:
My question to your opposing also is, where's the trade dress?

[00:17:44] Speaker 03:
But my question to you is, do we get that far?

[00:17:48] Speaker 01:
We don't have to get that far, because if you do that and it's a tennis ball, it's yellow, it's fuzzy, it's got a number on it, and it doesn't have a trade dress.

[00:17:55] Speaker 01:
It's a tennis ball.

[00:17:56] Speaker 01:
If it's a cardboard box, it's a cardboard box.

[00:17:59] Speaker 01:
You've got to have something about it.

[00:18:00] Speaker 01:
Sure, but that's their problem.

[00:18:02] Speaker 03:
But if you copied that tennis ball, i.e.

[00:18:06] Speaker 03:
you made a mold of it, and however you do tennis balls, and produced it, and someone said, well, they copied my tennis ball and produced it, that in itself is an allegation of something.

[00:18:20] Speaker 03:
And then, of course, they have to say, here's the trade dress.

[00:18:24] Speaker 01:
The fact of the matter is that copying of things that don't have any intellectual property... Yes, they have to say that there's trade threats.

[00:18:30] Speaker 05:
Copying alone is not violation.

[00:18:33] Speaker 05:
They have to show that they had protectable trade threats.

[00:18:36] Speaker 05:
Right.

[00:18:36] Speaker 03:
But in any event... I'm trying to get the facts now, Dan, before I ask them the questions about what on this thing demonstrates trade threats.

[00:18:44] Speaker 03:
We believe nothing.

[00:18:46] Speaker 01:
And we believe that the evidence in summary judgment shows nothing.

[00:18:49] Speaker 05:
sit down at this point.

[00:18:51] Speaker 05:
We'll give you time for rebuttal and let's hear from opposing counsel.

[00:19:01] Speaker 04:
May it please the Court, Michael Anderson on behalf of the Appellees and across appellants.

[00:19:07] Speaker 03:
Okay, so the only evidence you presented from customers for trade dress inquiries is from three people who sell and distribute your utility molds.

[00:19:19] Speaker 03:
Am I correct, that's it?

[00:19:22] Speaker 04:
That is correct, your honor.

[00:19:23] Speaker 04:
That is from Mike Dunakin, Ron Zimmer, and Jay Jiff.

[00:19:26] Speaker 03:
Are they actually purchasing the molds as well?

[00:19:29] Speaker 04:
Not the molds, just the actual product, the end product.

[00:19:32] Speaker 03:
Why haven't you presented an additional direct consumer testimony to show secondary meaning?

[00:19:39] Speaker 04:
Because for purposes of summary judgment, we brought forward testimony from these three individuals, and these three individuals, their testimony is enough

[00:19:49] Speaker 04:
to raise a genuine issue of material fact.

[00:19:51] Speaker 05:
I don't understand how that's true, because there's no testimony that the particular model that industrial planned to produce was protected by your trade dress.

[00:20:05] Speaker 05:
There's no connection there between the two.

[00:20:08] Speaker 04:
Two issues here.

[00:20:11] Speaker 04:
And the issue when you say, well, there's no issue about what industrial models intended to produce when

[00:20:18] Speaker 04:
SNF filed the lawsuit, what it knew was is that Badger had made a mold of an SNF... Well, we're not talking about that.

[00:20:30] Speaker 05:
In the course of this lawsuit, they have identified what the model is that they plan to produce.

[00:20:35] Speaker 05:
It's very specific.

[00:20:36] Speaker 05:
It's like the Badger-Warrior model.

[00:20:38] Speaker 05:
Let's just assume that.

[00:20:39] Speaker 05:
You may not agree with it, but let's assume that.

[00:20:42] Speaker 05:
What's missing, it seems to me, in your summary judgment opposition is any connection

[00:20:48] Speaker 05:
between that warrior model and protectable trade dress that your client has.

[00:20:56] Speaker 05:
And I looked at the opposition to the summary judgment motion.

[00:20:59] Speaker 05:
I don't see that in there.

[00:21:01] Speaker 04:
If you're talking about a comparison of our trade dress to the warrior model, no, I don't believe that is in there other than because

[00:21:12] Speaker 04:
That is the warrior, the badger model.

[00:21:14] Speaker 04:
That is not the industrial models.

[00:21:16] Speaker 03:
Where's your evidence of non-functionality?

[00:21:18] Speaker 03:
You have the, you have a affidavit from an individual by the name of Lee Finley, correct?

[00:21:28] Speaker 03:
Yes, your honor.

[00:21:28] Speaker 03:
How's that enough to overcome the presumption of functionality for design products in 1125A3?

[00:21:37] Speaker 04:
Well,

[00:21:38] Speaker 04:
His testimony goes to the issue as to the shape.

[00:21:43] Speaker 04:
It's very vague.

[00:21:46] Speaker 04:
I disagree where he talks about the shape and then we have testimony from him, the shape and curvatures of the body front to back, top to bottom.

[00:21:56] Speaker 04:
And it is no different than the cases that have found trade dress

[00:22:01] Speaker 04:
and car bodies, the General Motors case, the Ferrari case, the Bentley case that we cited, the first two out of the Sixth Circuit, the last one out.

[00:22:09] Speaker 05:
Well, then maybe what you didn't do is to make any connection between your trade dress and their alleged infringement.

[00:22:18] Speaker 05:
The issue at that point in time was simply that... They moved for summary judgment on a sort of declaratory judgment of no trade dress infringement.

[00:22:27] Speaker 04:
The issue at that point in time, Your Honor, was they did not have a definite and final design.

[00:22:34] Speaker 05:
The testimony of... Let's assume we disagree with you about that.

[00:22:38] Speaker 05:
It doesn't have to be a final design.

[00:22:39] Speaker 05:
They said, we're going to produce something like the warrior model.

[00:22:46] Speaker 05:
using these molds.

[00:22:47] Speaker 05:
Let's assume they said that.

[00:22:48] Speaker 05:
I think it's pretty clear in the record that they've alleged that in their summary judgment motion.

[00:22:56] Speaker 05:
You came back, you didn't identify how that would infringe your trade dress.

[00:23:01] Speaker 05:
So why isn't summary judgment on the trade dress claim appropriate under those circumstances?

[00:23:07] Speaker 04:
Okay, well you can go back a step further.

[00:23:09] Speaker 04:
Summary judgment never would have been appropriate on the trade dress claim because

[00:23:14] Speaker 04:
There was no justiciable controversy when this lawsuit was filed.

[00:23:19] Speaker 05:
I'm asking to assume that you're wrong about that.

[00:23:23] Speaker 05:
We'll come to the patents in a moment.

[00:23:24] Speaker 05:
But as to the trade dress claim, there's a specific allegation that they planned to produce this model and that there were threats and in fact a lawsuit of claims of trade dress infringement.

[00:23:38] Speaker 05:
And they moved for something, they brought a declaratory judgment action

[00:23:42] Speaker 05:
seeking a declaratory judgment of no trade dress infringement, you did not respond to that and say what they're planning to do is an infringement of our trade dress.

[00:23:53] Speaker 04:
I believe the way they couched it was we had no trade dress capable of being infringed.

[00:23:59] Speaker 05:
No, but try to address my question because that's important.

[00:24:04] Speaker 05:
There is no evidence in opposition to the summary judgment motion

[00:24:08] Speaker 05:
that what they were planning to do in terms of the warrior model and accept that, infringed your trade dress?

[00:24:15] Speaker 04:
In terms of the warrior model, that is correct.

[00:24:17] Speaker 05:
Okay.

[00:24:18] Speaker 05:
Now, could we shift for a moment to the patent claim?

[00:24:20] Speaker 05:
Do you allege that they have infringed any of your patents?

[00:24:25] Speaker 04:
No, we do not and have not.

[00:24:27] Speaker 05:
And that... Are you willing to give a covenant not to sue?

[00:24:32] Speaker 05:
No, we're not.

[00:24:33] Speaker 05:
And we're not required to.

[00:24:34] Speaker 05:
Why not?

[00:24:35] Speaker 05:
We're not required to because ultimately... Well, you can't just at one and the same time say, you know, we've had cases like this where, you know, they say, oh, no, we're not saying they infringe the patents, but on the other hand, we're not willing to give a covenant not to sue.

[00:24:50] Speaker 05:
You have to fish or cut bait.

[00:24:51] Speaker 05:
You have to say one way or the other whether there's a live controversy here as to patent infringement.

[00:24:58] Speaker 04:
There is not a live controversy, and it's not a fish or cut bait issue because we haven't gotten to that point.

[00:25:04] Speaker 00:
You accused them of patent infringement, did you not?

[00:25:07] Speaker 04:
We accused them upfront SNF, not brand FX holding, not brand FX.

[00:25:13] Speaker 04:
Only SNF from the initial email from Mr. Finley said, we have patents that cover this.

[00:25:21] Speaker 04:
We ultimately didn't find out what their final product was.

[00:25:27] Speaker 04:
In fact, in discovery, we asked for it in this case.

[00:25:31] Speaker 04:
They haven't given us

[00:25:33] Speaker 04:
specificity enough for us to be able to do a claim by claim comparison to their final product.

[00:25:42] Speaker 05:
That's not true.

[00:25:42] Speaker 05:
They have told you that they plan to use the, to copy the warrior model of badger and to produce according to that and that they're afraid that if they do that they'll be sued by you for trade dress copyright and patent infringement.

[00:26:00] Speaker 05:
So you surely

[00:26:01] Speaker 05:
ought to be able to give them a covenant not to sue to say that if they produce the warrior model, we don't claim, you know, we covenant not to sue you for patent infringement.

[00:26:11] Speaker 05:
Why are you unable to do that?

[00:26:13] Speaker 04:
We don't have enough information to be able to do that.

[00:26:15] Speaker 03:
Mr. Anderson, I have to tell you something.

[00:26:18] Speaker 03:
The one area that has bothered me, son, is the attorney's fees area.

[00:26:24] Speaker 03:
And the judge, on one hand, has a lot of discretion.

[00:26:27] Speaker 03:
On the other hand, I'm looking, I'm not seeing as much as I

[00:26:31] Speaker 03:
would be happy with to affirm on that.

[00:26:34] Speaker 03:
But you're convincing me that he was right with your argument.

[00:26:38] Speaker 04:
Well, let me address that then.

[00:26:40] Speaker 04:
The patent issue, SNF no longer owned any patents, all right?

[00:26:45] Speaker 04:
So at the time they asked us, tell us what patents, brand FX, the company that had the patents

[00:26:55] Speaker 04:
had made no decision and hasn't looked at it at all.

[00:26:58] Speaker 05:
Okay, look, the district court said that he was going to treat them as a unit.

[00:27:00] Speaker 05:
Let's assume that that was right and that we're going to do the same thing, that you can't avoid a declaratory judgment by transferring your intellectual property rights to a subsidiary.

[00:27:10] Speaker 05:
Let's assume that for the moment.

[00:27:12] Speaker 05:
You need to address the question of whether under those circumstances there is an allegation of trade dress infringement or patent infringement.

[00:27:23] Speaker 05:
with respect to this model that they have identified, the warrior model.

[00:27:28] Speaker 04:
There has been no comparison to that product.

[00:27:32] Speaker 04:
We believed, and the defense was simply, that because there was no controversy, that no threat had been made, it wasn't transferred to us.

[00:27:40] Speaker 05:
So why not give them a covenant not to sue with respect to producing the warrior model?

[00:27:46] Speaker 05:
We simply did not.

[00:27:47] Speaker 00:
Or even give them the courtesy of a response to their letter to say, at this time we know of no

[00:27:53] Speaker 00:
potential for patent infringement.

[00:27:55] Speaker 00:
You didn't even bother to respond.

[00:27:57] Speaker 00:
We did not respond.

[00:27:59] Speaker 03:
What I'm saying is I'm beginning to understand Judge McBride's frustration with you and why he imposed a turning fee.

[00:28:06] Speaker 00:
You wanted to keep the specter of the threat over their head instead of being willing to resolve the very real question of whether there really is any intellectual property that you could assume.

[00:28:17] Speaker 04:
I don't believe that's quite accurate.

[00:28:18] Speaker 04:
What we have here is once, step back for a second.

[00:28:23] Speaker 04:
Once the state court lawsuit, once it was reversed on the service of process, SNF no longer had the intellectual property, all right?

[00:28:32] Speaker 04:
We're all there.

[00:28:34] Speaker 04:
No longer had it.

[00:28:35] Speaker 04:
And then it was, it dismissed the case, completely dismissed it.

[00:28:43] Speaker 04:
And then everything leading up from the other side was always angled at manufacturing an antitrust

[00:28:52] Speaker 04:
claim and therefore it was, look, these guys are trying to manufacture an antitrust claim.

[00:28:59] Speaker 04:
We're not going to respond to them.

[00:29:00] Speaker 04:
We don't have any duty to respond to them.

[00:29:02] Speaker 04:
Maybe it would have been professional courtesy.

[00:29:04] Speaker 05:
You accused them of infringement and you refused to tell them what the basis for it is.

[00:29:09] Speaker 05:
And then you sue them for trade dress infringement.

[00:29:11] Speaker 05:
When you brought the suit in Texas court, you were able to identify and allege what they were planning to do and say that it was trade dress infringement.

[00:29:18] Speaker 05:
Somehow then you got in a federal court and all of a sudden it's a mystery what they're going to do.

[00:29:23] Speaker 04:
Well, what it was in state court was they had our very specific molds.

[00:29:29] Speaker 04:
They had our specific molds that was a complete copy of our product that we believe had trade dress.

[00:29:35] Speaker 05:
They're saying they're going to use those molds.

[00:29:37] Speaker 05:
It's the same thing that you sued them about before.

[00:29:40] Speaker 04:
But now they're saying it's going to be like the badger with improvements and we're going to change it.

[00:29:45] Speaker 04:
And we asked them.

[00:29:46] Speaker 05:
No, they didn't say that they were going to change it.

[00:29:48] Speaker 05:
Show me where in the record they said they were going to change it.

[00:29:50] Speaker 04:
I believe it was the affidavit of Mr. Waller.

[00:30:02] Speaker 00:
What's the appendix site?

[00:30:04] Speaker 04:
The appendix site we have is 1163.

[00:30:07] Speaker 04:
We have paragraphs five.

[00:30:10] Speaker 05:
Wait, wait, wait.

[00:30:11] Speaker 05:
1163?

[00:30:19] Speaker 00:
There is no 1163.

[00:30:25] Speaker 05:
There's no such page in the appendix.

[00:30:29] Speaker 04:
I have the wrong page on my sheet then, Your Honors, and I apologize.

[00:30:34] Speaker 04:
Well, what's the right page?

[00:30:38] Speaker 02:
What's the name of the affidavit?

[00:30:40] Speaker 04:
It's the affidavit.

[00:30:42] Speaker 04:
It's a declaration of Fred Hallberg.

[00:30:44] Speaker 02:
Spell it.

[00:30:47] Speaker 04:
holler H a L L E R. Okay.

[00:30:57] Speaker 02:
Opposing counsel, do you know if it's in the record?

[00:31:00] Speaker 02:
No, you have to stand up when you press the button.

[00:31:03] Speaker 01:
Your Honor, there are two declarations of Fred Holler.

[00:31:07] Speaker 01:
I'm not sure which one your opposing counsel is referring to.

[00:31:11] Speaker 01:
One begins on Appendix 935, and the other one

[00:31:17] Speaker 01:
There are at least two, I should say, quickly looking.

[00:31:21] Speaker 01:
Another one begins up on appendix page 18.

[00:31:32] Speaker 02:
OK.

[00:31:35] Speaker 02:
Which one is it, please?

[00:31:36] Speaker 04:
I do not have it.

[00:31:37] Speaker 04:
If I may have the courtesy.

[00:31:40] Speaker 05:
You didn't bring the appendix with you?

[00:31:41] Speaker 04:
Well, I had it on the laptop and I had the sign and I wrote it down wrong.

[00:31:45] Speaker 05:
You're supposed to bring the appendix with you.

[00:31:46] Speaker 01:
I would add there's a third one starting on appendix 1061.

[00:31:54] Speaker 05:
Maybe opposing counsel will lend you his appendix.

[00:32:05] Speaker 04:
Yes, it is appendix 880 through

[00:32:11] Speaker 04:
882 is the declaration.

[00:32:13] Speaker 04:
Thank you.

[00:32:13] Speaker 02:
And what paragraphs, please?

[00:32:15] Speaker 04:
The paragraph five and paragraph nine talk about planned products.

[00:32:24] Speaker 04:
There's nothing more than the plan is not contemplated is in nine.

[00:32:31] Speaker 02:
Let's see.

[00:32:33] Speaker 04:
And planned is in five.

[00:32:34] Speaker 05:
But this is your witness, right?

[00:32:37] Speaker 04:
No, it's not.

[00:32:38] Speaker 04:
This is their witness.

[00:32:39] Speaker 04:
This is their witness?

[00:32:41] Speaker 04:
And this went to our issue that there was no final indefinite design.

[00:32:49] Speaker 04:
And that was the issue that we couldn't compare anything to other than them simply now sending a picture.

[00:32:57] Speaker 04:
Hold on.

[00:32:58] Speaker 05:
Wait a moment.

[00:32:58] Speaker 05:
Wait a moment.

[00:32:59] Speaker 05:
You say paragraph five.

[00:33:12] Speaker 05:
It says industrial models planned products were like the Badgers, the Warrior, right?

[00:33:19] Speaker 05:
Yes, Your Honor.

[00:33:21] Speaker 02:
Where does it say they were changed?

[00:33:30] Speaker 04:
Well, if we look at nine is where... It says contemplated in nine.

[00:33:33] Speaker 02:
I don't have to look.

[00:33:34] Speaker 04:
And then five is the plant.

[00:33:37] Speaker 04:
This is what we planned.

[00:33:38] Speaker 04:
Our planned products were like

[00:33:40] Speaker 04:
And what we said was that was not a definite and final design when you take that in conjunction with just simply a picture of a product.

[00:33:53] Speaker 04:
And then you take that in connection with we had served discovery requests asking for the design specifications, the engineering drawings, and had not received any of those to actually do a side-by-side comparison to to tell them that...

[00:34:10] Speaker 03:
If you consult the transcript of this oral argument, you will find that you told this court that there were planned changes, not planned models.

[00:34:21] Speaker 03:
You used the word planned changes, and then you refers to changes are contemplated as opposed to planned.

[00:34:29] Speaker 03:
But what you told us wasn't accurate, and this does not support it.

[00:34:34] Speaker 04:
I apologize, Your Honor.

[00:34:39] Speaker 05:
Thank you.

[00:34:40] Speaker 05:
Okay, thank you.

[00:34:45] Speaker 05:
We'll give you three minutes for a model.

[00:34:48] Speaker 01:
Thank you, Your Honor.

[00:34:49] Speaker 01:
I'll try to be efficient here.

[00:34:52] Speaker 01:
It is true that Mr. Holler's declaration, Mr. Holler is the owner and CEO of Industrial Models, does not contemplate, does not speak of any change, and there is none intended.

[00:35:08] Speaker 01:
design of the outward look of the design of these products is that of the warrior that's determined by the mold shape which is not the shape incidentally of any brand effects products and that was shown at summary judgment.

[00:35:26] Speaker 05:
Let's assume for the moment that the district court was correct in giving a declaratory judgment of no infringement of trade dress

[00:35:37] Speaker 05:
copyright patents.

[00:35:39] Speaker 05:
What about your antitrust claim?

[00:35:41] Speaker 05:
The district court rejected your antitrust claim.

[00:35:43] Speaker 05:
That's the basis for your appeal.

[00:35:45] Speaker 05:
What is the reason that he made an error?

[00:35:50] Speaker 05:
Because if I understand correctly, in these North Pennington cases, you've got to have one of two things.

[00:35:58] Speaker 05:
You've either got to have collective action by multiple parties or you've got to have an attempt to monopolize.

[00:36:04] Speaker 05:
At the time that these threats were made, were there separate entities here or was everything done by SNF?

[00:36:16] Speaker 01:
It occurred both prior to August 30, 2013 and after, so yes and yes.

[00:36:21] Speaker 01:
There were times when there was a single entity, SNF, and there were times after August 30, 2013 when they were acting as a common enterprise.

[00:36:29] Speaker 01:
and the pleading involved says that they came together intentionally and agreed to do so.

[00:36:33] Speaker 00:
Even if they were acting in a concerted way with respect to the judge felt that collectively with respect to the threats as it relates to the intellectual property, isn't it true that under anti-trust law, which is a totally different animal, that a corporation cannot conspire with its subsidiaries?

[00:36:56] Speaker 01:
Certainly, the Copperweld case stands for the fact that a parent company cannot conspire with its wholly-owned subsidiary.

[00:37:04] Speaker 01:
It actually expressly says it's not taking into account subsidiaries that are less than wholly-owned.

[00:37:10] Speaker 01:
Copperweld is the case that they were on.

[00:37:11] Speaker 05:
Isn't Brand X wholly-owned by SNF?

[00:37:15] Speaker 05:
It is not.

[00:37:16] Speaker 05:
I think in the sanctions motion there's an allegation that it is.

[00:37:21] Speaker 01:
They are all bound up in ownership agreements.

[00:37:25] Speaker 01:
If you look, you will see that SNF is a part owner of Brandefex Holdings, which is a sole owner of Brandefex LLC.

[00:37:38] Speaker 01:
With respect to the mistakes of the district court in dismissing on 12b6 the antitrust and tortuous interference counts, the core mistake is that the district court found that the sham litigation exception to Nora Pennington did not apply.

[00:37:55] Speaker 01:
That's a big mistake, because the sham litigation exception to Nora Pennington, as defined by professional real estate investors, the 1993 Supreme Court case, and frequently cited by the Federal Circuit, says that if the litigation or the litigation threats were objectively baseless, which is clearly the case here, since there was no intellectual property behind the threats,

[00:38:23] Speaker 01:
And if the subjective intent of the party accusing another of infringement is to interfere with that other party's ability to compete, that is sham litigation.

[00:38:38] Speaker 01:
And Norpennington does not apply.

[00:38:39] Speaker 05:
The fact that it's sham litigation isn't sufficient to state an antitrust claim.

[00:38:43] Speaker 05:
There has to be collective action by separate parties or an attempt to monopolize.

[00:38:49] Speaker 01:
An individual, a sole entity, can engage in sham litigation against others under Sherman Act Section 2.

[00:38:58] Speaker 05:
Well, Section 2, an attempt to monopolize, but it can't be a Section 1 violation.

[00:39:04] Speaker 01:
We have Sherman Act 1 and Sherman Act 2 claims in this case.

[00:39:09] Speaker 01:
So that is relevant.

[00:39:12] Speaker 01:
And there are other points of mistake made by the district court.

[00:39:17] Speaker 01:
One is an adverse inference against the plaintiff, which is inappropriate at the pleading stage.

[00:39:25] Speaker 01:
The district court found that because industrial models had stopped its manufacturing once threatened with litigation, it must have believed that there was some basis for the threat and for the litigation that then ensued.

[00:39:42] Speaker 01:
There's no evidence for that.

[00:39:43] Speaker 01:
There's simply nothing like that in the pleading.

[00:39:46] Speaker 01:
And so for the district court to have found that there was a basis, on the basis of the subjective thoughts of the party that faced the litigation threat and the litigation, it's just not supported by professional real estate investors or any of the related case logs concerning the sham litigation exception.

[00:40:05] Speaker 05:
And also... I think we're out of time.

[00:40:09] Speaker 05:
Thank you.

[00:40:09] Speaker 05:
I think Mr. Anderson will give you one minute on the cross appeal.

[00:40:17] Speaker 04:
Thank you, Your Honor.

[00:40:18] Speaker 04:
As to the cross-appeal issue, the central issue is simply was there a case or controversy at the time the lawsuit was filed in 2015?

[00:40:29] Speaker 04:
I would submit there was nothing at that point in time to give rise to a case or controversy to the three declaratory judgment claims.

[00:40:40] Speaker 04:
SNF no longer owned any intellectual property and therefore it couldn't be

[00:40:46] Speaker 04:
a proper party to a declaratory judgment claim for infringement there.

[00:40:51] Speaker 00:
There is a little bit of inconsistency between your argument that you were all separate entities and therefore couldn't be, I mean you were the same entities and therefore couldn't really conspire with each other in your antitrust arguments and then say on the other hand that you're all completely separate despite all the

[00:41:15] Speaker 00:
common ownership channels.

[00:41:18] Speaker 04:
The issue, I don't believe, is the inconsistency at all there.

[00:41:23] Speaker 04:
It is under the copper weld you look at, are you different economic actors?

[00:41:31] Speaker 04:
And here, as they alleged us in there, we're not, even though they do allege, and we are separate legal entities, the allegation that was at issue there was,

[00:41:43] Speaker 04:
We were all common enterprise with Lee Findley being common management.

[00:41:50] Speaker 04:
It's a different issue though as to who can enforce any intellectual property rights.

[00:41:57] Speaker 04:
And the argument is simply this is that SNF at the time in 2015 when the declaratory judgment actions are brought, it did not own any intellectual property as of this issue.

[00:42:12] Speaker 04:
Brand FX Holdings did not own anything.

[00:42:16] Speaker 04:
Rather, the intellectual property rested in Brand FX LLC.

[00:42:22] Speaker 04:
Brand FX LLC has done nothing except defend and respond to this lawsuit.

[00:42:29] Speaker 05:
What is the relationship among the three companies?

[00:42:32] Speaker 04:
I believe the relationship is as represented there is that SNF has an ownership part of Brand FX Holdings

[00:42:39] Speaker 04:
Brand FX Holdings is the holding company for Brand FX LLC.

[00:42:44] Speaker 05:
What percentage ownership does SNF have in Brand X?

[00:42:49] Speaker 05:
I'm sorry.

[00:42:50] Speaker 05:
What percentage ownership does SNF have in Brand X Holdings?

[00:42:55] Speaker 05:
I do not know the answer to that.

[00:42:58] Speaker 05:
Okay.

[00:42:58] Speaker 05:
All right.

[00:42:59] Speaker 05:
Thank both counsel.

[00:43:00] Speaker 05:
The case is submitted.