[00:00:03] Speaker 02:
The first case for argument this morning is 17-1953, Automated Merchandising versus Yanku.

[00:00:16] Speaker ?:
Mr. Berkman.

[00:00:17] Speaker ?:
Thank you, Lana.

[00:00:21] Speaker 00:
May I please court?

[00:00:24] Speaker 00:
AMOS is not waiving or banning any of the arguments presented in its briefing, but given the importance of the policy question that's presented here,

[00:00:32] Speaker 00:
I want to focus the argument today on that issue.

[00:00:35] Speaker 00:
Specifically, what value should consent judgments be given in subsequent litigation?

[00:00:42] Speaker 00:
Because the statute at issue has expired, if you rule for me, you will simply be affirming the value of consent judgments based on stipulation without creating a broad precedent.

[00:00:52] Speaker 00:
This statute was replaced, as you know, the Interparties re-examination was replaced by Interparties review a number of years ago.

[00:00:59] Speaker 00:
So this is unique to inter-party re-examination.

[00:01:02] Speaker 03:
At JA 1738, the PTO dismissed your petition to terminate the proceedings on the basis that AMS had not demonstrated that the same claims were at issue in the district court litigations and the re-examination proceedings.

[00:01:19] Speaker 03:
Where in the opening brief do you challenge the PTO's determination that the same claims were involved in both proceedings?

[00:01:26] Speaker 00:
Your Honor, two responses to that.

[00:01:29] Speaker 00:
We filed a petition for each of the four patents at issue in each of the four cases.

[00:01:34] Speaker 00:
And we got a dismissal from the patent office in the first round saying you didn't do this, you didn't do that, didn't do this.

[00:01:40] Speaker 00:
Each of these petitions at the time was costing $1,940.

[00:01:43] Speaker 00:
Since the exact same issues were present in all four cases, we filed a second petition and a renewal of that petition only for the 634 patent.

[00:01:53] Speaker 00:
But the issues would be the same.

[00:01:55] Speaker 00:
However, that was decided, we believe, would control all four cases.

[00:01:58] Speaker 00:
So that dismissal, that sort of became water under the bridge when the final decision in the 634 patent case was issued.

[00:02:08] Speaker 00:
The answer to that is they were saying that only certain claims were at issue.

[00:02:12] Speaker 00:
What we did is we presented in the renewed petition for the 634 patent, we presented the answer which included all their counterclaims attacking the validity of each of the asserted patents.

[00:02:25] Speaker 00:
And then also their expert report

[00:02:27] Speaker 00:
where it was late in the game where they were still attacking each of the claims that were asserted.

[00:02:32] Speaker 03:
Let me ask you this.

[00:02:33] Speaker 03:
Supposing we agree with you that the PTO should have terminated the proceedings, but we also conclude that the same claims weren't at issue in the district court litigation and the re-exams.

[00:02:46] Speaker 03:
Would the appropriate remedy be partial termination for the claims at issue in both?

[00:02:53] Speaker 00:
Your honor, what I would suggest to that is I think that would be one answer, and that would be splitting the baby.

[00:02:58] Speaker 00:
But I think the best answer would be to remand it to determine which claims were actually at issue.

[00:03:03] Speaker 00:
And the issue that the PTO raised specifically, there's actually two categories.

[00:03:09] Speaker 00:
The issue that they raised was primarily based on the fact that going to trial, we were scheduled to go to trial like two or three days later after we reached agreement.

[00:03:19] Speaker 00:
Um, but that week we had, we had, we had presented a pretrial order.

[00:03:24] Speaker 00:
It where we had reduced the number of claims that we were going to go to trial on because we had four patents with, I don't know, maybe 200 claims.

[00:03:30] Speaker 00:
So we reduced it somewhat.

[00:03:32] Speaker 00:
There were still a large number of claims and those your honor are still the key claims in our case.

[00:03:37] Speaker 00:
Uh, but, but then the defendant, Crane in that case, the requester was under no obligation to mirror that and reduce their validity challenge.

[00:03:46] Speaker 00:
They did that voluntarily.

[00:03:48] Speaker 00:
And so that was their choice.

[00:03:49] Speaker 00:
But critically here, things happened very quickly after that.

[00:03:53] Speaker 00:
That pretrial order was never entered.

[00:03:56] Speaker 00:
It was only a draft pretrial order.

[00:03:58] Speaker 00:
So the offer to reduce claims, both by us and by Crane, never became effective.

[00:04:04] Speaker 00:
So where does that lead us?

[00:04:05] Speaker 02:
The claims were the same, all the claims that were there or in this proceeding, or said another way, all the claims in this proceeding?

[00:04:12] Speaker 00:
All the claims were present in the case.

[00:04:15] Speaker 00:
And so, but if there's going to be a determination that one way or the other, I think that the patent office would be, rather than using this court's time to try to wade through the evidence, I think it should go back to the patent office.

[00:04:28] Speaker 00:
But critically also from my perspective is the district court didn't come in and say, these claims of the patent are valid.

[00:04:36] Speaker 00:
It went back to what was originally put at issue by the complaint and the counterclaims and said the claims of these patents.

[00:04:44] Speaker 00:
or valid, didn't identify specific claims.

[00:04:47] Speaker 00:
So Crane stipulated to that.

[00:04:49] Speaker 00:
Crane was the requester.

[00:04:50] Speaker 02:
And we feel that that should have ended the... So under the statutory language of 317B requires a final decision entered.

[00:05:00] Speaker 02:
The party has not sustained its burden of proving the invalidity of any patent claim or suit.

[00:05:05] Speaker 02:
Isn't this consent judgment different?

[00:05:08] Speaker 02:
All it says is that the party stipulate that these patents that are listed

[00:05:14] Speaker 02:
are valid.

[00:05:17] Speaker 02:
Isn't that a distinction?

[00:05:20] Speaker 00:
No, I don't think it is a distinction, because if you look at the consensual- Why not?

[00:05:23] Speaker 02:
The district court has made no determination with respect to the validity of any of these claims, right?

[00:05:28] Speaker 00:
The statute doesn't require it.

[00:05:29] Speaker 00:
That's the Patanoff's argument.

[00:05:31] Speaker 00:
They're saying the consent judgments are only valid if it either reflects the court's decision or is worded to suggest that the court decided that.

[00:05:41] Speaker 00:
No consent judgment is based on a court decision.

[00:05:44] Speaker 00:
That's a whole different animal.

[00:05:46] Speaker 03:
So what in your?

[00:05:46] Speaker 03:
Well, you know, I sat at trial for a long time.

[00:05:51] Speaker 03:
And certainly, I reviewed those consents from the court's viewpoint as well as the parties.

[00:06:01] Speaker 03:
I wouldn't have signed something that I thought was improper.

[00:06:04] Speaker 00:
I agree.

[00:06:04] Speaker 00:
But I'm not saying that, Your Honor.

[00:06:06] Speaker 00:
What I'm saying is that the statute doesn't require that the court decide, in fact,

[00:06:10] Speaker 00:
The final decision is a terminology that, frankly, has very little to do with the pathways.

[00:06:17] Speaker 03:
It's not a stipulation.

[00:06:18] Speaker 03:
It's a consent decision.

[00:06:19] Speaker 03:
You're stipulating to it.

[00:06:21] Speaker 03:
It is a consent decision.

[00:06:24] Speaker 00:
OK, it is.

[00:06:25] Speaker 00:
But that's the policy position that I want to talk about.

[00:06:29] Speaker 00:
And that is this court and all the courts, to my knowledge, follow the same practice.

[00:06:34] Speaker 00:
And that is consent judgments are treated as on the merits to the extent that they actually specify.

[00:06:40] Speaker 00:
what the issue is.

[00:06:42] Speaker 00:
In this case, if you look at the consent judgment, it's Appendix 1509 in Volume 2 of the appendix.

[00:06:49] Speaker 00:
The preamble to the consent judgment, it leads into exactly what the court was doing.

[00:06:55] Speaker 00:
It said the parties, and this is quoting now, hereby consent to entry of judgment as follows.

[00:07:01] Speaker 00:
And then bullet point two is the parties stipulate that United States patents and lists of patents are valid.

[00:07:07] Speaker 00:
So to say that that's simply a stipulation to be given no effect, I think, is to undermine the value of consent judgments.

[00:07:13] Speaker 00:
And that is a major policy concern.

[00:07:16] Speaker 00:
Historically, this court rules on cases.

[00:07:19] Speaker 00:
And I've had cases.

[00:07:20] Speaker 00:
And I'm sure each of you have had cases where, based on what happened below, the parties stipulate the validity and infringement in order to get a review, probably, of a marked claim construction, which is dispositive.

[00:07:32] Speaker 00:
This court, which can only hear, only has jurisdiction over appeals,

[00:07:37] Speaker 00:
based on final decisions from the district court, it always accepts those decisions, those consent judgments based on stipulations, as final decisions.

[00:07:46] Speaker 00:
And that's true of every court.

[00:07:47] Speaker 00:
In every case I've looked at, the intervener points to a 1953 Supreme Court decision and says, no, no, no.

[00:07:55] Speaker 00:
These things are only to be treated as proform acceptance of what the parties stipulated to.

[00:07:59] Speaker 00:
And Your Honor, you know the judges actually do look at these things, as you suggest.

[00:08:04] Speaker 00:
And they wouldn't sign something that runs afoul of what they think is appropriate.

[00:08:09] Speaker 02:
That's been my experience as well.

[00:08:10] Speaker 02:
So you're saying that the district court judge here drew, reached conclusions with respect to the validity of these seven patents?

[00:08:19] Speaker 00:
No, I'm not saying that, because I don't have the evidence to support that.

[00:08:22] Speaker 02:
Analyzed though?

[00:08:23] Speaker 02:
Did she have the evidence?

[00:08:24] Speaker 02:
I mean, what was the role of the district court judge, other than approving the party stipulation?

[00:08:31] Speaker 02:
Did she have any,

[00:08:32] Speaker 02:
have any substantive involvement in the adjudication or analysis of any of the claims of abetting?

[00:08:39] Speaker 00:
He did, Your Honors, Judge Bailey.

[00:08:41] Speaker 00:
And Judge Bailey, on the same pieces of art, very late in the case, the defendant Crane filed a summary judgment.

[00:08:50] Speaker 00:
And based on the same art and the same arguments, in fact, to their briefs, Invalidity.

[00:08:55] Speaker 00:
Invalidity.

[00:08:56] Speaker 00:
And to their briefs, they attach all of the patent office

[00:09:00] Speaker 00:
decisions in these inter-parties re-examinations, and the court denied that.

[00:09:05] Speaker 00:
Now, I don't think that's a final decision, but again, I think that you want to get onto a slippery slope of thinking, what was the judge thinking?

[00:09:12] Speaker 00:
The final decision, according to the statute, doesn't require that the judge have made the determination, and that's the intervener's position.

[00:09:21] Speaker 03:
Let me get you on the merits a little bit, okay?

[00:09:26] Speaker 03:
In the blue rave, you argued that the PTAB misconstrued certain claim terms, including Venn space, fall, and calibration circuit.

[00:09:36] Speaker 03:
Yes.

[00:09:37] Speaker 03:
Where in the briefs before the PTAB did you offer construction of Venn space?

[00:09:44] Speaker 00:
There were a number of places where we did that, but among others, we presented... I'd like a citation because I'm looking for it.

[00:09:52] Speaker 00:
I don't have that on top of my head, but I'll just tell you what they were.

[00:09:55] Speaker 00:
and I'll find them while the other side speaks, but what they were was we had a Mark McClaim construction from the district court and we presented that as an attachment.

[00:10:05] Speaker 00:
We also had, there had been 12 prior re-examinations on these patents by Crane.

[00:10:10] Speaker 03:
Did it differ from the PTABS construction that then space quote extends the between the glass to the product support services and so on?

[00:10:21] Speaker 00:
Yes and no.

[00:10:22] Speaker 00:
The PTAB agreed that the vent space has to be between the shelves where the products are displayed, invented from, and the glass, and then the side to side where those trays exist.

[00:10:33] Speaker 00:
But the critical distinction is they said, that's it.

[00:10:37] Speaker 00:
It doesn't extend down into the retrieval bin.

[00:10:40] Speaker 00:
But if you look at the claims that are asserted, the claims that are in dispute, they always have the vent space going from up there down into the retrieval bin.

[00:10:48] Speaker 00:
And so we feel that the longitudinal aspect was completely ignored because the primary reference that they used in every rejection had a device that had divider between the above area and the retrieval bin.

[00:11:01] Speaker 00:
So we said there's no way a product can fall through there freely.

[00:11:06] Speaker 00:
Can't fall freely.

[00:11:07] Speaker 00:
It can't fall automatically.

[00:11:08] Speaker 03:
I read your argument this time.

[00:11:10] Speaker 00:
So I'll happily find those and get back to you.

[00:11:13] Speaker 00:
Your Honor, the time has flown.

[00:11:14] Speaker 00:
I apologize.

[00:11:16] Speaker 00:
I want to reserve what I have.

[00:11:18] Speaker 00:
Thank you.

[00:11:21] Speaker 02:
Good morning, Your Honors.

[00:11:34] Speaker 04:
May it please the Court?

[00:11:36] Speaker 04:
As counsel started with the 317 issue, I guess I'll start there.

[00:11:40] Speaker 01:
The first point being... Do you think the stipulation by the parties that it's entered into by a

[00:11:46] Speaker 01:
the court as a consent judgment could ever satisfy this?

[00:11:51] Speaker 04:
Yes, Your Honor.

[00:11:52] Speaker 04:
I think there are consent judgments that could satisfy 317.

[00:11:55] Speaker 01:
So if the consent judgment had said the challenging party agrees that it has not met its burden of proving invalidity and the court then enters that as a consent judgment, would that satisfy this bar?

[00:12:13] Speaker 04:
That would be

[00:12:13] Speaker 03:
I think a stronger case would be... How about one where the parties submit findings affecting conclusions of law in support of it?

[00:12:23] Speaker 04:
Absolutely, Your Honor.

[00:12:24] Speaker 04:
And because that's where the statute, we keep going back to the statute in the brief, because it talks about a final decision that the party has not sustained its burden of proving invalidity.

[00:12:33] Speaker 04:
And we told AMS during these various petition decisions, those aren't magic words.

[00:12:39] Speaker 04:
There are other formulations you can use.

[00:12:41] Speaker 02:
Are there some examples of what the other formulations you can use?

[00:12:46] Speaker 04:
Sure.

[00:12:46] Speaker 04:
So for example, on Appendix 138, which is one of the petition decisions, we said, while the statutory language is preferred, alternative language imparting a specific decision by the court on the non-invalidity of the particular claims would be accepted, such as, for example, this judgment is a decision by the court that each and every claim of the 634 patent

[00:13:10] Speaker 04:
is in suit and is valid, which was not provided.

[00:13:14] Speaker 04:
And AMS has more or less argued these are just magic words.

[00:13:18] Speaker 04:
It's a meaningless reformulation.

[00:13:20] Speaker 04:
But what really undercuts that is that they admitted in their first appeal, the prior appeal to this court, that they went back to Crane, the requester, and said, will you agree to go with us to the district court judge and request a new consent judgment, request to modify the language in accordance with what the PTO suggested?

[00:13:40] Speaker 04:
and Crane declined that.

[00:13:41] Speaker 02:
Can you tell us why that matters?

[00:13:43] Speaker 02:
I mean, looking at what the statutory language was intended to allow or foreclose while the distinctions you're drawing, how they fit into the purpose of the statute?

[00:13:55] Speaker 04:
Right.

[00:13:55] Speaker 04:
So the purpose of the statute, I think we have to look at the statute as a whole.

[00:13:59] Speaker 04:
And part of that is Section 313, which tells the Patent Office, once we determine there's a significant new question of patentability, we are required to

[00:14:09] Speaker 04:
to take that to resolution and make a determination.

[00:14:12] Speaker 04:
And 317 is an exception.

[00:14:14] Speaker 04:
And there is a non-discretionary duty to terminate the proceedings if the question has been finally decided by a court or in another reexamination proceeding.

[00:14:24] Speaker 04:
But it's narrowly tailored in the plain language of the statute because otherwise we are obligated to carry the examination forward, which is what we did here.

[00:14:32] Speaker 04:
And with respect to the importance of crane agreeing or not agreeing, I think that just

[00:14:38] Speaker 04:
to whether this is just a form over substance type of rejection, which was what AMS essentially argues.

[00:14:45] Speaker 01:
So let me try again, because I'm still not sure I understand the answer to your question.

[00:14:49] Speaker 01:
If the stipulation said the parties stipulate to dismissal, and then said in a second sentence, the parties stipulate that the one party, Crane I assume, has not met its burden of proving invalidity,

[00:15:03] Speaker 01:
And the district court just enters that.

[00:15:05] Speaker 01:
In your view, that's not good enough.

[00:15:07] Speaker 01:
Correct.

[00:15:08] Speaker 01:
That would not... That's not a determination by the court.

[00:15:11] Speaker 04:
Correct.

[00:15:12] Speaker 01:
Where in the statute does it require that the court make the determination rather than just a final decision showing that the party has not made its... That it's burdened?

[00:15:25] Speaker 01:
Sure.

[00:15:25] Speaker 01:
So what does that?

[00:15:26] Speaker 01:
It's just implicit that a final decision showing X has to be the court's decision showing X. That's exactly correct.

[00:15:34] Speaker 04:
In fact, it's unclear who else's decision that would be.

[00:15:39] Speaker 04:
And as Judge Wallach pointed out, there are situations where a court adopts findings and the parties can propose a finding and the court could sign off on that.

[00:15:48] Speaker 04:
Now you could get into some difficult line drawing questions if we try to get inside the judge's head.

[00:15:54] Speaker 04:
and say, you know, was there a substantive evaluation to an earlier point or an earlier question.

[00:16:00] Speaker 04:
But we don't try to do that.

[00:16:02] Speaker 04:
What we do is we say, if you could bring us a judgment, a final decision from a district court, and it's a decision by the court signed by an Article III judge that, you know, you have not met your burden or even that these claims are valid and that they are in suit, then we will dismiss the action.

[00:16:20] Speaker 04:
And as AMS points out, we have dismissed many

[00:16:24] Speaker 04:
judgment, many inter-parties re-exams based on consent judgments that do use that language.

[00:16:31] Speaker 04:
And those were before the Eastern District of Virginia in the prior proceeding.

[00:16:35] Speaker 04:
I'm not sure why AMS thinks it's improper to look at those, but we've been very consistent with those, with the admitted exception of these Codian decisions, which we've addressed before.

[00:16:47] Speaker 04:
So unless your honor has any other questions.

[00:16:49] Speaker 01:
Well, I mean, I have to tell you, it still troubles me a little bit, because it seems

[00:16:53] Speaker 01:
to turn on the notion of whether this stipulated judgment includes the words the parties agree that the patent is valid or the patent is valid.

[00:17:06] Speaker 01:
If they had left out the parties agree that and the district court had otherwise entered the stipulation and the consent judgment, that seems like it would have been good enough for you.

[00:17:18] Speaker 04:
Well, because then the judge is adopting

[00:17:21] Speaker 04:
the finding.

[00:17:22] Speaker 04:
And there is a policy reason to make this distinction.

[00:17:24] Speaker 04:
And that is that parties agree to dismiss lawsuits for a lot of reasons.

[00:17:29] Speaker 04:
And here, particularly, if we look at the consent judgment, the parties are stipulating that five patents are valid.

[00:17:35] Speaker 04:
And that fifth patent is a crane patent.

[00:17:38] Speaker 04:
And that's relevant because the parties were suing each other.

[00:17:40] Speaker 04:
They were both accusing each other of patent infringement.

[00:17:43] Speaker 04:
We don't know if they just agreed it was too costly and they would both go their own ways.

[00:17:47] Speaker 04:
We have no idea why they settled.

[00:17:52] Speaker 03:
It's not beyond district court judges to get something like that, what Judge Hughes posited, just a decision.

[00:18:06] Speaker 03:
It's not beyond district court judges to say, send it back and say, give me findings and conclusions, because they do do that.

[00:18:13] Speaker 04:
And that would be appropriate here.

[00:18:15] Speaker 04:
And in fact, in this case, the judge originally just... In that hypothetical.

[00:18:22] Speaker 04:
Right, well, in this specific case, in the district court case in West Virginia, the district court judge originally just entered a judgment dismissing all claims with prejudice and said, you come back to me if there's anything more I'm required to say.

[00:18:33] Speaker 04:
And they came back, and then that's when they got this consent judgment that's at Appendix 1509.

[00:18:38] Speaker 02:
Can you describe any other areas of the law where the line you're drawing here between what we needed for the district court to say and what we didn't say has

[00:18:52] Speaker 02:
a similar effect.

[00:18:53] Speaker 02:
Are there other areas?

[00:18:54] Speaker 02:
Finality questions, I should think.

[00:18:57] Speaker 02:
I don't know if it's attorney's fees.

[00:18:59] Speaker 02:
I know there's been the cannon and some questions about what actually was resolved and whether there's a prevailing party.

[00:19:04] Speaker 02:
Do you think of any others where that distinction would be dispositive of something?

[00:19:11] Speaker 04:
Top of mind, I don't have an analogous area, but I do know that the cases... You'd look under rule 54B certifications and whether there's

[00:19:21] Speaker 03:
a determination of finality or not, what the court did in it?

[00:19:26] Speaker 03:
Because you can see that in Wright and Miller all over the place.

[00:19:30] Speaker 04:
That seems reasonable to me.

[00:19:32] Speaker 04:
I know that in the cases that have been cited in this dispute, if we look at even, for example, that Supreme Court case, there was a stipulation, but then it was followed by an actual entry of an order

[00:19:45] Speaker 04:
adopting the finding with respect to the tax liability in specific years, and that's why that became final.

[00:19:53] Speaker 04:
But again, Congress made a policy decision, and notably it's a different policy decision than they made in the AIA for post-grant proceedings like IPRs, where 317 was actually renamed Settlement, and the parties could just come to the Patent Office and say, we've agreed not to pursue this anymore, and the PTO

[00:20:14] Speaker 04:
can drop it at that point, which is a very different policy decision than what Congress did.

[00:20:20] Speaker 02:
Do you know if there are other cases other than this one that are percolating through the system?

[00:20:26] Speaker 02:
I mean, the new provisions don't, you know, this is based on a provision which is no longer alive.

[00:20:33] Speaker 04:
I'm not aware of any specific cases working their way through the system that raise this specific issue.

[00:20:40] Speaker 04:
There are other inner-parties re-exams that are still pending.

[00:20:44] Speaker 04:
So I asked about that and it turns out there are somewhere in the range of 150 to 160 that are still pending before the agency.

[00:20:56] Speaker 04:
Now this issue did come before the court before and was briefed in the Affinity Labs case, but the court didn't ultimately need to reach the question because there the judgment, it was a dismissal without prejudice and the court noted that the court hadn't

[00:21:11] Speaker 04:
made a finding because there was similar stipulation language, but also it wasn't clear that there was even a concession by the parties.

[00:21:21] Speaker 04:
So I don't know if the court has directly addressed this, but I'm also not aware of another case pending that will present this issue.

[00:21:31] Speaker 04:
Unless you have any further questions about 317, I'd like to briefly address the merits questions.

[00:21:37] Speaker 04:
And I think the claim construction questions, as we said in our brief,

[00:21:41] Speaker 04:
not really what AMS is taking issue with the board's decision.

[00:21:46] Speaker 04:
They really are questioning the reading of the art.

[00:21:49] Speaker 04:
And the board went to great pains to step through the art in each of these cases.

[00:21:53] Speaker 04:
In fact, almost the entire first volume of the appendix, 500 pages, is the board carefully stepping through each reference, the teachings, why someone would have been motivated to combine them, and why the art was analogous.

[00:22:05] Speaker 04:
And I think it helps to take a step back and say, what was undisputed here?

[00:22:10] Speaker 04:
It was undisputed that we had vending machines with transparent fronts.

[00:22:14] Speaker 04:
We had vending machines that had been sensors to determine if a product had in fact been delivered to the customer.

[00:22:20] Speaker 04:
We knew that there were a limited number of types of sensors that were available for someone to use.

[00:22:25] Speaker 04:
And we know that optical sensors had been used in several vending machines.

[00:22:29] Speaker 04:
And moreover, we know that optical sensors had been used in many fields of endeavor.

[00:22:33] Speaker 04:
This isn't a situation where the board or the examiner plucked out a single reference from some

[00:22:39] Speaker 04:
disconnected field, there were several references, including these seed dispensers, but also an intrusion detector, the safety curtain, and also optical sensors that were used in vending machines themselves.

[00:22:53] Speaker 04:
And the board said, properly, if we look at Shuler, which is a glass front vending machine that meets all the other claim limitations, and already had an electromechanical Venn sensor, so it would have been obvious to substitute that

[00:23:08] Speaker 04:
for an optical sensor, which could sense lighter and smaller items more accurately.

[00:23:13] Speaker 04:
Even AMS's expert agrees that there would have been a problem for those types of articles in Shuler.

[00:23:20] Speaker 04:
And in terms of combining them with the other art, the board found, for example, in Appendix 386, that there was a similar problem that was reasonably pertinent to the vending machine designers, which was how do you detect these small items as they're falling through a large space?

[00:23:36] Speaker 04:
And that's exactly

[00:23:38] Speaker 04:
what you could learn when you look at references like Dragney and Friend.

[00:23:43] Speaker 04:
And one other point I'd like to make about those, because it didn't get as much attention, certainly not in the blue brief, is that Dragney and Friend both were found to have not only mechanisms to deal with ambient light, but also calibration circuits.

[00:23:57] Speaker 04:
And even the judge who dissented in the rehearing decision agreed that those calibration circuits were there, that they dealt with ambient light.

[00:24:05] Speaker 04:
and the board properly held ambient light could be internal or external.

[00:24:09] Speaker 04:
There's no reason to make that, to draw a differentiation between those.

[00:24:14] Speaker 04:
And moreover, the other references like CALL and ENDL actually deal explicitly with external ambient light.

[00:24:21] Speaker 04:
So at the end of the day, this is really not that dissimilar to KSR.

[00:24:25] Speaker 04:
KSR, we had pedals in a vehicle and we were going from mechanical to electromechanical.

[00:24:31] Speaker 04:
And what do we have here?

[00:24:32] Speaker 04:
We have a vending machine.

[00:24:34] Speaker 04:
with an electromechanical sensor, and we're moving to an optical sensor.

[00:24:39] Speaker 04:
It's the natural progression of the art.

[00:24:42] Speaker 04:
And unless your honors have other questions, we ask that you affirm.

[00:24:57] Speaker 00:
Thank you.

[00:24:57] Speaker 00:
Your Honor, I disagree with the intervener.

[00:25:00] Speaker 00:
Claim construction still is an issue in this case.

[00:25:03] Speaker 03:
Do you have a site for me?

[00:25:04] Speaker 00:
I do.

[00:25:04] Speaker 00:
I have three, Your Honor.

[00:25:05] Speaker 00:
The first is APPX 2246.

[00:25:10] Speaker 03:
Don't waste your time.

[00:25:11] Speaker 03:
Just give me the numbers and all of them.

[00:25:15] Speaker 03:
2246.

[00:25:16] Speaker 03:
2246.

[00:25:16] Speaker 00:
Hey, where are they?

[00:25:22] Speaker 00:
I have two more, very quickly.

[00:25:26] Speaker 00:
APPX 5085 and APPX 5110.

[00:25:32] Speaker 00:
all of them address events facing in particular.

[00:25:35] Speaker 03:
Thank you.

[00:25:38] Speaker 00:
And on one of the other terms that there was a dispute about, and it was raised by Interveners Council just a minute ago, is the question of ambient light.

[00:25:49] Speaker 00:
Ambient light in this case was treated as a term that had no real limit.

[00:25:54] Speaker 00:
The patent actually defines, if you look at the 634 patent, column 16, it's APPX 0552.

[00:26:02] Speaker 00:
It defines what it means by ambient light.

[00:26:04] Speaker 00:
In the specification, it says the ambient light is external to the system.

[00:26:09] Speaker 00:
And excitation light is from the system.

[00:26:13] Speaker 00:
So when they say it could be from either source in analyzing the prior art, we don't agree, and we've never agreed with that.

[00:26:19] Speaker 00:
We think that that's one of the terms that they sort of played with and ran over.

[00:26:25] Speaker 00:
Similarly, they grouped mechanical filtering

[00:26:30] Speaker 00:
in the same thing as calibrating.

[00:26:32] Speaker 00:
Calibrating is adjusting, according to claims, is adjusting detection thresholds to account for ambient light.

[00:26:38] Speaker 00:
In their case, they put calibrating so that if there's dust on the device or the emitters are weak over years, you can increase the power.

[00:26:48] Speaker 00:
And they're saying that's essentially the same as calibrating.

[00:26:50] Speaker 00:
And we've never agreed with that.

[00:26:52] Speaker 00:
But I do want to go back to the 317B issue, because a couple of interesting points were made.

[00:26:59] Speaker 00:
First,

[00:27:00] Speaker 03:
Thank you.

[00:27:01] Speaker 03:
That was Helen.

[00:27:02] Speaker 00:
You're welcome, Your Honor.

[00:27:04] Speaker 00:
First, the question of finding is a fact that could have been requested and would have been happy to supply them with more detail or whatever.

[00:27:11] Speaker 00:
The reason why there was a dismissal up front, as I told you, we settled this case about two days before trial.

[00:27:18] Speaker 00:
And so the judge came in.

[00:27:19] Speaker 00:
He was a chief judge at that time of that district.

[00:27:22] Speaker 00:
And he told me I was the lead counsel in that case.

[00:27:24] Speaker 00:
He said, I understand you've got a settlement.

[00:27:26] Speaker 00:
We've got a settlement here.

[00:27:27] Speaker 00:
We've got all the terms, but we don't have it signed.

[00:27:30] Speaker 00:
And you don't have the consent judgment you've agreed to in front of me.

[00:27:34] Speaker 00:
But I'm the chief judge and I'm after all the other judges in this district because of old cases.

[00:27:40] Speaker 00:
This is the oldest case in this jurisdiction by five years, because we had 12 re-exams that the case was stable.

[00:27:47] Speaker 00:
All those re-exams were pending.

[00:27:49] Speaker 00:
So he was very interested and he understood that he was going to dismiss it, but then reopen it once we had all the consent judgment that we agreed to.

[00:27:58] Speaker 00:
finalized and the settlement executed.

[00:28:00] Speaker 00:
So that sort of explains what happened.

[00:28:03] Speaker 00:
And I don't think it's a question of any significance, but if you were interested, that's what happened.

[00:28:08] Speaker 00:
The Patent Office continues to assert that since they had a duty upon a finding of a substantial new question of patentability, that they had a duty to continue this re-examination.

[00:28:19] Speaker 00:
I don't agree with that.

[00:28:20] Speaker 00:
If you look at 313, it says it has a duty to open an inner party's re-examination.

[00:28:27] Speaker 00:
not to continue it no matter what happens.

[00:28:29] Speaker 00:
In fact, 317 terminates that duty and expressly says you can't continue.

[00:28:34] Speaker 00:
You may not thereafter maintain this action or this proceeding.

[00:28:38] Speaker 00:
So just because they found this initially a substantial new question of patentability, the Patent Office is not under statutory obligation to continue no matter what happens.

[00:28:47] Speaker 02:
I'm not sure I can strew what he said to be as extreme as that.

[00:28:50] Speaker 02:
I think what he said is this is the duty.

[00:28:53] Speaker 02:
There are exceptions.

[00:28:54] Speaker 02:
317 is an exception.

[00:28:56] Speaker 02:
I think that's kind of inappropriate.

[00:28:59] Speaker 00:
Because in their briefs, sometimes it wasn't always clear.

[00:29:01] Speaker 00:
I want to make clear that that duty is not unlimited.

[00:29:04] Speaker 00:
And as far as the coding case, when we looked at it, the coding case, which we had exactly the language we had a consent judgment based on party stipulation of validity, and the Patent Office terminated twice, once in 2008 and 2009, that was the only case that we were aware of.

[00:29:20] Speaker 00:
And no other case has been brought to our attention

[00:29:23] Speaker 00:
by the board or by the PTO when they were dealing with our petitions.

[00:29:28] Speaker 00:
All of the cases where the intervener analysis, they're consistent, all of those cases are of recent genesis.

[00:29:35] Speaker 00:
And in fact, we may be the very first one.

[00:29:37] Speaker 00:
And the reason that they gave for their reason for denying our petition to terminate is they said the AIA really changed things.

[00:29:45] Speaker 00:
And I don't agree with that.

[00:29:46] Speaker 00:
I've never agreed with that.

[00:29:47] Speaker 00:
The AIA, even as explained here today, was only partially explained.

[00:29:51] Speaker 00:
Under the AIA, under the new 317, there's two parts to it.

[00:29:56] Speaker 00:
The parties can agree in writing to request termination.

[00:30:01] Speaker 00:
And the patent office has two responses.

[00:30:03] Speaker 00:
The first one is automatically the petitioner, if they ask, is relieved from further participation.

[00:30:09] Speaker 00:
But then the second part of that provision is that the patent office has discretion to proceed without them.

[00:30:15] Speaker 00:
So it's a whole different ballgame.

[00:30:19] Speaker 00:
The adoption of the AIA 317 doesn't really reflect, I think, at all on the PAR application of 317.

[00:30:28] Speaker 02:
Your time is up, so you get one final thought.

[00:30:31] Speaker 02:
You've exceeded the time.

[00:30:33] Speaker 00:
Oh, am I a negative?

[00:30:34] Speaker 00:
I apologize.

[00:30:35] Speaker 00:
In red, yes.

[00:30:37] Speaker 00:
If you look at the cases that they're on... That's why it's growing.

[00:30:41] Speaker 00:
If you look at the cases they rely on, the International Building Supreme Court case and the Affinity Labs case that came down from this court within the last year or two,

[00:30:48] Speaker 00:
I think both of those squarely support our position that stipulations in a consent judgment are treated as final law and merits.

[00:30:56] Speaker 00:
Thank you.

[00:30:56] Speaker 02:
Thank you.

[00:30:57] Speaker 02:
We thank both sides.