[00:00:00] Speaker 04: is 172128 EBN holding versus ITC. [00:00:43] Speaker 00: I thought you were gone. [00:00:45] Speaker 00: No. [00:00:45] Speaker 04: All right, let's just give them a moment to settle. [00:00:52] Speaker 00: I was kind of hoping they'd stay and watch ours. [00:00:55] Speaker 00: I was hoping the Boy Scouts were going to stay for all of it. [00:00:57] Speaker 04: I know. [00:00:58] Speaker 04: OK, we're ready. [00:01:08] Speaker 04: Please proceed, Mr. Braun. [00:01:14] Speaker 00: It should be 10. [00:01:17] Speaker 00: It should be 10. [00:01:20] Speaker 04: Is it 15? [00:01:20] Speaker 00: All right. [00:01:22] Speaker 00: May it please the court. [00:01:24] Speaker 00: The ITC abused its discretion by failing to consider and grant a waiver under its rules. [00:01:30] Speaker 03: uh... petition that was filed to rescind or modify six point two million dollar penalty based on change in this case whether they should have granted right we can only decide whether they should have reviewed because they say bristly should apply so i would consider you're not asking us in the first instance to do the discretionary job that the i t c is otherwise entitled to do it that that's correct i mean we uh... i review the second argument we make is because the [00:02:00] Speaker 00: have so abdicated their responsibility by failing even to consider it, the court should go ahead. [00:02:05] Speaker 03: They didn't look at something they should have, and so now I should not only look at it but decide it in the first instance, a very discretionary type decision. [00:02:14] Speaker 03: An appellate court judge should decide that. [00:02:17] Speaker 00: Fair enough. [00:02:18] Speaker 00: As you know, that was the second argument, the principal argument, which is we never even got a hearing. [00:02:23] Speaker 00: And that is our principal argument on appeal. [00:02:27] Speaker 03: Didn't the government argue last time around [00:02:29] Speaker 03: that if you wanted a mitigation of this penalty, the way to go was to file this very motion that you had not yet at that point filed? [00:02:39] Speaker 00: We had not filed it because the ITC didn't have jurisdiction to consider it. [00:02:44] Speaker 00: And indeed, if you look at their supplemental brief... No, no, you're misunderstanding my question. [00:02:47] Speaker 03: It's helpful. [00:02:48] Speaker 03: Don't fight it. [00:02:49] Speaker 03: The question was, isn't it true that the government came to court last time and told us [00:02:54] Speaker 03: that there's a proper way for you to seek a rescission or a remittance or a reduction, and that would be for you to file this motion below, which at that point you hadn't yet filed, but now you've gone ahead and filed and done exactly what they told you was the proper process for you to proceed under. [00:03:09] Speaker 00: That is correct. [00:03:10] Speaker 00: I was just getting to the next point in case you're concerned as to why we hadn't filed it. [00:03:13] Speaker 03: I wasn't. [00:03:14] Speaker 00: OK. [00:03:15] Speaker 00: But they certainly couldn't have been any clearer in their supplemental brief on page 4 and also on pages 7 and 8. [00:03:22] Speaker 00: They said the one proper approach is for the court to proceed on both of those appeals. [00:03:27] Speaker 00: And if it's affirmed, the invalidity from the district court to then file this petition. [00:03:31] Speaker 03: So at this point, you've done exactly what the government last time around said was the proper way for you to proceed. [00:03:37] Speaker 00: Correct. [00:03:38] Speaker 00: That is exactly. [00:03:40] Speaker 00: They told the court that's what we should do. [00:03:42] Speaker 00: We did what we were supposed to do. [00:03:43] Speaker 00: It's a rule that they've had on the books for a very long time [00:03:47] Speaker 03: and in fact you can see anything in that prior opinion happened to come out of somebody at this court that indicated that they were not permitted to consider a motion if you were to file one? [00:03:58] Speaker 00: No, we were stunned that they either, you know, I mean there's no mention obviously of the rule [00:04:03] Speaker 04: Can I just ask for some clarification because I've become confused by the terminology here because there's a difference. [00:04:09] Speaker 04: Obviously there's a consent order and then there's a civil penalty order. [00:04:13] Speaker 02: Correct. [00:04:14] Speaker 04: So your motion for rescission or whatever it's called [00:04:18] Speaker 04: was with respect to the civil penalty order not to the consent order? [00:04:23] Speaker 00: Or am I missing something? [00:04:25] Speaker 00: Well, I understand your confusion, because although that's the language they used, if you look at that Magnus case where the ITC actually used this rule, what they did is they go back and they actually vacate the underlying consent order [00:04:40] Speaker 00: and therefore vacate the penalty that was based on that. [00:04:43] Speaker 04: But what were you seeking? [00:04:44] Speaker 04: I mean, do you have to seek something in particular? [00:04:46] Speaker 04: Would it have to be rescinding or vacating the consent order? [00:04:52] Speaker 04: Or is it the civil penalty order? [00:04:54] Speaker 04: I know you're going after the civil penalty. [00:04:56] Speaker 00: Obviously, the money is why we're here. [00:04:58] Speaker 00: But we actually are seeking a vacation of what would be effectively both, because the underlying consent order [00:05:07] Speaker 00: is based on having to do with the so-called infringing conduct, which it can no longer be anymore once this court affirmed and a mandate issued as to the final invalidity of all of the claims of the patent. [00:05:25] Speaker 00: That Magnet's case, which is actually what the ITC cited to this court in their supplemental brief, provided the roadmap. [00:05:32] Speaker 00: It said that was a case in which [00:05:35] Speaker 00: a company had a consent order. [00:05:38] Speaker 00: They continued to do the exact same thing. [00:05:40] Speaker 00: And needless to say, there was then an enforcement action. [00:05:43] Speaker 00: The ITC imposed, I think, a $1.5 million penalty in that case. [00:05:49] Speaker 00: And that came up on appeal and was affirmed. [00:05:52] Speaker 00: And subsequent to this court affirming the enforcement order and the penalty, the underlying parties entered into a licensing agreement. [00:06:03] Speaker 00: They then filed this petition to rescind or vacate under the ITC rule, and the ITC granted it and wiped out the penalty. [00:06:13] Speaker 00: And so that was the roadmap that the ITC presented to this court. [00:06:18] Speaker 02: So is there a difference between a civil penalty and, let's say, one of the ITC's orders, exclusionary orders? [00:06:30] Speaker 00: Well, I think. [00:06:34] Speaker 00: I mean, the former. [00:06:35] Speaker 00: Yeah, I'm struggling with, you know, obviously the penalty, it hasn't been paid. [00:06:40] Speaker 00: And so if there was an exclusion order, presumably that would then also, that would be, we didn't have one in our case, but that would be vacated as well. [00:06:49] Speaker 02: I don't think there's any dispute that the ITC has authority to modify or rescind an exclusion order. [00:06:56] Speaker 02: We're talking about a penalty, a civil penalty. [00:06:59] Speaker 02: And that penalty was based on an agreement, a consent order that you wrote, or that... Based on their rules, but yes. [00:07:07] Speaker 00: Yes. [00:07:08] Speaker 02: And you agreed in that order that you would not engage in any type of infringing activity. [00:07:15] Speaker 02: Correct. [00:07:16] Speaker 02: You were found to have engaged in infringing activity. [00:07:20] Speaker 02: And the ITC issued a civil penalty. [00:07:24] Speaker 02: Isn't that a part? [00:07:26] Speaker 02: Isn't there a bright fence between this, a civil penalty, and the ITC just rescinding some sort of exclusionary order? [00:07:38] Speaker 00: I don't think so. [00:07:39] Speaker 00: Because what you have in the circumstance, and both of them, is we agreed not to engage in any infringing behavior. [00:07:46] Speaker 00: And that at the time the ITC issued its order, [00:07:52] Speaker 00: the patent that was still valid, and it concluded, we obviously disagree. [00:07:57] Speaker 02: That's the point. [00:07:58] Speaker 02: At that point, the patent was still valid, where at least all the parties thought the order, especially you, you entered into the consent order, you drafted it, and you agreed, I'm not going to engage in any infringing activity. [00:08:10] Speaker 02: The ITC found that you did, and issued a civil penalty, which I take is different from an exclusionary order. [00:08:19] Speaker 00: Well, I would suggest no because of the following. [00:08:22] Speaker 00: I mean, it would be the equivalent of saying you can collect damages for infringing a patent up until the moment the jury actually invalidates the patent. [00:08:31] Speaker 02: You're bringing the conversation back into the patent infringement stage. [00:08:36] Speaker 02: Fair enough. [00:08:37] Speaker 02: OK, whereas a civil penalty is apart from that. [00:08:41] Speaker 02: A civil penalty is pretty much closer to a criminal penalty. [00:08:46] Speaker 02: And if you're deemed to have violated an engaging criminal activity and you're sanctioned for that, you can't, for example, say that I robbed the bank, but you can't penalize me for it because there's no money in the bank. [00:09:07] Speaker 00: That's your argument here. [00:09:09] Speaker 00: Actually, the thing is, you know, [00:09:12] Speaker 00: Your question takes me to a place where I can't quite on the tip of my tongue remember. [00:09:16] Speaker 00: The Supreme Court had a case that just came down this past year of whether or not I believe it was the state of Ohio could just keep a penalty even though the conviction was overturned on appeal. [00:09:26] Speaker 00: And I think it was Ohio. [00:09:27] Speaker 00: And they said, oh, we can just keep it. [00:09:30] Speaker 00: And the answer from the Supreme Court was, no, you can't. [00:09:32] Speaker 00: The underlying penalty, the purpose of which is it's been wiped out, if you will, by the fact that the patent has been invalidated. [00:09:41] Speaker 03: I agree with him on a percent. [00:09:46] Speaker 03: I love his analogy about robbing the bank and it turns out the vault was empty. [00:09:51] Speaker 03: I mean, maybe that results though. [00:09:57] Speaker 03: You seem to be going for all or nothing. [00:09:58] Speaker 03: You're not going to win all. [00:10:00] Speaker 03: The six million dollar penalty, we're not taking it away. [00:10:02] Speaker 03: We made that clear last time. [00:10:04] Speaker 03: They have a right to penalize you for violating the order, even if it turns out the order maybe shouldn't have been imposed. [00:10:11] Speaker 03: There was an order imposed. [00:10:12] Speaker 03: Your client chose to violate that order. [00:10:15] Speaker 03: There is a right to penalize. [00:10:17] Speaker 03: Do you have kids? [00:10:18] Speaker 03: I do this all the time with my kids. [00:10:20] Speaker 03: I set a rule, and then when they break the rule, I punish them for it. [00:10:23] Speaker 03: In hindsight, perhaps the rule was too strict the first time around. [00:10:26] Speaker 03: But you broke the rule. [00:10:28] Speaker 03: You knew what the rule was, and you broke it, and there's going to be a consequence. [00:10:30] Speaker 03: But if the rule was too strict the first time around, I usually take that into account, and it affects how long they're going to be punished for. [00:10:38] Speaker 03: So I guess what I'm wondering, you seem to be going after rejecting Judge Reyna's what I think is a very logical approach to this case. [00:10:47] Speaker 03: And it's because you're trying to get all. [00:10:50] Speaker 03: Can't you just be happy with some? [00:10:52] Speaker 03: Meaning, can't you be happy with a remittitor or a rescission? [00:10:55] Speaker 03: Can't your response to him be, we asked for eliminating it all, but in the alternative, at least remitting it or reducing it. [00:11:02] Speaker 03: And yes, perhaps my client could still be punished for breaking the court order, but it turns out the order shouldn't have been in place at all. [00:11:09] Speaker 03: So maybe the punishment should be mitigated. [00:11:11] Speaker 03: Can't that be your answer to him instead of no, none? [00:11:15] Speaker 00: Our position to this court, and it would be to the ITC if we could ever get a hearing on our petition, our petition was to modify or dissent. [00:11:27] Speaker 00: And so if you go through the six factors that the ITC uses, it doesn't add up to $6.2 million when you have a situation where it is based on an invalid. [00:11:40] Speaker 04: But even to just go a step further than Judge Moore, [00:11:44] Speaker 04: That's not even before us, too. [00:11:46] Speaker 04: The issue before us, as I understand it, is extremely limited. [00:11:51] Speaker 04: And it's simply whether or not the commission correctly said, bed circuit has already decided this, we can't even give you a hearing or consider your arguments. [00:12:01] Speaker 04: And all you're asking us to do, and all I think we would appropriately have the authority to do, is to decide whether or not [00:12:09] Speaker 04: No, the ITC still has some discretion, reviewable discretion. [00:12:13] Speaker 04: And so they ought to give you a chance to make your case. [00:12:16] Speaker 00: And that is certainly true. [00:12:18] Speaker 00: I mean, that is the bottom line position of what we have for today. [00:12:21] Speaker 04: So it could be that you go back and the ITC says, no way. [00:12:25] Speaker 04: You have bad faith violation. [00:12:27] Speaker 04: It's our policy. [00:12:28] Speaker 04: We think people have to abide by the law, whatever it is, and whatever. [00:12:31] Speaker 04: I mean, you may want to appeal that, but we'd review. [00:12:35] Speaker 04: But that's not before it's not, right? [00:12:38] Speaker 00: I think that's fair to say. [00:12:40] Speaker 00: And I see I'm cutting into my rebuttal time. [00:12:42] Speaker 00: So if the court, if I could save the rest of my time. [00:12:46] Speaker 04: Thank you. [00:12:47] Speaker 00: Thank you. [00:12:53] Speaker 01: Good morning. [00:12:53] Speaker 01: May it please the court? [00:12:57] Speaker 01: Basically, three years ago, DVM was before this court. [00:13:00] Speaker 01: The same arguments are making now in a petition before the commission. [00:13:03] Speaker 04: Well, there was no pending motion for rescission or modification at that time, correct? [00:13:08] Speaker 01: That's correct. [00:13:09] Speaker 04: So it wasn't the same issue, really, was it? [00:13:15] Speaker 01: I would disagree. [00:13:16] Speaker 01: This court specifically asked for supplemental briefing asking what effect, if any, the firmness by this court of the subsequent invalidity of the patented issue would have on the commission's enforcement of this consent order and subsequent civil penalty. [00:13:31] Speaker 02: Isn't it a mistake on your part to rely too much on our prior opinion? [00:13:35] Speaker 02: Because if you do, aren't you going to paint yourself into a box where you can never review or consider a civil penalty? [00:13:45] Speaker 01: I don't think that's the case under these facts, because, again, the court asked that specific question. [00:13:48] Speaker 02: But we addressed the legal issue in that case. [00:13:52] Speaker 01: Right, you did. [00:13:53] Speaker 01: But there's been no changed circumstance since that final president's decision. [00:13:56] Speaker 01: Sure there has. [00:13:56] Speaker 03: Now there's been a motion for rescission or modification. [00:14:00] Speaker 03: Last time this case was up here, they argued that the invalidity decision invalidated entirely the civil penalty. [00:14:09] Speaker 03: The civil penalty had you revoked. [00:14:11] Speaker 03: And you all, the government, in response to the supplemental briefing, said they could unregulate [00:14:18] Speaker 03: file a motion for receiving a modification, and then the ITC would consider it. [00:14:23] Speaker 03: And you said that was the appropriate way to proceed. [00:14:26] Speaker 03: At that point in time, there was no such motion on file by anyone. [00:14:30] Speaker 03: So how could we have decided the propriety of the very method you said was the way they should do this when it hadn't been done yet? [00:14:39] Speaker 01: I think there's a slight mischaracterization with what the ITC said in its supplemental brief. [00:14:44] Speaker 01: We didn't say [00:14:46] Speaker 01: court rule on this issue of what effect, if any, the subsequent invalidating of firm expense? [00:14:51] Speaker 03: No, no, they did. [00:14:52] Speaker 03: That's what they asked us to do. [00:14:54] Speaker 03: They asked us to conclude that the subsequent invalidation therefore required the civil penalty to be eliminated entirely. [00:15:02] Speaker 03: And we said, no, it doesn't require that. [00:15:05] Speaker 03: But you all argued that they could, on remand, make a motion to have the civil penalty modified in light of the changed circumstances. [00:15:15] Speaker 03: the invalidation. [00:15:16] Speaker 03: That's what you suggested to us was the appropriate course of action. [00:15:19] Speaker 03: And I can tell you right now, as I sit here, I didn't mean to foreclose that and didn't think I did in this opinion and still don't think I did in this opinion. [00:15:27] Speaker 03: So I would love for you to point me to something in the opinion that you say amounts to race judicata, where there is a decision regarding what authority the ITC has as a matter of its discretion to modify a civil penalty in light of a motion for modification. [00:15:44] Speaker 03: Where did I decide that issue? [00:15:46] Speaker 03: Because the ITC, in one sentence, says race judicata without pointing to any portion of the opinion. [00:15:51] Speaker 03: So where in this opinion is the race judicata? [00:15:55] Speaker 01: Right. [00:15:55] Speaker 01: I would say, one, again, the court asked this question. [00:15:58] Speaker 01: What effect, if any? [00:16:00] Speaker 01: A broad question regarding what effect, if any, affirmation by this court of subsequent ability had on the commission's ability to enforce the consent order. [00:16:09] Speaker 01: DBM chose and made several arguments, made an argument regarding [00:16:14] Speaker 01: negation. [00:16:15] Speaker 01: They made an argument also regarding modifications, supplemental brief nine. [00:16:18] Speaker 01: And they also argued, hey, remand is not necessary. [00:16:21] Speaker 01: There are no factual legal outstanding issues. [00:16:23] Speaker 03: But doesn't race judicata require me to have decided the issue in order for it to bar? [00:16:29] Speaker 03: I have to have decided the issue. [00:16:31] Speaker 03: Correct. [00:16:31] Speaker 03: Where did I decide this issue? [00:16:34] Speaker 03: Where in the opinion previously did our court decide to what extent the ITC would be permitted to, in response for a motion for modification, to modify a civil penalty? [00:16:48] Speaker 01: Well, this court specifically said we don't need to remand the issue. [00:16:51] Speaker 01: We can decide this issue by ourselves. [00:16:53] Speaker 01: We don't need [00:16:54] Speaker 01: for a man to the commission. [00:16:55] Speaker 03: Because there wasn't a motion for modification pursuant to that case. [00:16:59] Speaker 03: I wasn't resolving. [00:17:01] Speaker 03: The court wasn't resolving any motion for modification. [00:17:04] Speaker 03: We were resolving only an argument that the entire penalty had to go away. [00:17:10] Speaker 03: Automatically, it was a matter of law. [00:17:12] Speaker 01: Right. [00:17:12] Speaker 01: I would say the commission's, I mean, excuse me, the court's prior opinion answered the question broadly. [00:17:18] Speaker 01: What effect, if any? [00:17:20] Speaker 01: And you answered against Debian, unfortunately for them, [00:17:24] Speaker 01: there was no retroactive effect for any future event. [00:17:27] Speaker 03: I don't see that in the opinion. [00:17:29] Speaker 03: I do not see that in the opinion. [00:17:33] Speaker 01: I'll answer this. [00:17:35] Speaker 01: OK, there's one part specifically regarding the argument they make regarding when the decision is made. [00:17:41] Speaker 03: Can you point me to a page? [00:17:42] Speaker 01: Yes, the opinion at 1335. [00:17:44] Speaker 01: They make an argument, then as of now, what happens when the subsequent ability becomes non-reviewable, i.e. [00:17:52] Speaker 01: denial of cert. [00:17:54] Speaker 01: And the court says, if that judgment, i.e. [00:17:56] Speaker 01: the district court summary judgment invalidity, becomes non-reviewable, the consent order will not apply prospectively as to the invalid claims. [00:18:03] Speaker 01: But the commission's finding that the law violates the consent order and the accompanying penalty for that violation will not be lifted. [00:18:08] Speaker 01: The commission acted within the scope of its authority in enforcing the consent order. [00:18:12] Speaker 01: So here specifically, the court specifically ruled, presidentially, that there's no [00:18:19] Speaker 01: For any future event, there is no retroactive effect on the Civil Penalty. [00:18:23] Speaker 03: I'm sorry. [00:18:24] Speaker 03: I have only now gotten to 1335. [00:18:26] Speaker 03: What sentence is it, do you think, that I ruled on that? [00:18:32] Speaker 01: Let's see. [00:18:32] Speaker 01: This court. [00:18:33] Speaker 01: Wait, it's that last paragraph on, when it says... Is it after the words in its supplemental briefing? [00:18:43] Speaker 03: Is it after that? [00:18:44] Speaker 03: Or is it before the supplemental briefing paragraph? [00:18:47] Speaker 01: It's that last section on that page where DeLorme also argues that the commission is not authorized to enforce consent with regard to invalid patent claims. [00:18:56] Speaker 01: Again, it's 1335. [00:18:57] Speaker 01: So after that paragraph starts, DeLorme argues that his position is supported by the commission rules. [00:19:03] Speaker 01: Paragraph after that. [00:19:04] Speaker 04: OK. [00:19:07] Speaker 04: Do you have an appendix site for the page? [00:19:09] Speaker 04: Because I don't have the right pages online. [00:19:17] Speaker 03: I think at the paragraph that begins, Delorme also argues that it's not authorized. [00:19:29] Speaker 03: Well, yes, they're arguing the commission is not authorized to enforce a consent order with regard to an invalid patent. [00:19:36] Speaker 03: I think that is exactly the point Judge Prost made a second ago, which is their argument to us previously was, as a matter of law, [00:19:43] Speaker 03: We can't be civilly penalized because the patent was later found invalid. [00:19:47] Speaker 01: All right. [00:19:48] Speaker 01: But they make that argument that there is no change circumstances from that decision. [00:19:53] Speaker 01: Subsequent denial of cert, there's no change circumstance. [00:19:57] Speaker 01: Nothing's changed. [00:19:58] Speaker 03: They're not asking. [00:19:59] Speaker 03: They're not arguing as a matter of law. [00:20:01] Speaker 03: They can't. [00:20:02] Speaker 03: They're availing themselves of the motion practice which is set out in the regulation that allows them to seek a rescission. [00:20:09] Speaker 03: You see there's no changed circumstance. [00:20:11] Speaker 03: The changed circumstance, it seems to me, is that they did not previously have on file any motion requesting rescission. [00:20:18] Speaker 03: So this court wouldn't even have jurisdiction to resolve it. [00:20:21] Speaker 03: And I never would have resolved it in the first instance. [00:20:23] Speaker 03: The ITC has the discretion to do that. [00:20:26] Speaker 03: None of that was before this court previously. [00:20:29] Speaker 03: So how could I have, or anyone on this court, have resolved it? [00:20:32] Speaker 03: And it's a matter of discretion to the ITC. [00:20:34] Speaker 03: I have no desire to usurp the discretion of the ITC. [00:20:39] Speaker 01: Correct. [00:20:39] Speaker 01: But again, Debian made a civic argument. [00:20:43] Speaker 01: They didn't want to remand. [00:20:44] Speaker 01: The court agreed. [00:20:45] Speaker 01: Remand is not necessary. [00:20:46] Speaker 01: Again, further in the opinion, you say that in the next paragraph, [00:20:52] Speaker 01: The commission laid out a number of possible actions for this court to take, including, one, remand to the commission for determination of the effect of affirmance and validity. [00:20:58] Speaker 01: Two, not to remand at all, proceed to judgment in both appeals. [00:21:02] Speaker 01: If the consent order were unclear as to the impact and validation decision in this case, we would remand. [00:21:05] Speaker 01: But the consent order unambiguously indicates that the validation trigger, like the expiration and enforceability triggers, applies only prospectively. [00:21:12] Speaker 01: Neither the commission nor DeLorme argues that the consent order is ambiguous. [00:21:16] Speaker 01: There is no reason to remand this case, because the consent order unambiguously answers the question at issue. [00:21:26] Speaker 01: So there's that part, and also I'd say there really was no new modification argument made by DBM and its petition. [00:21:46] Speaker 01: They offer pretty much the same analysis that either A, negate all, or modify it all the way back to what the ALJ originally decided. [00:21:56] Speaker 01: So again, this issue was before the court in the original appeal three years ago. [00:22:03] Speaker 01: Is there any further questions? [00:22:07] Speaker 01: We'll ask for the court to affirm since there's no change circumstances. [00:22:10] Speaker 01: Thank you. [00:22:15] Speaker 00: I think the court understands our position, which was obviously there was no discussion in the prior appeal of the ITC rule. [00:22:22] Speaker 00: We simply took the path that they said we could take. [00:22:25] Speaker 00: if this court actually affirmed the validity of the path. [00:22:29] Speaker 00: There's an ITC rule that provides for it. [00:22:31] Speaker 00: We took that path, and we would like them to consider it in the first instance, unless the court has any further questions. [00:22:38] Speaker 04: Thank you. [00:22:38] Speaker 04: We thank both sides. [00:22:39] Speaker 04: The case is submitted. [00:22:40] Speaker 00: Thank you.