[00:00:02] Speaker 03:
First case is Net Talk, Calm, the Magic Jack.

[00:00:09] Speaker 03:
You've reserved five minutes, Mr. Wood?

[00:00:12] Speaker 03:
Yes, Your Honor.

[00:00:13] Speaker 03:
Please proceed.

[00:00:14] Speaker 04:
May it please the Court.

[00:00:16] Speaker 04:
The District Court failed to weigh, under the Totality of Circumstances test, the facts that the District Court itself found.

[00:00:25] Speaker 04:
The District Court found that

[00:00:27] Speaker 04:
Net Talk's $200 million damages claim was based on provisional rights going back to 2009, and that those rights exist only if the issue claims are substantially identical to the provisional claims.

[00:00:40] Speaker 01:
Can I ask you about the portion of your argument about fees that you just began with about the damages claim?

[00:00:53] Speaker 01:
What did you explain, either here or to the district court, about what you would have done differently, concretely, in preparing the litigation if, instead of believing that you might be on the hook for $200 million, you were going to only be on the hook for, I'm going to make up a number, I don't know what the number is, $30 million.

[00:01:16] Speaker 01:
Would you have lessened your efforts on liability or what?

[00:01:22] Speaker 04:
All of the reporters who report on the cost of patent litigation say that the cost of that litigation is proportionate to the amount in controversy.

[00:01:35] Speaker 04:
And so there would have been things like that.

[00:01:36] Speaker 03:
But you're right.

[00:01:37] Speaker 04:
I didn't.

[00:01:38] Speaker 03:
Wait.

[00:01:39] Speaker 03:
Wait.

[00:01:40] Speaker 03:
All of the reporters say, that sounds anecdotal.

[00:01:44] Speaker 03:
Give us a site.

[00:01:46] Speaker 04:
Well, the AIPLA's.

[00:01:50] Speaker 04:
The AIPLA does a survey every couple of years, and they come up with those statistics.

[00:01:55] Speaker 04:
And they show that the cost of litigation goes up when the mountain controversy goes up.

[00:02:03] Speaker 04:
And here we have a very solid effect, a very real effect, where Net Talk used the $200 million claim to assert against the estate of the individual defendant in this case, the former CEO.

[00:02:18] Speaker 04:
and that prevented distribution of the estate proceeds.

[00:02:21] Speaker 04:
So it had a very real effect on this case, not just the hypothetical one.

[00:02:26] Speaker 04:
And that claim itself was suspect.

[00:02:29] Speaker 03:
How did that have an effect on this case as opposed to the estate case?

[00:02:34] Speaker 04:
Well, it drove a wedge between the defendants because the individual defendant would have been trying to

[00:02:45] Speaker 04:
uh... gets at the case disposed of so that they could proceed with the estate and we really would have or did well would have but we we we don't know because because the case this was disposed of before uh... so what we're seeing is that speculative we're not saying that speculative your honor it did drive a wedge between the defendants in the case and it did with what evidence of that is there in the record the evidence in the well uh... there isn't your honor

[00:03:15] Speaker 03:
One of the things that you claim is that NETTALK eventually didn't proceed with a lawsuit because it was completely baseless.

[00:03:32] Speaker 04:
I'm sorry?

[00:03:33] Speaker 03:
One of the things you say is eventually NETTALK recognized that its claims were completely baseless.

[00:03:41] Speaker 04:
It did eventually.

[00:03:42] Speaker 04:
Eventually.

[00:03:43] Speaker 04:
Eventually, yes.

[00:03:45] Speaker 03:
When in December 2014, Magic Jack asked Net Talk to discontinue the lawsuit.

[00:03:56] Speaker 03:
And it says, we want a bond posted if you continue.

[00:04:00] Speaker 03:
And we want a bond because you're financially insolvent.

[00:04:04] Speaker 03:
I think the language is Net Talk would become insolvent by the time this matter is resolved.

[00:04:11] Speaker 03:
Now, isn't it at least as likely that

[00:04:14] Speaker 03:
that net talk didn't proceed because it was broke?

[00:04:20] Speaker 04:
No, Your Honor, because Mr. McAndrews at the status conference said to the court that they could not win on infringement under the court's claim construction.

[00:04:32] Speaker 04:
So he conceded that they couldn't win.

[00:04:36] Speaker 04:
It wasn't because they were broke.

[00:04:40] Speaker 04:
And they could have.

[00:04:42] Speaker 04:
If they were truly broke and wanted to dispose of the case, they could have withdrawn the $200 million claim so that the estate could proceed.

[00:04:51] Speaker 04:
They could have told the court that we're not going to proceed with this case and let's not have to bother with discovery or expert reports or remaining trial prep and let us wind down this case.

[00:05:05] Speaker 04:
Instead, it proposed a schedule that required Nagy Jack to continue as if this is a $200 million case

[00:05:12] Speaker 04:
and continue with discovery throughout the period of time until the very last minute when Netalk finally dismissed the case of its own accord.

[00:05:23] Speaker 04:
And so instead of acting in good faith, they required us to get ready for these depositions, cancel them at the last moment,

[00:05:32] Speaker 04:
required us to prepare expert reports.

[00:05:36] Speaker 01:
How much of what you're now describing took place between the December 1st, 2014 claim construction order and the final dismissal on February 27th?

[00:05:44] Speaker 04:
It spanned both periods, Your Honor.

[00:05:47] Speaker 04:
It started at the beginning of the case, and it went through even through until the end of the case.

[00:05:53] Speaker 04:
There was never any let up.

[00:05:55] Speaker 04:
What's the breakdown?

[00:05:57] Speaker 04:
The breakdown.

[00:05:58] Speaker 03:
How much of the $2 million in fees?

[00:06:02] Speaker 04:
I don't have that detail, Your Honor.

[00:06:05] Speaker 04:
I'm sure it was heavily proportioned around the time before dismissal of the case, probably before January, although I know we did proceed with trying to finish up the depositions because Net Talk would refuse to relent on its claim of damages or its claim in total.

[00:06:27] Speaker 04:
And we were facing deadlines.

[00:06:29] Speaker 04:
We had no choice but to proceed, and we did.

[00:06:31] Speaker 04:
a number of times where we notice depositions, they cancel them at the last minute, and that behavior both was before the client construction and after.

[00:06:43] Speaker 03:
What was the basis for your $14,000 in cost?

[00:06:51] Speaker 03:
How was it broken down, just in general?

[00:06:53] Speaker 04:
I believe it was based on production costs, I believe, and it was

[00:07:00] Speaker 04:
deposition costs and transcripts I That's not that's not something that's on appeal at this point no I didn't think it was my interest is it's proportion in relation to two million dollars in fees well we A lot of the fees were were incurred in preparing for depositions that never occurred because net thought cancel them at the last minute

[00:07:23] Speaker 04:
Well, right after we've already invested in the prep for both taking depositions of their witnesses and in preparing our witnesses.

[00:07:32] Speaker 04:
And in that case as well, in that talk, never took any technical witnesses' depositions or even noticed them of our client.

[00:07:42] Speaker 04:
Why?

[00:07:42] Speaker 04:
Because Mr. Paxinos had already tested the accused device back in 2012.

[00:07:48] Speaker 04:
They knew

[00:07:49] Speaker 04:
that it could not meet the internet connection provided by the ATA limitation.

[00:07:55] Speaker 04:
We didn't find that out until we took Mr. Paksinow's deposition in late 2014, around November, I believe.

[00:08:01] Speaker 04:
And at that point, we asked them to dismiss the case.

[00:08:05] Speaker 04:
They wouldn't.

[00:08:06] Speaker 04:
The claim construction order then issued, excuse me, the claim construction order issued, and then we asked them to dismiss the case, and they wouldn't.

[00:08:14] Speaker 04:
And then they continued throughout January and February.

[00:08:18] Speaker 04:
And they never withdrew their $200 million claim.

[00:08:21] Speaker 01:
Can I just double check something?

[00:08:23] Speaker 01:
You didn't go to the district court after the December 1, 2014 claim construction order and say, there are a bunch of discovery deadlines coming up.

[00:08:34] Speaker 01:
There's a lot of work that's going to have to take place in the next couple of months.

[00:08:38] Speaker 01:
It sure looks like this case has to be dismissed.

[00:08:42] Speaker 01:
Can you suspend the schedule?

[00:08:47] Speaker 04:
We didn't want to suspend the schedule because Netalk wouldn't relinquish its claim.

[00:08:54] Speaker 04:
And we felt that we had to go forward because Magic Jack was a public company.

[00:09:00] Speaker 04:
It had a $200 million claim that was sitting out there that was public record because Netalk filed that in the estate and said it was based on this litigation.

[00:09:10] Speaker 04:
And so we had no choice but to continue to press forward.

[00:09:14] Speaker 04:
Instead of relenting, as I said, Netalk continued to press its claims, continued to ask for more deadlines for discovery and trial, instead of doing what it should have done, which is dismiss the case.

[00:09:27] Speaker 04:
Eventually it did, but that was way too late.

[00:09:30] Speaker 04:
Again, the district court found that the internet connection provided by the ATA was not the subject of claim construction.

[00:09:38] Speaker 04:
It found that Mr. Paxinos tested the device in 2012, confirmed it was a sound card, which meant

[00:09:43] Speaker 04:
that it did not have an internet connection provided by the ATA, and that NETTALK never addressed this limitation in the court below.

[00:09:50] Speaker 04:
The district court waited only to say that it was standing alone, not enough, and then recited the Totality of Circumstances test without actually adding it to the rest of the conduct.

[00:10:04] Speaker 01:
Can you remind me, why do you think that your

[00:10:09] Speaker 01:
analog telephone adapter doesn't provide an interconnection?

[00:10:19] Speaker 04:
It doesn't.

[00:10:21] Speaker 01:
Well, first of all, I want to understand that if you can quickly give me the technical details so that I might understand whether those words alone without a claim construction make it so clear that

[00:10:35] Speaker 04:
The claim language is an intranet connection, not just a connection.

[00:10:40] Speaker 04:
But what does provide mean?

[00:10:43] Speaker 04:
Provide, well, we don't have any expert testimony by NETTALK, and they never explain how it doesn't provide it.

[00:10:51] Speaker 01:
Instead, they... But isn't your, I mean, tell me if this is wrong.

[00:10:56] Speaker 01:
I kind of understood that if you divide this case, put aside the damages question, which I know you don't want to do,

[00:11:04] Speaker 01:
divided between December 1st, 2014, before and after.

[00:11:07] Speaker 01:
And before, the question is, was it clear enough before the December 1st claim construction that they absolutely couldn't win, that it was just irresponsible for them to proceed?

[00:11:17] Speaker 01:
And the December 1st claim construction was not on this element, it was on another element.

[00:11:22] Speaker 01:
So as to this element, your theory must be the words alone of the claim, unconstrued, and I gather not even the subject of a request of claim construction, make it really, really clear

[00:11:32] Speaker 01:
should have made it really, really clear to them that the accused product wouldn't satisfy it.

[00:11:37] Speaker 01:
And I guess I want to understand why is that so clear?

[00:11:40] Speaker 04:
Because the literal words say that the ATA has to provide the internet connection.

[00:11:44] Speaker 04:
It's not just provide any connection, it's provide internet connection.

[00:11:48] Speaker 01:
I'm not sure what providing means, so can you translate that into the technical thing going on here?

[00:11:54] Speaker 04:
It means that it has, in technical terms, it's as Mr. Paxinos admitted, which is that

[00:11:59] Speaker 04:
The sound card, which is what our device is, passes no internet-formatted packets.

[00:12:05] Speaker 04:
And Net Talk never came back and said, oh, no.

[00:12:10] Speaker 04:
In this world, providing means just providing any kind of connection.

[00:12:14] Speaker 04:
They never said this at all.

[00:12:15] Speaker 04:
They never addressed this in the court below.

[00:12:17] Speaker 04:
The only time they addressed it is on appeal, and that's too late.

[00:12:20] Speaker 04:
It's been waived.

[00:12:21] Speaker 04:
The time to have addressed this was either on claim construction or in opposition to our fee motion.

[00:12:27] Speaker 03:
Just so you know, you're in your rebuttal time.

[00:12:29] Speaker 03:
I'm sorry.

[00:12:29] Speaker 03:
that's up to you.

[00:12:36] Speaker 04:
In that case I'd like to reserve my time for rebuttal.

[00:12:52] Speaker 02:
Morning, Your Honors, may it please the Court.

[00:12:58] Speaker 02:
Under the

[00:12:59] Speaker 02:
highly differential standard was your internet connection provided by the eighty eight argument presented to the district court here opposing councils it was during the two-hour oral argument between uh... before magistrate judge turnoff down in miami he had a lot of questions about that we actually had uh... samples uh... argument on what motion at what stage of the house i'm sorry i'm on the two eighty five feet position

[00:13:28] Speaker 02:
Well, one of the points that I would have made on the time and attention of the district court, both the magistrate in reaching the report and recommendation and then the district court in conducting the de novo review, they put an awful lot of time and attention into this matter.

[00:13:45] Speaker 02:
I brought my four client representatives, magistrate Turnoff, introduced himself, and met the client.

[00:13:53] Speaker 02:
I thought that it was important that he see the people that were accused of this

[00:13:58] Speaker 02:
these bad faith litigation tactics.

[00:14:01] Speaker 02:
Judge Toronto asked my colleague a good question about whether or not the ATA provides an internet connection.

[00:14:10] Speaker 02:
Just by way of brief analogy, this is an iPhone, a lot of people have Samsung Galaxies, but we all know what smartphones are.

[00:14:20] Speaker 02:
This phone can have

[00:14:24] Speaker 02:
And it can facilitate access to the internet, internet access connection, simply through one of the hotspots that the Court of Appeals for the Federal Circuit has.

[00:14:35] Speaker 02:
I'm sure that all your honors may have tablets.

[00:14:37] Speaker 02:
You certainly have smartphones.

[00:14:39] Speaker 02:
And when you're on the premises, the phone isn't what's facilitating the connection.

[00:14:44] Speaker 02:
It is indirectly, when me or my colleague, Mr. Wallenberg, pull up a patent or an opinion,

[00:14:53] Speaker 02:
The phone is part of the connection, but it's that access point that has an ethernet cable that's plugged into it.

[00:15:00] Speaker 02:
That was a good faith argument.

[00:15:02] Speaker 02:
That was an argument that was made through and through.

[00:15:04] Speaker 02:
And Judge Turnoff had a lot of pointed questions about that.

[00:15:08] Speaker 02:
It went to the heart of the issue.

[00:15:11] Speaker 02:
But the issue in dispute, going back, Your Honor, to your questions about the timing, this all started on December 1, 2015.

[00:15:23] Speaker 02:
This is a case about a bad claim construction.

[00:15:26] Speaker 02:
It happens.

[00:15:28] Speaker 02:
2014.

[00:15:32] Speaker 02:
I'm sorry, Your Honor.

[00:15:33] Speaker 02:
It was 2014.

[00:15:35] Speaker 02:
I'm doing the math in my head.

[00:15:36] Speaker 02:
That's absolutely right.

[00:15:39] Speaker 02:
December 1st of 2014, it was a negative claim construction.

[00:15:43] Speaker 02:
My clients didn't like it.

[00:15:45] Speaker 02:
I didn't like it.

[00:15:45] Speaker 02:
But I didn't get to know about it.

[00:15:47] Speaker 02:
Because at the time, Net Talk didn't have counsel.

[00:15:52] Speaker 02:
We're heading into the holiday season.

[00:15:53] Speaker 02:
It's December 1st.

[00:15:55] Speaker 02:
Judge Gales graciously gave my client a month until the new year to retain new counsel.

[00:16:04] Speaker 02:
And on January 1st, my local counsel, Matt Tucker, down in Miami and I, signed on with these very wonderful folks from Net Talk.

[00:16:13] Speaker 02:
On Saturday, January 10th, I was on the phone for the first time introducing myself to my colleague, Mr. Wool.

[00:16:22] Speaker 02:
And the first thing I said is, let's talk about stipulating to dismissal and entry of judgment of non-infringement.

[00:16:31] Speaker 02:
My thought at the time, I was still reviewing the record.

[00:16:34] Speaker 02:
I had just been hired.

[00:16:35] Speaker 02:
Let's take a look at the non-infringement issue.

[00:16:38] Speaker 02:
Does it make sense then to appeal?

[00:16:41] Speaker 02:
Unfortunately, just about three weeks after that, I went in for cervical spine surgery, and that interrupted our

[00:16:52] Speaker 02:
our march toward getting this case resolved and dismissed, unfortunately.

[00:16:58] Speaker 02:
I said at the time, I think I said it in the records and the submissions, I have never in 23 years of practice encountered a defendant who wanted less to be dismissed from a case than I find in the instance of Magic Jack.

[00:17:14] Speaker 02:
I asked for a stipulation for a 30-day stay pending my surgery and my recovery, which is actually a pretty

[00:17:22] Speaker 02:
It's a pretty quick recovery for cervical spine.

[00:17:26] Speaker 02:
They denied that.

[00:17:27] Speaker 02:
I had to go to Judge Gales, and he granted the 30-day extension.

[00:17:31] Speaker 02:
And I think your honors will see from the timeline, from the time that that negative claim construction came down, where it was clear to me there could not be infringement under the court's instruction, Mr. Rua is correct.

[00:17:45] Speaker 02:
I conceded that point.

[00:17:47] Speaker 02:
It took me a while to familiarize myself with the record, the arguments that had been made, the party's briefing.

[00:17:52] Speaker 02:
a lengthy moral argument transcript, not on the 285 hearing, but earlier on the claim construction.

[00:18:01] Speaker 01:
Was there discussion in the period after December 1st, 2014, about two different kinds of judgments that would result from a conclusion that you can't win under that claim construction?

[00:18:22] Speaker 02:
dismiss the case the other is judgment for them but you have a right to appeal the claim construction that they're they're worried about it was seriado in in this order uh... first the first thing i proposed mister who was the concept of a dismissal a stipulation of uh... non-infringement with the thought that we would not appeal we would have the right to appeal which by the way we we point out our submissions we could have appeal in good faith

[00:18:50] Speaker 02:
My clients made an economic decision, counseled by their new legal team, that with all the additional language added with the re-exam, I think your honors have seen that in the record.

[00:19:05] Speaker 02:
That's all the text that appears in the italics.

[00:19:08] Speaker 02:
Let's focus on our claims that are still in prosecution at the Patent and Trademark Office.

[00:19:13] Speaker 02:
And that proved to be fruitful, in fact.

[00:19:18] Speaker 02:
That's what we counseled our clients.

[00:19:19] Speaker 02:
We ultimately dismissed the case.

[00:19:23] Speaker 03:
Let me clarify something just for when I talked to Mr. Wilk.

[00:19:29] Speaker 03:
You came in January 1st.

[00:19:31] Speaker ?:
I did.

[00:19:32] Speaker 03:
January 10th you went in for surgery?

[00:19:35] Speaker 02:
I'm sorry.

[00:19:35] Speaker 02:
January 28th I went in.

[00:19:37] Speaker 02:
January 10th on Saturday.

[00:19:39] Speaker 02:
I know it was a Saturday.

[00:19:40] Speaker 02:
I was at my brother's house.

[00:19:41] Speaker 02:
He's like, what are you doing on the phone?

[00:19:42] Speaker 02:
I said, well, I'm introducing myself to my new opponent.

[00:19:45] Speaker 02:
Did you ask for that extension at that point?

[00:19:49] Speaker 02:
I didn't ask in my first call with Mr. Wu on Saturday.

[00:19:53] Speaker 02:
I did not.

[00:19:53] Speaker 02:
Do you know when you did?

[00:19:56] Speaker 02:
It certainly would have been in the ensuing seven-day period.

[00:20:00] Speaker 02:
And the record will bear this out.

[00:20:01] Speaker 02:
I know we have the docket sheet here.

[00:20:03] Speaker 02:
I can take a look.

[00:20:04] Speaker 02:
That's all right.

[00:20:04] Speaker 02:
Because I ultimately moved the court.

[00:20:06] Speaker 02:
And during the telephonic status, I asked Judge Gales if he would grant me 30 days under the circumstances.

[00:20:14] Speaker 02:
And he did.

[00:20:14] Speaker 02:
I got out of surgery.

[00:20:20] Speaker 02:
And during the recovery period, we did our research.

[00:20:24] Speaker 02:
I said, this is a case for dismissal.

[00:20:30] Speaker 03:
We prepared a... This is the second best argument about that kind of thing that I've heard.

[00:20:37] Speaker 03:
When I was at the Court of International Trade, I had counsel who said, I went in for minor surgery and I fully expected to take care of this on Monday morning.

[00:20:47] Speaker 03:
Unfortunately, I was in a coma for five months.

[00:20:50] Speaker 02:
Well, Judge Walk, what can I do to make it the best art?

[00:20:55] Speaker 01:
It's not a competition.

[00:20:57] Speaker 01:
You don't want to compete for that award.

[00:20:59] Speaker 02:
No, of course it's not.

[00:21:00] Speaker 02:
But look, particularly when we're talking about 285, and we still have the vestiges of Brooks Furniture in the cloud of bad faith and willful conduct, the conduct of the parties and the motivations of the parties matter.

[00:21:16] Speaker 02:
But the conduct of counsel matters too.

[00:21:19] Speaker 02:
And that's a handshake.

[00:21:20] Speaker 02:
That's a two-way street.

[00:21:21] Speaker 02:
I was flabbergasted when I asked for that extension, and I didn't get it.

[00:21:25] Speaker 02:
The court granted it.

[00:21:27] Speaker 01:
Can I take you back to the pre-December 1, 2014 world, which I know is a... You were there and talked a little bit about the interconnection provided by the analog telephone adapter.

[00:21:41] Speaker 01:
As I understand it, Magic Jack's point is

[00:21:48] Speaker 01:
It is self-evident that for that to be so, the analog telephone adapter has to have internet formatted packets pass through it.

[00:22:00] Speaker 01:
Try to correct me if I've misunderstood.

[00:22:05] Speaker 01:
And that it's perfectly clear that the accused MagicJack device doesn't have internet formatted packets pass through it.

[00:22:16] Speaker 01:
and that I think their theory or their argument is you never had any ground for, any reasonable ground for having a different understanding of what it means to provide an internet connection.

[00:22:30] Speaker 02:
Sure.

[00:22:30] Speaker 02:
So if I understand you, Judge Tronan, you're characterizing Magic Jack's argument with respect to the internet packet.

[00:22:38] Speaker 02:
So the internet packet issue, that claim phrase, if you will,

[00:22:44] Speaker 01:
Well, Packet's not in the claim phrase.

[00:22:47] Speaker 02:
That's exactly right.

[00:22:48] Speaker 02:
What I'm saying is, where that came from, that emerged out of Mr. Paxoneau's, Gary Paxoneau's, deposition, because he acknowledged.

[00:22:57] Speaker 02:
He's an engineer.

[00:22:57] Speaker 02:
He's a software guy.

[00:22:58] Speaker 02:
He said, no, there are no internet packets exchanged back and forth.

[00:23:03] Speaker 02:
But the legal team and my team, when we looked at it, said, that's not a claim requirement.

[00:23:09] Speaker 02:
That constricts the scope of the claim far too much.

[00:23:14] Speaker 01:
Again, it goes back to the general concept that if you have a full... In the course of discovery leading up to December 1st, 2014, did you have what evidence, if any, experts or otherwise or contentions or anything that said in order for a device, this device, the accused device to provide an interconnection, it does not have to

[00:23:44] Speaker 01:
have internet packets?

[00:23:46] Speaker 02:
Sure.

[00:23:46] Speaker 02:
So not during the claim construction process, because this was not a claim that was construed.

[00:23:53] Speaker 02:
Neither side requested a construction.

[00:23:54] Speaker 02:
No.

[00:23:54] Speaker 02:
This is an argument that arose out of a fundamental dispute that we see in every patent case.

[00:24:01] Speaker 02:
What about infringement on the plain language of the claim itself?

[00:24:07] Speaker 02:
Net talk has always maintained, long before I came along, and I can tell you,

[00:24:13] Speaker 02:
when I came along in their position, because that was something I wanted to know.

[00:24:19] Speaker 02:
Does this facilitate an internet connection?

[00:24:22] Speaker 02:
And they said, of course it does.

[00:24:23] Speaker 02:
It's indirect.

[00:24:25] Speaker 02:
The claim language itself, the lengthy claim language, goes on to talk about the fact and the functionality of an indirect claim.

[00:24:36] Speaker 02:
So I think one of the things we said in our brief submission to the court

[00:24:41] Speaker 02:
is that under their proposed construction, even though it's not a construction, their argument of this internet packet thing, the claim on its face wouldn't make any sense.

[00:24:51] Speaker 02:
Because when you get to the portion in the claim that talks about indirect internet connection, and let me give a more tangible example of that.

[00:25:03] Speaker 02:
If my phone is speaking to that access point, the access point has an ethernet cable plugged into it.

[00:25:11] Speaker 02:
That's plugged into a switch and a router and it goes off to the internet service provider.

[00:25:15] Speaker 02:
That access point, the Wi-Fi access point, is facilitating the internet connection.

[00:25:22] Speaker 02:
But without this, my colleague and I can't... This is a necessary part of facilitating the internet connection to the user.

[00:25:32] Speaker 02:
I mean, it's not even a strained argument, let alone a bad faith argument.

[00:25:36] Speaker 02:
And it had always been their position.

[00:25:39] Speaker 02:
And perhaps in

[00:25:41] Speaker 02:
the clarity of hindsight, Your Honor, maybe it's something that the party should have crystallized on claim construction.

[00:25:50] Speaker 02:
But what I believe and what I felt when I reviewed it doesn't matter.

[00:25:57] Speaker 02:
I think what matters is how the district would assess this very, very voluminous record over the course of several years.

[00:26:04] Speaker 02:
As we mentioned in our submission, Judge Gayles himself presided over the

[00:26:09] Speaker 01:
uh... several hours of claim construction picnic and we have we haven't talked about the uh... the damages claim in it and i guess i had to consider to possible issues with that one is how could it conceivably be the case that when you add this number of words charlie and the patent office is not doing that idly that there was in this case and uh... any meaningful question

[00:26:39] Speaker 01:
that there was a substantive difference, and so damages couldn't reach back further.

[00:26:46] Speaker 01:
And then the other is what Mr. Wu was talking about, which is that it has to be the case, doesn't it, that the behavior of his side as a litigant is affected by what's at stake, the amounts at stake, by an order of magnitude.

[00:27:04] Speaker 02:
You know, an interesting point on that.

[00:27:07] Speaker 02:
I don't agree with that.

[00:27:08] Speaker 02:
I've been doing this 23 years, not 40 years, but my experience has been that there is... Why are you looking at Judge Toronto when you say not 40 years?

[00:27:22] Speaker 02:
Well, he had asked the question.

[00:27:25] Speaker 02:
I'll work on my eye contact.

[00:27:30] Speaker 02:
So in my experience, there is some degree of proportionality, but I think that we are risking

[00:27:38] Speaker 02:
to some of the comments Judge Wogg made, were running the risk of wading into this circumstantial territory, something the court counseled against just on the 23rd in the Max Plank case.

[00:27:53] Speaker 02:
You were on the panel on the opinion.

[00:27:57] Speaker 02:
That's what we're talking about here.

[00:27:58] Speaker 02:
I mean, my colleague is citing APLA, the Report of Economic Survey Statistics,

[00:28:06] Speaker 02:
If they're part of the record, they're certainly not.

[00:28:09] Speaker 01:
We've seen it.

[00:28:10] Speaker 02:
Yeah, OK.

[00:28:13] Speaker 02:
Those are convenience stats that suggest that there is some degree of proportionality.

[00:28:20] Speaker 02:
I would certainly concede that.

[00:28:23] Speaker 02:
You're over your time.

[00:28:25] Speaker 02:
I'm sorry.

[00:28:26] Speaker 02:
I am over my time.

[00:28:29] Speaker 02:
It's running out now.

[00:28:31] Speaker 02:
So on the issue of damages that I didn't really get to speak to,

[00:28:35] Speaker 02:
Um, had the case continued, uh, we were heading into the expert stage.

[00:28:40] Speaker 02:
Uh, I can tell you from experience working with experts, that's where you home down and you, uh, you refine your, your damages theory.

[00:28:49] Speaker 02:
Uh, but in this case, I don't think there is any support for the proposition, um, that, that there is proportionality of the type that my colleague Mr. Wu was talking about here.

[00:28:59] Speaker 02:
And, and I think if we look at the billing records, it would bear out that everything was,

[00:29:04] Speaker 02:
The vast majority of this billable time was pre-holiday season, pre-my surgery, before Judge Gales came out with his claim construction.

[00:29:14] Speaker 02:
Are there any additional questions from the panel?

[00:29:18] Speaker 02:
Thank you, Your Honors.

[00:29:26] Speaker 03:
The only thing that... Yes?

[00:29:31] Speaker 03:
What would that 30-day stipulation cost your client?

[00:29:39] Speaker 03:
Why didn't you grant it?

[00:29:41] Speaker 04:
We didn't grant it because they wouldn't remove their $200 million claim.

[00:29:46] Speaker 03:
That $200 million claim was directly related to your opposing counsel having surgery?

[00:29:54] Speaker 04:
No.

[00:29:55] Speaker 03:
You know a barrel when you see a lawyer over it?

[00:29:58] Speaker 04:
No, Your Honor.

[00:29:59] Speaker 04:
That is not the reason.

[00:30:01] Speaker 04:
They had opportunity.

[00:30:03] Speaker 04:
First of all, they chose Mr. McAndrews knowing that he had that surgery coming up.

[00:30:08] Speaker 04:
They also had local counsel who also... Where's that in the record?

[00:30:15] Speaker 04:
It's not, Your Honor.

[00:30:17] Speaker 04:
Well, they knew that they must have known.

[00:30:19] Speaker 04:
People don't schedule surgeries the next day at any rate.

[00:30:28] Speaker 04:
They also, Netalk continued to want to press this case forward.

[00:30:33] Speaker 04:
Again, Mr. McAndrews says that they would have put it off, but they didn't put it off.

[00:30:39] Speaker 04:
They insisted on a schedule.

[00:30:41] Speaker 03:
They did put it off.

[00:30:41] Speaker 03:
They got a 30-day extension.

[00:30:43] Speaker 04:
They did.

[00:30:44] Speaker 04:
And then they kept on going.

[00:30:48] Speaker 04:
They provided a schedule that had us having to do depositions and expert reports and everything else.

[00:30:56] Speaker 04:
And without any real intent of going forward, if they knew at that point, they could have just said, we're not going to do this.

[00:31:04] Speaker 04:
And people don't walk away from $200 million claims when they can get contingent fee counsel, when appeals aren't that expensive, if they really had met merit to their claims.

[00:31:16] Speaker 04:
But that's exactly what they did.

[00:31:18] Speaker 03:
And the only thing that they ever did.

[00:31:19] Speaker 03:
Do you deny your opposing counsel's discussion of his initial conversation with you?

[00:31:26] Speaker 03:
in early January?

[00:31:28] Speaker 04:
He said he was thinking about it, but thinking and doing are two different things.

[00:31:32] Speaker 04:
In the meantime, we were on a tight schedule to get the case to trial.

[00:31:40] Speaker 04:
The only thing he said in the case below was that the accused product facilitated an internet connection, but the claim line would just provide an internet connection

[00:31:49] Speaker 04:
Mr. Paxos even admitted that that was different.

[00:31:52] Speaker 03:
Wait a minute now.

[00:31:53] Speaker 03:
Isn't it in the interest of your client, when opposing counsel says, I'm thinking about dismissing, isn't it in your client's interest to say, hey, let's hold off spending any more of your money?

[00:32:07] Speaker 04:
We tried to do that.

[00:32:09] Speaker 04:
And then instead, they came back and said, let's go forward with these depositions.

[00:32:13] Speaker 04:
We're not going to dismiss the case.

[00:32:14] Speaker 04:
We're not going to withdraw our $200 million dollar claim.

[00:32:20] Speaker 04:
The district court was supposed to weigh exceptionality under the preponderance standard.

[00:32:24] Speaker 03:
I'm going to let you run over for a minute, since I let you close in counsel.

[00:32:27] Speaker 03:
Thank you, Your Honor.

[00:32:29] Speaker 04:
As to non-infringement, we show that the internet connection provided by the ATA limitation was not met, tipping the scales toward magic check.

[00:32:37] Speaker 04:
Net Talk never addressed this below, so it couldn't have tipped the scales back the other way.

[00:32:41] Speaker 04:
As to the damages claim, we showed how it was meritless.

[00:32:44] Speaker 04:
They never said anything about it in the court below, or even in this court.

[00:32:48] Speaker 04:
so that the scales cannot have tipped back the other way.

[00:32:51] Speaker 04:
As to the litigation in this conduct, we showed how they canceled depositions at the last minute, both as to their witnesses and ours, how they did the same thing on expert reports.

[00:33:00] Speaker 04:
They never refuted those facts, but just pointed to what happened later.

[00:33:05] Speaker 04:
But the conduct started at the beginning.

[00:33:08] Speaker 04:
They were doing this throughout the case.

[00:33:11] Speaker 04:
Under the preponderance standard, everything tipped Magic Jack's way.

[00:33:14] Speaker 04:
Net Talk did nothing to try and tip it back.

[00:33:16] Speaker 04:
The district court abused its discretion by failing to find an exceptional case.

[00:33:21] Speaker 04:
Even on appeal, they haven't justified it.

[00:33:23] Speaker 04:
Last sentence.

[00:33:24] Speaker 04:
Last sentence.

[00:33:26] Speaker 04:
Your Honor, again, they could have adopted a schedule for remaining discovery that dispensed with the need for taking more depositions or expert reports.

[00:33:39] Speaker 04:
They didn't do that.

[00:33:40] Speaker 04:
They instead waited until the last minute on each one and then finally

[00:33:45] Speaker 04:
tank the case at the very end on a walk-away basis with no right of appeal.

[00:33:51] Speaker 04:
People don't do that if they have a $200 million.

[00:33:53] Speaker 04:
There was a period there.

[00:33:57] Speaker 03:
Thank you, Your Honor.

[00:33:58] Speaker 03:
Thank you, Counsel.