[00:00:00] Speaker 00:
This is two zero one six dash two one seven zero next learn versus Allen.

[00:00:07] Speaker 00:
Mr. Vickrey.

[00:00:12] Speaker 02:
Thank you.

[00:00:14] Speaker 02:
I represent Next Learn.

[00:00:19] Speaker 02:
Next Learn and Allen are direct competitors and that's relevant to two issues before the court today.

[00:00:30] Speaker 02:
In 2009, Alan was interested in NextLearn's Next Generation SimWriter simulation program.

[00:00:41] Speaker 02:
And it approached NextLearn about the product, said it was interested in possibly weaving it into its product line, executed an NDA for purposes of accessing the trial version

[00:00:57] Speaker 02:
of the Sim Ryder, which was not yet public.

[00:01:01] Speaker 00:
Just to be clear, this is a case appealed to us from dismissal for lack of specific jurisdiction.

[00:01:09] Speaker 00:
Are you alleging that these back and forth discussions before a patent ever issued are relevant to the question of specific jurisdiction?

[00:01:19] Speaker 02:
Yes, we do, Your Honor.

[00:01:21] Speaker 00:
Now, how?

[00:01:21] Speaker 00:
For minimum context for specific jurisdiction, the Supreme Court has been quite clear

[00:01:26] Speaker 00:
that they have to be contacts that are what caused the claim.

[00:01:32] Speaker 00:
And I don't see how back and forth exchanges before there's ever a patent in existence could cause infringement.

[00:01:41] Speaker 02:
It's not the communications back and forth.

[00:01:45] Speaker 02:
It was the accessing of the trial version of the software that we maintain and alleged in the complaint enabled Alan

[00:01:56] Speaker 02:
to copy Simrider.

[00:01:59] Speaker 02:
And hence, even though there wasn't infringement at the time because a patent had not yet issued, it had been applied for.

[00:02:08] Speaker 02:
And eventually, when the patent issued, Alan is infringing.

[00:02:13] Speaker 02:
And it's infringing because it copied the software when it had access to the trial version.

[00:02:20] Speaker 02:
It accessed that software in Kansas,

[00:02:25] Speaker 02:
and had agreed in the NDA, not just the NDA, but there were two different agreements between the parties.

[00:02:32] Speaker 02:
The NDA provided for the application of Kansas law, a factor that the Supreme Court has said is relevant, not dispositive.

[00:02:41] Speaker 00:
Or breach of contract action.

[00:02:43] Speaker 02:
Correct.

[00:02:45] Speaker 02:
But the parties also, Allen also agreed to the end user license agreement.

[00:02:54] Speaker 02:
By clicking through, and we made credentials available for Alan to access the program, and by clicking through, it agreed that any dispute arising out of or relating to the agreement or the product must be brought in Wichita, Kansas.

[00:03:12] Speaker 02:
And the various access that we know Alan made to our product, our trial version of our product.

[00:03:22] Speaker 00:
Just to be clear, I don't

[00:03:24] Speaker 00:
I don't remember the EU LA saying any cause of action related to the product.

[00:03:29] Speaker 00:
I thought it said arising out of or related to the agreement.

[00:03:32] Speaker 00:
Am I misremembering?

[00:03:34] Speaker 01:
Your honor, it says, I'll quote it.

[00:03:37] Speaker 00:
Why don't you tell me where I can see the agreement?

[00:03:45] Speaker 00:
I believe the agreement appears at JA 212.

[00:03:48] Speaker 00:
Is there a particular place you'd like me to look?

[00:03:51] Speaker 02:
Well, yes, the choice of law provision 18, paragraph 18 of the EU LA, also quoted in the district court's opinion.

[00:04:06] Speaker 00:
Oh, I see.

[00:04:06] Speaker 00:
The agreement in any disputes arising out of or related to this agreement or the product shall be governed by the law of the state of Kansas.

[00:04:14] Speaker 00:
So yes, it says that.

[00:04:16] Speaker 02:
And it goes on to say that any dispute arising out

[00:04:20] Speaker 02:
of or related to this agreement or the product must be brought exclusively in a court sitting in Wichita, Kansas.

[00:04:29] Speaker 02:
And we allege in the complaint that it was this activity accessing our trial version of Sim Rider before it was even released, but before the patent issued, was a foundational activity that resulted in the copying that occurred here.

[00:04:48] Speaker 02:
And eventually when the patent issued, there's infringement.

[00:04:51] Speaker 02:
There's infringement because the product that they created that infringes was actually developed based on its access to our trial program.

[00:05:01] Speaker 02:
And we say that by that activity, by agreeing to the ULA, that in and of itself subjects Allen to jurisdiction in Kansas.

[00:05:12] Speaker 01:
You're saying even though the activity occurred

[00:05:18] Speaker 01:
before the patent came into existence, it was that activity that enabled them, after the patent was in existence, to infringe.

[00:05:26] Speaker 01:
Is that basically the thrust of it?

[00:05:28] Speaker 01:
Correct, Your Honor.

[00:05:29] Speaker 02:
Because we had applied for the patent.

[00:05:31] Speaker 02:
It was not yet public.

[00:05:32] Speaker 02:
The application didn't publish until after the access.

[00:05:38] Speaker 02:
And at that time, Allen was creating the infringing product, the Zebra Zaps product.

[00:05:44] Speaker 02:
The district court

[00:05:45] Speaker 02:
seemingly conflated the NDA with the EULA, and it rejected Next Learn's jurisdictional argument based on the EULA by saying, Allen's actions under the NDA cannot serve as a basis for a specific personal jurisdiction.

[00:06:11] Speaker 02:
over its patent infringement claim because the party's obligations terminated before the patent issue.

[00:06:18] Speaker 02:
But the court did not then go on to analyze or explain why the EULA wouldn't govern this situation.

[00:06:29] Speaker 02:
And the EULA does not have any sort of temporal limitation.

[00:06:33] Speaker 01:
What exactly the thrust of the EULA?

[00:06:36] Speaker 01:
The EULA governs

[00:06:41] Speaker 01:
I know it stands for end-use license agreement, but what was the thinking there?

[00:06:46] Speaker 01:
What was the concept?

[00:06:50] Speaker 02:
Among other things, Next Learn didn't want somebody to gain access and then just copy its IP.

[00:06:57] Speaker 02:
And if something happened arising out of the accessing of the trial program, there'd be rules governing the violation of the EULA.

[00:07:10] Speaker 04:
But you didn't file

[00:07:11] Speaker 04:
Claim for violation of the EULA.

[00:07:14] Speaker 02:
We did not, Your Honor.

[00:07:15] Speaker 04:
You didn't file a breach of contract claim or anything like that.

[00:07:19] Speaker 02:
We filed a breach of contract claim under the NDA, which the court didn't address because declining to exercise supplemental jurisdiction.

[00:07:31] Speaker 02:
We did claim a breach of the EULA, but we didn't.

[00:07:35] Speaker 05:
Is there not diversity jurisdiction here?

[00:07:37] Speaker 02:
There is diversity jurisdiction here.

[00:07:40] Speaker 02:
But we say that it was the activity surrounding the EULA that at a minimum subjected Allen to specific jurisdiction when they agreed that any sort of misuse, violation, dispute related to the agreement or the product, our product, which they were copying.

[00:08:00] Speaker 05:
But the dispute isn't about your product, it's about their product.

[00:08:04] Speaker 02:
Correct.

[00:08:05] Speaker 02:
But our product is covered by our patent, the 522 patent.

[00:08:10] Speaker 05:
Doesn't that mean you have a right under the agreement to sue for breach of that agreement and any suit for that kind of breach has to be in Kansas?

[00:08:23] Speaker 05:
Because I don't see anything in an infringement suit that necessarily directly implicates this agreement or your product.

[00:08:33] Speaker 05:
Clearly they're related.

[00:08:34] Speaker 02:
If they're copying specific features of our product,

[00:08:40] Speaker 02:
And hence, eventually infringing our patent that eventually issues, we maintain that it's completely connected.

[00:08:49] Speaker 02:
And that if the mere fact that the patent hadn't issued yet doesn't mean that that activity, let's say they got on a plane and went to Wichita, Kansas to view our product and then copy our product functionality.

[00:09:08] Speaker 02:
The mere fact that they didn't do that, but instead access it through our servers by getting an authorization code from our people in Wichita, Kansas and agreeing to this.

[00:09:21] Speaker 00:
But doesn't the Supreme Court in Walden and in many of the recent specific jurisdiction cases say the only contacts you can look at for minimum contacts for specific jurisdiction

[00:09:38] Speaker 00:
have to give rise to the claim you're asserting.

[00:09:42] Speaker 00:
Contacts that give rise to that claim.

[00:09:45] Speaker 00:
A claim for infringement, I'm sorry, but no activity that is undertaken prior to the patent's issuance could give rise to a claim for infringement.

[00:09:56] Speaker 00:
No activity.

[00:09:58] Speaker 00:
If you don't have a property right, you don't have a patent, then nothing they're doing can give rise, which is the Supreme Court's language, to the claim you're asserting, which is infringement.

[00:10:08] Speaker 00:
So I just don't know how I could morph those early activities under which they gained access before you had a patent into fitting within the rubric the Supreme Court has articulated for what you're allowed to look at for the purposes of minimum contact.

[00:10:26] Speaker 02:
Well, we respectfully submit that pre-issuance activity has and should be

[00:10:34] Speaker 02:
part of the calculus, particularly when we're alleging, for example, copying.

[00:10:39] Speaker 00:
But do you have a case that would, well, you're alleging copying, but copying isn't infringement if you don't have a patent.

[00:10:47] Speaker 00:
So do you have some case that would indicate that post Walden, post the recent Supreme Court decisions, I mean, I can quote what they say, that the minimum context must arise out of or relate to

[00:11:03] Speaker 00:
the activities that you're claiming are the infringing activities.

[00:11:07] Speaker 02:
So I just... Well, but I don't think that that analysis would force one to put blinders on as to what the activity was that led up to the infringement of the patent.

[00:11:23] Speaker 00:
We can't artificially assume that... But none of those acts were infringing acts, were they?

[00:11:28] Speaker 02:
Not at the time.

[00:11:30] Speaker 00:
Right.

[00:11:31] Speaker 02:
But they were certainly in violation of

[00:11:33] Speaker 02:
the NDA and the EULA.

[00:11:37] Speaker 00:
But we're not being asked to decide whether there's specific jurisdiction for a breach of contract claim.

[00:11:43] Speaker 00:
We're being asked on appeal to review whether there's specific jurisdiction for a patent claim.

[00:11:48] Speaker 02:
Correct.

[00:11:49] Speaker 02:
And we maintain that pre-issuance activity is relevant to this particular situation where they copied the product that

[00:11:58] Speaker 00:
Do you have any case that you could point me to?

[00:12:01] Speaker 00:
And it doesn't even have to be a patent case.

[00:12:02] Speaker 00:
Any case at all that would justify, in any regional circuit, looking beforehand like that at activities which would not themselves have been relevant to the cause of action because the property right didn't exist.

[00:12:19] Speaker 00:
It's just a very unusual set of circumstances.

[00:12:22] Speaker 02:
It is, Your Honor, but it's a continuum of tortious conduct.

[00:12:28] Speaker 00:
No, but none of that is torsious conduct.

[00:12:31] Speaker 00:
A continuum of torsious conduct, that language implies that there was torsious conduct throughout the continuum.

[00:12:36] Speaker 00:
Actually, none of that conduct was torsious because you didn't have a patent yet.

[00:12:40] Speaker 02:
But, for example, breach of the NDA, that could be trade secret misappropriation.

[00:12:49] Speaker 02:
He didn't file trade secrets.

[00:12:50] Speaker 02:
We did not.

[00:12:51] Speaker 02:
But we did maintain that what they did was improper, and that conduct did continue to

[00:12:58] Speaker 02:
There was a continuum because they made the product and they began selling it.

[00:13:05] Speaker 02:
And we also maintain that there was general jurisdiction because of, among other things, the interactive website with a specific call-down menu item for Kansas.

[00:13:21] Speaker 02:
The contacts into Kansas, other than the contacts in addition to the contacts that they made to us,

[00:13:29] Speaker 02:
sales into Kansas.

[00:13:32] Speaker 02:
And we maintain that under this court's opinion in Trinitech versus Pedra promotional products, at a minimum we've made a prima facie showing of jurisdiction to defeat a motion to dismiss and at a minimum cause a remand for jurisdictional discovery because there's been no discovery as to

[00:13:59] Speaker 02:
how many times Kansas residents have, for example, interacted with their interactive website.

[00:14:07] Speaker 02:
In Trinitech, the court remanded the case to address those issues.

[00:14:17] Speaker 02:
The Trinitech court cited the Zippo manufacturing case, and the Zippo manufacturing case is a case where the court held that

[00:14:28] Speaker 02:
The interactive menu alone, website alone, was sufficient to establish personal jurisdiction.

[00:14:37] Speaker 02:
The court didn't actually accept or reject that analysis, but did say that the record was silent as to how frequently those features are used or indeed whether any district residents have ever actually used Pedra's website to transact business.

[00:14:55] Speaker 00:
Can I just, as a procedural matter, I just want to make sure that I do have your appeal in the proper context.

[00:15:02] Speaker 00:
Your entire argument appears on page 10 through the rest of your brief.

[00:15:07] Speaker 00:
And every single heading that I'm looking at is related to specific jurisdiction and whether you've established whether specific jurisdiction exists.

[00:15:18] Speaker 00:
Look, I often overlook things.

[00:15:20] Speaker 00:
Is there a place in your brief where you separately argued that you were appealing a decision on general jurisdiction?

[00:15:27] Speaker 00:
Because every single header in your brief uses the word specific jurisdiction.

[00:15:33] Speaker 00:
And those are two different legal concepts.

[00:15:35] Speaker 00:
And so by no means do I want to slight you if you've also made the alternative on general jurisdiction, but I just don't see it.

[00:15:44] Speaker 02:
Well, Your Honor, at pages 13 through

[00:15:48] Speaker 02:
16, we address general jurisdiction, albeit through an improperly worded headline or inaccurately worded title.

[00:16:01] Speaker 00:
Oh, so when you say Allen's other Kansas contacts also support specific jurisdiction?

[00:16:08] Speaker 02:
That is a typo.

[00:16:14] Speaker 02:
Because in that section we address Alan's other contents, his contacts, and its interactive website.

[00:16:22] Speaker 02:
And the Trintec case, where this court remanded the case for jurisdictional discovery as to, for example, how many residents actually interacted with that website.

[00:16:36] Speaker 00:
OK.

[00:16:38] Speaker 00:
Well, you've exhausted all of your time for today, including your rebuttal time.

[00:16:43] Speaker 00:
I'll give you a couple minutes back, but let's hear from opposing counsel.

[00:16:50] Speaker 03:
Good morning, Your Honors.

[00:16:52] Speaker 03:
Let me just address that last point first.

[00:16:55] Speaker 03:
There's no allegation here of general jurisdiction.

[00:16:58] Speaker 03:
If you look at appendix page APPX 7, the court made it clear, and they made it clear below, the court says at the bottom of the page here, Next Learn does not allege general jurisdiction.

[00:17:10] Speaker 03:
but rather that Allen had minimum contacts with Kansas based on specific jurisdiction.

[00:17:15] Speaker 03:
That's the only allegation here.

[00:17:17] Speaker 03:
So Your Honors are exactly right.

[00:17:19] Speaker 03:
As I understand the law, they have to show that the specific activities directed into Kansas gave rise to the cause of action for patent infringement.

[00:17:30] Speaker 03:
And they can't do that.

[00:17:31] Speaker 03:
They could have alleged an action for breach of the EULA.

[00:17:35] Speaker 03:
They did not do that.

[00:17:37] Speaker 03:
They probably could not have, they have an action for a breach of the NDA, but by its terms it expired in 2011.

[00:17:42] Speaker 03:
The patent application here, by the way, that led to this patent was published in 2009.

[00:17:50] Speaker 03:
So it's hard to even understand how there could be a breach of any of those agreements, anything that was used in our product, which wasn't by the way launched until 2011.

[00:18:00] Speaker 03:
If copied, that information was in the public domain by that point.

[00:18:03] Speaker 03:
It was all in the published patent application.

[00:18:07] Speaker 03:
Those causes of actions probably don't even exist.

[00:18:09] Speaker 03:
And as for the patent infringement action, under the EULA, based on the questions I heard here, and as I understand it as well, the EULA simply says that any cause of action for breach of this agreement, i.e.

[00:18:22] Speaker 03:
the EULA, or relating to the product, and the product is not my client's product, the product is the Simrider product, it's the patented product.

[00:18:32] Speaker 03:
must be brought.

[00:18:33] Speaker 03:
There is no cause of action here relating to the Simrider product.

[00:18:36] Speaker 03:
Products don't infringe products, as we all know.

[00:18:38] Speaker 03:
Only patents are infringed by products.

[00:18:41] Speaker 03:
Nor is there any action here for breach of the EULA.

[00:18:45] Speaker 03:
So there is no basis here for specific jurisdiction over our client in Kansas.

[00:18:52] Speaker 00:
I would also... What about the fact that your client sent a free trial

[00:19:00] Speaker 00:
of the product to an individual in the state of Kansas.

[00:19:06] Speaker 03:
Firstly, I don't think we sent a free trial of the product.

[00:19:09] Speaker 03:
We sent email blasts out to anybody who was on our lead database.

[00:19:15] Speaker 03:
And the people who were on our lead database happened to be two employees of NextLearn.

[00:19:20] Speaker 00:
No, there was a separate allegation related to a former NextLearn employee

[00:19:29] Speaker 00:
contacting Mr. Allen because he tried to purchase the software and said he couldn't get his credit card to go through.

[00:19:36] Speaker 00:
And then Mr. Allen said, well, we'll give you a free trial of the product and sent it to him.

[00:19:44] Speaker 03:
Well, I think the law is also clear in that regard.

[00:19:47] Speaker 03:
Again, that was an employee of NextLearn.

[00:19:50] Speaker 03:
And that attempted sale was done, obviously, at the request of the plaintiff in this action.

[00:19:56] Speaker 00:
Why does that matter?

[00:19:57] Speaker 03:
Well, because there are lots of cases that say that for purposes of jurisdiction, you can't manufacture jurisdiction yourself by having your own employees reach out to the other side.

[00:20:07] Speaker 00:
Well, no, each of those cases say the employees reaching out to the other side constitutes a unilateral action by the person trying to manufacture jurisdiction.

[00:20:18] Speaker 00:
None of those cases say that if Mr. Allen responds and is willing to make the sale

[00:20:26] Speaker 00:
that it's still a unilateral action.

[00:20:28] Speaker 00:
Every one of those cases uses the words unilateral action by one party.

[00:20:32] Speaker 00:
Can't create specific jurisdiction.

[00:20:35] Speaker 00:
But once Mr. Allen engages in a dialogue with the person and agrees to make a sale or offer a free version or whatever, it's no longer a unilateral action, as those cases call it.

[00:20:46] Speaker 00:
So I don't know why they would apply.

[00:20:47] Speaker 03:
I'm not sure that's exactly right.

[00:20:49] Speaker 03:
If I remember those cases, in fact, in some of those cases, the sale actually took place.

[00:20:53] Speaker 03:
Somebody reached out for a sale.

[00:20:55] Speaker 03:
from the plaintiff company, the product was in fact sold into the jurisdiction and it was that sale that was alleged to be the basis for the jurisdiction and ultimately rejected.

[00:21:04] Speaker 00:
Well, in those cases, and there are definitely federal circuit cases that have held a single sale alone to a jurisdiction.

[00:21:13] Speaker 00:
It's not really sufficient to be minimum context to avail yourself of a jurisdiction.

[00:21:18] Speaker 00:
And you're absolutely right that your recollection is in those cases I found

[00:21:24] Speaker 00:
Those single sales were often precipitated by a request from somebody associated with the patentee.

[00:21:31] Speaker 00:
But I really read those cases as focusing more on the single sales.

[00:21:36] Speaker 00:
Suppose that 100 different Next Learn employees, 100 different ones, all went on Mr. Allen's interactive website.

[00:21:44] Speaker 00:
All of them live in Kansas.

[00:21:46] Speaker 00:
All of them place orders, and Mr. Allen ships them 100 different copies of his software,

[00:21:53] Speaker 00:
Shipping is kind of irrelevant because everybody downloads now, so I realize there's no old-fashioned AOL disk that goes through the mail.

[00:21:59] Speaker 00:
But in any event, you understand the point.

[00:22:01] Speaker 00:
Mr. Allen sends to the state of Kansas to 100 different individuals his products and makes 100 different sales to individuals who live in Kansas.

[00:22:09] Speaker 00:
Are you telling me that the law stands for the proposition that if those people were all employed by the patentee and thus those sales were precipitated by the patentee, that they're all irrelevant for jurisdictional purposes?

[00:22:21] Speaker 00:
Is that the way you view the law?

[00:22:23] Speaker 03:
Your Honor, I don't view the law hypothetically.

[00:22:25] Speaker 03:
I'm viewing the law based on the facts that are in this case.

[00:22:27] Speaker 03:
I'm only addressing these facts.

[00:22:29] Speaker 03:
I'm not a jurist.

[00:22:31] Speaker 03:
I don't decide policy.

[00:22:33] Speaker 03:
But it seems to me that a single request from a single Next Learn employee, which results in a trial, and again, I don't have the fact in front of me.

[00:22:42] Speaker 03:
I'm not even sure that took place after or before the patent issued.

[00:22:46] Speaker 00:
It took place after.

[00:22:47] Speaker 03:
Assuming it took place after.

[00:22:49] Speaker 03:
A self-inflicted wound like that, as the courts have put it, is not a sufficient basis to confer jurisdiction here over our client in Kansas.

[00:23:00] Speaker 00:
You agree it would be a different case if it were 100 different such sales?

[00:23:04] Speaker 03:
It could be a different case.

[00:23:06] Speaker 03:
I wouldn't concede it.

[00:23:07] Speaker 03:
I'd have to research the law more and see if there are cases that talk about multiple attempts by the plaintiff to establish jurisdiction in that manner.

[00:23:16] Speaker 03:
But I do see, obviously, there's

[00:23:18] Speaker 03:
clear factual distinction there that might lead, in fact, to a different legal result.

[00:23:24] Speaker 00:
Anything further?

[00:23:25] Speaker 03:
No, I would just mention to the Court that we had a cross-appeal here.

[00:23:30] Speaker 03:
Obviously, it's moot if the Court denies, agrees and affirms the denial of jurisdiction based on Section 101.

[00:23:37] Speaker 03:
I know it was not considered below, but as I read the law, we at least had the right to raise it on appeal.

[00:23:43] Speaker 03:
And I just want to mention that that's before the Court, and we think the patent is clearly invalid in view of the

[00:23:48] Speaker 03:
the Supreme Court's Alice decision.

[00:23:51] Speaker 03:
Thank you, Your Honor.

[00:23:52] Speaker 00:
Okay, thank you very much.

[00:23:54] Speaker 00:
We'll do two minutes of rebuttal time.

[00:23:59] Speaker 02:
Briefly on the last point, Your Honor, the cross-appeal.

[00:24:03] Speaker 02:
This Court has identified the procedural posture of this situation as being distinctive in the Accenture Global Sales versus Guidewire case.

[00:24:15] Speaker 02:
The Court distinguished Ultramershal and pointed to

[00:24:18] Speaker 02:
the fact that this was on a motion to dismiss.

[00:24:21] Speaker 02:
And in this situation, the complaint and the patent must themselves show clear and convincing evidence of a disembodied abstract idea.

[00:24:29] Speaker 02:
Here the complaint states and shows that this was an inventive advance over what existed in this field.

[00:24:39] Speaker 02:
And in the Alice case, the court said, more is required than well-understood routine conventional activity.

[00:24:48] Speaker 02:
Page 36 of the appendix, paragraph 2, 2009, 2010, this product won the Excellence in Technology Gold Award for Best Advanced in Technology for Game or Simulation Authoring.

[00:25:05] Speaker 02:
And also in 2009, it won the Harvard Business Publishing Partner of the Year Award based on SimWriter.

[00:25:13] Speaker 02:
So what's in the record?

[00:25:16] Speaker 02:
establishes that this was a major advance in the industry and hence it's patent eligible.

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

[00:25:27] Speaker 00:
You reserved two minutes and he addressed your cross appeal.

[00:25:29] Speaker 00:
Is there anything you'd like to add?

[00:25:31] Speaker 02:
No, you are.

[00:25:32] Speaker 00:
Okay.

[00:25:33] Speaker 00:
We thank both counsels.

[00:25:34] Speaker 00:
The case is taken under submission.