[00:00:02] Speaker 04:
And good morning, everybody.

[00:00:04] Speaker 04:
First argued case this morning is No.

[00:00:06] Speaker 04:
162700, Jack Henry and Associates Against Plano Encryption Technologies.

[00:00:13] Speaker 04:
Mr. Hedrick.

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

[00:00:18] Speaker 00:
My name is Jay Hedrick.

[00:00:20] Speaker 00:
I represent the appellants, all the appellants in this case.

[00:00:23] Speaker 00:
It's my first time arguing before the court.

[00:00:25] Speaker 00:
I've been here several times, but I appreciate the opportunity to be here today.

[00:00:28] Speaker 00:
You're welcome.

[00:00:29] Speaker 00:
With me as well is Andrew Wimmer from Jack Henry In-House Council as well.

[00:00:34] Speaker 02:
Let me start with the Red Wing in the room.

[00:00:37] Speaker 02:
Absolutely.

[00:00:39] Speaker 02:
And you're arguing that we should overrule Red Wing's shoot.

[00:00:45] Speaker 02:
And I think you're conceding that we can't overrule it as a panel.

[00:00:51] Speaker 02:
If we follow our precedent in Red Wing, are you looking at seeking an on-bank?

[00:01:00] Speaker 00:
Well, if I could back up, that overruling is one of our arguments.

[00:01:03] Speaker 00:
It's not our sole argument.

[00:01:04] Speaker 00:
I personally don't think you have to overrule Red Wing to get to where we believe that the Court should have gotten to in the district court.

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

[00:01:12] Speaker 02:
So I'm going to take you there.

[00:01:13] Speaker 02:
OK.

[00:01:15] Speaker 02:
Why should we accept your argument?

[00:01:17] Speaker 02:
You say Red Wing created a rigid bright line rule.

[00:01:21] Speaker 02:
But in reading it, I'm not so sure that we can't fit within Red Wing without overruling.

[00:01:28] Speaker 00:
I agree with you, Your Honor.

[00:01:30] Speaker 00:
the rigid bright line rule that's created is that it is created a perception that... Well there's a perception of a rigid bright line rule.

[00:01:38] Speaker 02:
Fair enough, yes.

[00:01:40] Speaker 02:
You're not saying there is one, are you?

[00:01:42] Speaker 00:
Because that contradicts... Exactly, yes.

[00:01:45] Speaker 00:
And that's exactly where I was going to begin, Your Honor, is that we don't have to overrule Red Wing to fit in this.

[00:01:53] Speaker 00:
And where I think the difference is with Red Wing is that Red Wing says that if the

[00:01:59] Speaker 00:
Letters that are sent out are demand letters.

[00:02:02] Speaker 00:
And we want to protect the intellectual property rights of patent owners to enforce them.

[00:02:07] Speaker 04:
Read what he carefully says in this case.

[00:02:11] Speaker 04:
Isn't that true where they say there were two letters, I think?

[00:02:15] Speaker 04:
Yes.

[00:02:15] Speaker 04:
And then we hear there are many more.

[00:02:17] Speaker 00:
Exactly.

[00:02:17] Speaker 04:
And it was very difficult for me to see where you did get any sort of bright line when it says more than once on the facts of this case.

[00:02:28] Speaker 00:
Yes.

[00:02:29] Speaker 00:
And I think the bright line argument, Your Honor, and probably should have used a different set of words there.

[00:02:34] Speaker 00:
I apologize.

[00:02:35] Speaker 00:
But the bright line probably.

[00:02:36] Speaker 04:
Where is the bright line?

[00:02:38] Speaker 04:
If there are two letters, that's the bright line?

[00:02:40] Speaker 00:
No.

[00:02:41] Speaker 00:
I don't think that the bright line exists, as I just discussed with Judge Wallach.

[00:02:48] Speaker 00:
I'm sorry.

[00:02:51] Speaker 00:
It's harder remembering those names.

[00:02:53] Speaker 00:
That's why we have the wall.

[00:02:54] Speaker 00:
I know.

[00:02:56] Speaker 00:
Your Honor, going to your question.

[00:02:59] Speaker 00:
The issue with Red Wing, to fit under it, is that these were business solicitations.

[00:03:05] Speaker 00:
These are business letters.

[00:03:06] Speaker 00:
They're not letters to merely inform somewhat of potential infringement.

[00:03:13] Speaker 05:
Why are they business letters, as compared to the letters in Red Wing, which were also prepared by a non-practicing entity?

[00:03:21] Speaker 00:
Two reasons, Your Honor.

[00:03:23] Speaker 00:
One, in that case, there were specific patents that were identified as potential infringement.

[00:03:29] Speaker 00:
There were specific products sent and there were a limited number of letters sent.

[00:03:34] Speaker 00:
Here, the Plano Encryption identified certain patents that they thought were infringed, but they also solicited a license to its entire portfolio for patents that were not even at issue.

[00:03:48] Speaker 00:
There's no allegation of infringement.

[00:03:50] Speaker 00:
And Plano Encryption's admitted sole business is to monetize its patent portfolio.

[00:03:58] Speaker 00:
It's in the other difference between Red Wing and Advocet is that Plano Encryption is a registered LLC in Texas.

[00:04:07] Speaker 05:
Can I ask you something?

[00:04:08] Speaker 05:
Do you think that in Red Wing, the patent owner there, that was not their business model?

[00:04:13] Speaker 05:
That was not their purpose of their business?

[00:04:17] Speaker 00:
I can't answer that, Your Honor.

[00:04:20] Speaker 00:
But one thing that is present here that also was not present in Red Wing is that that was looking at a jurisdictional issue from

[00:04:28] Speaker 00:
a company that had no other contacts with the state.

[00:04:32] Speaker 00:
And that's what Red Wing looked at, is there's no other contacts other than the demand letters that were sent out.

[00:04:37] Speaker 00:
Here, Plano Encryption is a registered LLC in the state of Texas, the entire state of Texas.

[00:04:42] Speaker 02:
Yeah, it's a district argument.

[00:04:44] Speaker 02:
And your argument is that, in fact, they're just right over the line.

[00:04:49] Speaker 00:
Well, it's more than that.

[00:04:50] Speaker 00:
Our argument is that they're registered to do business in the entire state of Texas, including the northern district.

[00:04:55] Speaker 00:
So if the northern district were a separate state,

[00:04:57] Speaker 00:
It would still be registered to do business there, which is a contact that wasn't present in Red Wing or Addison.

[00:05:02] Speaker 02:
Can you say something about there being much closer to the courthouse in your district than in the district?

[00:05:09] Speaker 00:
Their headquarters is much closer to the district in the Northern District of Texas than it is in Marshall, Texas, where they have initiated the lawsuits in the Eastern District of Texas.

[00:05:17] Speaker 00:
Yes, Your Honor.

[00:05:22] Speaker 00:
To go back to the original question is, you can fit under the precedent of Red Wing, that these are business solicitations.

[00:05:31] Speaker 00:
And that's where it gets tricky with a non-practicing entity, is we all think that the law is pretty settled, but if you do business as a general rule in a district, you're probably going to be subject to personal jurisdiction there.

[00:05:43] Speaker 00:
And so when a company's sole business is to monetize its patent portfolio,

[00:05:51] Speaker 00:
Where do we draw the line then as to when it gets away from the policies set forth in Red Wing that we want to allow patent owners to inform others of petitional rights?

[00:06:01] Speaker 04:
And- But that wasn't the only consideration.

[00:06:04] Speaker 04:
Was there in this district court duplicative litigation in adjacent districts?

[00:06:09] Speaker 04:
So isn't there a degree of discretion for efficiency?

[00:06:18] Speaker 00:
Your Honor, there, that is one thing that was mentioned.

[00:06:23] Speaker 00:
I'm not, it was not the focus of Judge Godby's ruling.

[00:06:29] Speaker 00:
And a court does have discretion.

[00:06:32] Speaker 00:
I, I, I will.

[00:06:32] Speaker 04:
I knew it wasn't the focus.

[00:06:33] Speaker 04:
What's that?

[00:06:34] Speaker 04:
He certainly was aware that these were contiguous districts with identical litigation.

[00:06:40] Speaker 00:
So certainly, Your Honor, a, a district court has discretion to manage its docket how it sees fit.

[00:06:47] Speaker 00:
Judge Godby had decided to dismiss the case based on the decision to manage his docket and for efficiencies, then he certainly would have clearly said so when he didn't in his order.

[00:07:00] Speaker 04:
Well, these don't have to be sole consideration issues.

[00:07:05] Speaker 04:
These are the combination of factors that came together.

[00:07:08] Speaker 04:
And to consider as a matter of discretion, again, efficiency overall,

[00:07:17] Speaker 04:
What were the factors?

[00:07:19] Speaker 00:
Yes, Your Honor, that is a consideration that can be made.

[00:07:21] Speaker 00:
But the cases were also on different case paths as well, where there was litigation pending in the Eastern District of Texas, but those cases were ahead, well ahead of the schedule.

[00:07:32] Speaker 00:
That was in the Northern District of Texas.

[00:07:37] Speaker 05:
But presumably, the judges in the Eastern District of Texas would have some familiarity.

[00:07:42] Speaker 00:
They would know the patents and everything, yes, Your Honor.

[00:07:45] Speaker 00:
Candor over valor, absolutely.

[00:07:48] Speaker 00:
I agree.

[00:07:49] Speaker 00:
I concede that point.

[00:07:52] Speaker 00:
But getting back to the point of why we're here today as to whether or not Plano Encryption is subject to venue in the Northern District of Texas, they are conducting business in the Northern District of Texas.

[00:08:09] Speaker 00:
It's the only business they conduct.

[00:08:13] Speaker 00:
if you were to take the license solicitation letters that were sent by Plano Encryption and where it says, we invite you to take a license to our patent portfolio and substitute the words, our software suite.

[00:08:27] Speaker 00:
And it was a software company.

[00:08:29] Speaker 02:
And they sent us the same letters.

[00:08:31] Speaker 02:
I want to take you back to your prior discussion.

[00:08:34] Speaker 02:
And that is, at the end, what Judge Godby says is, because

[00:08:39] Speaker 02:
PET doesn't have sufficient contacts with the Northern District under 1391D.

[00:08:47] Speaker 02:
It's an improper venue.

[00:08:50] Speaker 02:
And accordingly, it grants motion under 12B6.

[00:08:54] Speaker 02:
But then it adds a footnote saying there was also a motion to dismiss under 12B1 saying the court should exercise its discretion.

[00:09:04] Speaker 02:
But I'm not going to do that.

[00:09:06] Speaker 02:
I'm not going to reach the other arguments.

[00:09:09] Speaker 02:
So it looks like it's going red wing all the way.

[00:09:13] Speaker 00:
That was the import of his opinion, yes, Your Honor.

[00:09:18] Speaker 00:
And that goes back to the exact point of if this was a software company that said, take a license to our software, we wouldn't be having this discussion.

[00:09:30] Speaker 00:
It would be very clear, I think, under the law.

[00:09:31] Speaker 00:
And that's what the 3D systems case says, that if you send out license solicitations pamphlet, if you solicit business from

[00:09:39] Speaker 00:
residents of the district, then you submit yourself to jurisdiction in that district.

[00:09:44] Speaker 00:
And when you have, that's all we're asking for is to allow the district court to make those determinations.

[00:09:53] Speaker 00:
That if there are one or two letters that are directly sent out that specifically identify like was the case in Red Wing or Addison that said we're informing you of our rights and these are very specific.

[00:10:04] Speaker 00:
That's one scenario.

[00:10:06] Speaker 00:
When you have

[00:10:07] Speaker 00:
almost 30 letters that are blasted out over the entire state that are form letters that have the same typos in them by an entity that does nothing but monetize its patent.

[00:10:19] Speaker 00:
That's doing business.

[00:10:20] Speaker 00:
If that's not doing business, what business do they do?

[00:10:24] Speaker 00:
They're seeking to enforce their patent portfolio.

[00:10:29] Speaker 04:
But are the issues, are the merits proceeding to litigation in the adjacent district

[00:10:37] Speaker 00:
The adjacent district has all been resolved, Your Honor.

[00:10:40] Speaker 00:
There are no pending cases against the banks that were sued in the Eastern District originally have all been resolved.

[00:10:51] Speaker 00:
I believe there may be some new litigation that's been filed by Plano Encryption, but as far as the banks that were in litigation, it's not recalled.

[00:10:58] Speaker 04:
Is that recent?

[00:10:58] Speaker 04:
I don't recall that in the briefs.

[00:11:00] Speaker 00:
I think that is recent, Your Honor, yes.

[00:11:03] Speaker 04:
So this is the only...

[00:11:06] Speaker 04:
This is the only district in which there's any litigation activity?

[00:11:11] Speaker 00:
I'm not aware of that, Your Honor.

[00:11:12] Speaker 00:
Mr. Pitcock would probably be able to speak to that as far as what entities he sued recently.

[00:11:18] Speaker 00:
But as far as the cases that were pending at the time that this action was filed, those cases have all been resolved.

[00:11:25] Speaker 00:
And there's one other point I'd like to make as to why these are business letters, is that in the adjacent litigation in the Eastern District of Texas,

[00:11:33] Speaker 00:
When it filed the complaints against those entities, Plano Encryption cited to these letters as a basis as to why these entities had prior knowledge of these patents and therefore sought enhanced damages under 285.

[00:11:47] Speaker 00:
And so this goes to the entire business model of Plano Encryption of monetizing these patents that these aren't letters just to inform people of their rights.

[00:11:55] Speaker 00:
They're creating evidence so they can use it in their business of suing companies.

[00:12:02] Speaker 00:
And that fits under Red Wing.

[00:12:04] Speaker 00:
It fits under Avacyn.

[00:12:05] Speaker 00:
If you find that these letters are business, are business solicitations and furtherance of Plano encryption's business, that the only business it engages, then there's no need to overrule Red Wing or Avacyn or that line and give district courts the discretion to decide.

[00:12:23] Speaker 00:
Is this a letter that deserves protection under Red Wing?

[00:12:26] Speaker 00:
Or is this furtherance of a non-practicing entity's business?

[00:12:32] Speaker 04:
Okay, let's hear from the other side.

[00:12:34] Speaker 00:
Thank you, Your Honor.

[00:12:40] Speaker 04:
Mr. Pitca.

[00:12:41] Speaker 01:
Yes, Your Honor.

[00:12:43] Speaker 01:
May it please the Court.

[00:12:44] Speaker 01:
So just to go back on the facts for a second, there have been two rounds of litigation against, there have actually been four litigations now.

[00:12:56] Speaker 01:
All of the actions that were brought by PET were in the Eastern District of Texas, which is, incidentally, where Jack Henry has an office and doesn't have one in the Northern District of Texas.

[00:13:08] Speaker 02:
Let's get down to specifics.

[00:13:10] Speaker 02:
Sure.

[00:13:11] Speaker 02:
In a declaration at J543, Mr. Little.

[00:13:17] Speaker 02:
Yes.

[00:13:17] Speaker 02:
Little or Liddell?

[00:13:19] Speaker 02:
It's Little, Your Honor.

[00:13:19] Speaker 02:
Mr. Little says he sent letters to various banks

[00:13:25] Speaker 02:
But the record doesn't show the total number of received letters of the districts in which they reside.

[00:13:30] Speaker 02:
Is that somewhere in the record?

[00:13:33] Speaker 02:
I don't believe it is, Your Honor.

[00:13:35] Speaker 01:
Okay.

[00:13:35] Speaker 02:
There were... No, no, no.

[00:13:38] Speaker 02:
Watch my lips.

[00:13:39] Speaker 02:
Sorry.

[00:13:39] Speaker 02:
They're moving.

[00:13:40] Speaker 02:
Don't talk.

[00:13:41] Speaker 02:
Okay?

[00:13:43] Speaker 02:
Given his lack of specificity, can we assume that the specific facts would be adverse to him?

[00:13:51] Speaker 01:
I don't believe so, Your Honor.

[00:13:52] Speaker 01:
I believe it would be the burden of the

[00:13:55] Speaker 01:
uh... movement uh... on a motion to dismiss to really really the burden is when when a party fails to disclose facts isn't there a presumption that those facts would be adverse to him isn't that the way the law works well i i don't think there was any finding that letters to any other party were relevant so i don't know and why do you say it

[00:14:22] Speaker 01:
I believe he was just being honest in his declaration that letters were sent out to various banks.

[00:14:29] Speaker 01:
I don't think the fact that there were other letters would have been... Okay, then let's get down.

[00:14:35] Speaker 02:
How many banks received letters from Plano Encryption?

[00:14:39] Speaker 01:
I don't recall off the top of my head.

[00:14:41] Speaker 01:
Really?

[00:14:42] Speaker 01:
Really.

[00:14:44] Speaker 01:
It's been through two rounds of litigation in the Eastern District of Texas.

[00:14:49] Speaker 02:
I don't care.

[00:14:51] Speaker 02:
Then you don't know how many of those banks were located in the Northern District?

[00:14:56] Speaker 01:
I do not, Your Honor.

[00:14:57] Speaker 02:
And you don't know how many were located in the Eastern District?

[00:15:01] Speaker 01:
I know at least four of them were located in the Eastern District of Texas.

[00:15:05] Speaker 02:
Out of?

[00:15:08] Speaker 01:
Approximately 30 letters.

[00:15:10] Speaker 02:
Oh, OK.

[00:15:11] Speaker 01:
So we do have something.

[00:15:13] Speaker 01:
Approximately 30.

[00:15:15] Speaker 04:
So is anything still pending in the Eastern District?

[00:15:18] Speaker 01:
There is a case that has settled, Your Honor, that has not officially been dismissed, but it is the only remaining case now pending in the Eastern District of Texas.

[00:15:30] Speaker 01:
There have been two prior litigations, both of which went to Markman and had substantial work done in them in the Eastern District of Texas.

[00:15:40] Speaker 01:
There was a DJ that was filed in Delaware.

[00:15:44] Speaker 01:
based on the corporate parentship that was dismissed by the judge there, and there was a case filed by a bank in the Western District of Texas.

[00:15:53] Speaker 04:
Sorry, Your Honor.

[00:15:54] Speaker 04:
Why was it dismissed in Delaware?

[00:15:56] Speaker 01:
Because there was no jurisdiction.

[00:16:01] Speaker 04:
You say there's a corporate parent or because it was the parent and not the subsidiary?

[00:16:08] Speaker 01:
That's right, Your Honor.

[00:16:09] Speaker 04:
The subsidiary is incorporated in Texas?

[00:16:11] Speaker 02:
That's correct, Your Honor.

[00:16:14] Speaker 02:
In New World v. Ford Global Tech, the auto parts case, we established three requirements that we assess for specific personal jurisdiction, whether the, one, whether the defendant purposely directed its activities at the residence of the forum, two, whether the claim arises out of or relates to the defendant's activities within the forum, and three,

[00:16:42] Speaker 02:
whether assertion of personal jurisdiction is reasonable and fair.

[00:16:46] Speaker 02:
You argue that Plano encryption doesn't have sufficient minimal contacts in the northern district, and that corresponds to the first two requirements.

[00:16:56] Speaker 02:
However, we recently held that these first two requirements are satisfied under these circumstances.

[00:17:04] Speaker 02:
Specifically in New World International, we said we've acknowledged that the defendant

[00:17:11] Speaker 02:
directs his activities at residence of the forum when the defendant sends an infringement letter to a potential plaintiff in that particular forum, and that a subsequent declaratory judgment action by that potential plaintiff arises out of or relates to the defendant's activity, namely the infringement letter.

[00:17:30] Speaker 02:
In light of our holding in New World, are you still saying those two requirements are not satisfying?

[00:17:37] Speaker 01:
Yes, Your Honor, I believe that that is incorrect.

[00:17:40] Speaker 01:
Just as he's arguing for Red Wing's shoe to be overturned, I do not concede that those first two elements... What distinguishes the proper analysis of the first two requirements from New World?

[00:17:55] Speaker 01:
Well, I believe that under Supreme Court precedent, in particular Burger King, that sending a letter is not purposeful availment of a... Okay.

[00:18:04] Speaker 02:
Listen to what I said.

[00:18:06] Speaker 02:
It'll help you.

[00:18:08] Speaker 02:
What distinguishes the proper analysis of those first two requirements from New World?

[00:18:15] Speaker 02:
Don't argue other cases.

[00:18:16] Speaker 02:
Tell me about what distinguishes it from the New World analysis.

[00:18:21] Speaker 01:
Nothing, Your Honor.

[00:18:23] Speaker 01:
I would concede that under the New World analysis and actually under several of the other precedents, the court has always found that

[00:18:32] Speaker 01:
the first two elements would be met by the mere sending of a letter into a form.

[00:18:38] Speaker 02:
So the case comes down to whether assertion of personal jurisdiction is reasonable and fair.

[00:18:44] Speaker 02:
Is that fair to say?

[00:18:45] Speaker 01:
I would say if you assume that those precedents are correct, then that would be true, Your Honor.

[00:18:52] Speaker 04:
So how do you fit Red Wing into all this?

[00:18:57] Speaker 01:
Well, I think Red Wing Shoe, along with a long line of other cases, Your Honor, held that it's not reasonable and fair to be hauled into court if you send a letter simply informing somebody of your federally protected patent rights.

[00:19:14] Speaker 05:
Do you agree, though, that when you're looking at whether something's reasonable and fair, there's a lot of other factors to consider, and it's a case-by-case determination?

[00:19:23] Speaker 01:
Well, in that case, if it were fact by fact, and unlike Breckenridge, where it was specifically held that the number of letters and other things didn't factor into this analysis, then the specific facts of this case are, of the defendants who sued, only three of the 14 were located in the Northern District of Texas.

[00:19:45] Speaker 01:
One of them was the corporate parent of the other.

[00:19:48] Speaker 01:
So there were really only two entities that got sent a letter.

[00:19:52] Speaker 01:
PET had no knowledge of the fact that Jack Henry had any relationship to any of these defendants at the time it sent the letter.

[00:20:00] Speaker 01:
And if it did, Jack Henry hasn't come in and shown why it's indemnifying or been involved in the case.

[00:20:07] Speaker 01:
Why did Jack Henry get such a letter then?

[00:20:09] Speaker 01:
They did not receive a letter, Your Honor.

[00:20:11] Speaker 01:
They have never received a letter from PET.

[00:20:13] Speaker 01:
And we argued that they don't have subject matter jurisdiction to be here.

[00:20:17] Speaker 01:
And we argued that in front of the district court as well.

[00:20:20] Speaker 01:
because they're here arguing on behalf of a bunch of banks, most of whom didn't receive a letter in the Northern District.

[00:20:28] Speaker 01:
Listen to me.

[00:20:29] Speaker 01:
Yes, Your Honor.

[00:20:30] Speaker 02:
It helps us if you direct your arguments to our questions.

[00:20:34] Speaker 02:
We have a lot of questions, OK?

[00:20:36] Speaker 02:
Yes, Your Honor.

[00:20:37] Speaker 02:
So let me keep you in Red Wing.

[00:20:43] Speaker 02:
Red Wing says, without more.

[00:20:49] Speaker 02:
And specifically in determining whether it's fair and reasonable, we have explained that without more, infringement letters are not sufficient.

[00:21:00] Speaker 02:
Could the without more language encompass a business practice designed to deliberately manipulate jurisdiction and raise litigation costs for parties targeted by the letters?

[00:21:11] Speaker 02:
Well, I think, Your Honor.

[00:21:13] Speaker 02:
I'm not asking you to concede facts.

[00:21:16] Speaker 02:
I'm just saying, if that were the situation, would that be the without more?

[00:21:20] Speaker 01:
Well, but I think, Your Honor, in answer to your question, sending a notice letter trying to get somebody to resolve something without litigation does the opposite.

[00:21:29] Speaker 01:
I mean, all that will happen is if you change the rule and say, if you send a letter

[00:21:35] Speaker 01:
then people will sue, and they'll sue first without giving any notice at all.

[00:21:40] Speaker 02:
If you won't answer my question, you're just going to lose my vote.

[00:21:43] Speaker 02:
I understand, Your Honor.

[00:21:44] Speaker 02:
I'm trying to answer your question.

[00:21:45] Speaker 02:
Please answer my question.

[00:21:46] Speaker 02:
Sure.

[00:21:48] Speaker 02:
In a hypothetical world, if a company was sending letters designed to deliberately manipulate jurisdiction and raise litigation costs for parties targeted by the letter,

[00:22:05] Speaker 02:
Would that fall within the more of without more?

[00:22:12] Speaker 01:
I want to answer your question.

[00:22:14] Speaker 01:
I don't see how sending a letter would do that.

[00:22:17] Speaker 01:
But if you could manipulate jurisdiction.

[00:22:21] Speaker 02:
I'll modify my question for you.

[00:22:23] Speaker 02:
Sure.

[00:22:26] Speaker 02:
If in some way that were the circumstance, could we find jurisdiction based on infringement letters

[00:22:34] Speaker 02:
if it was in conjunction with other activities?

[00:22:40] Speaker 01:
I don't believe so, Your Honor.

[00:22:41] Speaker 01:
If those activities aren't directed towards the forum, if there's no purposeful availment of the Northern District of Texas as a forum, if there's no plus factor, no exclusive jurisdiction there, no meetings to try to settle the patents, I do not believe that

[00:22:59] Speaker 01:
that you would have minimum contacts.

[00:23:02] Speaker 02:
The district court in its opinion said that the only connection between PET in the northern district of Texas is a letter sent to a single bank inviting the bank to take a license in PET's patents.

[00:23:22] Speaker 02:
The record appears to show that PET sent letters to at least three banks in the northern district.

[00:23:27] Speaker 02:
Am I correct?

[00:23:28] Speaker 01:
That would be correct, Your Honor.

[00:23:30] Speaker 01:
Well, two banks and one bank's parent.

[00:23:33] Speaker 01:
Yes, Your Honor.

[00:23:34] Speaker 02:
So three.

[00:23:35] Speaker 01:
Yes, Your Honor.

[00:23:36] Speaker 02:
Did the district court clearly err in saying that PET only sent a letter to a single bank?

[00:23:43] Speaker 01:
I believe that would be an error on the facts, Your Honor.

[00:23:45] Speaker 04:
OK.

[00:23:47] Speaker 04:
Or would it have been a matter of timing?

[00:23:50] Speaker 04:
Because I would have thought that that would have been clearly stated before the district court.

[00:23:56] Speaker 04:
Could it have been that the

[00:23:57] Speaker 04:
Other letters resented later?

[00:23:59] Speaker 04:
Or can you explain that?

[00:24:01] Speaker 04:
What seems to be a clear mistake or fact?

[00:24:07] Speaker 01:
I can't explain it, Your Honor.

[00:24:08] Speaker 01:
I believe that it may have been a lack of knowledge on the part of somebody.

[00:24:15] Speaker 01:
It may have been a mistake as to the location.

[00:24:18] Speaker 01:
I mean, the districts are drawn not along, sometimes easy to follow the lines.

[00:24:23] Speaker 01:
So perhaps there was a mistake of fact in one of the

[00:24:27] Speaker 01:
sets of pleadings.

[00:24:28] Speaker 01:
I know we would not have, of course, and I'm sure opposing counsel would not have intentionally said anything that was factually incorrect to the court.

[00:24:38] Speaker 02:
Do you concede the appellant banks have standing?

[00:24:43] Speaker 01:
No, Your Honor.

[00:24:44] Speaker 01:
Actually, only three of the banks have any reason at all to be in the Northern District of Texas.

[00:24:51] Speaker 01:
The rest of them are not located, nor were any letters sent to the Northern District of Texas on behalf of those banks.

[00:24:57] Speaker 05:
But you asked about standing.

[00:24:59] Speaker 05:
Judge Wallach asked about standing.

[00:25:02] Speaker 01:
Yes, I understand.

[00:25:04] Speaker 01:
I don't believe they have standing.

[00:25:05] Speaker 01:
I don't believe that they should be part of the litigation, because there's no reason for them to be suing my client in the Northern District of Texas.

[00:25:17] Speaker 01:
Oh, I'm sorry.

[00:25:18] Speaker 01:
I apologize, Your Honor.

[00:25:21] Speaker 01:
Yes, they would have proper DJ standing under MedImmune.

[00:25:25] Speaker 01:
I apologize.

[00:25:26] Speaker 02:
Okay.

[00:25:27] Speaker 01:
I got lost in the facts.

[00:25:28] Speaker 01:
Thank you, Your Honor.

[00:25:29] Speaker 02:
Thank you.

[00:25:30] Speaker 01:
Yes, they would all, they have all been, they were all accused of infringement at one point in history and would have standing under many.

[00:25:38] Speaker 01:
Okay, let me follow up there.

[00:25:39] Speaker 02:
Yes, Your Honor.

[00:25:40] Speaker 02:
Considering that this case was decided under Rule 12, why isn't Jack Henry's allegation of indemnification in the complaint sufficient to establish its standing?

[00:25:51] Speaker 01:
We've never

[00:25:52] Speaker 01:
And under data turn and other cases, they've never accepted just the mere pleading of indemnification.

[00:26:01] Speaker 01:
You usually are required to produce the agreement.

[00:26:04] Speaker 02:
They offered to produce the agreements, did they not?

[00:26:06] Speaker 01:
They did not.

[00:26:07] Speaker 01:
And in fact, we specifically requested them and they have never produced those agreements.

[00:26:11] Speaker 04:
Was this an issue before the district court?

[00:26:16] Speaker 01:
Well, we never got into discovery, Your Honor, but we asked for the

[00:26:21] Speaker 01:
agreement that would have shown their supposed indemnification obligations to these banks and they never produced it.

[00:26:31] Speaker 01:
We've never seen that.

[00:26:32] Speaker 01:
Do you have the record in front of you?

[00:26:37] Speaker 01:
I do not, Your Honor.

[00:26:38] Speaker 01:
I apologize.

[00:26:40] Speaker 04:
But it wasn't denied?

[00:26:41] Speaker 04:
Did anyone say no, there's no indemnification obligation?

[00:26:45] Speaker 01:
It was moved because... I'm sorry, Your Honor.

[00:26:48] Speaker 01:
It was rendered moot by the motion to dismiss on venue grounds.

[00:26:54] Speaker 01:
So we never got into subject matter jurisdiction.

[00:26:57] Speaker 05:
But Jack Henry has taken the position that they are the indemnitor.

[00:27:01] Speaker 05:
You're just saying that you haven't seen an agreement to that effect.

[00:27:04] Speaker 05:
Do I understand that correctly?

[00:27:05] Speaker 01:
Haven't seen an agreement, don't know what the terms are, and under data terms.

[00:27:10] Speaker 02:
I want to direct your attention to the appendix of 562.

[00:27:12] Speaker 02:
OK.

[00:27:14] Speaker 02:
And I think your opposing counsel will provide that to you.

[00:27:17] Speaker 01:
Thank you.

[00:27:19] Speaker 02:
Look at footnote two on that page, please.

[00:27:25] Speaker 02:
Are you familiar with that?

[00:27:27] Speaker 02:
Yes, Your Honor.

[00:27:28] Speaker 02:
So they did offer to provide the documents, did they not?

[00:27:32] Speaker 01:
Well, the prelude is if the court wishes to see copies of the indemnity agreements, and the court, we wish to see copies of them, they never provided them to us.

[00:27:41] Speaker 01:
Did you ask for them?

[00:27:42] Speaker 01:
Yes.

[00:27:44] Speaker 01:
And mentioned it in our papers that they had never provided them.

[00:27:48] Speaker 01:
repeatedly, which is why they dropped this footnote.

[00:27:51] Speaker 01:
They're just saying, we'll give them to you if you order us to, but we've never seen them.

[00:27:57] Speaker 01:
I'll hear from your opposing counsel about that.

[00:28:00] Speaker 01:
That's right.

[00:28:01] Speaker 04:
Any more questions?

[00:28:02] Speaker 04:
Any more questions?

[00:28:03] Speaker 04:
OK.

[00:28:04] Speaker 04:
Thank you.

[00:28:06] Speaker 04:
OK.

[00:28:07] Speaker 04:
Let's do the hybrid.

[00:28:08] Speaker 00:
Thank you, Your Honor.

[00:28:09] Speaker 00:
If I can begin with the standing issue.

[00:28:13] Speaker 00:
It was not our position that the court had to order us to produce them.

[00:28:16] Speaker 00:
If the court felt like this standing issue was an issue, we were more than willing to produce them.

[00:28:21] Speaker 02:
Were you asked for them and refused to provide them?

[00:28:23] Speaker 00:
I don't recall ever being asked for them.

[00:28:25] Speaker 00:
In fact, we wanted to engage in discovery, Your Honor, and Plano Encryption filed a motion to stay all discovery that would have allowed for these, as well as discovery as to other contacts into.

[00:28:34] Speaker 02:
Why didn't you just drop them in the mail?

[00:28:37] Speaker 00:
We didn't feel it was necessary.

[00:28:39] Speaker 00:
We didn't feel like it was necessary for the court, Your Honor, because under Rule 12,

[00:28:42] Speaker 00:
the court is required, under the basis of the motion, to accept the claim.

[00:28:45] Speaker 00:
Well, I know.

[00:28:45] Speaker 02:
But when I practiced law, I used to just send everything to the other side unless it was privilege.

[00:28:51] Speaker 02:
You did?

[00:28:52] Speaker 02:
You bet.

[00:28:54] Speaker 02:
It saves a ton of money.

[00:28:57] Speaker 00:
If I could, you asked another question, Your Honor, about where the letters are set forth by the number of banks that were sent letters on the record.

[00:29:06] Speaker 00:
That is in the appendix at 549 to 553.

[00:29:10] Speaker 00:
It outlines approximately 30 banks that receive letters.

[00:29:13] Speaker 00:
And these are the ones that we know of, that we're able to find.

[00:29:15] Speaker 00:
There may be more, as well as their connections to which district in the northern district.

[00:29:20] Speaker 00:
And Mr. Pitcock referred that there's only three banks that receive letters.

[00:29:24] Speaker 00:
That is true as far as three banks that are part of this appeal.

[00:29:28] Speaker 00:
There are an additional four banks that are part of the northern district that aren't part of this appeal that also receive letters.

[00:29:35] Speaker 05:
And there are-

[00:29:37] Speaker 05:
Are they identified in these pages at 549?

[00:29:39] Speaker 00:
Yes, yes, they are.

[00:29:40] Speaker 00:
And there's also additional banks that aren't headquartered in the northeastern Texas, but have offices or customers in the northern district.

[00:29:52] Speaker 00:
And when you go towards the first factor of directing your business activities towards the residents of the district, all of these letters should be considered when

[00:30:01] Speaker 00:
determining whether or not Plano Encryption has directed its business activities towards this district.

[00:30:09] Speaker 00:
In going to the finality of the litigation, Your Honor, that you've asked about, if this were to proceed to a patent infringement action, and they asserted counterclaims, they would be seeking damages for alleged infringement by customers in the Northern District of Texas.

[00:30:25] Speaker 00:
So when they send letters,

[00:30:27] Speaker 00:
to banks that have customers, offices, or a base in the Northern District, they're directing their activities towards that district.

[00:30:37] Speaker 00:
Unless the Court has other questions.

[00:30:41] Speaker 02:
No, but I want to add a practice note for anybody who actually litigates in this room.

[00:30:47] Speaker 02:
And that is, I also used to answer interrogatories and requests for admissions with an objection where it was proper, but then I'd say,

[00:30:55] Speaker 02:
But I think you're trying to get this information, and here it is.

[00:30:59] Speaker 02:
And if necessary, here's the documents to support it.

[00:31:01] Speaker 02:
It's a lot easier to practice law that way.

[00:31:05] Speaker 02:
Thank you, Your Honor.

[00:31:06] Speaker 03:
Is this when you were representing the United States or when you were representing?

[00:31:11] Speaker 03:
Both.

[00:31:13] Speaker 03:
OK.

[00:31:14] Speaker 03:
Any more questions?

[00:31:16] Speaker 03:
No.

[00:31:16] Speaker 03:
Thank you.

[00:31:17] Speaker 03:
Thank you both.

[00:31:17] Speaker 04:
The case is taken.