[00:00:04] Speaker 06: The United States Court of Appeals for the Federal Circuit is now open and in session. [00:00:09] Speaker 06: God save the United States and this honorable state. [00:00:14] Speaker 04: Please be seated. [00:00:14] Speaker 04: Good morning. [00:00:19] Speaker 04: Before we begin our regular proceedings, I'd like to turn it over to Judge Wallach. [00:00:24] Speaker 06: I understand we have a motion for admission. [00:00:27] Speaker 06: We'll hear that motion. [00:00:28] Speaker 04: Thank you. [00:00:30] Speaker 04: Shamour, would you stand, please? [00:00:33] Speaker 04: I move the admission of Chamor Anas, who is a member of the Bar and Good Standing in the highest court of Texas. [00:00:39] Speaker 04: I have the knowledge of his credentials and am satisfied that he possesses the necessary qualifications. [00:00:46] Speaker 04: I've said before, this is such a bittersweet time for our chambers and for the court, because we have a turnover of clerks. [00:00:53] Speaker 04: And it's particularly bittersweet for me. [00:00:57] Speaker 04: Poor Shamur, I had extraordinary expectations for him when he came to the court. [00:01:02] Speaker 04: And that's only because he was unbelievably well thought of by Chief Judge Stark, who strongly recommended him for clerkship in my chambers. [00:01:13] Speaker 04: But I have to say, he really managed to exceed those expectations. [00:01:19] Speaker 04: He's been a wonderful, talented, thoughtful, mature clerk. [00:01:23] Speaker 04: A pleasure to be in the office, to have in the office. [00:01:27] Speaker 04: We shared long distance, at least, his wonderful marriage to his wonderful wife a few months ago. [00:01:33] Speaker 04: He survived last week in Houston. [00:01:37] Speaker 04: So he's got all sorts of talent and ingenuity, and he's been just a delight to get to know and to have as part of our clerk family. [00:01:46] Speaker 04: So with that, I would move to admit. [00:01:48] Speaker 06: It sounds highly qualified to me. [00:01:52] Speaker 06: Your motion is granted. [00:01:53] Speaker 06: Thank you. [00:01:55] Speaker 00: Mr. Director, I hand you solemnly swear that you will report yourself as an attorney and counselor of this court, but rightly and according to law, and that you will support the Constitution of the United States of America. [00:02:13] Speaker ?: Thank you. [00:02:13] Speaker 04: Congratulations. [00:02:13] Speaker 04: First case this morning is 16-2211, WCM Industries versus IPS. [00:02:20] Speaker 04: Mr. Silvia, whenever you're ready. [00:02:42] Speaker 05: May it please the court, I have two issues that I'd like to discuss today. [00:02:46] Speaker 05: The legal impossibility of the indirect infringement judgment against the revised classic product line. [00:02:52] Speaker 06: Is there any difference between the revised products and the classic products other than the modified lock nut? [00:02:59] Speaker 06: No, there isn't. [00:03:01] Speaker 05: Okay. [00:03:01] Speaker 05: And then the court's erroneous sustaining of the willful infringement verdict based entirely on pre-patent conduct and the associated trebling of damages. [00:03:11] Speaker 06: If we find that WCM prevails on its cross-appeal, do we need to address your arguments that there wasn't indirect infringement by the revised products? [00:03:23] Speaker 05: Well, I think the issue on cross-appeal is whether there was sufficient evidence to establish a doctrine of equivalence. [00:03:29] Speaker 05: And that is the issue also on our direct appeal. [00:03:33] Speaker 06: So if they prevail on that, we don't have to... Correct. [00:03:37] Speaker 05: Although I believe that cross-appeal is improper and unnecessary. [00:03:41] Speaker 05: First, the district court judgment upholding the indirect infringement verdict with respect to the revised classic product line reflects a legal impossibility. [00:03:54] Speaker 05: After trial, the judge vacated the verdict. [00:03:57] Speaker 02: That legal impossibility is for a case-specific reason, namely that you actually have, in the current state of play, [00:04:07] Speaker 02: a judgment that the full package, the full assembly is non-infringing on the revised product. [00:04:15] Speaker 02: And so it really doesn't matter what the plumbers would do once they get even pieces and put stuff together. [00:04:24] Speaker 05: Is that... That's absolutely right, Your Honor. [00:04:27] Speaker 02: Is there... I don't remember the details, but I think you'll fill in the details. [00:04:32] Speaker 02: I think the other side makes an argument that there is at least some term in one of the claims that might not actually or that the jury might have concluded wasn't met until the materials that you supply are assembled. [00:04:59] Speaker 05: I'm not sure. [00:05:00] Speaker 02: Was that an argument? [00:05:02] Speaker 05: I don't believe that was an argument, Your Honor, because the claims are directed to an assembly of parts but don't require any installation. [00:05:10] Speaker 05: They require the device to be capable of being installed. [00:05:15] Speaker 05: but not actually, it's not directed to the installed configuration. [00:05:18] Speaker 02: I guess I have in mind that Mr. Jakes knows what I'm talking about. [00:05:23] Speaker 02: They have some term that they focus on saying something is not detachably connected or something like that until the thing is actually put together. [00:05:34] Speaker 02: And they, of course, don't sell it put together. [00:05:36] Speaker 02: They sell a package that the plumber has [00:05:40] Speaker 05: Well, I can understand the argument you're making there, Your Honor. [00:05:43] Speaker 05: It's the finished cap that ultimately is placed onto the elbow to cover up the hole that allows the water to flow out. [00:05:55] Speaker 05: But the claim limitation is detachably engaged. [00:05:58] Speaker 05: It still does not require it to be attached. [00:06:00] Speaker 05: The jury certainly could have made such a theory, but again, even [00:06:07] Speaker 05: the installed construction. [00:06:09] Speaker 02: Was that argument presented to the jury? [00:06:11] Speaker 02: Was there was there a argument or evidence on the specific point that [00:06:18] Speaker 02: I guess it would have been a point that you might have made as a defendant that that element is not met by what you ship out the door because nothing is engaged until it's actually put together. [00:06:37] Speaker 05: No, I don't think that argument was met was made because it wouldn't have made a difference in the original design. [00:06:42] Speaker 05: The original design had the same you know component parts [00:06:46] Speaker 05: Obviously, as we just discussed, one of the parts was different. [00:06:50] Speaker 05: But the assembly was the same. [00:06:52] Speaker 05: And if you look at the verdict with respect to the original design, the jury held IPS liable for direct infringement on all counts and all claims. [00:07:00] Speaker 05: So they couldn't have made that. [00:07:01] Speaker 05: I don't believe they were making that leap that because in IPS's hands, the cap wasn't attached, thus they don't infringe. [00:07:08] Speaker 05: Because in fact, on the original design, they found us to have infringed directly. [00:07:19] Speaker 05: After trial, as we were just discussing, the judge vacated the verdict of direct infringement against IPS for its sale of that revised classic product line because, in the judge's mind, insufficient evidence existed to establish infringement under the doctrinal equivalence. [00:07:37] Speaker 05: Once the judge made that conclusion, he erred by not also vacating the indirect infringement verdict with respect to the same product line. [00:07:45] Speaker 05: To put it most simply, the asserted claims are directed to an assembly [00:07:49] Speaker 05: And if IPS does not infringe when it makes and sells the complete assembly, then there's simply no way that a buyer can directly infringe and install using the same assembly of parts. [00:08:00] Speaker 05: We're not dealing with method claims, as we just discussed, or claims directed to an installed system, but just an assembly of parts that have certain capability. [00:08:10] Speaker 06: In the blue break, you argue that enhanced damages [00:08:15] Speaker 06: can't be awarded for the revised products because they were developed after WCM filed suit. [00:08:22] Speaker 06: Where did you make that argument before the district court? [00:08:25] Speaker 06: Where did we make it before the district court? [00:08:27] Speaker 06: Yeah, I need a record site please. [00:08:37] Speaker 05: Yeah, if you don't mind, I'll move on until my co-counsel here locates it. [00:08:41] Speaker 02: Was that part of the argument that led to the December, I'm sorry, October 5th summary judgment of no willfulness as to any post-filing? [00:08:54] Speaker 05: Well, I think, Your Honor, certainly in our motions for judgment as a matter of law, we argued that since the judge had held that there was no post-trial willful conduct, [00:09:07] Speaker 05: that it wouldn't seem to extend to a product that was developed post trial. [00:09:11] Speaker 05: And in fact, his ruling of no post trial willfulness was based in part on the fact that we had redesigned. [00:09:20] Speaker 05: But on the issue of willfulness, the record is devoid of substantial evidence of egregious conduct. [00:09:32] Speaker 05: All of the activity that the court relied on [00:09:35] Speaker 05: and its opinions to justify willfulness took place years before the patents and suit issued. [00:09:43] Speaker 05: It's undisputed that WCM filed suit seven days. [00:09:46] Speaker 06: Why can't we consider knowledge of a pending patent application considering willfulness? [00:09:51] Speaker 05: Well, I don't think we had knowledge of a pending patent application. [00:09:56] Speaker 05: I think state industries even suggest knowledge of a patent within the family that wasn't asserted isn't sufficient to establish [00:10:04] Speaker 05: pre-suit egregious conduct. [00:10:07] Speaker 05: A patent application is really informs you of little. [00:10:12] Speaker 05: There's no guarantee that the claims will ultimately issue the way they are. [00:10:16] Speaker 05: There's no guarantee the claims will ultimately ever issue. [00:10:21] Speaker 02: I don't remember in this particular case was the, whatever the relevant patent is here, was that, had that been published? [00:10:28] Speaker 02: Was it a published patent application? [00:10:30] Speaker 05: I believe it had been published, but we're talking about these are applications that the genesis of the first application was in 2003. [00:10:36] Speaker 05: They didn't issue patents until 10 years later. [00:10:40] Speaker 02: And the notice of allowance here was roughly September, is that right? [00:10:44] Speaker 05: Again, probably several months before. [00:10:46] Speaker 02: Does the record tell us or do you know enough about how this works in general? [00:10:54] Speaker 02: Would that notice of allowance have been a public [00:10:59] Speaker 02: publicly knowable? [00:11:01] Speaker 05: It certainly would have been a publicly available document, yes. [00:11:04] Speaker 05: Because it appears on some... Yes, private pair or public pair for the U.S. [00:11:08] Speaker 05: Patent and Trademark Office, correct. [00:11:10] Speaker 02: And the evidence of you all monitoring patent developments was what exactly? [00:11:20] Speaker 05: Well, the evidence related to, as Mr. Casella and Mr. Humber testified to, that they were [00:11:25] Speaker 05: monitoring patents. [00:11:27] Speaker 05: They weren't monitoring patent applications. [00:11:30] Speaker 05: And again, we're talking about... Which patents were they monitoring? [00:11:34] Speaker 05: I don't know if it was expressly stated, but I think there was inference that they were monitoring WCM's patents on some level. [00:11:40] Speaker 05: But again, the patents at issue here issued days before this litigation began. [00:11:45] Speaker 05: This is a product that was put on the market... But wasn't the testimony of Mr. Humber? [00:11:50] Speaker 05: Excuse me, yes. [00:11:51] Speaker 04: OK, so didn't testimony include that he was looking at literature and catalogs and some of those catalogs marked WCM products, patent pending? [00:12:04] Speaker 04: Patent pending, correct. [00:12:06] Speaker 05: But again, I think to hold companies at bay because literature indicates patent pending, I don't think establishes egregious conduct. [00:12:17] Speaker 05: I think monitoring competitors' products [00:12:20] Speaker 05: Designing functional equivalents, certainly during the patent pending tell you you're acting at your own risk. [00:12:27] Speaker 05: I think patent pending gives you notice that they've sought a patent, but I don't think it tells you that you're at a high level of risk. [00:12:33] Speaker 05: My experience with the patenting process is that the vast majority of patents either don't come out or they don't come out in the form that they were originally sought. [00:12:43] Speaker 05: And we're talking about, again, a prosecution that took, in essence, if you look at the life of the family, [00:12:48] Speaker 05: close to 10 years before they were able to get this patent. [00:12:53] Speaker 05: I don't think it would be reasonable to expect a company to hold off sale of a product based on a patent pending notice for 10 years. [00:13:00] Speaker 04: What about the evidence of copying? [00:13:04] Speaker 04: I think the evidence of copying is- Isn't that important, at least background noise for the jury to evaluate? [00:13:13] Speaker 05: I think evidence of copying is important background in essence if it related to the product at issue. [00:13:19] Speaker 05: But the evidence that was put in the record in terms of copying didn't even relate to the waste and overflow assemblies that we related to. [00:13:25] Speaker 05: I believe there were two emails that were referenced either potentially knocking off or could we do this, and neither one of them related to the waste and overflow assembly that's the subject of the lawsuit. [00:13:36] Speaker 05: So that's where we take issue with this evidence of copying, because we don't believe there is any evidence that we copied their product. [00:13:43] Speaker 04: And can you just very briefly give us the timetable here, because that's the essence of your argument, the time between the patents issuing and you being apprised of the patents and the soup being boiled? [00:13:55] Speaker 05: I think that's very important. [00:13:58] Speaker 05: That's, in my mind, sort of the theme of this case. [00:14:02] Speaker 05: acquired a company in 2010 that had been making a product for eight years. [00:14:07] Speaker 05: And the court took issue with the fact that they didn't conduct some sort of investigation at that point in time when, first of all, patents did not exist at that point in time. [00:14:17] Speaker 05: But the client had over hundreds of products for them to investigate each and every one. [00:14:22] Speaker 05: I would argue that they shouldn't. [00:14:24] Speaker 05: What they did was [00:14:26] Speaker 05: You look at a product that's been on the market for eight years. [00:14:28] Speaker 05: I think there's a reason for resumption, if you haven't heard from WCM or some other entity, that that product is free and clear. [00:14:36] Speaker 02: Can I ask this one question? [00:14:39] Speaker 02: Assuming for purposes of this question that willfulness stands, I don't know whether you made an argument to this court and secondarily to the district court [00:14:55] Speaker 02: that even if willfulness stands, the enhanced damages ruling here, I guess a trebling, should be set aside. [00:15:07] Speaker 02: And in particular, what is that argument? [00:15:12] Speaker 02: What do you have to say about why, even if this was willful, there either shouldn't be any enhanced damages or as much as trebling? [00:15:21] Speaker 05: I think the judge erred as a legal matter and a factual matter in assessing enhancement, and I believe we certainly made those arguments in post-trial motion practice. [00:15:31] Speaker 02: Did you specifically say even if enhancement is okay, trebling is not okay? [00:15:37] Speaker 02: That's just too much of an enhancement. [00:15:39] Speaker 05: I don't know if we specifically argued that the magnitude was inappropriate, but we argued that certainly that enhancement in itself was inappropriate, because all the read factors were not taken into consideration. [00:15:49] Speaker 05: And a matter of fact, in my opinion, the judge refused to take into consideration several read factors, and I'm not sure he has the latitude to do that. [00:15:58] Speaker 04: But I think Judge Toronto's question is one that I have as well. [00:16:01] Speaker 04: I mean, I see that, at least in blue, you're saying [00:16:05] Speaker 04: in any event, i.e., even if you affirm willfulness, there shouldn't have been enhanced damages. [00:16:10] Speaker 04: But was your argument reduced to all or nothing, i.e., you were only arguing there should have been nothing in enhanced damages, which it seems you were, as opposed to saying there was just too much of an enhancement? [00:16:24] Speaker 05: I think our argument was essentially that the damages should not have been enhanced at all. [00:16:31] Speaker 02: And besides willfulness, what's the reason [00:16:35] Speaker 05: Well, I believe if you look at the read factors, we argued to the district court judge the closeness of the case. [00:16:41] Speaker 05: He summed it up that the case wasn't close. [00:16:46] Speaker 05: He refused to take into consideration that there were originally eight patents at suit, 37 claims. [00:16:53] Speaker 05: We had knocked out five of the patents and 31 of the claims prior to suit, but he refused to take that into consideration in terms of the closeness of the case. [00:17:01] Speaker 05: He refused to take into consideration the fact that we redesigned the product as a remedial action. [00:17:09] Speaker 05: You know, if you look at his decision on this matter, he didn't address that at all. [00:17:14] Speaker 05: He didn't address the fact that we had several pre-suit victories. [00:17:19] Speaker 05: He also didn't address the fact that we did not attempt to conceal. [00:17:23] Speaker 05: We filed our own patent application in 2003 and obtained a patent. [00:17:27] Speaker 04: But if your quibble, not quibble, but if your disagreement is with his assessment of the read factors, can that not lead to alternative conclusions? [00:17:37] Speaker 04: One is that there shouldn't have been any enhancement at all. [00:17:40] Speaker 04: Alternatively, well, it could have enhanced one time or $50,000 or something, but it should certainly not, was insufficient to support a trebling of damages. [00:17:53] Speaker 04: Absolutely. [00:17:53] Speaker 04: But I thought you just kind of indicated that you didn't really make that argument. [00:17:57] Speaker 05: Well, I think, you know, I think we feel strongly that no enhancement. [00:18:01] Speaker 05: I guess, I certainly, I'm not going to sit up here and say we didn't make the argument, but I think the crux of our argument was we think that enhancement in any instance is inappropriate, and certainly trebling in view of these facts is excessive. [00:18:16] Speaker 05: But even if we look at the willfulness, you know, I want to go back to willfulness for just a second. [00:18:20] Speaker 05: I mean, we're talking about there was no post-patent willful conduct. [00:18:25] Speaker 05: So his decision on willfulness was based entirely on pre-patent conduct. [00:18:30] Speaker 05: And I think that would be a first instance for this court and any court to hold an entity willful based entirely on pre-patent conduct. [00:18:40] Speaker 03: Do you have Judge Wallach's site? [00:18:42] Speaker 03: Excuse me? [00:18:43] Speaker 03: Judge Wallach was waiting person. [00:18:44] Speaker 03: I'm sorry. [00:18:45] Speaker 05: Yes, Judge. [00:18:46] Speaker 05: My apologies. [00:18:47] Speaker 05: I believe it's at appendix four at the very bottom of the page. [00:18:54] Speaker 04: Thank you. [00:18:54] Speaker 04: I will restore your rebuttal time. [00:18:57] Speaker 04: Thank you. [00:18:58] Speaker 01: Good morning. [00:19:07] Speaker 01: Good morning. [00:19:08] Speaker 01: May it please the court? [00:19:11] Speaker 01: IPS's indirect infringement argument is just wrong as a matter of law. [00:19:16] Speaker 01: They're arguing that there can be no indirect infringement because they were not a direct infringer. [00:19:22] Speaker 02: In this particular case, because the finding of no direct infringement is a finding that encompasses the entirety of what the plumber eventually [00:19:36] Speaker 02: ends up with. [00:19:37] Speaker 02: So unless you have a argument for why a claim element is not met until the plumber puts it all together, then it seems to me on the premise that we're starting with here that there's nothing wrong with their argument. [00:19:55] Speaker 01: Well, two points, Your Honor. [00:19:59] Speaker 01: First of all, that is an argument that jury verdicts are inconsistent. [00:20:05] Speaker 01: I think fundamentally that's what is being argued. [00:20:08] Speaker 01: And what you need to do is look at the jury verdict that is being challenged under JMOL and say, is there substantial evidence? [00:20:16] Speaker 01: Now, that's a procedural aspect. [00:20:18] Speaker 01: To answer your question, is there some way the jury could have found no direct infringement but indirect infringement, well, you did ask about the detachably engaged part of it. [00:20:30] Speaker 01: And the jury could have found for certain claims [00:20:33] Speaker 01: that requires the cap to be detachably engaged, that somebody had to actually install it. [00:20:39] Speaker 02: Was that a point that the defendants made? [00:20:42] Speaker 01: I don't believe they did make that point. [00:20:44] Speaker 02: So why would you expect that the jury could, if that wasn't even contested, that everybody assumed that the assembly in the tub is the same as the assembly that you ship out when you ship out the full kit. [00:21:02] Speaker 01: based on these facts and given the instructions that were given to the jury, it's possible the jury could have done that. [00:21:09] Speaker 01: But to get back to my first point, I think that really comes down to, are you trying to harmonize these verdicts by saying the indirect verdict can't stand because of the direct verdict? [00:21:19] Speaker 01: And that's wrong. [00:21:20] Speaker 01: They did not raise that. [00:21:22] Speaker 01: They had two opportunities to raise the fact [00:21:24] Speaker 01: that these verdicts were inconsistent, and they didn't do that. [00:21:28] Speaker 04: I may be completely wrong on this. [00:21:30] Speaker 04: The jury found infringement under DOE, and it's the judge. [00:21:34] Speaker 04: So this came up on Jamal, where he threw out the DOE. [00:21:38] Speaker 04: So it wasn't a matter of the jury found DOE. [00:21:41] Speaker 04: It's the judge that created this question here about direct or indirect after he overturned the jury verdict. [00:21:49] Speaker 01: And at that motion hearing, IPS said there was no inconsistency. [00:21:54] Speaker 01: They have said that they did not believe that verdicts were inconsistent. [00:21:58] Speaker 01: And now they've turned around and said, you need to resolve these. [00:22:01] Speaker 02: I'm curious about the same thing I think the chief is. [00:22:04] Speaker 02: What exactly are the two things that you think their argument amounts to saying are inconsistent? [00:22:10] Speaker 02: Things in the jury's verdict. [00:22:12] Speaker 01: Right. [00:22:13] Speaker 01: That a verdict of no direct infringement cannot be reconciled with a verdict of direct infringement. [00:22:19] Speaker 02: There was a verdict of direct infringement. [00:22:21] Speaker 02: There was, yes. [00:22:23] Speaker 02: The two things you're saying are inconsistent. [00:22:25] Speaker 02: One doesn't exist. [00:22:28] Speaker 01: There is no longer a verdict of direct infringement. [00:22:30] Speaker 04: Yeah, but in terms of what the jury analyzed and whether they were inconsistent, they weren't. [00:22:35] Speaker 04: They found direct infringement. [00:22:37] Speaker 04: This issue was only created post-jury when the judge throws out the DOE. [00:22:42] Speaker 04: So I don't see how the analysis of inconsistent jury verdicts plays in here. [00:22:48] Speaker 01: The inconsistency of it existed was there when the jury verdict came. [00:22:51] Speaker 01: because the jury on indirect infringement could have found either literal or doctrinal equivalence. [00:22:57] Speaker 01: They were not separated out. [00:22:58] Speaker 01: IPS did not ask for separate verdicts on literal or doctrinal equivalence on indirect infringement as there were for the direct infringement. [00:23:07] Speaker 01: And so we don't know what the jury did on indirect infringement. [00:23:12] Speaker 01: What we have to do since this is being challenged on JMOL is look at was there substantial evidence to support the verdict. [00:23:20] Speaker 01: not whether some other portion of the verdict undermines the finding of indirect infringement. [00:23:26] Speaker 02: And your primary argument, and I guess you present this as a cross appeal, you get to make it regardless of whether it's a cross appeal or not, is that, yes, there was sufficient evidence of equivalence infringement for the revised product. [00:23:38] Speaker 01: There was for direct infringement. [00:23:40] Speaker 02: And that makes this indirect infringement issue go away. [00:23:42] Speaker 01: It makes it go away. [00:23:43] Speaker 01: But even if it doesn't go away, there is enough evidence of indirect infringement to support the JMO over. [00:23:51] Speaker 01: to support the verdict that was being challenged under JMOL. [00:23:55] Speaker 01: This is a Rule 50 motion, not anything else. [00:23:58] Speaker 01: And so what you look at is that verdict of indirect infringement, contributory or induced infringement, supported by substantial evidence. [00:24:06] Speaker 01: And it is. [00:24:08] Speaker 01: There is evidence that all the limitations are met, that there were instructions to the installers or the users about how to install the revised classic. [00:24:18] Speaker 01: None of that's challenged. [00:24:20] Speaker 01: The only thing that's being challenged is that some other finding the jury made undermines this verdict. [00:24:25] Speaker 01: And that's not the right analysis. [00:24:27] Speaker 01: Well the doctrine of equivalence, the judge here did make a mistake. [00:24:35] Speaker 01: He did throw it out because he said there wasn't opinion testimony. [00:24:39] Speaker 01: Opinion testimony [00:24:41] Speaker 01: There are no rigid rules that say you have to have opinion testimony. [00:24:44] Speaker 04: Well, what in lieu of, I mean, there was no, your expert got thrown out, right? [00:24:47] Speaker 04: He did, yes. [00:24:48] Speaker 04: So what in lieu of opinion testimony do you, what's your strongest testimony that you think makes that, you know, unnecessary? [00:24:56] Speaker 01: There are, there are two parts to that. [00:24:58] Speaker 01: First is, IPS's expert on, for example, certain claims like the 220 patent claim 12, admitted every limitation is met except one. [00:25:08] Speaker 01: And that's the lugs. [00:25:08] Speaker 01: And everybody agrees that was the focus in this case. [00:25:12] Speaker 01: Then you have Mr. Humber, who is IPS's director of engineering, saying that the revised classic, the way they changed it, it works the same way as the previous product. [00:25:24] Speaker 01: That's what you have to show for equivalency. [00:25:28] Speaker 01: He said you put it on, you turn it, that's working the same way. [00:25:32] Speaker 01: He didn't use the words function, way, result. [00:25:34] Speaker 01: And the difference between the two is this finger indentation stuff? [00:25:39] Speaker 04: They remove the finger end adaptations. [00:25:41] Speaker 04: Is that in the claims themselves? [00:25:44] Speaker 04: No, it's not. [00:25:48] Speaker 02: Is it just a circle around? [00:25:52] Speaker 02: It is. [00:25:53] Speaker 02: So you now just have to, by friction, grip the thing rather than... That's right. [00:25:58] Speaker 01: There are high points that are on the... It's a different shape. [00:26:02] Speaker 01: It's a circle with a... I think it's got five or six points on it. [00:26:08] Speaker 01: And those are raised. [00:26:09] Speaker 01: And this was demonstrated. [00:26:10] Speaker 04: The high points were in both. [00:26:12] Speaker 01: The high points were in both, yes. [00:26:13] Speaker 01: But they removed the indentations, and the jury could have said, well, they're no longer lugs, because they don't look like they're scalloped. [00:26:20] Speaker 01: But you put it on, and you turn it, and you could hear it click. [00:26:24] Speaker 01: You could actually feel the friction. [00:26:25] Speaker 01: And the jury had these exhibits, and they were demonstrated to them. [00:26:28] Speaker 01: And Mr. Humber testified, it doesn't work any differently. [00:26:32] Speaker 01: It works the same way. [00:26:33] Speaker 01: And that's the essence of equivalency. [00:26:36] Speaker 01: And the judge, I think, just [00:26:39] Speaker 01: mistakenly said, first he let the case go to the jury. [00:26:43] Speaker 01: He said, well, you don't have to have an expert. [00:26:45] Speaker 01: You can still try this case. [00:26:46] Speaker 01: And they did. [00:26:47] Speaker 01: And the jury still found infringement under the document of equivalence. [00:26:51] Speaker 01: And the judge said, well, I think you need opinion testimony. [00:26:53] Speaker 01: That's just not required. [00:26:54] Speaker 01: And that's the kind of rigid rule that you don't need. [00:26:57] Speaker 01: You do need particularized testimony. [00:26:59] Speaker 01: But here, that requirement is very low because there's only one limitation that was really at issue. [00:27:07] Speaker 01: WCM didn't have to put up in bright lights. [00:27:10] Speaker 01: We're now talking about the doctrinal equivalents. [00:27:13] Speaker 01: They gave the jury enough here that they could find it. [00:27:16] Speaker 01: And when you go to those cases that discuss things like particularized testimony, the issue is you just don't want to have overall similarity. [00:27:23] Speaker 01: You don't want the jury just to be saying these two things look alike. [00:27:26] Speaker 01: That's not the case because of the way it was presented and that only one limitation is at issue. [00:27:32] Speaker 04: You want to turn to willfulness? [00:27:33] Speaker 01: Yes, I'd be happy to. [00:27:35] Speaker 01: In this case on willfulness, [00:27:38] Speaker 01: Well, there are two aspects to it. [00:27:40] Speaker 01: First, as to whether the amount was troubled, what the judge did, that's an abuse of discretion standard. [00:27:47] Speaker 01: I don't think IPS in their opening brief even mentioned an abuse of discretion. [00:27:50] Speaker 06: What about the district court's determination that IPS acted with objective recklessness in light of Halo? [00:28:00] Speaker 01: Well, he was operating under the pre-Halo Supreme Court case, and so he made that finding. [00:28:07] Speaker 01: And as this court has said since then, that can be something that is considered and increased damages. [00:28:15] Speaker 01: He found much more than just objective recklessness. [00:28:18] Speaker 06: Yeah. [00:28:18] Speaker 06: What's the substantial evidence of subjective recklessness on the record? [00:28:23] Speaker 01: Sure. [00:28:24] Speaker 01: The sorts of things that the judge pointed to and that were in front of the jury was copying. [00:28:31] Speaker 01: that they frequently copied products. [00:28:34] Speaker 01: Historically, but nothing to do with this patent of these products, right? [00:28:37] Speaker 01: Well, there was an inference that could be drawn that they copied these products specifically. [00:28:42] Speaker 06: The nut that IPS used. [00:28:44] Speaker 06: I've always wondered if you can make an argument that at a point, the court can take judicial notice of a business practice, if you give enough evidence. [00:28:52] Speaker 01: I think that's probably true. [00:28:54] Speaker 01: But the nut that IPS used could be threaded onto WCM's pipe. [00:29:02] Speaker 01: That doesn't happen by accident. [00:29:03] Speaker 01: Those threads were very carefully designed to be of a certain rise. [00:29:07] Speaker 01: There is no code that says you have to do it that way. [00:29:10] Speaker 01: It wasn't a coincidence that one could fit on the other. [00:29:13] Speaker 01: And the jury was within its rights to draw an inference that they had actually had the product in hand, because the chances of those things being identical were very low. [00:29:23] Speaker 02: So just focus on this. [00:29:25] Speaker 02: This patent issued December 5th or something? [00:29:28] Speaker 02: That's right. [00:29:28] Speaker 02: December 5th. [00:29:31] Speaker 02: Disregarding the Colorado case, this suit is like January 9th or... The suit is filed five weeks later. [00:29:38] Speaker 02: Five weeks later. [00:29:39] Speaker 02: There is not actually any evidence that they knew about this patent before the suit, right? [00:29:46] Speaker 01: I think there's circumstantial evidence that they monitored WCM's patents, that they knew that there was patent pending, and as Your Honor recognized, those things were publicly available. [00:29:57] Speaker 01: I think a reasonable inference that Jerry could make. [00:29:59] Speaker 02: I'm saying those things. [00:30:00] Speaker 01: I'm saying what things were... Oh, that notice of allowance, the prosecution. [00:30:06] Speaker 02: Is it... I think there was a reference to they hired some patent monitoring service, I don't know what it's called. [00:30:13] Speaker 02: Yes. [00:30:14] Speaker 02: Is there evidence about what a reasonable use of such a service would be, like tracking in what period of time [00:30:26] Speaker 02: What's going on in the PTO? [00:30:28] Speaker 01: I don't think that there is evidence of that. [00:30:31] Speaker 01: It is just evidence that they did monitor WCM's patents and knew what was going on. [00:30:37] Speaker 01: And so the jury couldn't infer that they knew about this. [00:30:41] Speaker 01: But you also have to look at the totality of the circumstances. [00:30:47] Speaker 01: Giving, again, credit to the jury and what the judge said, there was copying. [00:30:51] Speaker 01: Once this patent issued, what did they do? [00:30:54] Speaker 01: And we're not just looking at this [00:30:56] Speaker 01: very narrow window. [00:30:57] Speaker 01: They waited. [00:30:58] Speaker 02: Why aren't we? [00:30:59] Speaker 02: There was a summary judgment that said, and you haven't appealed that, a summary judgment of no willfulness as to any post January 9th conduct. [00:31:09] Speaker 01: Yes. [00:31:09] Speaker 01: There are two things. [00:31:10] Speaker 01: One, the jury wasn't told that. [00:31:12] Speaker 01: The jury was afraid to look at all the conduct. [00:31:15] Speaker 02: And in fact... No, but the question of willfulness is what evidence is there and there is a determination binding on you as a matter of law that whatever they did after January 9th was not willful conduct. [00:31:32] Speaker 01: By itself. [00:31:33] Speaker 01: I agree. [00:31:34] Speaker 01: That is what the judgment was. [00:31:35] Speaker 01: That conduct by itself, the judge said, there was not a material fact that that supported willfulness. [00:31:43] Speaker 01: Now, we know after the mentor case that's actually wrong because the judges... That's not the issue. [00:31:50] Speaker 01: I understand. [00:31:51] Speaker 01: But the jury was not told that. [00:31:54] Speaker 01: And we can look at all the evidence that the jury looked at to see whether the verdict of willfulness was supported. [00:32:01] Speaker 01: And the jury was not given an artificial time period to look at. [00:32:05] Speaker 01: They actually found that there was willful infringement with respect to the 272 pattern, which issued after the suit was filed. [00:32:11] Speaker 01: They were not told you cannot look at post litigation conduct. [00:32:14] Speaker 01: So for the jury verdict, knowing the law what it is now that post litigation conduct is not excluded, I think this court can look at all of it and say the verdict was supported. [00:32:23] Speaker 01: Now the judge said no willfulness after that time. [00:32:28] Speaker 01: They can't support it by itself. [00:32:30] Speaker 01: At least that's the way I understood the ruling. [00:32:32] Speaker 01: But he still found that there was enough evidence to support willful infringement and egregious conduct, which is then reviewed for an abuse of discretion. [00:32:42] Speaker 01: And I think that's really where it comes out, is that there was enough to support the verdict, looking at the totality of the circumstances, and the judge was correct. [00:32:50] Speaker 01: He found the verdict wasn't a close call, that their defenses were particularly weak. [00:32:57] Speaker 01: He saw this case, and that's exactly what Halo is, I think, instructed, is that the district court judges are supposed to look at the totality of the conduct and determine whether or not there's willful infringement. [00:33:07] Speaker 06: Did your opposing counsel, did you [00:33:10] Speaker 06: get any flavor that they were saying, well, it's all or nothing. [00:33:21] Speaker 01: Your Honor, I'm not aware of any arguments where they argued for a lesser amount. [00:33:24] Speaker 01: I suggested some a lower amount would be appropriate. [00:33:27] Speaker 01: And even on their appeal, I think the focus is on the willfulness verdict. [00:33:31] Speaker 04: Well, yeah, but they do have a separate section on the enhancement, even assuming there was willful conduct. [00:33:38] Speaker 04: They do. [00:33:39] Speaker 04: And so the question is whether or not all or nothing fairly includes something less than all or nothing. [00:33:48] Speaker 04: And I think you agree that arguably it does? [00:33:51] Speaker 01: I don't think this court has really any room to find something, whether it's all or nothing. [00:33:58] Speaker 01: I'm sorry, let me understand. [00:34:01] Speaker 04: So you're saying it has to be all or nothing because that's the only argument they made? [00:34:05] Speaker 01: I don't think they have made an argument for something in between. [00:34:08] Speaker 01: I agree. [00:34:09] Speaker 01: And in fact, if you look at the section where they say it shouldn't have been trebled and there wasn't egregious conduct, it's based on the jury verdict. [00:34:17] Speaker 01: They don't even say abuse of discretion. [00:34:19] Speaker 01: It's not an argument that notwithstanding the willfulness verdict, the judge abused [00:34:24] Speaker 01: his discretion. [00:34:25] Speaker 04: Well, they do make that argument, don't they? [00:34:27] Speaker 04: I mean, there seems to be a whole section that's titled, even assuming, I think, something of that sort. [00:34:36] Speaker 02: My recollection is they basically have two paragraphs. [00:34:39] Speaker 02: One says, no enhancement, because willfulness is wrong. [00:34:41] Speaker 02: But the second paragraph says, even aside from that, there was a failure to consider at least one, maybe more than one, read factor. [00:34:49] Speaker 01: That is true. [00:34:50] Speaker 01: That is not amount to abusive discretion. [00:34:52] Speaker 04: No, but that's a result. [00:34:54] Speaker 04: We're talking about more or less a waiver question of whether they preserved an argument, not whether you should win or lose on the results of that argument. [00:35:00] Speaker 04: So can you answer the former rather than the latter? [00:35:04] Speaker 01: If there isn't a waiver, it's the thinnest argument, limited to a paragraph, which is not fully fleshed out. [00:35:10] Speaker 01: And I don't think whether you say they didn't raise it, or they haven't raised it adequately, or they have not shown an abuse of discretion, it all comes out in the same place. [00:35:32] Speaker 05: I'd just like to address a couple of quick things on rebuttal. [00:35:35] Speaker 05: First, I'd just like to, you know, go back to where we, you know, remind us how we got here. [00:35:41] Speaker 05: You know, this was before trial. [00:35:43] Speaker 05: They were informed that their expert was going to be excluded. [00:35:47] Speaker 06: And the judge also. [00:35:48] Speaker 06: Excuse me. [00:35:49] Speaker 06: I want you to begin by showing me where on Appendix 4 you say at the bottom of the page. [00:35:57] Speaker 05: Oh, I believe 425. [00:36:00] Speaker 05: Sorry, Your Honor. [00:36:03] Speaker 05: So heading into trial, they were informed that they would not have a technical estimate. [00:36:07] Speaker 04: I'm sorry. [00:36:07] Speaker 04: I want to just go back to Judge Waller just to make sure he's satisfied with what you... I'm sorry. [00:36:12] Speaker 05: I just looked at the bottom of the form. [00:36:15] Speaker 05: Sorry. [00:36:15] Speaker 05: That is what I referenced. [00:36:16] Speaker 05: That was my mistake. [00:36:20] Speaker 05: Then in the judge's pretrial order, it was indicated that one of the two contested issues was whether the revised classic product line infringed some of the doctrinal equivalence. [00:36:29] Speaker 05: So heading into trial, there should have been a heightened awareness that the doctrinal equivalence was at issue here. [00:36:35] Speaker 04: But can you explain to me? [00:36:36] Speaker 04: I mean, there's no difference between the revised and the classic other than this thing around, right? [00:36:43] Speaker 04: The lock, correct. [00:36:45] Speaker 04: Well, the lock has logs, correct. [00:36:48] Speaker 04: Well, the finger indentation in the stuff that I'm looking at. [00:36:53] Speaker 05: To me, the finger indentations create quite a different appearance [00:37:00] Speaker 04: You know, the question is whether... Where in the claim are... Where does the claim talk about the finger? [00:37:07] Speaker 05: I appreciate that question, Your Honor, because that's what I take issue with here. [00:37:10] Speaker 05: None of these witnesses were referencing the claim in their commentary. [00:37:15] Speaker 05: They were comparing accused product to another accused product. [00:37:18] Speaker 05: And the claim limitation requires a nut element with a threaded portion that is compatible with said threads of said overflow bytes. [00:37:26] Speaker 05: sudden knot element having an outer periphery with a series of radially extending lugs that detachably engage an inner surface of a cap that fits over said knot. [00:37:37] Speaker 05: And none of the testimony reference is particularized, certainly not directed to this particular element under the insubstantial differences or the function way result test, which would allow then us to also focus on the claim construction, because several of these terms were construed, [00:37:55] Speaker 05: and also look at the scope and content of the prior art. [00:37:59] Speaker 05: But because there was an improper doctrine of equivalence analysis performed here, there's insufficient evidence. [00:38:05] Speaker 05: And I think the judge, as he was there, he saw it. [00:38:09] Speaker 05: He realized that it was insufficient. [00:38:11] Speaker 05: They knew going in, and they didn't meet their burden. [00:38:14] Speaker 05: So they shouldn't thus be rewarded by cobbling together testimony from four different witnesses, three of which are their own employees, to make such an argument. [00:38:25] Speaker 05: And then the last thing I just want to... Wait. [00:38:28] Speaker 06: Now I want to ask you something. [00:38:29] Speaker 06: Okay. [00:38:29] Speaker 05: Sure. [00:38:30] Speaker 06: I asked you... You argued that enhanced damages can't be awarded for revised products because they were developed after WCM filed suit. [00:38:41] Speaker 06: And I asked you for a citation to the record. [00:38:44] Speaker 06: And I'm looking at appendix four and appendix five, pages three and four of the judge's order. [00:38:54] Speaker 06: I don't see that. [00:38:57] Speaker 06: It's only a paragraph. [00:39:00] Speaker 06: Where is it? [00:39:03] Speaker 06: Where's the timing issue discussed at all there? [00:39:09] Speaker 00: What am I missing? [00:39:23] Speaker 05: Well, I think, and I can't read the laptop until the size of the print, but I think the argument was made in four and five where they're referencing what they call based only on infringing units because at that point their view was the revised classic wasn't an infringing unit under the arguments that were previously made, that it was not found to be infringed under [00:39:52] Speaker 05: direct infringement and then later... That's it, huh? [00:39:56] Speaker 05: That's the basis. [00:39:59] Speaker 06: That's what we call a stretch in the law. [00:40:04] Speaker 05: The last thing I'd just like to point out when, you know, we were talking about abuse of discretion standard and the issue of enhanced damages, you know, as this Court held in Reed, the district court is obligated to explain his basis for enhancing the damages. [00:40:21] Speaker 05: But more importantly, the district court must not only consider factors that favor enhancement, but also factors that favor or weigh against enhancement. [00:40:29] Speaker 05: And in this instance, I think I pointed to three clear instances where the district court didn't discharge its duty to consider things that mitigate against enhancement. [00:40:39] Speaker 05: Thank you, Your Honors. [00:40:41] Speaker 04: We thank both sides, and the case is submitted.