[00:00:00] Speaker 05: Okay, council is ready. [00:00:23] Speaker 01: The next argued case in this series, again in the order of the appeals, [00:00:28] Speaker 01: It was number 16, 2054, XY LLC against trans-OVID genetics. [00:00:35] Speaker 01: Mr. Ossel. [00:00:38] Speaker 05: Thank you, Your Honor, and good morning to the panel. [00:00:44] Speaker 02: Before we get to the, I'm sorry. [00:00:47] Speaker 02: You're allowed to say your name and then ask my question. [00:00:52] Speaker 02: Charles Ossel on behalf of the defendant, trans-OVID genetics LLC. [00:00:56] Speaker 02: Okay, I have a couple of minor questions before we get to the meat of this. [00:01:01] Speaker 02: First of all, in this third case we have this morning, the 425 patent or some of the claims of the 425 patent were held unpatentable. [00:01:10] Speaker 02: And that, as I understand it, is one of the patents here where there was the stipulation of infringement and the jury awarded [00:01:21] Speaker 02: a lump sum of damages, including damages for 425. [00:01:24] Speaker 02: Am I correct about that? [00:01:27] Speaker 02: I believe so. [00:01:29] Speaker 02: So is your argument that if we were to sustain the board's holding of the 425 claims not being patentable, that there would have to be a remand here? [00:01:41] Speaker 02: What are we supposed to do? [00:01:44] Speaker 02: I believe that's correct. [00:01:47] Speaker 02: Okay. [00:01:47] Speaker 02: My second question is, [00:01:49] Speaker 02: All this argument about willfulness, what difference does it make? [00:01:53] Speaker 02: There was no award of enhanced damages or attorney's fees. [00:01:57] Speaker 02: There's no appeal from the refusal of the award. [00:02:00] Speaker 02: Why do we care whether there was willfulness or not? [00:02:02] Speaker 02: Why is that issue significant? [00:02:05] Speaker 03: Your Honor, I would agree that it is not among the most significant issues here. [00:02:11] Speaker 02: But it has no significance. [00:02:12] Speaker 03: Well, I would say simply this. [00:02:15] Speaker 03: A finding of willfulness has an impact, not a party. [00:02:19] Speaker 02: Reputational? [00:02:20] Speaker 03: It doesn't. [00:02:21] Speaker 03: OK. [00:02:22] Speaker 01: Well, unless we were to reinstate the jury's position. [00:02:28] Speaker 03: That's true. [00:02:29] Speaker 03: OK, proceed. [00:02:32] Speaker 03: But our position on willfulness, I would agree, Your Honor, that that is not the significant issue in this appeal, but rather the antitrust and ongoing loyalty issues we would submit should be the focus. [00:02:46] Speaker 03: I'd like to focus on those issues. [00:02:48] Speaker 03: beginning with the antitrust. [00:02:50] Speaker 01: Okay, tell us what you believe are the significant issues. [00:02:54] Speaker 03: The centerpiece of this appeal is an antitrust trial that never happened. [00:03:01] Speaker 03: And that was the Sherman Section 2 monopolization, attempted monopolization trial against Ingram and XY that did not occur in this jury trial. [00:03:15] Speaker 03: And the reason it didn't occur [00:03:16] Speaker 03: is because the district court on the motion for summary judgment dismissed those claims, both against XY and Ingrid, on the grounds of statute and limitations. [00:03:31] Speaker 03: And mentioned, but in our view, did not address the evidence of new and accumulating injury that was put forward in the opposition to the motion for summary judgment. [00:03:43] Speaker 06: As I understand the district court's position, [00:03:46] Speaker 06: to use the continuing conspiracy exception on statute of limitations, it was your burden to come forward with at least some amount of evidence and argument per silitex to meet the two elements of the continuing conspiracy exception. [00:04:08] Speaker 06: And the court below determined that you didn't really [00:04:15] Speaker 06: identify or explain in any kind of sufficient way how you would fulfill the second element of that two element test. [00:04:27] Speaker 06: That is to say, the new and accumulating injury. [00:04:31] Speaker 06: And so it's almost like a failure to plead something to meet your burden. [00:04:39] Speaker 06: And so therefore, he felt like on that technical ground, [00:04:44] Speaker 06: he was going to grant summary judgment given that that was your burden, or that would have been your burden at trial. [00:04:52] Speaker 06: Can you explain where the error is in your view of what the court said and did? [00:04:59] Speaker 03: Yes, Your Honor. [00:05:00] Speaker 03: First, I would agree that it was Transova's burden to demonstrate a triable issue of fact with respect to new and accumulated interest. [00:05:11] Speaker 03: Absolutely agree. [00:05:12] Speaker 03: Where the disagreement arises is whether, with all favorable inferences given to Transova, which we believe the district court did not do, whether or not a genuine issue of material effect existed. [00:05:25] Speaker 03: And what we think happened, [00:05:28] Speaker 03: Because that evidence is in the record, the court acknowledged, in particular, the long-term customer contracts that were alleged to be anti-competitive and indeed were found to be anti-competitive in the AVS case against Inger. [00:05:49] Speaker 03: This court mentioned the evidence, did not analyze the evidence, [00:05:57] Speaker 03: did not extend those inferences that were appropriate under Rule 56. [00:06:02] Speaker 03: And what we think happened, and I think it's evident when you look at Joe and Appendix 41 through 43, the court conflated damages and injury. [00:06:13] Speaker 03: The court went off on an analysis of Dr. DeRamos, the damages expert, TransOVA's damages expert, testimony [00:06:26] Speaker 03: regarding whether damages under the antitrust claims and under the breach of contract claim might be the same or consistent, which he acknowledged that that could be. [00:06:39] Speaker 06: I guess the point I saw the district court say was he didn't see Dr. DeRamos identify something that could be regarded as a new and accumulating injury, and neither did you in your opposition to the summary judgment motion. [00:06:56] Speaker 03: I would agree that what I would say is that evidence was there. [00:07:00] Speaker 03: The district court didn't look at it and turned to evaluating on its merits. [00:07:06] Speaker 03: There's nowhere in the district court's initial opinion or reconsideration opinion where the district court evaluated the evidence of new and accumulating injury that had been put forward, in particular the long-term customer contract. [00:07:23] Speaker 02: The refusal to deal cases seem to suggest that there's no new injury if the refusal to deal was final. [00:07:33] Speaker 02: I guess the theory is here that the 2007 refusal to deal was final. [00:07:39] Speaker 02: The problem with that is that the jury found that the 2007 refusal to deal was a breach of the contract. [00:07:47] Speaker 02: So if they wanted to continue to refuse to deal with you, they had to do something else. [00:07:52] Speaker 02: other than the 2007 termination. [00:07:57] Speaker 02: In other words, that wasn't a final action on their part because it was ineffective. [00:08:03] Speaker 03: Yes, Your Honor, I would agree. [00:08:05] Speaker 03: And if you look at the case law, the 10th Circuit case law, in terms of looking at whether the 2007 termination letter was a final act, because that's the touchstone of the analysis here. [00:08:21] Speaker 03: under 10th Circuit law. [00:08:22] Speaker 03: And the language used is very, very strong in the Champagne Metals case. [00:08:27] Speaker 03: Irrevocable, immutable, and final. [00:08:30] Speaker 03: Immediately and permanently destroy Transoba's business. [00:08:34] Speaker 03: Completely and permanently exclude Transoba. [00:08:38] Speaker 03: The 2007 termination letter didn't accomplish any of those things. [00:08:42] Speaker 03: In fact, one of the allegations is that the parties continued to negotiate over [00:08:50] Speaker 03: the terms of a revised license, alleged to be a bad-face negotiation. [00:08:57] Speaker 03: They continued to engage each other, ultimately resulting, unfortunately, in this lawsuit, which defies the logic as a notion of the 2007 termination letter was final in the sense of finality, as Your Honor refers to, in a sense articulated by the Tenth Circuit. [00:09:17] Speaker 06: You know, trying to understand the 10th Circuit case law really matters here. [00:09:21] Speaker 06: And so you mentioned champagne metals. [00:09:25] Speaker 06: Champagne metals, there was this horizontal boycott decision by all these distributors to try to knock out champagne metals. [00:09:35] Speaker 06: And then in order to put that into effect, it needed to pressure all these mills into not selling aluminum. [00:09:46] Speaker 06: to champagne metals, which it did, but all those additional actions took place inside the statute of limitations period, whereas the original horizontal boycott agreement occurred outside. [00:10:03] Speaker 06: For that reason, because of the way the anti-competitive conduct was structured, there needed necessarily to be those additional actions in order to carry out the alleged [00:10:16] Speaker 06: unlawful action. [00:10:20] Speaker 06: Here we have just a single party, XY, who has refused to permit you to use their patented technology, arguably unlawfully, when it terminated the license. [00:10:39] Speaker 06: But then it didn't need to do anything else beyond that act with anybody else. [00:10:46] Speaker 06: like the defendants did in Champaign Metals, or the defendants did in Hennigan, the Ninth Circuit opinion, where the souvenir shops were paying off the tour operators, or in a more recent Tenth Circuit opinion called Auroria. [00:11:05] Speaker 06: Are you familiar with that one? [00:11:07] Speaker 03: Yes, sir. [00:11:07] Speaker 06: Okay, where the University of Colorado Denver was continuing to enforce an agreement with Campus Village, [00:11:17] Speaker 06: keep out regency from being able to house freshmen. [00:11:22] Speaker 06: Every new class of freshmen were basically blocked from living in regency. [00:11:28] Speaker 06: So those cases all seem to show there's this extra overt act, usually with somebody else, in order to be a continuing conspiracy. [00:11:41] Speaker 06: I don't see that [00:11:44] Speaker 06: Here, how does this fact pattern fit with those fact patterns? [00:11:49] Speaker 03: Your Honor, I think the best answer to that is the long-term exclusive contracts with third parties, with suppliers, I've seen them, that Ingram entered into. [00:12:03] Speaker 03: After, within the limitations period, SelectSires was one such supplier. [00:12:11] Speaker 03: Those were analogous to [00:12:13] Speaker 03: the additional acts that Your Honor referred to in the 10th Circuit Court. [00:12:18] Speaker 02: But you know those contracts do? [00:12:20] Speaker 03: Those contracts locked up suppliers into long-term agreements that we would have led were themselves anti-competitive, and effectively prevented those suppliers from using, for example, TransOVA's technology. [00:12:35] Speaker 03: So Your Honor, I would submit that those are acts with third parties. [00:12:42] Speaker 06: TransOVA's technologies, though, were [00:12:44] Speaker 06: were predicated on being able to use XY's patented technology, right? [00:12:49] Speaker 06: And so you were blocked from XY's patented technology with the termination letter, with the refusal to permit you to use XY's patented technology, arguably unlawfully when they breached, right, through the termination letter. [00:13:05] Speaker 06: I mean, the termination letter, you know, we can regard it as a breach of contract, fine, but it's also a [00:13:14] Speaker 06: a decisive shot to block you from using their patented technology. [00:13:19] Speaker 03: It wasn't. [00:13:19] Speaker 03: It was ineffective. [00:13:20] Speaker 03: And the jury found it was a violation of X, Y's duty of fair dealing and good faith. [00:13:29] Speaker 03: And it constituted unclean hands. [00:13:32] Speaker 03: So it was ineffective. [00:13:34] Speaker 06: Well, that's the unlawful action, right? [00:13:36] Speaker 06: Your Honor. [00:13:36] Speaker 06: That's the unlawful action. [00:13:38] Speaker 03: That is the first unlawful action. [00:13:40] Speaker 06: I mean, if it was lawful, right? [00:13:42] Speaker 06: then we wouldn't have an antitrust problem. [00:13:45] Speaker 06: You're absolutely right. [00:13:47] Speaker 06: That's your antitrust problem, or your allegation that they committed this material breach of the license. [00:13:56] Speaker 03: That is the first allegation. [00:13:58] Speaker 03: That is the first step in what we allege to be a continuing set of anti-competitive acts, which occurred not only with respect to Transova, but also with respect to third parties. [00:14:12] Speaker 03: fitting into the 10th Circuit case law about where are the additional acts that effectuated what had been initially done. [00:14:23] Speaker 06: And here... But did you then identify in the opposition to the summary judgment what the injury was? [00:14:29] Speaker 06: You certainly identified a series of acts, but what was the new injury that you needed to identify? [00:14:38] Speaker 06: Champagne medals, there's a footnote there that explains [00:14:42] Speaker 06: what Champagne Metals' new injury was once the other distributors pressured the mills. [00:14:48] Speaker 06: It was the fact that Champagne Metals now had to pay a higher price than it would have otherwise because it wasn't able to bargain with all the available mills there that were selling aluminum. [00:15:01] Speaker 06: That was its new injury after the unlawful actions that took place inside the statute of limitations period. [00:15:08] Speaker 06: What did you do that Champagne Metals apparently did? [00:15:12] Speaker 06: in your opposition to summary judgment to identify a new and accumulating injury from all the evidence of new alleged acts? [00:15:21] Speaker 03: Your Honor, what we did was allege that, for example, the long-term customer contracts further damaged, further hampered TransO's ability to compete in the marketplace for these services. [00:15:38] Speaker 03: And we further allege that, and again, [00:15:41] Speaker 03: as Champaign Metals acknowledged, you look at the type of antitrust violation involved. [00:15:46] Speaker 03: This wasn't a boycott. [00:15:48] Speaker 03: So I understand and agree with the court's characterization. [00:15:52] Speaker 03: But here, you had a different kind of violation. [00:15:57] Speaker 03: You had an attempted monopolization, monopolization by not only XY, but also anger. [00:16:03] Speaker 03: And anger was never before this jury. [00:16:06] Speaker 03: In fact, it was a stipulated jury instruction [00:16:09] Speaker 03: after the dismissal of Ingram that specifically told the jury, you are not to evaluate the anti-competitive, any anti-competitive conduct of Ingram. [00:16:18] Speaker 03: You are not to consider it. [00:16:20] Speaker 03: But to your question, Your Honor, on summary judgment, there was sufficient evidence that especially the long-term customer contracts constituted new and accumulating injury that satisfied the second prong [00:16:38] Speaker 03: of the continuing conspiracy exception, particularly on summary judgment. [00:16:44] Speaker 03: It was not TransO's burden to prove that that injury had occurred. [00:16:50] Speaker 02: Well, I guess your theory is that because the termination was ineffective, you would have been in a position to offer an alternative to these customers that were subject to the long-term contract. [00:17:01] Speaker 06: That's exactly correct. [00:17:04] Speaker 06: I'm sorry. [00:17:05] Speaker 03: Could you repeat that? [00:17:08] Speaker 03: Transo's position was, from the outset, that that attempted termination was ineffective. [00:17:12] Speaker 03: And, you know, if you look at the record, so was XY continued to deal with us. [00:17:19] Speaker 02: Well, but the point is that in terms of these new contracts, these long-term contracts with these other people, that if the termination was ineffective, you would have been in a position to offer the technology because you would still have had a license under the agreement. [00:17:33] Speaker 03: That's correct. [00:17:36] Speaker 03: And the license was not properly terminated. [00:17:38] Speaker 03: It didn't expire until April 2009. [00:17:41] Speaker 01: All right, let's hear from the other side and we'll pursue this a bit further. [00:17:47] Speaker 05: Thank you. [00:17:52] Speaker 05: Mr. Schallert. [00:17:57] Speaker 00: May it please the court to take a shot for appellee cross-appellant XY. [00:18:03] Speaker 00: Unless the court prefers otherwise, I'll first address the antitrust issue and then... Well, let me just ask you the same questions I asked the opposing counsel. [00:18:11] Speaker 02: Do you agree that if in this third case we were to sustain the invalidation of the 425 PAC claims, we'd have to remand here for new trial on damages? [00:18:20] Speaker 00: I don't think that would actually be necessary, Your Honor. [00:18:23] Speaker 00: In our red brief at footnote eight, we explain [00:18:25] Speaker 00: What the court did in the damages section, or what the experts, I should say, did with respect to the damages, is they grouped the 425 patent with the other two freezing patents. [00:18:37] Speaker 00: And essentially, the evidence they grouped, for damages purposes, they grouped them into three groups. [00:18:43] Speaker 00: So that 425 patent is grouped with the other two patents. [00:18:45] Speaker 00: And the expert testimony, [00:18:47] Speaker 00: from x, y at trial, which the court found that the jury essentially adopted because it mapped onto the damages verdict, essentially described a hub and spoke distribution method that you would have to use all three patents in conjunction to make that hub and spoke distribution method work. [00:19:03] Speaker 00: Either you freeze them on site and then send it off for sorting, or you send it off for sorting and then freeze it. [00:19:09] Speaker 00: And because you would need all three of those patents to make it work, the fact that one of those three patents were invalidated [00:19:16] Speaker 00: It wouldn't affect the damages. [00:19:18] Speaker 02: Okay, but I understand the argument, but isn't this something we should let the district court sort out if that comes to pass? [00:19:24] Speaker 00: Your Honor, it's certainly within this court's discretion to remand, to allow the district court. [00:19:28] Speaker 00: One thing I would point out is they have never requested that relief in their blue brief. [00:19:33] Speaker 00: We raised it in the red brief and said no remand is necessary. [00:19:36] Speaker 00: They don't come back and reply and dispute that either. [00:19:41] Speaker 00: As far as we're concerned, they have never asked for that relief, and they've waived that relief. [00:19:45] Speaker 00: But of course, it's within this Court's discretion to send it back, if it would like to. [00:19:50] Speaker 02: And on the willfulness, you agree there's no consequences? [00:19:53] Speaker 00: Yes, Your Honor. [00:19:53] Speaker 00: I don't think the Court needs to reach that issue. [00:19:56] Speaker 00: And in our view, it's been waived anyways. [00:19:58] Speaker 02: OK. [00:19:58] Speaker 02: Why don't you go ahead with antitrust? [00:20:00] Speaker 00: Sure. [00:20:01] Speaker 00: So I think the antitrust, before you even get into the merits of the 10th Circuit case law, here we have a more fundamental threshold defect of sort of civil procedure 101. [00:20:09] Speaker 00: under the Supreme Court standard in Zalatex, they had the burden to point to the district court in its summary judgment brief to at least some evidence in the record that would allow a tribal issue of fact on the new injury element. [00:20:28] Speaker 00: They filed a reconsideration brief. [00:20:30] Speaker 00: They filed two appeal briefs and had oral argument. [00:20:33] Speaker 00: They still cannot point to where in their summary judgment response [00:20:38] Speaker 00: They point to evidence of new injury from anything. [00:20:43] Speaker 00: And the reason that's critical is district court's summary judgment. [00:20:46] Speaker 00: The Supreme Court has made this clear. [00:20:47] Speaker 00: 10th Circuit law makes it clear. [00:20:49] Speaker 00: It's not the district court's burden to rummage through the record and find, oh, well, let me connect this act to this new injury. [00:20:56] Speaker 00: They cannot point to anything in the summary judgment papers itself that identifies this evidence. [00:21:02] Speaker 00: And the district court explains it. [00:21:03] Speaker 06: Well, when you say they didn't identify any evidence, I guess [00:21:07] Speaker 06: their evidence would be the acts, right? [00:21:10] Speaker 06: So like bad faith negotiations, threats to file lawsuits, refusal to carry out terms of license, and then finally these [00:21:23] Speaker 06: locking in customers with these exceedingly long contracts. [00:21:27] Speaker 00: Yes, Your Honor. [00:21:27] Speaker 00: They allege all of those acts. [00:21:29] Speaker 00: That's true. [00:21:29] Speaker 06: So I guess I'm wondering why isn't that the evidence that they pointed to in their opposition to summary judgment? [00:21:36] Speaker 00: Well, the reason is because all of those acts could equally have caused no new injury. [00:21:42] Speaker 00: That is the 2007 termination, which, of course, they allege was ineffective. [00:21:46] Speaker 00: But that's the limit. [00:21:47] Speaker 02: In other words, they don't allege that it's ineffective. [00:21:50] Speaker 02: The jury found it was invalid. [00:21:52] Speaker 00: The jury did find it. [00:21:53] Speaker 00: But at the time of summary judgment, the relevant allegations are there for their inner antitrust claim, the linchpin of their antitrust claim. [00:22:00] Speaker 00: And it was borne out that the 2007 termination letter was invalid, right? [00:22:08] Speaker 00: If that was invalid and the jury found it was, then all of the acts that they allege don't cause a new injury. [00:22:15] Speaker 00: They just reinforce that same injury. [00:22:17] Speaker 00: That is, it was improper. [00:22:19] Speaker 02: Well, I'm not following this entirely. [00:22:22] Speaker 02: Let's take the long-term contracts, for example, which were entered into after the four-year period, right? [00:22:31] Speaker 00: That were entered into afterwards, yes. [00:22:33] Speaker 02: Yeah. [00:22:34] Speaker 02: And they're saying that caused injury. [00:22:37] Speaker 02: And the argument is, well, no, it couldn't have because they terminated the license agreement earlier and they wouldn't have been in a position [00:22:47] Speaker 02: to offer this technology in competition with these long-term contracts. [00:22:51] Speaker 02: But the fact is that they could have because the license agreement wasn't terminated, so they would have been a licensee and able to do that. [00:23:00] Speaker 02: Why doesn't that show continuing injury from new acts that occurred after the four-year period? [00:23:10] Speaker 00: A couple of responses there, Your Honor. [00:23:12] Speaker 00: Whether, at the time they alleged us [00:23:14] Speaker 00: Nobody knew whether the 2007 termination was valid or not. [00:23:17] Speaker 00: So they had to make allegations where even without the 2007 termination letter, that they would have been able to, say, for example, supply these customers and do that. [00:23:30] Speaker 00: But they didn't make any allegation. [00:23:32] Speaker 00: Allegation is the wrong word. [00:23:34] Speaker 00: At summary judgment, they have to point to evidence. [00:23:36] Speaker 00: They didn't point to any evidence that customers would have signed up for them with them at that time. [00:23:41] Speaker 00: And no customer would have because it was XY's position that the termination had happened in 2007. [00:23:48] Speaker 00: So no customer is going to sign up with them because they would essentially be infringing the patents without a license. [00:23:56] Speaker 00: And so all of it in there. [00:23:58] Speaker 02: But a customer would have signed up for them if they had a license under the patent, which the jury found that they did. [00:24:05] Speaker 00: Right, Your Honor. [00:24:05] Speaker 00: But you have to look at the allegations of their antitrust theory. [00:24:09] Speaker 00: And at summary judgment, the linchpin was the 2007 termination. [00:24:13] Speaker 00: And then they have these additional acts. [00:24:17] Speaker 00: Without the 2007 termination, [00:24:19] Speaker 00: then there is no other injury that happens. [00:24:21] Speaker 00: Or if they want to claim, for example, that they would have suffered some additional injuries separate and apart from the termination. [00:24:28] Speaker 00: That is, look, we have the termination, but the fact that they entered into these contracts, we could have come up with our own technology to supply them with the swords. [00:24:40] Speaker 00: How can it be a final refusal to deal when it was ineffective? [00:24:44] Speaker 00: Well, Your Honor, again, we're looking at what the allegations were. [00:24:48] Speaker 00: They all along said it was ineffective. [00:24:51] Speaker 02: Forget about allegations. [00:24:53] Speaker 02: If the refusal to deal was ineffective, how could it be final within the meaning of these 10th Circuit cases? [00:25:00] Speaker 00: It's the conduct that's at issue, right? [00:25:02] Speaker 00: XY had been refusing to deal all along because XY believed the termination was valid. [00:25:09] Speaker 00: They treated it as invalid. [00:25:10] Speaker 00: They didn't take any license payments. [00:25:12] Speaker 00: So none of that changed based on the jury's verdict. [00:25:16] Speaker 00: The jury's verdict was a legal finding about what had happened. [00:25:19] Speaker 00: But the course of conduct is what happened actually from 2004 to 2013. [00:25:24] Speaker 00: There was a constant refusal to deal throughout that entire period. [00:25:30] Speaker 00: And that's the allegations of their antitrust complaint. [00:25:34] Speaker 00: And so the question is, did they point to anything at summary judgment to show that there was new injury caused [00:25:40] Speaker 00: by these other elements of their antitrust law. [00:25:43] Speaker 02: It's not just the refusal to deal. [00:25:45] Speaker 02: It's also entering into the long-term contracts. [00:25:47] Speaker 00: Sure, entering, entering. [00:25:48] Speaker 02: In the long-term contracts, they say, foreclose those people from dealing with us and that that was an antitrust violation, which may or may not be the case. [00:25:56] Speaker 02: But those are certainly new acts which cause new injury if, in fact, they were able to offer [00:26:04] Speaker 02: competitive product. [00:26:06] Speaker 00: But Your Honor, at that point they were not in fact able to offer that product because the XY was treating them as not a licensee. [00:26:16] Speaker 02: So they could have gone ahead and done it and say we have a license, right? [00:26:21] Speaker 00: If they would have pointed to evidence of that in the summary judgment record, that that's what they did, but that's a counterfactual. [00:26:28] Speaker 00: One, that never happened. [00:26:30] Speaker 00: And two, the critical point here [00:26:32] Speaker 00: given that we're on summary judgment, is they had to point to some evidence of that. [00:26:35] Speaker 00: If they would have pointed to evidence that said, look, we're going to go ahead and do this anyways. [00:26:40] Speaker 00: We're going to sign up these customers. [00:26:42] Speaker 00: In fact, we did sign up customers, and then they broke the contract because of this Ingarand deal. [00:26:47] Speaker 00: Any of that, Your Honor, then maybe this theory would work. [00:26:50] Speaker 00: But again, at summary judgment, they have to point to some triable issue. [00:26:54] Speaker 00: And there's no doubt, they still, after reconsideration, to appeal brief oral argument, they cannot point to any evidence like that. [00:27:02] Speaker 00: of actual tribal injury, of a new injury. [00:27:05] Speaker 00: And tellingly, in their appeal brief, they cite almost exclusively trial evidence with respect to the acts and the alleged injuries. [00:27:14] Speaker 00: Nothing from the summary judgment record, let alone their summary judgment opposition brief, which is the correct piece of paper to be looking at when you're reviewing the district court's grant of summary judgment. [00:27:27] Speaker 00: And the district court made this clear in its reconsideration motion. [00:27:31] Speaker 00: which it didn't have to go into this much detail, but it did. [00:27:35] Speaker 00: And I would point you to page 51. [00:27:36] Speaker 00: At the top of it, JA 51, it says, in the instant motion, Transova now argues that it suffered two categories of new and accumulating injury. [00:27:45] Speaker 00: This is on reconsideration, resulting from X, Y, and ignorance post-termination letter acts, including these customer agreements. [00:27:53] Speaker 00: The court will not permit Transova to supplement its response [00:27:56] Speaker 00: in opposition to summary judgment in the guise of emotion for consideration, when such arguments should have been included in the prior briefing, TransOVA failed to identify a genuine issue of material fact as to the new injury prong of the continuing conspiracy exception, and it may not have a second bite at the apple. [00:28:12] Speaker 00: And again, on JA 53, TransOVA's belated assertion that reams of admissible evidence support a finding of new injury does not cure its failure to present such evidence in its summary judgment briefing [00:28:24] Speaker 00: And then it cites cases that the party has to point them to evidence of a triable issue of fact. [00:28:29] Speaker 00: It didn't do that then. [00:28:31] Speaker 00: And it still hasn't done it in its appeal briefs. [00:28:33] Speaker 00: It doesn't cite its original summary judgment response brief as to where it pointed to evidence that, in fact, it was going to go forward and use the technology and try to sign up customers. [00:28:45] Speaker 02: Well, it's a question of how specific they have to be about it, I guess. [00:28:48] Speaker 00: Well, you know, they have to at least point to some evidence of it. [00:28:51] Speaker 00: And this is all counterfactual. [00:28:52] Speaker 00: Well, if they had known the termination letter was ineffective, then they might have done X, and then they might have tried to do Y. But their claim is simple. [00:29:03] Speaker 02: They say, after the four-year period, there were long-term agreements that prevented other people from dealing with us. [00:29:11] Speaker 02: And that caused us additional injury. [00:29:12] Speaker 02: Your response to that is, well, they didn't have the right to use the technology. [00:29:15] Speaker 00: Not only did they not have the right to, but they couldn't have used it physically, because we weren't supplying them [00:29:23] Speaker 00: with the materials and all of that, that they needed to do it. [00:29:26] Speaker 00: If they would have said, look, we were on the cusp of readying to sign up as customers, have some affidavit, like that, point it. [00:29:34] Speaker 00: Maybe this is a different case. [00:29:35] Speaker 00: Again, they didn't point to that. [00:29:37] Speaker 00: And they still haven't pointed to that here. [00:29:39] Speaker 00: They cite trial evidence. [00:29:41] Speaker 00: This is a summary judgment disposition that's being renewed. [00:29:44] Speaker 00: The other thing I would say which I think may make all of this moot is that this [00:29:50] Speaker 00: Continuing conspiracy exception, although it was granted at summary judgment, the trial court actually let them raise it again at trial. [00:29:57] Speaker 02: Oh, yeah, but excluding a lot of evidence as to Ingram, right? [00:30:01] Speaker 00: No, Your Honor. [00:30:02] Speaker 00: All of that evidence was allowed in. [00:30:04] Speaker 00: Limiting jury instruction said, jury, you cannot consider for the merits. [00:30:08] Speaker 00: You can't consider whether Ingram violated the antitrust laws. [00:30:12] Speaker 00: But in terms of the continuing conspiracy exception, they asked the district court to reconsider [00:30:18] Speaker 00: at trial, whether now, looking at all of the evidence they put in, whether they've satisfied the continuing conspiracy exception. [00:30:26] Speaker 00: XY objected, said, look, you've already decided this at summary judgment. [00:30:30] Speaker 00: The trial court overruled that, said, no, I'm going to look at the evidence. [00:30:33] Speaker 00: But then, at JA 11-429 to 11-32, and this is cited in our red brief on page 12, footnote 2, the district court then looks at their trial evidence and says, even your trial evidence doesn't [00:30:46] Speaker 00: uh... satisfied the new injury problem they have not appealed back so even if there was some of the trial and i'm sorry so we can consider the trial well they have an appeal that's a no they've only appeal the summary judgment but my point is your honor even if there was some uh... defect and we don't know where that's what you said that they asked a trial to have a summary judgment will be considered and refused to do that why can't we consider the evidence that considered at the same time [00:31:14] Speaker 00: Well, Your Honor, he didn't refuse to reconsider it. [00:31:17] Speaker 00: He looked at it and said, even now, you haven't met the new injury. [00:31:21] Speaker 00: They don't appeal. [00:31:23] Speaker 00: The point is a procedural one. [00:31:24] Speaker 00: They don't appeal that ultimate denial of their continuing conspiracy exception. [00:31:28] Speaker 00: So not only did they fail at summary judgment, but even if you give them some leeway, they failed at burden, they don't appeal that. [00:31:36] Speaker 00: So I don't know, even if you overturn summary judgment, it wouldn't get them anything. [00:31:41] Speaker 00: It was subsumed within the trial line. [00:31:43] Speaker 06: What is the JA site for that? [00:31:46] Speaker 00: The 11-429 to 11-432. [00:31:47] Speaker 00: 11-429-11-432. [00:31:53] Speaker 00: And it's pointed to in our red brief at 12 in footnote 2. [00:32:00] Speaker 00: We included the citation as well. [00:32:03] Speaker 00: If there are no further questions about the antitrust claim, if I could turn to the cross appeal, because I think that's an important issue. [00:32:11] Speaker 00: on a model and setting an ongoing royalty rate. [00:32:16] Speaker 00: This court's precedents indicate that once a jury has set a royalty rate using the Georgia-Pacific factors and set a reasonable royalty rate, of course the district court can deviate from that royalty rate and setting an ongoing rate. [00:32:30] Speaker 00: But it has to look at changed circumstances from when the jury already assessed it. [00:32:34] Speaker 00: So the jury assessed it based on the hypothetical negotiation at the time infringement started. [00:32:40] Speaker 00: So has there been some change in economic circumstances that warrants a departure? [00:32:45] Speaker 00: Usually, as this court said in the motto, what that means is because there's now been an infringement. [00:32:52] Speaker 06: We understand that your argument is these royalty rates need to be an economic-based analysis. [00:33:00] Speaker 06: And I guess what I'm wondering is, ongoing royalty rates have been characterized as an equitable remedy. [00:33:07] Speaker 06: Is there no room for any kind of equitable consideration in this royalty rate calculation for the ongoing royalty? [00:33:16] Speaker 00: Your Honor, there may be, in theory, there's certainly none that are presented on the facts of this case that would, because what you're trying to do is- Can you imagine a scenario where it would? [00:33:28] Speaker 00: I mean, offhand, I cannot imagine a scenario where you would want to depart from the jury's calculation of the reasonable royalty rate. [00:33:36] Speaker 00: And the reason I say that is twofold. [00:33:40] Speaker 00: One is because a modest has changed economic circumstances. [00:33:42] Speaker 00: It doesn't say equitable circumstances. [00:33:44] Speaker 02: Surely there are circumstances where there is new technology introduced in the market, and the license becomes less valuable. [00:33:51] Speaker 00: Absolutely. [00:33:51] Speaker 00: That's a classic economic circumstance that a court could take into account in making [00:33:58] Speaker 00: royalty rate lower here though it was the opposite case at JA-27 the district court acknowledges in fact this technology has become more valuable so that would support an upward adjustment in the royalty rate. [00:34:09] Speaker 01: So what remedy are you looking for on your cross appeal to go back for a trial with damages experts back to the jury? [00:34:18] Speaker 00: No, Your Honor, the jury has already set the rate. [00:34:20] Speaker 00: We're not challenging the jury rate. [00:34:22] Speaker 00: This is just the district court's calculation of the ongoing rate. [00:34:26] Speaker 00: So we would just have a remand back to the district court to redo the ongoing royalty rate, consistent with the court's guidance in a motto. [00:34:37] Speaker 00: And even apart from the equitable circumstances, Judge Chen, here, that was one piece of it. [00:34:42] Speaker 00: But what was primarily driving [00:34:45] Speaker 00: the district courts departure downward from the royalty rate was not the equitable circumstance, but the prior royalty agreement from 2004 that the parties into at 10%. [00:34:56] Speaker 00: Well, that was in front of the jury at Georgia Pacific. [00:34:59] Speaker 00: In fact, it's one of the primary factors that the jury considered in setting the 15% rate started with the 10% rate. [00:35:06] Speaker 00: And because of the greater demand of this technology and all of the other Georgia Pacific factors, it landed at 15%. [00:35:13] Speaker 00: For 2009? [00:35:14] Speaker 00: Yes, starting at infringement in 2009. [00:35:21] Speaker 00: And so then the court to say, well, I'm going to average that with the 2004 royalty rate, one, that departs clearly from a motto, which says you look at change circumstances. [00:35:33] Speaker 00: It's obviously not a change circumstance. [00:35:35] Speaker 00: It's exactly what the jury considered the 2004 rate. [00:35:38] Speaker 00: But two, to then average that with the jury rate is double counting it. [00:35:42] Speaker 00: The jury rate already depressed it. [00:35:45] Speaker 00: It would have been higher than 15% if you didn't have a 10% baseline. [00:35:49] Speaker 00: But then to average the jury rate with that 10% agreement again, double counts it and depresses it further. [00:35:56] Speaker 00: So even putting aside the equitable circumstance, even if it could account for the unclean hands, the primary thing it did here was average it with that prior license agreement, which squarely is part of the [00:36:09] Speaker 00: jury rate that was already set and that is not to be revisited by the court in setting the ongoing royalty rate. [00:36:18] Speaker 02: I understand what you're saying. [00:36:19] Speaker 02: I just think this footnote in a motto doesn't get you quite as far as you'd like. [00:36:24] Speaker 00: No, and I don't want to rely just on the footnote in a motto, Your Honor. [00:36:27] Speaker 00: I want to rely on the text, which says that the court is exercising, when it's doing an ongoing royalty rate, is looking at things that have changed, whether you want to call them economic circumstances or not, [00:36:39] Speaker 00: things that have changed since when the jury calculated it. [00:36:42] Speaker 00: So you gave the classic example, which maybe the market, the bottom is falling out of the market for this technology because something else has come up new. [00:36:50] Speaker 00: That's the type of stuff the jury is supposed to consider. [00:36:52] Speaker 00: And as Amato said, in particular, you're supposed to give up a bump to the patentee because now you have an infringement and non-validity finding. [00:36:59] Speaker 00: We have that here. [00:37:00] Speaker 00: So you should get a bump up from 15%. [00:37:03] Speaker 00: And then as to your market base factor, [00:37:05] Speaker 00: At J-27, the district court acknowledged that cut in our favor as well. [00:37:09] Speaker 00: So we should be well above 15. [00:37:10] Speaker 01: I just want to be sure I understand. [00:37:12] Speaker 01: You keep telling us that circumstances have changed, but that it would be inappropriate to have a further trial proceeding to provide evidence of changed circumstances. [00:37:24] Speaker 01: You're just saying that your words should be accepted by the court, even though they may argue with you? [00:37:30] Speaker 00: No, Your Honor. [00:37:31] Speaker 00: So the district court didn't disagree with any of these. [00:37:34] Speaker 00: So my understanding of how these proceedings work is the jury sets the rate. [00:37:40] Speaker 00: Then as for the ongoing royalty rate, the district court then has a hearing and says, OK, now I have to set the ongoing royalty rate. [00:37:47] Speaker 00: Is there any evidence of changed circumstances, such as the market falling and the parties would have a chance to submit evidence on the briefs? [00:37:54] Speaker 00: And then the court has a hearing and sets an ongoing royalty rate looking at that. [00:37:58] Speaker 00: That's what happened here. [00:37:59] Speaker 00: It set the ongoing royalty rate, though, by averaging a 10% rate with the jury, a 15% rate, and came to a 12.5% rate. [00:38:07] Speaker 00: And we think that was legal error for it to double count the 2004 agreement, which the jury had already accounted for. [00:38:15] Speaker 00: So all we're looking for is a remand. [00:38:17] Speaker 00: There doesn't have to be any new evidence, no nothing, no new evidence of any kind. [00:38:22] Speaker 00: Just tell remand to the district court to apply it consistent with a motto and only take into account not [00:38:29] Speaker 00: The prior license agreement, which was not a new circumstance. [00:38:33] Speaker 00: So that would be the nature of the remand. [00:38:34] Speaker 01: Thank you. [00:38:35] Speaker 01: We'll hear from the other side on the cross-appealing. [00:38:37] Speaker 01: You've saved a minute in rebuttal. [00:38:41] Speaker 05: Thank you, Your Honor. [00:38:45] Speaker 03: The elephant in the room is unclean hands. [00:38:50] Speaker 03: My opponent is arguing that there should be a remand to the district court. [00:38:54] Speaker 02: How does unclean hands help you? [00:38:56] Speaker 03: And so, unclean hands is an equitable consideration. [00:39:02] Speaker 02: In sitting in equity... Unclean hands was terminating the agreement in 2007. [00:39:08] Speaker 02: That's the unclean hands. [00:39:10] Speaker 02: Yes. [00:39:11] Speaker 03: So why should that affect the continuing royalty, right? [00:39:16] Speaker 03: Because when a court is considering sitting in equity, all the considerations that should apply [00:39:24] Speaker 03: That consideration is one that our opponent is urging. [00:39:29] Speaker 03: The district court should have ignored. [00:39:31] Speaker 03: And however you dress it up, they're asking for a remand, essentially with instructions from the district court to use the jury's award as a floor, with an instruction, implicitly or explicitly, to the district court to ignore unclean hands. [00:39:48] Speaker 06: Is there any case law you have that can support the idea of some kind of [00:39:55] Speaker 06: Inequitable Act that occurred a decade ago should be a consideration or can be a consideration for an ongoing royalty right? [00:40:05] Speaker 03: No, there's neither authority supporting that nor contrary to it. [00:40:09] Speaker 03: There is no authority that the other side suggests for ignoring a jury finding related to unclean hands that went to the very essence of this dispute. [00:40:20] Speaker 02: What's the unclean hands point argued [00:40:22] Speaker 02: to the jury in connection with the royalty award that the jury made? [00:40:28] Speaker 03: No, it was argued, and the jury verdict reform reflects it in connection with a violation of their duty of good faith and fair dealing. [00:40:36] Speaker 02: Well, if it was relevant to the royalty rate, why wasn't it argued to the jury for that purpose? [00:40:42] Speaker 03: Your Honor, and this gets to the notion that somehow this was baked into the jury verdict. [00:40:48] Speaker 03: It would have been error to instruct the jury. [00:40:50] Speaker 03: to consider an equitable factor like unclean hands and arriving at the legal remedy for damages. [00:40:56] Speaker 02: So only the court can consider unclean hands for a continuing royalty, but the jury can't consider it in setting the initial royalty? [00:41:03] Speaker 02: That's correct. [00:41:06] Speaker 02: OK. [00:41:07] Speaker 06: Could you respond really briefly to A11-1429 to A11-1431 that the other side cited to as the district court revisiting [00:41:19] Speaker 06: your continuing conspiracy exception and then concluding again that it didn't work. [00:41:25] Speaker 06: And then I guess this hasn't been appealed to us. [00:41:30] Speaker 03: Your Honor, we don't disagree with the notion that the district court went back and said that the sufficient evidence hadn't been presented. [00:41:40] Speaker 02: We agree. [00:41:41] Speaker 02: But what they're saying is that we can't consider the trial record because you only appealed the grant of summary judgment and not the reconsideration. [00:41:55] Speaker 02: How did this come up at the trial? [00:41:57] Speaker 02: Did you ask them to reconsider the summary judgment ruling? [00:42:00] Speaker 02: Yes. [00:42:04] Speaker 02: I don't understand why appealing from the denial of summary judgment wouldn't encompass the denial of reconsideration. [00:42:11] Speaker 02: I would concede that that's correct. [00:42:12] Speaker 03: But I would respectfully point the court to JA 43. [00:42:17] Speaker 03: That's where the district court initially looked at the evidence presented in the opposition's motion for summary judgment. [00:42:25] Speaker 03: That's where the court did not extend the required assumptions by Rule 56. [00:42:33] Speaker 03: It's instructive what the district court said in JA 43. [00:42:37] Speaker 03: The evidence shows that trans ova's injuries began when counterclave defendants prevented it from fairly competing by purporting to terminate the degree. [00:42:48] Speaker 03: Began. [00:42:50] Speaker 03: So the court implicitly acknowledged that it was the beginning of the injury. [00:42:55] Speaker 03: It said that on JA 43. [00:42:58] Speaker 03: But it never went on to evaluate the evidence. [00:43:01] Speaker 03: I mean, if you look. [00:43:02] Speaker 03: at the next page, there's no consideration of the evidence that the court identifies in 41. [00:43:10] Speaker 03: And it strongly suggests that the evidence, that the injuries began and continued, and indeed they did, or at least there was a triable issue of fact as to whether they did. [00:43:22] Speaker 03: But our position on summary judgment [00:43:24] Speaker 03: is that the court that overlooked that never actually analyzed. [00:43:29] Speaker 06: What would you say is the best thing in your opposition to the summary judgment motion that you can point us to, the particular page of it, that proves up that you made a case for what the new injury is that's separate from the act of terminating, illegally terminating the license? [00:43:53] Speaker 03: Your Honor. [00:43:54] Speaker 03: The appendix 3759 and the excerpts from the record, the testimony, and from the declaration of our expert, which goes through. [00:44:09] Speaker 03: What page of your SJ op? [00:44:14] Speaker 03: Well, I'm looking at the joint appendix. [00:44:16] Speaker 03: If you give me a moment, I'll look at the op itself. [00:44:20] Speaker 01: Yes, please. [00:44:31] Speaker 06: I don't think the summary judgment opposition is in the joint appendix, is it? [00:44:37] Speaker 03: Portions of it all. [00:44:39] Speaker 03: And that's what I was referring your honor to. [00:44:42] Speaker 03: OK. [00:44:44] Speaker 03: And I'll be happy to refer to it, because it is replete. [00:44:47] Speaker 03: The opposition is replete with evidence, largely coming from the notion of these long-term contracts, but relying heavily on Dr. Dramamis. [00:44:59] Speaker 03: Evidence put forward in the opposition. [00:45:01] Speaker 03: And this is, again, I understand, contrary to the district court's reconsideration motion where it said, you never presented this evidence to me. [00:45:09] Speaker 03: We would respectfully disagree, particularly given the presumptions that were necessary and were not really acknowledged by the court at all. [00:45:18] Speaker 03: So it's OK. [00:45:19] Speaker 03: We can review it ourselves. [00:45:20] Speaker 03: But to answer your question, Your Honor, in the joint appendix, 3759, 3787, [00:45:28] Speaker 03: 3847, 3864, 3865, 4077 to 4079 in the joint appendix. [00:45:38] Speaker 03: OK. [00:45:41] Speaker 03: I can repeat that. [00:45:45] Speaker 03: But these are excerpts from the opposition for the motion for summary judgment and the affidavit supporting it. [00:45:55] Speaker 03: It's not there in its entirety. [00:45:57] Speaker 03: But if the court looks at the entire motion and the exhibits, I don't see how one could not conclude that there was at least a genuine issue of material fact with respect to new and accumulating information. [00:46:13] Speaker 01: Any more questions? [00:46:15] Speaker 01: Any more questions? [00:46:15] Speaker 01: Thank you. [00:46:16] Speaker 03: Your Honor, I hope I haven't confused Madison with my citations to the joint appendix. [00:46:22] Speaker 01: No, we understand our rules prohibit [00:46:25] Speaker 01: including in the Joint Appendix pages other than those that are cited in the briefs. [00:46:31] Speaker 03: Thank you. [00:46:35] Speaker 01: And Mr. Shah, you saved one minute for rebuttal on the cross appeal. [00:46:40] Speaker 01: You'll have to talk fast. [00:46:44] Speaker 00: Sure, Your Honor. [00:46:45] Speaker 00: The only point I would make on rebuttal, unless there are questions, is that there is no rationale that's consistent with any [00:46:53] Speaker 00: law on how you do ongoing royalty assessments that would allow the district court to average a pre-existing license agreement which the jury used to set the 15% royalty rate with the jury royalty rate. [00:47:08] Speaker 00: It would be double counting it and looking at a past license agreement, a past economic circumstance that the jury has already taken into account and then giving it different weight. [00:47:18] Speaker 00: That is precisely what the district court is not supposed to do. [00:47:21] Speaker 00: It's supposed to look at new circumstances, whatever those new circumstances would be. [00:47:25] Speaker 02: Well, basically, they're saying that the district court has the equitable discretion to punish you for your unclean hands conduct by lowering the royalty rate. [00:47:36] Speaker 00: Well, Your Honor, it's supposed to set a reasonable royalty rate. [00:47:39] Speaker 00: There isn't any law that we're aware of that allows them to do that. [00:47:42] Speaker 00: In fact, the CIDAC article that we cite [00:47:44] Speaker 00: looks at all 35 cases that have been published on ongoing royalty rates, exactly zero of them have an ongoing royalty rate set below the jury rate. [00:47:56] Speaker 00: And the reason for that is because, as Amato explains, in almost every case, the patentee's bargaining position will have strengthened from that at the time that infringement began. [00:48:09] Speaker 00: because there's now an infringement verdict. [00:48:11] Speaker 00: There's now a non-invalidity verdict. [00:48:13] Speaker 00: So the only way the court could go down for that, I'm not saying it can't go down, but is to take into account precisely the type of circumstance, Judge Dyke, that you set forth is, oh, well, maybe the bottom fell out of the market for this technology. [00:48:26] Speaker 00: It's no longer in demand. [00:48:27] Speaker 00: A licensee wouldn't want to pay that same royalty rate. [00:48:31] Speaker 00: But again, the evidence goes exactly in the opposite direction here. [00:48:35] Speaker 00: So this is a legal error. [00:48:36] Speaker 00: that the district court should be directed to fix and do the type of analysis that every other district court has done in the last decade since these ongoing royalty rate determinations have become common. [00:48:49] Speaker 00: Thank you. [00:48:54] Speaker 01: Thank you both. [00:48:55] Speaker 01: The case is taken under submission.