[00:00:28] Speaker 01:
All right, Mr Saunders, please proceed.

[00:00:58] Speaker 02:
Good morning, your honors, and may it please the court.

[00:01:01] Speaker 02:
There are five issues raised in the briefs in this appeal.

[00:01:05] Speaker 02:
Two issues are the construction of the claim term word sense number, construction of the claim term syntax usage data.

[00:01:12] Speaker 02:
Another issue is whether the district court erred denying WTI's motion, the leave to amend its infringement contentions, response to district court's construction of those two terms.

[00:01:22] Speaker 02:
And then two additional arguments that were raised by Facebook are additional

[00:01:27] Speaker 02:
alternative arguments for affirmance, one relating to the word sense number limitation, and one relating to the dictionary database claim term.

[00:01:37] Speaker 02:
I'd like to begin today with what we see as the simplest and most straightforward issue that the district court abuses discretion in applying the local patent rules contrary to the plain language of Rule 3-6A.

[00:01:50] Speaker 02:
The question is, under the district court's patent rules,

[00:01:55] Speaker 02:
When a showing of good faith is based on a claim, construction by the court different from that proposed by the party seeking amendment, is the timeliness of good cause measured from when the court adopted the construction or from when the party first proposed the construction to the moving party?

[00:02:10] Speaker 01:
Doesn't the district court, within its discretion, get to decide how it wants to operate its courtroom and how it wants to handle

[00:02:20] Speaker 01:
these kinds of issues.

[00:02:21] Speaker 01:
Is it going to allow parties, when is it going to allow parties to amend?

[00:02:25] Speaker 01:
When is it going to require that infringement contentions be in?

[00:02:31] Speaker 01:
Aren't these kind of things things that we give deference to the district court on?

[00:02:35] Speaker 02:
You're right, Your Honor.

[00:02:36] Speaker 02:
There is significant deference provided to the district courts and their application of the local pattern rules and other local rules.

[00:02:44] Speaker 02:
But what this court has been clear is that that discretion is not unlimited.

[00:02:49] Speaker 02:
And in particular, the district courts aren't allowed to apply a local rule, such as a local patent rule, contrary to its plain language.

[00:02:58] Speaker 01:
And that's... What if a district court judge, I think the district court in this case, had at least two decisions that he had written where he indicated that for him, the rule was going to operate that when he is measuring prejudice, it's going to be from the time that the party learns of the plaintiff's

[00:03:15] Speaker 01:
the other side's claim construction.

[00:03:17] Speaker 02:
Well, in particular, this district court judge acknowledged there was a split of authority, both in this decision and in the prior decisions that he filed.

[00:03:27] Speaker 02:
But he also issued his decision that he would determine which of the two rules to apply on a case-by-case basis.

[00:03:35] Speaker 02:
And he decided in this case that it was appropriate to apply the time of disclosure by the opposing party

[00:03:43] Speaker 02:
instead of the time of the district court's claim construction.

[00:03:48] Speaker 02:
So it was not a particular situation as if that particular district court judge had a consistent ruling that the only appropriate time for disclosure was the time that the opposing party first proposed.

[00:04:02] Speaker 03:
Well, then why isn't that a fact-bound inquiry where that's within the tolerable limits of reasonableness for him to say on these facts

[00:04:13] Speaker 03:
he's going to use the rule that he did.

[00:04:18] Speaker 02:
We don't believe it's a fact bound in court because we believe both the interpretation that it's the time that the opposing party proposes construction as well as the interpretation that either of those two times could be used are both inconsistent with the plain and unambiguous language of rule 3-6A.

[00:04:35] Speaker 01:
But didn't he even go on to that and say, look, it's not as if you had to provide a claim charter or an updated infringement

[00:04:44] Speaker 01:
contentions, you could have just let the court know or let opposing counsel know that you might have to do that were their claim construction adopted.

[00:04:55] Speaker 02:
That was something that was included in the district court's order denying the motion for leave to mend, although that was obviously after the fact of the motion and the circumstances which preceded that, which led to filing the motion.

[00:05:10] Speaker 02:
There wasn't a consistent rule that had been adopted

[00:05:13] Speaker 02:
by the district court that says, you know, if a party intends to, you know, file a motion for leave to amend its contentions, that it should let the district court know at the hearing.

[00:05:22] Speaker 01:
So it wasn't like that was... Are you suggesting that maybe you were surprised by the court's ruling?

[00:05:30] Speaker 02:
It is our position that the party can reasonably rely on the plain and unambiguous language of the local pattern rules.

[00:05:37] Speaker 03:
But there was a practice with this particular judge where he had a

[00:05:42] Speaker 03:
specific interpretation and conception of that local rule.

[00:05:46] Speaker 03:
So you probably should have known about that, right?

[00:05:51] Speaker 02:
You're correct, Your Honor, that that specific district court judge had issued prior opinions the other way.

[00:05:58] Speaker 02:
But this court's precedent is clear that a district court is required to apply the local rules in a way that's consistent with them.

[00:06:06] Speaker 02:
They cannot apply the local rules in a manner that's inconsistent with their unambiguous language.

[00:06:11] Speaker 02:
And that's not altered by the fact that the district court may have erred in other cases prior to that fact by interpreting the local rule in a different manner in repeated prior cases.

[00:06:24] Speaker 03:
Well, I guess the judge was looking for some form of diligence from your side in order to justify a good cause here.

[00:06:31] Speaker 03:
And the judge did seem to go out of his way to provide a tentative ruling on the eve of the Markman hearing.

[00:06:40] Speaker 03:
giving a lot of information to both parties about what the court was thinking about these various claim terms.

[00:06:48] Speaker 03:
And so in a way, he was putting in and devoting a lot of effort to giving all of you a head start and thinking about what you needed to do in terms of contingencies in case you get a claim construction ruling you did not like.

[00:07:07] Speaker 03:
I guess what I'm wondering is, if the judge is giving you all this information, why isn't the court likewise entitled to expect a little bit more proactive activity from the parties as well?

[00:07:24] Speaker 02:
A few points in response to that, Your Honor.

[00:07:25] Speaker 02:
One major point is that the district court's claim construction order issued quite promptly.

[00:07:31] Speaker 02:
As you noted, the tentative ruling came

[00:07:35] Speaker 02:
very quickly before the actual mark in the hearing itself.

[00:07:39] Speaker 02:
The district court issued its claim construction order promptly after the hearing.

[00:07:45] Speaker 02:
It was not extended a lengthy period of time.

[00:07:48] Speaker 02:
And then immediately after the claim construction order was issued, WTI sought discovery directly addressing those points where the district court had deviated from WTI's proposed construction and then

[00:08:05] Speaker 02:
within another month and a half was able to finalize that source code review, create another set of proposed contentions, and file that with a motion for leave with the court.

[00:08:19] Speaker 02:
So this is not a scenario where there's been a lengthy period of time.

[00:08:23] Speaker 02:
But the key to our position is that the rule 3-6A says that here is an event that may constitute good cause.

[00:08:34] Speaker 02:
And that event is the adoption

[00:08:36] Speaker 02:
by the court of a construction different from that proposed by the party seeking amendment.

[00:08:41] Speaker 02:
Now certainly under FRCP 83, the district court could have adopted a different local rule.

[00:08:47] Speaker 02:
The district court could have adopted a local rule that says that good cause may be when a party proposes a different construction and therefore moves that date to the local rule 4-2 date, when the party is served with a proposed construction different than

[00:09:06] Speaker 02:
what it was using in its infringement contentions.

[00:09:08] Speaker 02:
That's not in the local rule, though.

[00:09:11] Speaker 03:
At 82666, it appears that there was some kind of case management hearing where the court announced that any amendments to validity or infringement contentions would have to be done within the 28-day period for electing claims.

[00:09:32] Speaker 03:
Yes, Your Honor.

[00:09:33] Speaker 03:
So in a way, the judge is

[00:09:37] Speaker 03:
providing notice to everybody on what he was thinking and expecting when it came to amendments of contentions.

[00:09:46] Speaker 02:
And Your Honor, the judge did not find that WTI violated that deadline.

[00:09:51] Speaker 02:
The judge found that, notwithstanding that, it was untimely based on his interpretation of Rule 3-6A.

[00:09:58] Speaker 02:
So this was not a decision based on the district court setting an additional Rule 16 deadline, whether in an order or verbally at the hearing.

[00:10:06] Speaker 02:
and therefore not finding compliance with Rule 16, it was an issue of the district court interpreting Rule 3-6A, acknowledging that there was a dispute in the interpretation of that rule among district court judges, but making a legal interpretation of that rule.

[00:10:22] Speaker 02:
And we think it's especially important to parties that are going to be litigating cases, both in the Northern District and in other districts where there are similar languages using the pattern rules, to have a resolution about whether that is

[00:10:35] Speaker 02:
the appropriate interpretation of that rule.

[00:10:37] Speaker 02:
And only this court can provide that, because otherwise there'll be new district court judges that continue to join the Northern District of California, and parties will not know whether the appropriate interpretation of the rule 3-6A is the one that this district court adopted or different.

[00:10:55] Speaker 01:
Doesn't this witness discourage district courts from adopting local rules?

[00:11:01] Speaker 01:
If they can't interpret their own local rules and maybe even have different practices amongst themselves or apply their local rules to different cases in different ways, depending on the facts of those cases, why would any of the district courts want to have local rules?

[00:11:15] Speaker 01:
I thought that, you know, really it's just a way to provide more guidance to the parties that appear before them, but they maintain their courtroom and their ability to decide when

[00:11:29] Speaker 01:
parties are going to be able to amend meetings, for example.

[00:11:32] Speaker 02:
You're correct, Your Honor, that district court judges can obviously, under Rule 16, set deadlines themselves, set interpretations, and provide something that's equivalent of local patent rules.

[00:11:44] Speaker 02:
One of the purposes of local patent rules, however, is to provide uniformity to the bar

[00:11:49] Speaker 02:
in understanding when deadlines are supposed to happen and what the appropriate standards for them are.

[00:11:54] Speaker 01:
What about where there's decisions, including the two from this particular judge, where he's made his view known about what that means?

[00:12:02] Speaker 02:
As I mentioned earlier, Your Honor, we don't believe that the district court judge in this case affirmatively said, in all of my cases, I will be applying the time of disclosure by the opposing party role.

[00:12:14] Speaker 02:
Because he entertained and analyzed and said, specifically in this case,

[00:12:18] Speaker 02:
It is appropriate to.

[00:12:20] Speaker 02:
So every party will have to, even before this particular district court judge, will have to analyze whether they think it is likely that the district court judge will apply.

[00:12:30] Speaker 02:
Even the specific district court judge will apply at the time of disclosure.

[00:12:34] Speaker 00:
And what's wrong with that?

[00:12:35] Speaker 02:
Well, the purpose of the local rules is to establish uniformity.

[00:12:39] Speaker 02:
And this court's precedent has established that where the rule itself is clear and unambiguous,

[00:12:46] Speaker 02:
We're supposed to hold the district courts to the language of the rule.

[00:12:50] Speaker 02:
And the language of the rule in this case says, a claim construction by the court different from that proposed by the party seeking amendment is one of the examples of good cause.

[00:13:01] Speaker 02:
And the question is, is that good cause timely?

[00:13:04] Speaker 02:
Well, our position is that that good cause cannot be found untimely if the good cause could not exist yet.

[00:13:10] Speaker 02:
The good cause did not exist until the district court adopted its claim construction.

[00:13:14] Speaker 01:
But you're emphasizing the fact that this is a claim construction that was not proposed by either of the parties.

[00:13:21] Speaker 02:
No, Your Honor.

[00:13:22] Speaker 02:
That's not what this rule... That's not what you're emphasizing.

[00:13:24] Speaker 02:
No.

[00:13:25] Speaker 02:
That's not what this rule provides.

[00:13:26] Speaker 02:
This rule provides a claim construction by the court different from that proposed by the party seeking amendment.

[00:13:32] Speaker 02:
In fact, we think that exact language rules out the judge's interpretation that says different rules should apply

[00:13:39] Speaker 02:
if the district court judge adopts a construction proposed by neither party or if the district court adopts a construction proposed by the non-moving party.

[00:13:48] Speaker 02:
Because if that was what the rules were intended to say, that's what the Northern District of California could have promulgated as those rules.

[00:13:55] Speaker 02:
And that would have been an acceptable use of its authority to promulgate local rules.

[00:14:00] Speaker 02:
But it chose to promulgate this specific local rule.

[00:14:03] Speaker 02:
Many of the district court judges have adopted that rule according to its plain language.

[00:14:08] Speaker 02:
And that's not what happened in this case.

[00:14:09] Speaker 02:
And that's why we believe that it's appropriate to reverse on that issue.

[00:14:14] Speaker 02:
I will address a couple of the policy related issues, although we think that the plain language of the... You're well into your rebuttal time.

[00:14:22] Speaker 01:
So keep that in mind.

[00:14:28] Speaker 02:
Unless the court has questions regarding the two claim construction issues, I will

[00:14:37] Speaker 00:
All right, Mr. Sanders, Ms.

[00:14:38] Speaker 00:
Keith.

[00:14:43] Speaker 00:
Thank you, Your Honors.

[00:14:44] Speaker 00:
Your Honors, I would simply start by reiterating that the law provides both under the Genentech and the O2 micro case that decisions enforcing local rules in patent cases will be affirmed unless one of four problems are found.

[00:15:03] Speaker 00:
A clear and unreasonable or arbitrary application of the rule

[00:15:07] Speaker 00:
an erroneous conclusion of law, a finding that was erroneous, or no evidence on which the district court could base their opinion.

[00:15:15] Speaker 00:
That's in the O2 micro case at page 1367.

[00:15:19] Speaker 00:
We submit here, Your Honor, none of those criterion have been met.

[00:15:24] Speaker 00:
In fact, this is not clearly unreasonable or arbitrary.

[00:15:28] Speaker 03:
In fact, the only case that... What if hypothetically the different district courts of

[00:15:34] Speaker 03:
Northern District of California had wildly different conceptions of how to apply a particular local rule, such that, depending on which courtroom you were in in the San Francisco Division, you could get a very different outcome based on identical facts.

[00:15:49] Speaker 03:
Would that be arbitrary?

[00:15:51] Speaker 00:
I don't believe so, Your Honor.

[00:15:52] Speaker 03:
Why not?

[00:15:53] Speaker 00:
Well, first off, I don't believe that happens in the Northern District.

[00:15:55] Speaker 03:
This is a hypothetical.

[00:15:56] Speaker 00:
So under the hypothetical situation, if it were

[00:15:59] Speaker 00:
Wildly possible that if you said the word green in front of Judge A, it would be interpreted as green.

[00:16:06] Speaker 00:
But if you said green in front of Judge B, it would be interpreted as purple.

[00:16:09] Speaker 00:
For something like that, Your Honor, would that be arbitrary?

[00:16:12] Speaker 00:
Again, I think not.

[00:16:13] Speaker 00:
It would depend on the facts.

[00:16:14] Speaker 00:
If the judges had put out opinions that showed how they were interpreting the rules, such that personnel coming in front of those courts would have the ability to understand how that judge is applying the rule,

[00:16:28] Speaker 00:
then I don't think it would be arbitrary or unreasonable, especially if it were supported by the language of the rule.

[00:16:34] Speaker 00:
We kept hearing that the plain language of Rule 36 somehow supports any time you want to do anything.

[00:16:42] Speaker 00:
But the plain language of Rule 36 in the Northern District says amendment of infringement contentions may be made only by order of the court upon a timely showing of good cause

[00:16:54] Speaker 00:
non-exhaustive examples of circumstances that may absent undue prejudice to the non-moving party support the finding include.

[00:17:03] Speaker 00:
And then it says, the claim construction by a court different from that proposed by the party seeking amendment.

[00:17:10] Speaker 00:
Here, that did not support it.

[00:17:13] Speaker 00:
And in fact, we were very clear, both parties, this was the second time

[00:17:19] Speaker 00:
that Patent Owner had moved to amend its infringement contentions.

[00:17:23] Speaker 00:
And in fact, during the first time that it had moved to amend its infringement contentions, the court noted at Appendix 4614 that Patent Owner at that point was very close to not having asserted the appropriate amount of diligence.

[00:17:39] Speaker 00:
In the briefing for that motion, the France Telecom case

[00:17:45] Speaker 00:
was raised showing what this court's practice was.

[00:17:49] Speaker 00:
And so that's something that the patent owner did, in fact, know.

[00:17:55] Speaker 00:
During the hearing for that, at a scheduling conference, I specifically asked the court if there are to be any further amendments.

[00:18:06] Speaker 00:
They will have to be with good cause, right?

[00:18:08] Speaker 00:
And the court said yes.

[00:18:09] Speaker 00:
And that was confirmed

[00:18:11] Speaker 00:
by WTI at appendix 2670, where they admitted themselves, yes, if I do anything else, it will have to be with good cause.

[00:18:20] Speaker 00:
And knowing that the France Telecom case and the Thought Inc case, which was the other case by Judge Oreck, indicating that the time for diligence starts at the disclosure of a construction, those had both been raised, both been researched by the parties, therefore both known at that time.

[00:18:37] Speaker 00:
There's also no evidence of an erroneous conclusion of law.

[00:18:40] Speaker 00:
The simple fact that there may be a split in a district does not create an erroneous conclusion of law.

[00:18:46] Speaker 00:
And in fact, the decision by Georgiorik falls within the majority opinions.

[00:18:50] Speaker 00:
In fact, there's no single decision coming out of the Northern District where a claim construction proposed by the non-moving party coupled with the timing in the case

[00:19:04] Speaker 00:
was ever not viewed as non-diligent.

[00:19:07] Speaker 00:
I think I just used about a quadruple negative.

[00:19:09] Speaker 00:
My point was that there aren't any cases that say if your construction doesn't match that which was proposed and it's not very early in the case, there will be no finding of diligence.

[00:19:24] Speaker 00:
So in fact, the majority opinion is supported by Judge Oreck's interpretation.

[00:19:29] Speaker 00:
There's no dispute on the dates or the facts, so no findings are erroneous.

[00:19:33] Speaker 00:
And there's no evidence in this case that refutes the evidence upon which Judge Oreck based his opinion.

[00:19:40] Speaker 00:
And therefore, the law in Genentech and O2 Micro applies mandating that decisions enforcing patent local rules will be affirmed.

[00:19:49] Speaker 00:
Your Honor, I noticed that there hadn't been any discussion of the claim constructions.

[00:19:55] Speaker 00:
I am happy to leave us on the briefing.

[00:19:58] Speaker 00:
I have plenty of time.

[00:19:59] Speaker 00:
If Your Honors have any questions, I'm happy to answer them.

[00:20:02] Speaker 00:
Otherwise,

[00:20:03] Speaker 00:
I'm not sure there's... We appreciate your honor's time very much.

[00:20:08] Speaker 00:
Thank you.

[00:20:11] Speaker 01:
Mr. Saunders?

[00:20:13] Speaker 02:
Thank you, your honor.

[00:20:15] Speaker 02:
In response to counsel's argument, we agree that the standard set forth in 02 micro applies.

[00:20:19] Speaker 02:
We think this is exactly a case which involves an erroneous conclusion of law.

[00:20:23] Speaker 02:
The issue is a legal interpretation of the plain language of rule 3-6A.

[00:20:30] Speaker 02:
The district courts, including this district court in this case, have expressly admitted that they are split about that legal interpretation.

[00:20:37] Speaker 02:
We are not challenging the particular value assessment about the timeliness under the other standard.

[00:20:44] Speaker 02:
And that's the kind of issue where we'd expect that full strength of discretion to apply in this court's review.

[00:20:51] Speaker 02:
But as to a legal interpretation under the erroneous conclusion of law standard, we assess that because the plain language of the rule is contrary to what the district court adopted,

[00:21:00] Speaker 02:
that therefore that prong of 02 micro is satisfied.

[00:21:04] Speaker 02:
And responding to counsel's argument about the use of the word may in rule 368, we think that misses the point.

[00:21:10] Speaker 02:
There was no dispute.

[00:21:12] Speaker 02:
There was no finding by the district court that there was not good cause.

[00:21:15] Speaker 02:
The district court's finding in this case was entirely about timeliness.

[00:21:18] Speaker 02:
And as the district court made clear, timeliness and good cause are two different prongs of the test.

[00:21:23] Speaker 02:
And the use of the word may indicates, in some cases, there may not be good cause even if the district court adopts a different instruction.

[00:21:30] Speaker 02:
For example, the district court could adopt a narrower construction than that advocated by the plaintiff who's seeking to amend his infringement contentions.

[00:21:38] Speaker 02:
Or it could be not substantively different.

[00:21:40] Speaker 02:
But the court didn't find there was no good cause.

[00:21:42] Speaker 02:
The court found timeliness.

[00:21:44] Speaker 02:
And it's our position that was incorrect in its assessment.

[00:21:48] Speaker 03:
OK.

[00:21:48] Speaker 03:
I thank both counsel for their argument.

[00:21:50] Speaker 03:
And this case is taken under submission.

[00:21:53] Speaker 02:
All rise.