[00:00:00] Speaker 01:
Her argument is 161620, Maxong Corporation versus Google.

[00:00:48] Speaker 01:
Everyone settled?

[00:00:49] Speaker 01:
All right.

[00:00:50] Speaker 01:
Mr. Boother, whenever you're ready.

[00:00:56] Speaker 04:
May it please the court, the district court's order dismissing Max Sound's case for lack of standing shall be reversed for several reasons.

[00:01:06] Speaker 04:
One is that the court ignored the substantial evidence showing that VSL, the signatory to the license agreement

[00:01:15] Speaker 04:
was the agent or alter ego of Vedanti, the patent owner.

[00:01:20] Speaker 04:
In addition, even Vedanti and VSL in the German litigation involving the German Department took the position that Vedanti gave VSL an exclusive license and then those exclusive rights were transferred by VSL to Matt Sound, which is another

[00:01:40] Speaker 04:
way by which Vedanti effectively transferred to Max Sound the exclusive rights that Max Sound was asserting in that lawsuit.

[00:01:49] Speaker 04:
But that's not what you're arguing happened here, or is it?

[00:01:52] Speaker 04:
Well, bottom line, I believe that VSL was a sham, and it was used as a conduit for Vedanti to transfer to Max Sound.

[00:02:00] Speaker 01:
Well, I mean, that's not an issue before us.

[00:02:02] Speaker 01:
I mean, if that's a predicate that you need for us to conclude

[00:02:06] Speaker 01:
before in order to find against you.

[00:02:08] Speaker 01:
How are we supposed to make those determinations here?

[00:02:11] Speaker 04:
Well, what Max Sound submitted in the district court was enormous evidence that VSL was either the agent or alter ego of Vedanti.

[00:02:21] Speaker 04:
If it is either the agent or alter ego of Vedanti, that makes Vedanti.

[00:02:25] Speaker 01:
And the district court rejected that.

[00:02:27] Speaker 04:
It didn't even consider that evidence, I submit, Your Honor.

[00:02:29] Speaker 04:
On the agency issue, we submitted enormous evidence

[00:02:34] Speaker 04:
VSL was formed just nine days before the contract was entered into.

[00:02:38] Speaker 04:
Nash, the head of both Vedanti and VSL, had signed prior agreements switching the contract and entity over and over and over again.

[00:02:48] Speaker 04:
The entire negotiation of the license agreement occurred before VSL even existed.

[00:02:55] Speaker 04:
So who was Nash negotiating on behalf of?

[00:02:58] Speaker 04:
She had to be negotiating on behalf of

[00:03:00] Speaker 01:
But then you tried to amend your complaint to put in VSL and not Vedanti.

[00:03:05] Speaker 04:
Well, that was only in response to the court's footnote where the court said that we should have added VSL as well if VSL actually had rights to the patent.

[00:03:18] Speaker 04:
Our point was that VSL was a former exclusive licensing.

[00:03:22] Speaker 04:
The rights granted by Vedanti to VSL, according to its confirmatory license agreements, were then transferred entirely to

[00:03:31] Speaker 04:
Max Sound, so VSL no longer had any rights, because VSL's purpose in this whole transaction was simply a conduit.

[00:03:39] Speaker 04:
There was no intent for VSL to hold any rights for any period of time.

[00:03:43] Speaker 04:
It was simply a vessel, and either is the agent of Vedanti, if we want to honor the corporate distinctions between the entities, or it was the alter ego of Vedanti.

[00:03:53] Speaker 04:
Either way, Vedanti is bound by the agreement entered into in the name of VSL.

[00:04:00] Speaker 04:
But I mean, VSL had no assets.

[00:04:02] Speaker 04:
It had no business purpose other than to be this conduit.

[00:04:06] Speaker 04:
And even Nash admitted in one point that VSL stands for all assets in Vedanti.

[00:04:12] Speaker 03:
Let me ask you, you're relying in part on the Alder ego doctrine.

[00:04:16] Speaker 03:
And one of the prongs of that doctrine is that there has to be an inequitable result.

[00:04:20] Speaker 03:
Yes.

[00:04:22] Speaker 03:
Okay.

[00:04:22] Speaker 03:
Now, certainly in a lawsuit between Max Sound and VSL and Vedanti,

[00:04:29] Speaker 03:
I could see Maxand arguing there's an inequitable result here.

[00:04:36] Speaker 03:
I was ill-used, if you will, by Ms.

[00:04:38] Speaker 03:
Nash.

[00:04:41] Speaker 03:
And maybe I'm wrong on this, but how does that impact Google?

[00:04:47] Speaker 03:
I mean, Google's kind of an innocent bystander when all of this is going on.

[00:04:51] Speaker 03:
Doesn't normally this inequitable result situation apply when you have

[00:04:58] Speaker 03:
the party who dealt with the party saying, I was treated unfairly and it's been an inequitable result to discharge me.

[00:05:07] Speaker 03:
Why should Google be stuck with what Ms.

[00:05:11] Speaker 03:
Nash did to Max Sound?

[00:05:14] Speaker 03:
They're not stuck.

[00:05:15] Speaker 04:
In a way, they are kind of a bystander in this.

[00:05:17] Speaker 04:
Well, they are stuck with the patents.

[00:05:19] Speaker 04:
But if Max Sound legitimately has the rights that the agreement gave to it,

[00:05:25] Speaker 04:
The judge said, well, Vedanti's not technically a party to the agreement.

[00:05:29] Speaker 04:
That is a superficial distinction because to say VSL was the party when VSL was merely an alter ego of Vedanti is to overlook the fact that if Max Sound was really dealing with Vedanti, which the overwhelming evidence shows that it was, and VSL was merely the sham conduit, that Max Sound got those rights, that it paid half a million in cash and 10 million in securities for,

[00:05:54] Speaker 04:
And so therefore, this isn't about inequity to Google.

[00:05:58] Speaker 04:
Google deserves to be sued by the party with the rights to enforce the patent.

[00:06:03] Speaker 04:
Max Sound is that party because it acquired those rights from Vedanti through VSL, either because VSL was the agent of Vedanti.

[00:06:12] Speaker 03:
Why in all these transactions was there's no mention of the 339 patent?

[00:06:16] Speaker 03:
There's this broad reference to, I guess the term is ODT technology.

[00:06:22] Speaker 03:
But the cases seem to be pretty clear that somehow there has to be reference to the patent that's at issue.

[00:06:29] Speaker 03:
It doesn't have to necessarily be in writing, but there's got to be some, doesn't there be some specification of the patent?

[00:06:36] Speaker 04:
I don't believe so.

[00:06:36] Speaker 04:
If you describe a genus, that includes the species.

[00:06:40] Speaker 04:
So if I say I'm assigning to you all of my wireless patents, the issue becomes what does that include?

[00:06:46] Speaker 04:
That's a contract issue to interpret it.

[00:06:48] Speaker 03:
And the court acknowledged... But then you have to go through and decide, okay, is this a wireless patent?

[00:06:53] Speaker 03:
Is that a wireless patent?

[00:06:54] Speaker 04:
You have to try and ascertain the intent of the parties, which is done in every contract dispute.

[00:06:58] Speaker 04:
And here, there is no dispute.

[00:07:00] Speaker 04:
And Vedanti confirmed, and VSL confirmed, that Max Sound was given the rights to the 277 patent.

[00:07:08] Speaker 04:
No one questions that.

[00:07:09] Speaker 04:
The 277 patent isn't mentioned by number in the Max Sound license agreement.

[00:07:15] Speaker 04:
There is no authority that says you have to actually cite the patent number.

[00:07:18] Speaker 04:
In fact, in the Speed Pay case, the number was wrong.

[00:07:22] Speaker 03:
But wasn't there a specific assignment of the 277 patent?

[00:07:25] Speaker 04:
Well, there was, but don't forget it said inter alia.

[00:07:28] Speaker 04:
The language was clear that the affidavit in Germany focused on the German litigation.

[00:07:34] Speaker 03:
Why was there no, when there was references to this other patent,

[00:07:38] Speaker 03:
Why was there never a reference anywhere to the 339 patent?

[00:07:42] Speaker 04:
But in the MAC sound license agreement, there was no reference to any specific patent.

[00:07:47] Speaker 04:
They were described in generic terms.

[00:07:49] Speaker 04:
And it didn't mention the 277 European patent either.

[00:07:53] Speaker 04:
But there's no dispute that Vedanti gave MAC sound those rights through VSL.

[00:08:00] Speaker 04:
And so there is no requirement that you have to list each patent.

[00:08:04] Speaker 04:
It would have been nice to do that.

[00:08:05] Speaker 04:
Obviously, we wouldn't be arguing about this if that was done.

[00:08:08] Speaker 04:
But we don't punish parties because their contract drafter didn't get it perfectly right.

[00:08:14] Speaker 04:
When there's an issue as to what does that include, we try to ascertain the intent of the parties.

[00:08:20] Speaker 04:
And the language in the Max Sondergaard was very broad, worldwide rights.

[00:08:26] Speaker 04:
And the negotiations of the parties, Nash kept emphasizing the 339 patent and the desire to enforce that in the United States.

[00:08:34] Speaker 04:
So in terms of ascertaining the intent of the parties,

[00:08:38] Speaker 04:
We believe that the only reasonable interpretation of the broad worldwide rights listed in the Maxout agreement is that it includes one of the ODT patents that's labeled optimized data transmission, which is the 339 patent.

[00:08:51] Speaker 04:
There is no other reasonable interpretation.

[00:08:54] Speaker 04:
And Google doesn't give any effort to define what worldwide rights meant.

[00:09:00] Speaker 04:
What did the ODT technology it referenced in the agreement, what did that mean?

[00:09:04] Speaker 04:
It meant intellectual property

[00:09:06] Speaker 04:
invented by Krzyzewski and Nash entitled Optimized Data Transmission System and Method.

[00:09:12] Speaker 04:
That's the very name of the 339 patent.

[00:09:15] Speaker 04:
So the intent has to be ascertained.

[00:09:18] Speaker 04:
The intent clearly was to include the 339 patent as well as the 227 patent or 277 patent as part of the worldwide rights that were being transferred from Vedanti through VSL to MaxSound.

[00:09:37] Speaker 04:
The agreement talks about, I think the agreement itself shows that VSL was being used as an intermediary.

[00:09:44] Speaker 04:
It says that VSL legally owns and controls all of the worldwide rights, title and interest to all fields of its trade secrets patents, plural, and all other know-how through its affiliated entities and owners.

[00:10:01] Speaker 04:
So the agreement itself says that VSL control these, not as the owner,

[00:10:07] Speaker 04:
But through its affiliates, and Vedanti was one of its affiliates, so the agreement itself... Vedanti was a subsidiary.

[00:10:14] Speaker 04:
It was at one time.

[00:10:15] Speaker 04:
It was moved around by Nash several times, but it's clearly an affiliate.

[00:10:19] Speaker 04:
Which one is the parent?

[00:10:20] Speaker 04:
Which one is the subsidiary?

[00:10:21] Speaker 04:
According to Nash, the parent is VSL.

[00:10:24] Speaker 04:
It was created, again, 11 days or 9 days before the agreement was entered, but she made Vedanti, at that time, a subsidiary of VSL.

[00:10:34] Speaker 04:
Later, she transferred Vedanti to another company called Semicom.

[00:10:38] Speaker 04:
These were all shells for her.

[00:10:39] Speaker 02:
They were moving to Miami.

[00:10:40] Speaker 02:
I guess hypothetically, I mean, you're saying VSL owned all these rights through Vedanti or due to Vedanti, but what if VSL was just lying?

[00:10:51] Speaker 02:
Because there's never actually an agreement between VSL and Vedanti.

[00:10:57] Speaker 04:
Well, there is actually.

[00:10:59] Speaker 04:
If you look at the Newell,

[00:11:01] Speaker 04:
affidavit submitted in Germany, he says, except for the license that has been granted to VSL, he's signing this on behalf of Vedanti, except for the license that has been granted to VSL, I'm skipping a few words here, and the sublicense granted to Max Sound Corporation, no other license has been granted by Vedanti.

[00:11:21] Speaker 04:
So Newell admits right there that Vedanti is the real party granting the rights to VSL and then to Max Sound.

[00:11:31] Speaker 02:
I don't know, written agreement between Vedanti and VSL?

[00:11:35] Speaker 04:
Yes.

[00:11:36] Speaker 04:
The Max Sound license is an agreement with Vedanti because VSL... Well, it's an agreement with VSL.

[00:11:43] Speaker 04:
Well, but VSL acting as the agent or alter ego of Vedanti makes Vedanti a part.

[00:11:48] Speaker 02:
Right, but you're assuming the conclusion there.

[00:11:50] Speaker 02:
That's what we're trying to get to.

[00:11:51] Speaker 02:
Well, but the law... I mean, let's take this step by step.

[00:11:54] Speaker 02:
Sure.

[00:11:55] Speaker 02:
I mean, the agreements between VSL and Max Sound, right?

[00:12:01] Speaker 02:
There's two ways to look at it.

[00:12:02] Speaker 02:
Just say yes, and then you can go on and talk about your alter ego and agency theory.

[00:12:08] Speaker 04:
Yes, the signatory is VSL.

[00:12:10] Speaker 04:
Connie Nash, who is both the president and CEO of VSL and Vedanti, signed the agreement as the president of VSL.

[00:12:17] Speaker 01:
And Vedanti isn't mentioned in the agreement.

[00:12:20] Speaker 04:
Other than when it says that VSL has these rights through its affiliated entities, which of course is Vedanti, but the name Vedanti doesn't show up in there.

[00:12:29] Speaker 04:
But once again, Nash admitted that VSL stands for all the assets of Vedanti.

[00:12:34] Speaker 04:
So when you see VSL anywhere, either as an agency matter or as an alter ego matter, that's Vedanti.

[00:12:40] Speaker 04:
And then you can see in the German litigation where Vedanti admitted.

[00:12:44] Speaker 03:
But that's very simply what Ms.

[00:12:45] Speaker 04:
Nash says, right?

[00:12:47] Speaker 04:
Well, but that's an admission.

[00:12:48] Speaker 04:
And that's certainly, you know, that evidence is uncontradicted.

[00:12:53] Speaker 04:
There's nobody saying under oath or in admissible form,

[00:12:57] Speaker 04:
I didn't mean that.

[00:12:58] Speaker 04:
I mean that is undisputed evidence that Vedanti was using VSL as an intermediary.

[00:13:05] Speaker 04:
So there's no question about that.

[00:13:07] Speaker 04:
Google didn't submit any real evidence in opposition.

[00:13:10] Speaker 04:
Their whole argument was you have to have this chain of title and there has to be an agreement actually naming Vedanti V-E-D-A-N-T-I.

[00:13:20] Speaker 04:
And because the agreement with Max Sound was signed by Nash as a VSL president,

[00:13:26] Speaker 04:
end of story, but that ignored the alter ego and the agency evidence that showed that VSL was simply this front conduit, whatever you want to call it.

[00:13:37] Speaker 04:
And the cases that we cited and the law is that that shows that Vedanti was the real party.

[00:13:45] Speaker 04:
They were bound by VSL when VSL signed the agreement in the name of VSL to do otherwise would result in this inequity.

[00:13:52] Speaker 04:
after shilling out 500,000 in cash and 10 million in shares of stock, Maxon is left with nothing?

[00:13:59] Speaker 01:
Nobody is disputing.

[00:14:03] Speaker 01:
I have no idea.

[00:14:04] Speaker 01:
And the normal thing, if you have a cause of action, the cause of action would be with the party that misled you into having you pay money for something you didn't receive.

[00:14:16] Speaker 01:
So it's not that you're left without nothing.

[00:14:18] Speaker 01:
The question here we're talking about

[00:14:20] Speaker 01:
is who is the proper party who is charged.

[00:14:22] Speaker 04:
But we weren't misled because we knew we were dealing with the patent owner Vedanti and its front VSL, or at one time it was four other entities.

[00:14:33] Speaker 04:
So we weren't misled.

[00:14:34] Speaker 04:
We're not claiming fraud against Vedanti.

[00:14:37] Speaker 04:
We're saying that Vedanti intended to, and the documentary evidence shows, transfer the rights to sue Google to Max Sound.

[00:14:45] Speaker 04:
Do you think there was fraud anywhere here?

[00:14:48] Speaker 04:
Well, certainly after the fact when Nash tried to steal the lawsuit for her own benefit and basically disavow what she had represented and promised to Maxow.

[00:14:58] Speaker 04:
But Maxow doesn't have to be relegated to a suit against VSL, which, by the way, has been dissolved.

[00:15:04] Speaker 04:
It no longer exists.

[00:15:05] Speaker 04:
Or Vedanti, which now no longer owns the patents.

[00:15:09] Speaker 04:
We want the rights to the patents.

[00:15:10] Speaker 04:
We paid for them.

[00:15:12] Speaker 04:
Vedanti gave them to us through VSL.

[00:15:15] Speaker 04:
And so all we want to do is

[00:15:17] Speaker 04:
confirm what the evidence shows we were given by Vedanti and be able to assert those rights.

[00:15:21] Speaker 01:
But did you try early on to get Vedanti, amend the complaint to get Vedanti in?

[00:15:27] Speaker 04:
Well, originally Vedanti was.

[00:15:29] Speaker 04:
They were a defendant.

[00:15:30] Speaker 04:
Well, in the Delaware action, Vedanti was a voluntary plaintiff with us.

[00:15:35] Speaker 04:
Then Ms.

[00:15:35] Speaker 04:
Nash went rogue, and she became uncontrollable and somewhat destructive.

[00:15:40] Speaker 04:
And that's what led to this current situation.

[00:15:43] Speaker 04:
Let's assume for the moment that we affirm

[00:15:47] Speaker 02:
Then who owns the patent right now?

[00:15:50] Speaker 04:
Right now, VLL, Vedanti Licensing Limited owns the patents.

[00:15:56] Speaker 04:
Except, yeah, all of the ODT patents, yes.

[00:15:59] Speaker 01:
And that's based on a subsequent?

[00:16:01] Speaker 02:
Post appeal.

[00:16:02] Speaker 02:
Post appeal.

[00:16:03] Speaker 02:
Yes, yes.

[00:16:03] Speaker 02:
But then if we were to firm here, then you would, you have an agreement with VLL, not VSL, but VLL.

[00:16:12] Speaker 02:
And Vedanti actually.

[00:16:13] Speaker 02:
And Vedanti.

[00:16:14] Speaker 02:
that you would now be the co-owner?

[00:16:16] Speaker 04:
Only at the termination of this litigation.

[00:16:19] Speaker 04:
But we lose the priority, if you will, that we have of our October 14 filing.

[00:16:26] Speaker 04:
And that would impair Max Sound's rights.

[00:16:28] Speaker 04:
So we are a party now who can't reinstitute this lawsuit.

[00:16:33] Speaker 04:
The dismissal is effectively with prejudice, because it says we don't have standing.

[00:16:37] Speaker 04:
And so we shouldn't be forced to drop this proceeding, because we can eventually

[00:16:44] Speaker 04:
get back to where we want to be.

[00:16:46] Speaker 01:
And plus, the attorney sees motion would be... Well, you can't really get back to where you want to be because the time is... Exactly.

[00:16:55] Speaker 01:
Exactly.

[00:16:56] Speaker 04:
I'm way over my limit.

[00:16:58] Speaker 01:
Yes.

[00:16:58] Speaker 01:
We'll restore three minutes.

[00:16:59] Speaker 04:
Thank you very much, Your Honor.

[00:17:11] Speaker 01:
Appreciate it.

[00:17:11] Speaker 01:
Good morning.

[00:17:15] Speaker 00:
I recognize it's a little awkward to start my argument with a question for the panel, but Judge Chen referred to our motion to dismiss for mootness towards the end of counsel for Maxon's argument.

[00:17:28] Speaker 00:
Would you like for me to address our motion to dismiss for mootness first, or would you like for me to just discuss the merits?

[00:17:34] Speaker 01:
Why don't you go on to the merits?

[00:17:36] Speaker 01:
I mean, I think maybe a couple of us have a few questions on that, but why don't you proceed with the merits first.

[00:17:40] Speaker 01:
Thank you for that, Mr. Honor.

[00:17:43] Speaker 00:
So Council for Maxdown focused on the agency and alter ego theory that they've advanced among their many theories for why they have standing in this case.

[00:17:52] Speaker 00:
So I will focus on that as well.

[00:17:55] Speaker 00:
I think the first and perhaps most telling point is that Council for Maxdown has not identified, and we have not identified, a single case in which

[00:18:05] Speaker 00:
agency or alter ego has actually led to a patent license.

[00:18:08] Speaker 01:
But let me ask you about the language and the license itself, which it says, the second paragraph I'm sure you're very familiar with, it says, through its affiliated entities and owners.

[00:18:19] Speaker 01:
Is there any doubt, was there any dispute over whether or not Vedanti is an affiliated entity with VSL?

[00:18:30] Speaker 00:
I certainly believe that Vedanti is an affiliated VSL insofar as its subsidiary company.

[00:18:38] Speaker 00:
I'm sorry, there are a number of entities here.

[00:18:41] Speaker 00:
That said, the way that the district court interpreted that whereas clause and the way that we've always interpreted that whereas clause is that it does not expand the rights that VSL is granting.

[00:18:51] Speaker 00:
It simply confirms that VSL owns the rights that it is granting.

[00:18:56] Speaker 00:
responds to another point that was raised during Council for Max Sound's presentation, which is that this agreement, again, it's not really Google's issue, but the agreement's not illusory.

[00:19:09] Speaker 00:
It does also talk about conferring VSL's rights to different claims, and it talks about conferring VSL's rights to source code and software and things like that.

[00:19:18] Speaker 00:
So we read that whereas clause is confirming that VSL is

[00:19:22] Speaker 00:
deferring the rights that it owns, but not expanding the parties to the agreement, nor expanding the rights that are being conveyed.

[00:19:35] Speaker 00:
So what I was saying is that there is no case where a patent license has resulted from an agency or alter ego theory.

[00:19:42] Speaker 00:
And as I was looking through cases relating to implied licenses, I found a quote from this court that I think explains why.

[00:19:51] Speaker 00:
In the spine solutions case, this court said if we were to find standing based upon these facts, and those facts involved two closely related entities essentially swearing to the court, insisting to the court that the second of them had rights as an implied license, the licensee of the patent.

[00:20:09] Speaker 00:
If we were to find standing on these facts, this would mean that any company related to a patent owner could be treated as an exclusive licensee.

[00:20:17] Speaker 00:
So long as that patent owner allows the company to practice the patent, regardless of any agreement as to actual exclusivity.

[00:20:24] Speaker 00:
And I think that's a similar danger that we run into here.

[00:20:27] Speaker 00:
What we have in the written record is an agreement between VSL and Max Sound that doesn't even mention the patent owner.

[00:20:34] Speaker 00:
And it doesn't convey the patent owner's rights to the 339 patent.

[00:20:38] Speaker 00:
But the agency and alter ego theories fail for a host of reasons in addition to that.

[00:20:43] Speaker 00:
The district court did consider

[00:20:46] Speaker 00:
all of the facts that were submitted by Max Sound.

[00:20:48] Speaker 00:
And I'll submit today that Max Sound hasn't identified a single fact, much less a meaningful one that would have made a difference to the result, that the district court failed to consider.

[00:20:58] Speaker 00:
The district court considered details about the negotiation history.

[00:21:04] Speaker 00:
It considered the back and forth between Nash and Halburn, who negotiated on behalf of Max Sound.

[00:21:12] Speaker 00:
It considered all of these different agreements that were entered into, the VSL agreement as well as these confirmatory license agreements which relate to the 277 European patent and the territory of Germany very specifically.

[00:21:24] Speaker 00:
The affidavit that Council for Maxdown mentioned also relates directly to the territory of Germany and the European 277 patent, not the 339 patent.

[00:21:35] Speaker 00:
In fact, the fact that there are licenses in the record

[00:21:40] Speaker 00:
that are similar to those confirmatory license agreements that actually do relate to the 339 patent that were never signed indicates, again, that the VSL agreement was not intended to confer rights to the 339 patent.

[00:21:52] Speaker 00:
But the district court considered all of these theories.

[00:21:55] Speaker 00:
And with regard to agency, as the panel likely knows, the test is that there has to be a manifestation by the principal that the agent will act for him.

[00:22:05] Speaker 00:
And that manifestation has to be accepted.

[00:22:07] Speaker 00:
It has to be an agreement between the parties that the principal

[00:22:11] Speaker 00:
is going to allow the agent to control the transaction.

[00:22:14] Speaker 00:
And no such evidence was presented here.

[00:22:16] Speaker 00:
The district court explicitly stated that it considered the negotiation history and the organizations of Vedanti and VSL, and it concluded that Max Sound felt short of showing that VSL was specifically authorized to transfer any of Vedanti's rights when it executed the agreement.

[00:22:33] Speaker 00:
And that authorization is the central tenant of finding agency.

[00:22:38] Speaker 00:
The district court rejected that based upon all of the facts that it reviewed and found.

[00:22:43] Speaker 00:
With regard to alter ego, the district court also has some very specific findings, both the fact and conclusions of law.

[00:22:51] Speaker 00:
It said that piercing the corporate veil is an extreme remedy.

[00:22:54] Speaker 00:
And it found that there is no reason to apply that remedy under these circumstances.

[00:22:59] Speaker 00:
It said that courts have set forth many factors regarding alter ego,

[00:23:04] Speaker 00:
But here, the evidence presented by Maxound didn't go to a lot of those factors.

[00:23:09] Speaker 00:
The district court did consider the organization of the two companies, Vedanti and VSL, and it said, nor is there sufficient evidence to find that Nash abused the corporate privilege such that it should be disregarded in her dealings with Halpern.

[00:23:22] Speaker 00:
So that finding and those findings, in fact, go directly to the question of alter ego.

[00:23:29] Speaker 00:
What we have here is an agreement entered between Maxound and VSL

[00:23:33] Speaker 00:
that cannot confer the rights to Vedanti's patent.

[00:23:36] Speaker 01:
Why don't we move on then to the motion?

[00:23:39] Speaker 01:
Why don't we talk a little about the motion?

[00:23:41] Speaker 01:
It seems to me your friend has a pretty strong argument that there's a different case here.

[00:23:47] Speaker 01:
There are things here to be won or lost in this case that aren't necessarily mooted out by the subsequent agreement and therefore we should just move forward as we always intended to move forward deciding this appeal and moving on.

[00:24:02] Speaker 00:
Well, let me respond to that.

[00:24:04] Speaker 00:
We obviously are satisfied to have the appeal decided on the merits should the court believe that it is not moot, but we do think there is a serious concern regarding mootness.

[00:24:13] Speaker 00:
Let me explain why.

[00:24:14] Speaker 00:
First of all, I want to start with a specific fact that was relied upon by counsel for Max Down, because I think it is telling as to the record on mootness generally.

[00:24:25] Speaker 00:
Max Down says that they want to preserve their damages period by preserving this original complaint.

[00:24:31] Speaker 00:
to go six years back from their October 14th filing date for the original complaint.

[00:24:37] Speaker 00:
But they cannot do that as a matter of math or as a matter of law, because the 399 patent issued in July of 2011.

[00:24:45] Speaker 00:
So their original filing date for the complaint, October of 2014, only goes back to July of 2011.

[00:24:51] Speaker 00:
And if they were to refile now, they would go back to July of 2011.

[00:24:56] Speaker 00:
So there's no legal interest of max sounds to be

[00:25:00] Speaker 00:
impacted by whether they proceed under the original complaint or whether they refile their complaint.

[00:25:06] Speaker 00:
And I'd submit that what's happened here is that appellees have been in the middle of a dispute.

[00:25:13] Speaker 01:
What about the other thing they argue is the attorney's fees motion pending before the district?

[00:25:18] Speaker 00:
Right.

[00:25:19] Speaker 00:
So actually, they argue two other things, the attorney's fees motions, and they say they might be subject to an additional IPR.

[00:25:25] Speaker 00:
Let me address those two things in turn.

[00:25:27] Speaker 00:
So with regard to the attorney's fees motion,

[00:25:30] Speaker 00:
In this court's Nasatka versus Delta Sci Corporation decision, the court found that the issue of a pending attorney's fees motion, even on the same merits issue, is irrelevant to the determination of whether the issue's on appeal or moved.

[00:25:45] Speaker 00:
And the reason for that, I can go into detail from that case that's actually very well on point, is that Maxdown could appeal the attorney's fees motion if it doesn't like the results on that.

[00:26:00] Speaker 00:
motion, but it's not before the court right now.

[00:26:03] Speaker 00:
What's before the court right now is whether or not the Maxdown had standing to sue when it filed its original complaint.

[00:26:10] Speaker 01:
Nisakam explained that... Yeah, but if we were to reverse that, that would eradicate the dispute over attorney's fees below.

[00:26:18] Speaker 01:
So they do have something to be gained if we have a reversal that automatically does away

[00:26:22] Speaker 01:
with the ability to seek attorney's fees for that first case in the first instance.

[00:26:27] Speaker 00:
So that's actually very similar to the situation in Nasaka, where the court explained that, in effect, Nasaka is seeking our blessing on an issue that no longer has any impact.

[00:26:36] Speaker 00:
And there, Nasaka also wanted the appeal decided because it would be informative of a pending fees motion.

[00:26:43] Speaker 00:
And the court found that that was inappropriate, that that would be an advisory opinion that's prohibited

[00:26:50] Speaker 00:
and that Nisaka could receive exactly the same relief if it were to refile its complaint as it could if the court were to reverse the decision finding.

[00:27:01] Speaker 01:
Well, let me take you to another point, which isn't your friend arguing that whatever this agreement is, it's not effectuated until after this appeal was decided?

[00:27:11] Speaker 00:
So he is arguing that.

[00:27:14] Speaker 00:
But the issue is that he's entered into a settlement agreement with VLL.

[00:27:18] Speaker 00:
that causes Maxdown to become a co-owner of the 339 patent, regardless of the outcome in this appeal.

[00:27:25] Speaker 00:
So it is a springing event that they've creatively drafted into their settlement agreement in order to try and avoid mootness.

[00:27:31] Speaker 00:
But that event will spring no matter what happens.

[00:27:35] Speaker 00:
And I think the best way to look at this- But it hasn't sprung yet, right?

[00:27:40] Speaker 00:
It has not sprung yet.

[00:27:41] Speaker 00:
But I think the best way to understand our mootness argument is to look at the three things that could happen here.

[00:27:47] Speaker 00:
This court could affirm the lower court decision, in which case Maxound and the new patent owner, VLL, are going to file a new lawsuit against Google.

[00:27:56] Speaker 00:
This court could reverse the lower court decision, in which case Maxound is going to file a new complaint in the existing lawsuit against Google, eliminating Vedanti, the old patent owner, and adding VLL, the new patent owner.

[00:28:10] Speaker 00:
The third option is that this court dismisses the appeal, in which case Maxound and the new patent owner are going to sue Google.

[00:28:17] Speaker 00:
So under any scenario, Max Sound files a new infringement lawsuit with the new patent owner, and the damages issue that it's raised is not correct.

[00:28:27] Speaker 00:
The fees motion should not be considered with regard to whether or not this appeal is moot.

[00:28:33] Speaker 00:
And the IPR is something that is related to an issue that came up in this court system divisions case.

[00:28:41] Speaker 00:
In that case, there was a collateral proceeding that could have been informed by a decision in an appeal on moot issues.

[00:28:50] Speaker 00:
And this court explained that the fact that an appellate order would be beneficially impactful in a tangentially related legal proceeding does not change the fact that the appeal is moot.

[00:28:59] Speaker 00:
So whether or not Maxdown is subject to another IPR, and Maxdown doesn't tell the court that there are actually already two IPRs,

[00:29:06] Speaker 00:
ready for argument in February and decision in May existing in this case.

[00:29:10] Speaker 00:
But whether or not Max Sound is subject to a third IPR is a completely hypothetical, tangentially related proceeding.

[00:29:17] Speaker 00:
And those are the three things that Max Sound has identified as what this appeal can actually impact.

[00:29:24] Speaker 00:
And none of them properly put this appeal before the court based on subject matter restriction.

[00:29:29] Speaker 00:
I'm happy to answer any further questions on this or on the merits.

[00:29:32] Speaker 02:
Just so I understand, Max Sound is not arguing

[00:29:37] Speaker 02:
that it was a co-owner of the 339 patent before it entered into this agreement with VLL, right?

[00:29:44] Speaker 02:
Correct.

[00:29:45] Speaker 02:
And that co-ownership of the 339 patent with VLL doesn't spring into reality if and until we affirm the dismissal here.

[00:29:59] Speaker 00:
Well, so there's no if.

[00:29:59] Speaker 00:
It's just until.

[00:30:01] Speaker 00:
So if you were to reverse the district court order

[00:30:05] Speaker 00:
it would spring into reality because VLL would join as a co-plaintiff in the current case.

[00:30:11] Speaker 02:
Right, but Max Sound wouldn't be a co-owner.

[00:30:12] Speaker 00:
They would become a co-owner.

[00:30:14] Speaker 00:
They become a co-owner no matter what.

[00:30:17] Speaker 00:
And if you were to affirm the district court decision, they will become a co-owner.

[00:30:24] Speaker 00:
I have the quote where Max Sound explains it in its brief.

[00:30:36] Speaker 00:
Where is that?

[00:30:38] Speaker 00:
I apologize.

[00:30:40] Speaker 00:
Maxdown puts it like this.

[00:30:41] Speaker 00:
Either way, Maxdown will be able to pursue a claim against Google for infringement of the 339 patent, thereby eliminating all issues withstanding in the long run.

[00:30:50] Speaker 00:
And it will be doing so as a co-owner of the patent, regardless of the outcome in this appeal.

[00:30:55] Speaker 02:
Is that what it says right now?

[00:30:56] Speaker 00:
That's what it says in the agreement.

[00:30:58] Speaker 00:
And yeah.

[00:31:00] Speaker 00:
The agreements were actually filed under seal, so I hesitate to read to you from the agreements.

[00:31:03] Speaker 00:
But I don't think there's any dispute that that's what this has in the agreements.

[00:31:10] Speaker 01:
Thank you.

[00:31:11] Speaker 00:
Thank you.

[00:31:14] Speaker 04:
Thank you, Your Honors.

[00:31:21] Speaker 04:
A couple points, one by one here.

[00:31:24] Speaker 04:
Can we start with moodness?

[00:31:26] Speaker 04:
Moodness, sure.

[00:31:27] Speaker 04:
You're right.

[00:31:27] Speaker 04:
This is a different case than the one that might be filed sometime in the future once Max Sound acquires co-ownership status.

[00:31:36] Speaker 04:
And I didn't hear any reason why the IPR issue isn't a genuine issue there.

[00:31:41] Speaker 04:
And as to the damages period.

[00:31:43] Speaker 01:
Well, you did hear something.

[00:31:44] Speaker 01:
I think your friend said that there are cases or whatever that suggest that we can't be affected in terms of our decision on who is standing by some tangential proceeding

[00:31:56] Speaker 01:
that's not part of this proceeding.

[00:31:58] Speaker 01:
I haven't read all of those cases, but that's what she said.

[00:32:00] Speaker 04:
But Max Sound's interests, our legal interests, are clearly affected by whether you dismissed for mootness or not.

[00:32:06] Speaker 04:
If you dismissed for mootness and a new lawsuit had to be refiled with V&L and Max Sound as co-owners, I didn't hear Google's counsel say that they couldn't file a new IPR within the one-year period after that new lawsuit gets filed, whereas if you reverse

[00:32:24] Speaker 04:
and we go back down, that one-year period has come and gone clearly.

[00:32:27] Speaker 04:
And so that would directly and adversely affect Max Sound if you dismissed this appeal.

[00:32:33] Speaker 04:
And furthermore, on the damages period, yes, the patent issued on July 11, 2011.

[00:32:39] Speaker 04:
But who knows when VLL will agree to file a new lawsuit?

[00:32:42] Speaker 04:
Who knows where they will file a new lawsuit?

[00:32:45] Speaker 04:
They don't necessarily have to file in the Northern District of California.

[00:32:48] Speaker 04:
They could file in a venue where there's proper venue.

[00:32:51] Speaker 04:
But with the T.C.

[00:32:52] Speaker 04:
Heartland case pending out there, that lawsuit might be dismissed, and then there would be a loss of damages, clearly.

[00:32:59] Speaker 04:
So we don't know when that new lawsuit will be filed, where, and what might happen to it.

[00:33:04] Speaker 01:
And if this appeal is dismissed... But they have pretty much control over it to assure that they will get the same amount of damages they would on

[00:33:13] Speaker 01:
in the new case as they would have under the old because the clock starts running in 2011.

[00:33:18] Speaker 01:
They might decide we don't care and we won't file it until 2020, but if they have the ability to get the accrual of six years worth of past damages, that ought to be enough.

[00:33:33] Speaker 04:
But it's not clear that they will, because even if they filed on July 11th of 2017 and going back the six years, because we believe there's infringement immediately from the issuance of the patent, if that lawsuit were dismissed for some reason, and again, one can only tell, and it had to be refiled in a different venue or for whatever reason, the damages start to get lost.

[00:33:55] Speaker 04:
The point is that Max Sound's rights to sue Google at this point

[00:34:01] Speaker 04:
do not exist unless you affirm or reverse, rather, or affirm until you decide we cannot, unlike the case that Google relied on, refile right now.

[00:34:12] Speaker 04:
We are barred from doing that by collateral estoppel.

[00:34:15] Speaker 04:
And then furthermore, on the attorney's fees.

[00:34:17] Speaker 04:
I don't understand.

[00:34:18] Speaker 02:
Hypothetically, if we have affirmed this appeal tomorrow, then you become a co-owner.

[00:34:24] Speaker 04:
Yes, that's true.

[00:34:25] Speaker 04:
That's true.

[00:34:26] Speaker 04:
But what I'm saying is, unlike the case that Google relied on, we cannot just

[00:34:30] Speaker 04:
as that plaintiff could have done, refile.

[00:34:32] Speaker 04:
We are barred from refiling as an exclusive licensee, and that's all we are right now, as an exclusive licensee.

[00:34:38] Speaker 04:
So the issue of mootness is a strict standard.

[00:34:43] Speaker 04:
I mean, we have to have no legally protected interest available to us, and we do.

[00:34:47] Speaker 04:
The attorney's fee issue is clear.

[00:34:50] Speaker 04:
And the case that Google relies on there

[00:34:52] Speaker 04:
The district court dismissed for lack of jurisdiction claims that involved the government under the 1498, I think, is the statute.

[00:35:01] Speaker 04:
Therefore, the federal circuit in that case said, we're not going to get into the prevailing party issue because the only issue that was appealed was the Rule 11 sanction dismissing that case.

[00:35:12] Speaker 04:
And yes, that was undone by the district court.

[00:35:15] Speaker 04:
But the judgment about the lack of jurisdiction on the claim involving the government

[00:35:20] Speaker 04:
That was there.

[00:35:21] Speaker 04:
That wasn't going to go away.

[00:35:22] Speaker 04:
And so therefore, the defending could still be the prevailing party.

[00:35:26] Speaker 04:
So the Federal Circuit there said, let's wait and see what happens.

[00:35:29] Speaker 04:
Here, if you reverse, game over, as you said, Your Honor.

[00:35:33] Speaker 04:
So this decision is going to be more than informative.

[00:35:37] Speaker 04:
It'll be dispositive of that issue.

[00:35:39] Speaker 01:
One final thought, because you exceeded your time.

[00:35:42] Speaker 01:
Oh, I'm sorry.

[00:35:43] Speaker 01:
OK.

[00:35:44] Speaker 01:
We thank both parties in the cases submitted.

[00:35:46] Speaker 01:
That concludes our questions for this morning.

[00:36:05] Speaker 01:
Your honor, the court is adjourned as of more than a day.