[00:00:00] Speaker 02:
Nine, energy heating versus heat on the fly.

[00:00:03] Speaker 02:
Mr. Bristler?

[00:00:05] Speaker 02:
Is it Brister?

[00:00:07] Speaker 02:
How is it?

[00:00:08] Speaker 02:
Brister.

[00:00:08] Speaker 02:
Brister.

[00:00:09] Speaker 02:
Please proceed.

[00:00:11] Speaker 01:
The court pleases.

[00:00:12] Speaker 01:
I'll spend most of the time on the inequitable conduct and obviousness findings made by the district judge in North Dakota that invalidated this patent.

[00:00:22] Speaker 01:
On the inequitable conduct, of course, there's two prongs, materiality and specific intent to deceive.

[00:00:28] Speaker 01:
We know neither could have been the case here.

[00:00:31] Speaker 01:
On materiality, the question is would the patent office have validate, have affirmed the patents, issued the patents if it had known about 61 prior frac jobs where the inventor was testing this, the invention for the intended purpose.

[00:00:50] Speaker 01:
And we know the answer to that because two continuation patents,

[00:00:54] Speaker 01:
were issued, approved by the patent office after full disclosure, not just of all 61 frag jobs, but of the district court's finding of inequitable conduct and depositions and everything else.

[00:01:07] Speaker 00:
Can I just, a point of clarification, just to confirm, it was my understanding that the PTO's decision in those subsequent applications came after the district court reached its conclusion

[00:01:23] Speaker 00:
on inequitable conduct.

[00:01:24] Speaker 00:
Is that correct?

[00:01:25] Speaker 01:
Right.

[00:01:25] Speaker 01:
Yes.

[00:01:26] Speaker 01:
And we disclosed the findings on inequitable conduct to the PTO when they found no.

[00:01:32] Speaker 01:
Or they issued the patent.

[00:01:34] Speaker 01:
So the question, would the PTO have issued the patent had they known?

[00:01:40] Speaker 01:
Yes, they in fact did.

[00:01:42] Speaker 01:
On intent to deceive, we also know there was no specific intent to deceive because the attorney

[00:01:50] Speaker 01:
the inventor's attorney declared under penalty of perjury, I decided the prior jobs were experimental.

[00:01:58] Speaker 00:
Wasn't his testimony excluded?

[00:02:02] Speaker 01:
From the tortious interference trial, yes.

[00:02:05] Speaker 00:
It was not excluded from the inequitable conduct trial?

[00:02:09] Speaker 01:
Well, it was implicitly.

[00:02:15] Speaker 01:
We designated him, asked to call him.

[00:02:17] Speaker 01:
He was there.

[00:02:17] Speaker 01:
He was at the evidentiary hearing.

[00:02:19] Speaker 01:
He was at the

[00:02:20] Speaker 01:
He was at the jury trial in September of 2014.

[00:02:23] Speaker 01:
He was at the evidentiary hearing on inequitable conduct four months later in January of 2015.

[00:02:28] Speaker 01:
Um, the trial judge had ordered him, uh, ordered us to submit his, um, uh, materials by, uh, affidavit, uh, which we did.

[00:02:39] Speaker 01:
And that's, um, uh, as a, uh, as an offer of proof, that's 23 112 of the record, which we did.

[00:02:47] Speaker 01:
Um, and so there's no reason.

[00:02:50] Speaker 01:
The issue is, should that have been excluded?

[00:02:54] Speaker 01:
Well, whether it should have been excluded for the jury is one thing, but this is months later.

[00:03:00] Speaker 01:
And why would you exclude it then?

[00:03:02] Speaker 01:
Under the Eighth Circuit, I think the law of the local circuit would apply.

[00:03:06] Speaker 01:
You've got to have to exclude it in that case.

[00:03:09] Speaker 01:
You've got to have a reason.

[00:03:11] Speaker 01:
Well, immediately for the jury trial is one thing, because you have to delay the jury trial.

[00:03:15] Speaker 01:
But months later, they had plenty of opportunity to discover this.

[00:03:18] Speaker 01:
It's no surprise.

[00:03:20] Speaker 01:
And it's, it's decisive.

[00:03:22] Speaker 01:
The, uh, patent attorney says, I told him, he explained it to me.

[00:03:27] Speaker 01:
I told him you didn't need to file it.

[00:03:29] Speaker 01:
So could the inventor have a specific intent?

[00:03:31] Speaker 00:
Do I understand correctly what the district court had said?

[00:03:33] Speaker 00:
The reason why he couldn't testify, at least in the first trial was because his test during a deposition, his testimony had been, you know, objected to his testimony on this very point had been objected to

[00:03:48] Speaker 00:
on the basis of an attorney-client privilege, right?

[00:03:51] Speaker 01:
Right.

[00:03:52] Speaker 01:
All of those objections were made before there was any pleading for an equitable conduct.

[00:03:57] Speaker 04:
So the question is... But you had noticed that they were going to file an amendment.

[00:04:02] Speaker 01:
Not at the time of the depositions.

[00:04:03] Speaker 01:
The trial judge based it on a general pleading that we're raising all affirmative defenses under the patent laws that may exist in the future.

[00:04:14] Speaker 01:
He said, well, that puts you...

[00:04:16] Speaker 01:
If that puts you on notice, that puts you on notice on every defense.

[00:04:19] Speaker 01:
I thought that they had actually notified you that they were going to file... There was emails back and forth, and I don't know exactly the timing, but they were at or about the time, and I think most of them were after, you know, the first application in 2013.

[00:04:31] Speaker 04:
Maybe your friend can help clarify the record afterwards, but I thought there was at least one communication prior to the attorney's deposition that inequitable conduct was going to be added to the case.

[00:04:41] Speaker 01:
I'd have to look back and see.

[00:04:43] Speaker 04:
I don't... Well, if that's the case, let's just assume I'm right.

[00:04:46] Speaker 04:
If that's the case, and you knew that inequitable conduct was going to be added as an issue, and you claim privilege for the attorney during that deposition, isn't that a sound basis for excluding his testimony?

[00:04:59] Speaker 01:
For the jury trial, yes.

[00:05:01] Speaker 01:
But after... Why not for everything?

[00:05:04] Speaker 04:
Well, because the Eighth Circuit standard... They weren't permitted to depose him

[00:05:11] Speaker 04:
on the very issue that you now assert a advice of counsel defense.

[00:05:17] Speaker 01:
Because what happened was when the issue was finally pleaded, they designated an expert who was willing to testify that he could infer intent from this, that, and the other.

[00:05:28] Speaker 01:
So we designated an expert, said you could infer advice of counsel from this, that, and the other.

[00:05:33] Speaker 01:
Our expert was struck the month before trial.

[00:05:37] Speaker 01:
So that's why we tried to

[00:05:39] Speaker 01:
when we first, uh, designated Mr. Narbus to come testify because the expert who was going to address that issue was struck at the last minute.

[00:05:47] Speaker 04:
Um, but the, you know, that, that sounds like litigation choices on your part that you have to be held to.

[00:05:54] Speaker 04:
I don't see how it was an abuse of discretion for the district court to exclude his testimony when you prohibited him from testifying in his deposition and prohibited them from asking him about that.

[00:06:09] Speaker 01:
Well, the question would be when the inequitable conduct is made months after trial, is there any reason to continue excluding him?

[00:06:19] Speaker 04:
Well, yes, because they didn't have the opportunity to depose him on that issue because you asserted privilege.

[00:06:25] Speaker 01:
They had for four months after the trial.

[00:06:28] Speaker 04:
It's not their obligation to re-notice a second deposition.

[00:06:32] Speaker 04:
You made that tactical choice to exclude his testimony.

[00:06:35] Speaker 04:
Let's just move on.

[00:06:36] Speaker 04:
I don't want to belabor this point.

[00:06:37] Speaker 04:
I think you have other things to say.

[00:06:39] Speaker 01:
On the obviousness question, the district court granted summary judgment that the patent was obvious based on prior art.

[00:06:49] Speaker 01:
In two subsequent reexaminations, the PTO examiner reviewed exactly the same prior art and that was not obvious.

[00:06:56] Speaker 00:
I understand your position is that there's genuine issues of material fact.

[00:07:00] Speaker 00:
Is it your position that

[00:07:03] Speaker 00:
Because the PTO on the same prior came up with a different conclusion that the PTO must have had some underlying fact findings that at a minimum would raise a genuine issue of material fact.

[00:07:13] Speaker 01:
No, we're not arguing that anything, any PTO fact findings are binding.

[00:07:18] Speaker 00:
That's not what I was saying.

[00:07:19] Speaker 00:
I said at a minimum raise a genuine issue of material fact.

[00:07:22] Speaker 01:
Right.

[00:07:23] Speaker 01:
Because when the issue is there evidence both ways on obviousness, then it's for the jury.

[00:07:29] Speaker 01:
And the examiner says, I'm looking at the prior and it's not obvious to me.

[00:07:33] Speaker 01:
So is that, you know, can we say as a matter of law, the examiner either wasn't a reasonable person or... I think there are cases that say if the examiner was not looking at everything the district judge was looking at, you can have a difference.

[00:07:52] Speaker 01:
But this is not that case.

[00:07:53] Speaker 01:
The only basis for the obviousness was prior art.

[00:07:57] Speaker 01:
Their counsel for the other side submitted a 35-page argument

[00:08:03] Speaker 01:
Institute request for reexamination that listed all the prior art made all these recommendations and the PTO examiner said look Heating water for fracking is just different from heating water for your shower or your swimming pool It's a it's four is four thousand gallons a minute It's it's not just heating water as it comes out of a fire hydrant But water that's coming at a rate that's multiple times your average fire hydrant.

[00:08:29] Speaker 01:
That's a different kind of problem

[00:08:33] Speaker 01:
Let's see.

[00:08:37] Speaker 01:
I think I've covered in, let me make clear the NEARBOS, exclusion of the NEARBOS declaration goes to the intent to deceive issue.

[00:08:47] Speaker 01:
It doesn't change the materiality problem.

[00:08:50] Speaker 01:
The materiality problem is would, the question is, would the PTO have done differently if they knew about all 61 prior jobs?

[00:08:58] Speaker 01:
And there's no question they did.

[00:08:59] Speaker 01:
Those were in some almost excruciating detail in Mr. Heffley's declaration that was submitted on both of the conditional patents.

[00:09:13] Speaker 01:
The problems on obviousness, the reason we think the district court got off base and came to different conclusions, it was obvious.

[00:09:23] Speaker 01:
He defined a person of ordinary skill in the art as somebody who doesn't need to know much about fracking operations.

[00:09:28] Speaker 01:
just has to be familiar with heating water, and that the field of endeavor is heating water.

[00:09:35] Speaker 01:
And we think that's just not true for several reasons.

[00:09:37] Speaker 01:
One is the volumes I've already mentioned, the flow rates, the remoteness.

[00:09:41] Speaker 01:
This is done in the middle of nowhere in Oklahoma or North Dakota.

[00:09:49] Speaker 01:
Sometimes the heating water has to be brought in from several miles away.

[00:09:55] Speaker 01:
Difference is the danger if the system doesn't work or if it fails.

[00:10:00] Speaker 01:
If your tankless water heater at home doesn't work, you have a cold shower.

[00:10:06] Speaker 01:
If it doesn't work on a fracking job, the casing can split, the well can sand up, you can lose the entire well, and you have danger of environmental, not to mention financial disasters.

[00:10:19] Speaker 00:
I just want to confirm on your trademark claim that you raised in your opening brief

[00:10:25] Speaker 00:
You have decided to abandon that issue, correct?

[00:10:29] Speaker 01:
37-year career, I've never had an appeal with this many points.

[00:10:32] Speaker 01:
I'm a little bit embarrassed, so that's why I dropped that one.

[00:10:36] Speaker 01:
Yes.

[00:10:38] Speaker 02:
Would you like to save the rest of your time for rebuttal?

[00:10:40] Speaker 01:
Yes.

[00:10:42] Speaker 01:
I forgot to look.

[00:10:43] Speaker 01:
Did I have 15 minutes to start?

[00:10:44] Speaker 01:
Yes.

[00:10:45] Speaker 02:
Thank you, Your Honor.

[00:10:47] Speaker 02:
Mr. Bounde.

[00:10:49] Speaker 02:
Now, just before you begin, we have 15 minutes on the clock.

[00:10:52] Speaker 02:
If you use all the time, he doesn't get to speak.

[00:10:55] Speaker 02:
I'm not worrying about his time.

[00:10:56] Speaker 02:
That's your job.

[00:10:59] Speaker 03:
May it please the court?

[00:11:00] Speaker 03:
My name is Ross Bounty, and we represent the cross appellants.

[00:11:03] Speaker 03:
Let me dive right into the question here of the Patent Office proceedings.

[00:11:07] Speaker 03:
The Patent Office proceedings took place eight months after the trial.

[00:11:11] Speaker 03:
And in the first instance, the Patent Office proceedings we're talking about with respect to the continuation patents are different patents.

[00:11:17] Speaker 03:
They're different scopes.

[00:11:18] Speaker 03:
There are different claims at issue.

[00:11:20] Speaker 03:
And what's interesting about that is that what you essentially have is an effort to do a do-over in the Patent Office of what didn't work at trial.

[00:11:29] Speaker 03:
Let me tell you why I believe that's the case.

[00:11:31] Speaker 03:
There are two sterling examples of this.

[00:11:33] Speaker 03:
First of all is the hefty 64-page declaration that's submitted in the Patent and Trademark Office.

[00:11:38] Speaker 00:
Can I interrupt you for a minute?

[00:11:39] Speaker 00:
You say the claims at issue in those later applications are different.

[00:11:43] Speaker 00:
How are they materially different for purposes of the issue before us?

[00:11:47] Speaker 03:
Well, I can't answer the question.

[00:11:49] Speaker 03:
Let me tell you why.

[00:11:50] Speaker 03:
There are 99 claims in the 993 patent in suit.

[00:11:54] Speaker 03:
There are, I believe, 48 claims in each of the other two.

[00:11:57] Speaker 03:
There's nothing in the record comparing the scope of those two.

[00:11:59] Speaker 03:
And I don't think oral argument at this time is the place to do that kind of claim analysis.

[00:12:04] Speaker 03:
They haven't done it.

[00:12:04] Speaker 03:
They've simply said they're

[00:12:06] Speaker 03:
They're all encompassing, they're broader, so therefore the conclusion must be that the examiner had that in mind as well.

[00:12:12] Speaker 03:
But my point is simply that they're different patents.

[00:12:15] Speaker 00:
It doesn't really help if you can't answer my question, to be honest with you.

[00:12:18] Speaker 03:
Well, my answer would be that I don't agree that they're the same, that it's necessarily broader, that could be narrow.

[00:12:25] Speaker 03:
He's argued that they're broader.

[00:12:26] Speaker 03:
I'm going to say, I don't know.

[00:12:28] Speaker 03:
And it would require an exhaustive analysis that nobody has done to determine whether or not that they are the same.

[00:12:36] Speaker 03:
The 64-page declaration, 400 pages of testimony at trial, and that is not submitted to the PTO.

[00:12:45] Speaker 03:
Instead, there's a newly-minted 64-page declaration, which is significantly at odds at what was testified to at trial.

[00:12:53] Speaker 03:
At trial, for example, Mr. Heppley said, well, I don't have any notes, and I don't have any clear recollection of any one of these particular jobs that I could testify to in any detail as to what was done.

[00:13:03] Speaker 03:
Suddenly, in a 64-page declaration, he submits a chart

[00:13:06] Speaker 03:
showing 51 of these sales with information about each one that he's somehow magically reconstructed now after the fact, eight months after trial.

[00:13:15] Speaker 03:
The second example is the Nehrbos and Brignac depositions.

[00:13:19] Speaker 03:
Sorry, offers of proof.

[00:13:22] Speaker 03:
They submit these declarations to the PTO, and that allows them to argue, they think, that we relied upon advice of counsel.

[00:13:34] Speaker 03:
What's interesting about that, though, as the court has pointed out,

[00:13:36] Speaker 03:
Those were excluded from trial.

[00:13:38] Speaker 03:
And there's not one mention of the fact in the PTO proceedings that, well, we couldn't get that in because we had asserted the attorney-client privilege to prevent all discovery on it.

[00:13:47] Speaker 03:
And I think it's fanciful at best to suggest that after the trial concluded, in the four-month period of time, counsel phrases it as an evidentiary hearing.

[00:13:56] Speaker 03:
It wasn't an evidentiary hearing.

[00:13:57] Speaker 03:
It was an argument on whether or not the case was exceptional or not.

[00:14:01] Speaker 03:
And there was no operative, nobody suggested, I didn't hear them say, would you like to take a deposition of somebody?

[00:14:06] Speaker 03:
I would have pointed out discovery closed eight months ago.

[00:14:09] Speaker 03:
We tried the case and a set of facts that are different than the set of facts that they submitted to the PTO.

[00:14:15] Speaker 03:
This court, not the PTO, is the body that reviews trial court findings.

[00:14:22] Speaker 03:
And there's a good reason for that.

[00:14:23] Speaker 03:
The MPEP 2010 cautions that inactual conduct is a statutory criteria.

[00:14:31] Speaker 03:
It is not a statutory criteria for patentability.

[00:14:34] Speaker 03:
But it's rather a judicial application of the unclean hands doctrine.

[00:14:38] Speaker 03:
And that's appropriate to be handled by the courts, says the MPEP, rather than by the administrative body.

[00:14:45] Speaker 03:
So unless this court were to decide that the trial court was clearly in error, clearly erred in its finding that the prior sales were commercial, that train has left the station.

[00:14:57] Speaker 03:
And the conclusion cannot be disturbed, regardless of whether a PTO examiner thought otherwise.

[00:15:02] Speaker 03:
With respect to intent, let me just note two things.

[00:15:08] Speaker 04:
Can I switch course?

[00:15:09] Speaker 04:
Assuming you're the right person, are you the right person to ask about torches, interferences?

[00:15:14] Speaker 04:
I am.

[00:15:15] Speaker 04:
OK, so I'm a little troubled and confused by this issue.

[00:15:21] Speaker 04:
So the objectionable testimony, or at least the testimony your friend on the other side objects to, is I think indisputably hearsay.

[00:15:32] Speaker 04:
could have been admitted for impeachment purposes, but can't be relied on to support the jury on the merits.

[00:15:38] Speaker 04:
Is that correct?

[00:15:39] Speaker 04:
Let me assume that you're correct.

[00:15:41] Speaker 04:
If you are correct, what?

[00:15:43] Speaker 04:
I'm assuming I'm correct.

[00:15:44] Speaker 04:
You don't have to assume it.

[00:15:46] Speaker 04:
I'm happy to make that assumption.

[00:15:48] Speaker 04:
Tell me what other evidence then supports the jury verdict on it, because I looked at what I thought you cited, and it seems pretty thin to me.

[00:15:57] Speaker 03:
All right.

[00:15:57] Speaker 03:
Let me just tell you that there were two witnesses to this telephone conversation.

[00:16:02] Speaker 03:
We called the first one Powell as a part of our case in chief.

[00:16:05] Speaker 03:
They objected on the basis of hearsay.

[00:16:09] Speaker 03:
A week later, they seem now to have forgotten, although the citation is in their brief.

[00:16:13] Speaker 03:
A week later, they called the other witness as a part of their case in chief.

[00:16:17] Speaker 03:
And they asked the witness this question.

[00:16:19] Speaker 03:
This is Lind as the second guy that they called.

[00:16:21] Speaker 03:
The question was, question, during the call, we're talking about, isn't it true that Mr. Kelly told Mr. Powell the Triangle could not award the work to plaintiffs?

[00:16:31] Speaker 03:
Because Ron Liles had told Kelly that he had a patent and he didn't apply.

[00:16:34] Speaker 03:
Answer, yes.

[00:16:36] Speaker 03:
It goes on, and there's a couple more questions to that effect.

[00:16:38] Speaker 03:
Where is that in the record?

[00:16:39] Speaker 03:
That is in appendix 22750.

[00:16:44] Speaker 03:
Which volume?

[00:16:47] Speaker 04:
I'll get that in just a second.

[00:16:48] Speaker 04:
Sorry, you have five volumes.

[00:16:49] Speaker 04:
I'm not going to sort.

[00:16:50] Speaker 04:
It's five and four.

[00:16:51] Speaker 04:
It's five.

[00:16:52] Speaker 04:
We'll give you that.

[00:16:53] Speaker 04:
Five and four.

[00:16:55] Speaker 03:
That continues.

[00:16:57] Speaker 03:
Appendix 22750, all the way up to 22757, which includes my cross-examination, where, again, he says, without objection, he says he basically just said that he couldn't put Triangle in jeopardy, and the superheaters was going to have the work.

[00:17:13] Speaker 03:
So any objection as to that hearsay is waived when they called another witness to testify.

[00:17:19] Speaker 03:
And that's a witness that's affiliated also with my client, with Energy.

[00:17:24] Speaker 03:
Both witnesses were affiliated with Energy.

[00:17:26] Speaker 03:
Both of them testified that they'd heard the conversation with Bill Kelly.

[00:17:30] Speaker 03:
Why isn't that hearsay too, then?

[00:17:32] Speaker 03:
Well, it's not hearsay because, first of all, nobody objected to an invasive hearsay.

[00:17:36] Speaker 03:
And secondly, I certainly didn't object to it.

[00:17:39] Speaker 04:
This is not the testimony I was looking at.

[00:17:40] Speaker 04:
The other testimony, is there other testimony?

[00:17:43] Speaker 03:
Yes.

[00:17:44] Speaker 04:
That's direct testimony from somebody on their side that would show they tried to.

[00:17:48] Speaker 03:
Yes, indeed there is.

[00:17:49] Speaker 03:
I can't give you a paid site right now.

[00:17:50] Speaker 03:
But there was a fellow by the name of Jim Cole

[00:17:54] Speaker 03:
who was Mr. Heffley's partner in the appellant organizations.

[00:17:58] Speaker 02:
Page 27, 716.

[00:18:00] Speaker 03:
Thank you.

[00:18:01] Speaker 03:
And he testifies that he had heard from Mr. Lyles that there had been a dust-up, I think you call it, dust-up with triangle.

[00:18:12] Speaker 03:
He names them by triangle.

[00:18:13] Speaker 04:
Discussion.

[00:18:14] Speaker 04:
Why don't you take a look at the page so you don't mislead us?

[00:18:17] Speaker 04:
27, 716.

[00:18:17] Speaker 04:
Sure.

[00:18:18] Speaker 04:
This is the one that I looked at specifically.

[00:18:21] Speaker 04:
It seems to me your best support.

[00:18:23] Speaker 04:
And it really, to me, is a question whether it rises to the level of evidence to show the elements of the claim here.

[00:18:40] Speaker 03:
Yeah.

[00:18:40] Speaker 03:
This is, I think, corroborative evidence for what our people say they heard.

[00:18:45] Speaker 03:
And this is from Mr. Cole, who says that he heard that there was this discussion.

[00:18:49] Speaker 04:
Wait a minute.

[00:18:50] Speaker 04:
Let me start with what you just said.

[00:18:52] Speaker 04:
I don't view the other testimony you're citing as admissible for this point at all.

[00:18:57] Speaker 04:
So it can't be that this corroborates that.

[00:19:00] Speaker 04:
You have to rely on something else independently, in my view, apart from the hearsay testimony.

[00:19:06] Speaker 04:
I know you disagree with that, but let's just assume that's a starting point.

[00:19:09] Speaker 04:
Why is this testimony sufficient to support the jury of our victim?

[00:19:12] Speaker 03:
Well, let me just say one thing to make sure that you understand my position.

[00:19:16] Speaker 03:
I'm sure you do.

[00:19:16] Speaker 04:
I understand your position.

[00:19:17] Speaker 04:
Tell me, I want to know where in this testimony it suggests that

[00:19:22] Speaker 04:
your friend on the other side was asserting its patents in an attempt to deprive you of business.

[00:19:29] Speaker 03:
Well, here's the circumstantial evidence, if you will.

[00:19:32] Speaker 03:
We had a relationship with Triangle that had gone on for several months.

[00:19:37] Speaker 03:
It was a lucrative relationship.

[00:19:38] Speaker 03:
We were making a lot of money.

[00:19:39] Speaker 03:
We were told as a part of that conversation that we were going to be able to continue to do work after December of 2014.

[00:19:46] Speaker 03:
Suddenly, 2014, the work stops.

[00:19:50] Speaker 03:
And suddenly, no surprise,

[00:19:52] Speaker 03:
The same time, it starts with superheaters of North Dakota.

[00:19:56] Speaker 03:
That's pretty powerful evidence, it seems to me like.

[00:19:58] Speaker 03:
The accountant took a look at all the records of their accounting records, our accounting records, saw that ours went up to a certain point, it stopped, and theirs went on.

[00:20:07] Speaker 03:
I think our clients were entitled to explain why our business stopped at that point in time as a part of our damage calculation.

[00:20:15] Speaker 03:
Are you with me?

[00:20:17] Speaker 04:
I understand what you're saying, but you're not answering my question, which is where is the direct evidence

[00:20:22] Speaker 04:
that heat on the fly attempted to unfairly assert its patent against you that meets the elements of the torches interference claim.

[00:20:30] Speaker 03:
Well, I think the answer to that question is it's circumstantial evidence, direct evidence.

[00:20:34] Speaker 04:
But there's other evidence in the record that there may have been price differentials and the like that could support a reason for moving from them to you.

[00:20:42] Speaker 03:
No?

[00:20:42] Speaker 03:
Well, yes, there's an email that they referred to.

[00:20:46] Speaker 04:
An email not that we wrote.

[00:20:48] Speaker 04:
I mean, you can't make out a torches interference claim by saying,

[00:20:52] Speaker 04:
We were getting the business.

[00:20:53] Speaker 04:
All of a sudden, now they're getting the business.

[00:20:56] Speaker 04:
You have to point to something direct that says that they were threatening other people with their patent if they didn't switch to them.

[00:21:05] Speaker 03:
Well, we do have evidence of that, that there were other entities that they threatened.

[00:21:08] Speaker 03:
They threatened Marathon, which was our major customer.

[00:21:11] Speaker 03:
Where's that evidence?

[00:21:13] Speaker 03:
That evidence is, I'll get you the site here momentarily, but it's from Mr.

[00:21:23] Speaker 03:
Roger Torgerson is his name, and I'll have to furnish it to you later.

[00:21:30] Speaker 03:
Roger Torgerson testified that he had a meeting with Mr. Lyles, and Mr. Lyles told him that if there were people that are heating with the heat in the fly method, and this was in the context of Torgerson was the company man for Marathon who was doing work with us.

[00:21:46] Speaker 03:
Was that cited in your brief?

[00:21:47] Speaker 03:
Yes, I believe it was.

[00:21:49] Speaker 04:
Where?

[00:21:50] Speaker 04:
Well, I'm going to have to...

[00:21:52] Speaker 04:
OK.

[00:21:53] Speaker 04:
You're not going to give me any good information during the oral argument, so why don't I stop wasting your time on this?

[00:21:58] Speaker 04:
I know you want to save some time for your friend.

[00:22:00] Speaker 03:
Yeah.

[00:22:00] Speaker 03:
But I don't want the court to miss, and I'm sure you haven't, but out of my nervousness, let me repeat it.

[00:22:07] Speaker 03:
I don't want the court to miss the fact that there were two witnesses in this hearsay conversation, supposedly.

[00:22:13] Speaker 03:
They've waived any hearsay objection when they call the second witness and ask him, and he

[00:22:20] Speaker 03:
gives the precise answers that the first witness gave that they did object to.

[00:22:24] Speaker 03:
It seems to me that that's the end of the hearsay inquiry.

[00:22:26] Speaker 03:
That testimony is admitted and is before the court.

[00:22:30] Speaker 03:
Whether it would have been an objection they could have made at the time or whether they made a mistake by calling the second witness, that's beside the point.

[00:22:41] Speaker 03:
The North Dakota attorney's fees statute

[00:22:49] Speaker 03:
Um, let me just say that the, under the North Dakota statute, there is a requirement that, um, there'd be an underlying tort.

[00:22:58] Speaker 03:
And it's a little bit of an anomaly, but in any case, um, what is clearly the case is both the, uh, the tort of interference and the tort of, of, uh, the North Dakota unfair sales and advertising statute.

[00:23:10] Speaker 03:
They're sort of joined at the hip, if you will.

[00:23:12] Speaker 03:
And this case, as we pointed out in our materials is directly controlled by the eight circuits, American family versus Hollander case.

[00:23:19] Speaker 03:
And it basically stands for the proposition that unless you can show privilege, unless that you didn't have actual notice of the claim, and to get back to an earlier question, Your Honor, that you asked, actually three months before the trial, we notified them that we were going to make this claim.

[00:23:38] Speaker 03:
And then also that you have to show that the evidence was admitted without objection.

[00:23:43] Speaker 03:
So here we have energy notifying the appellants of the claim three months before trial.

[00:23:47] Speaker 03:
We have both parties briefing the North Dakota statute in their trial briefs.

[00:23:51] Speaker 03:
We have evidence relative to the issue being admitted.

[00:23:54] Speaker 03:
We have the appellants not objecting to a jury instruction on the North Dakota statute.

[00:23:58] Speaker 00:
But they did object to that jury instruction.

[00:24:00] Speaker 00:
I'm sorry?

[00:24:01] Speaker 00:
They did object to that jury instruction.

[00:24:04] Speaker 00:
And they said that they didn't think, Your Honor, I don't think this should be properly an issue in the case.

[00:24:09] Speaker 00:
Instead, this just goes to an element of the tortious interference claim.

[00:24:16] Speaker 00:
I'm pretty sure that's in the record.

[00:24:17] Speaker 03:
I may be wrong, but I don't think so, Your Honor.

[00:24:20] Speaker 03:
I believe that discussion took place at the time on which we were arguing about whether or not this claim was involved.

[00:24:25] Speaker 00:
When it came to the jury instructions... So it's your position that even if they thought the jury instruction went to the tortious interference, they needed to preserve that argument, even though the court very clearly said this might not be an issue in the case.

[00:24:39] Speaker 00:
I'm going to punt on that until later, see how the jury works out this issue, and then I'll figure out at the end whether in fact this was properly before me.

[00:24:47] Speaker 03:
Yes.

[00:24:48] Speaker 03:
The jury instruction, the only one that they objected to was with respect to instruction number six, which I'm talking about, was that the burden of proof was different or something.

[00:24:59] Speaker 03:
We didn't object to that.

[00:25:01] Speaker 03:
But the jury is then asked two interrogatory questions about the North Dakota statute.

[00:25:06] Speaker 03:
Was there a violation of the statute?

[00:25:08] Speaker 03:
And secondly, was it a knowing violation of the statute?

[00:25:11] Speaker 03:
And I explained to the court that I wanted that knowing clause in there because it fit under the statute.

[00:25:16] Speaker 03:
So the jury goes ahead and deliberates on that issue.

[00:25:20] Speaker 03:
They sign the jury checking off both of those torts.

[00:25:25] Speaker 03:
And subsequently, the judge enters a judgment on the jury findings.

[00:25:31] Speaker 03:
What is the only thing that's possibly missing in this from implied consent?

[00:25:34] Speaker 03:
What, that we didn't in a complaint somewhere, say, and we're specifically referring to the North Dakota statute?

[00:25:39] Speaker 03:
That's the only thing that's missing.

[00:25:40] Speaker 02:
Why don't you briefly address your cross-appeal on attorney's fees under 285?

[00:25:46] Speaker 03:
Let me just say this by way of introduction to Mr. Pullman, who's going to take the laboring oar on that.

[00:25:51] Speaker 02:
Mr. Pullman's not going to have any time.

[00:25:53] Speaker 02:
You've used all of the time you had for both direct and rebuttal.

[00:25:56] Speaker 02:
But I'm going to allow you to address this issue.

[00:25:58] Speaker 03:
Well, let me just say that I don't think you can read the court's initial order on unequal conduct and then read the second order on exceptionality without sort of wondering, is it the same judge that wrote both opinions?

[00:26:12] Speaker 02:
Well, I can see that it's the same judge that wrote both opinions, because in the inequitable conduct, well, let's just say, in the attorney's fees opinion, he bewilderingly, to me, says that they had a meritorious argument on inequitable conduct.

[00:26:30] Speaker 02:
And that's why he's going to deny your attorney's fees.

[00:26:32] Speaker 02:
Meritorious, if I understand the meaning of that word, because he actually uses it twice.

[00:26:36] Speaker 02:
Once with regard to marathon, then he says that their arguments were not without merit.

[00:26:41] Speaker 02:
with regard to you.

[00:26:43] Speaker 02:
And so I'm bewildered.

[00:26:44] Speaker 02:
But I'm likewise bewildered by his approach, for example, in obviousness, where he says, every possible fact underlying the obviousness inquiry is in dispute.

[00:26:54] Speaker 02:
So this case is ripe for summary judgment.

[00:26:57] Speaker 02:
That's pretty close to a direct quote to what he said.

[00:27:00] Speaker 02:
So I can see that it's the same judge that decided the whole thing.

[00:27:03] Speaker 03:
Well, let me tell you why I said that.

[00:27:04] Speaker 03:
Yesterday, this court entered an opinion, Honeywell versus Fujifilm, in which you

[00:27:10] Speaker 03:
considered exceptionality.

[00:27:12] Speaker 03:
And one of the things you decided in there was that the district court had conducted a detailed and structured analysis of exceptionality.

[00:27:18] Speaker 03:
The judge had considered the totality of the circumstances.

[00:27:21] Speaker 03:
And then a second time, he said the detailed findings, the detailed versions of why the plaintiff's position on the merits of litigation were not exceptional.

[00:27:31] Speaker 03:
You look at that order on exceptionality, and believe me, I don't see any evidence that he has considered the totality of the circumstances.

[00:27:39] Speaker 02:
I think we have your argument.

[00:27:40] Speaker 02:
Your time is up, so let's have the rebuttal.

[00:27:43] Speaker 02:
Mr. Brister, you have some rebuttal time left.

[00:27:56] Speaker 01:
The hearing four months after trial was an evidentiary hearing because that was its title.

[00:28:01] Speaker 01:
Whether anybody chose to add evidence is a different matter, but it was set and called as an evidentiary hearing.

[00:28:09] Speaker 01:
The continuation patents were not different.

[00:28:13] Speaker 04:
The examiner... Can I just move you to the torches interference issue?

[00:28:18] Speaker 04:
Assuming I agree with you that the main hearsay testimony should be excluded, your friend has pointed to apparently a different witness that repeated the same thing and said you didn't object to that testimony.

[00:28:31] Speaker 04:
Is that correct?

[00:28:32] Speaker 01:
I'd have to look at it to see.

[00:28:33] Speaker 04:
I mean, you all are not very helpful.

[00:28:35] Speaker 04:
We're asking you very specific questions about the record and neither of you can answer them.

[00:28:39] Speaker 04:
I mean, this is not my job to dig through the record independently and come up with reasons to affirm or reverse this appeal.

[00:28:47] Speaker 01:
I agree.

[00:28:49] Speaker 01:
This is a two-week trial, and this is something I heard the first time five minutes ago.

[00:28:54] Speaker 01:
So if he's going to add that to the record, just request it.

[00:28:59] Speaker 04:
Well, he's not adding it to the record.

[00:29:01] Speaker 04:
The record exists.

[00:29:03] Speaker 01:
Correct.

[00:29:04] Speaker 04:
I mean, if you had arguments about why

[00:29:07] Speaker 04:
this verdict should or shouldn't be upheld, you should have put them in.

[00:29:12] Speaker 01:
Well, just reasoning on the fly, once the evidence is admitted, which it was before this witness was called, and we've stated our objections, and the question is, do we have to state the same objection again?

[00:29:27] Speaker 01:
And sometimes you do, and sometimes you don't.

[00:29:30] Speaker 02:
Well, when you say do we need to state the same objection again, if I understood your opposing counsel's argument,

[00:29:35] Speaker 02:
He says the second witness is actually called by you and on direct.

[00:29:39] Speaker 02:
I know it wasn't you personally, just to be clear, but actually asked by you on direct.

[00:29:42] Speaker 02:
So would you be objecting to your own calling of the witness and your own questioning of him?

[00:29:47] Speaker 02:
How would that work precisely?

[00:29:49] Speaker 01:
Well, once evidence comes in, you can question the witness about what they said without waiving the objection.

[00:29:57] Speaker 01:
I mean, there's exceptions and stuff to that I'd need to look at and see.

[00:30:00] Speaker 00:
Wouldn't that have been done and it wasn't done here?

[00:30:03] Speaker 00:
I'm sorry.

[00:30:04] Speaker 00:
But that did not occur, right?

[00:30:07] Speaker 00:
So your client's counsel called a witness who then presented testimony that, had it been called by the other party, I guess you would have objected to.

[00:30:19] Speaker 00:
But there was no follow-up and no questioning of the type that you're talking about, right?

[00:30:23] Speaker 01:
It's been a long time since my second year evidence class.

[00:30:27] Speaker 01:
I'm trying to remember.

[00:30:28] Speaker 01:
And I'm sorry.

[00:30:31] Speaker 01:
That's all I can say.

[00:30:31] Speaker 00:
Why don't we ask you about attorney's fees for a minute?

[00:30:34] Speaker 00:
So I would like to follow up on the questions from Judge Moore and in particular that sentence that she was referring to in the judge's opinion where the judge says that he's not going to award attorney's fees and as justification for that he says he'd on the fly reasonably disputed with its own evidence and provided a meritorious argument against a finding of inequitable conduct.

[00:30:59] Speaker 00:
That doesn't make much sense to me

[00:31:01] Speaker 00:
given that inequitable conduct requires a finding that the single reasonable inference is an intent to deceive.

[00:31:09] Speaker 00:
And not only is here do we have the judge saying, I'm not going to award attorney's fees because the inequitable conduct argument was meritorious, and also saying something, even if meritorious were interpreted as plausible, that doesn't make any sense.

[00:31:23] Speaker 00:
It totally undermines the finding of inequitable conduct.

[00:31:27] Speaker 01:
I agree, as well as the summary judgment when he says every fact was in dispute.

[00:31:31] Speaker 00:
OK, but we're not talking about the obviousness issue right now.

[00:31:34] Speaker 00:
I just want to have you address, please, why it is that this court didn't err in its determination that attorney fees aren't appropriate.

[00:31:43] Speaker 00:
And I don't mean to suggest that attorney fees are appropriate in every case where there is an equitable conduct finding.

[00:31:49] Speaker 00:
But there's something here where there's a finding of an equitable conduct

[00:31:53] Speaker 00:
And then the district court says no attorney fees are appropriate, but then has this weird sentence that is completely in contrast to the inequitable conduct finding and suggests that maybe the district court erred.

[00:32:07] Speaker 01:
Well, unless inequitable conduct is always an exceptional case, that can't be so.

[00:32:15] Speaker 00:
No, no, I have to look at the district court's reasoning for why attorney fees are inappropriate.

[00:32:21] Speaker 00:
And if there's something in here like saying that your client, which lost on inequitable conduct, provided a meritorious argument on inequitable conduct, isn't there a problem there with the district court's reasoning?

[00:32:34] Speaker 01:
I don't think so, because it's not the only reason.

[00:32:38] Speaker 01:
Several reasons.

[00:32:38] Speaker 01:
Number one, we're two months after the evidentiary hang, so he knows for a fact what Mr. Hefley was told by his attorney.

[00:32:44] Speaker 01:
Number two, a lot of his analysis on an exceptional case is, we didn't sue them, they sued us.

[00:32:49] Speaker 01:
We're not a vexatious litigant.

[00:32:51] Speaker 01:
We don't go around suing people and the kind of things that make a case exceptional.

[00:32:56] Speaker 02:
Can you hold on for a second just on that one?

[00:32:58] Speaker 02:
They brought a DJ action, correct?

[00:33:00] Speaker 01:
Correct.

[00:33:01] Speaker 02:
There has to be a case or controversy over this patent for them to bring a DJ action, correct?

[00:33:08] Speaker 02:
They had to fear a threat that you would sue them, and it has to be legitimate in order to be eligible to even bring a DJ action.

[00:33:16] Speaker 01:
I'm not sure they have to be in fear.

[00:33:18] Speaker 02:
There has to be a case of controversy.

[00:33:20] Speaker 02:
And a patentee who's never enforced a patent against anybody and is standing down on it, there couldn't be a case of controversy.

[00:33:27] Speaker 01:
Well, I'm not saying we were standing down on it.

[00:33:29] Speaker 01:
I'm saying we didn't sue anybody on it, and we had a valid patent.

[00:33:32] Speaker 02:
Had you threatened the litigation?

[00:33:33] Speaker 01:
uh... no no there's no evidence that we threaten them with litigation there's no evidence that we threaten marathons do you know all you threaten marathons marathons didn't cancel any jobs on torches interference then why was there dj jurisdiction?

[00:33:45] Speaker 04:
why didn't you move to dismiss for lack of jurisdiction?

[00:33:47] Speaker 01:
well because they wanted to do what you have a if i wanted to do something that somebody has a patent on the safe thing to do well that's not good enough though i mean if there's not a case or controversy and you

[00:34:02] Speaker 04:
truly believed you weren't asserting the patent against anybody, you weren't threatening to assert it, then you should have moved to dismiss for lack of jurisdiction.

[00:34:11] Speaker 04:
But you don't.

[00:34:12] Speaker 04:
You admit that there's a case or controversy.

[00:34:14] Speaker 01:
If somebody claims my homestead, even though I've never heard from them, never met them, I can sue them for a declaratory judgment that they don't own my house.

[00:34:24] Speaker 01:
I don't have to be in fear or anything like that.

[00:34:26] Speaker 01:
It's their claim.

[00:34:29] Speaker 01:
And patent is, after all, a claim.

[00:34:32] Speaker 02:
OK, well, I think we've exhausted all of our time for today.

[00:34:36] Speaker 02:
I thank all counsel.

[00:34:37] Speaker 02:
The case is submitted.

[00:34:38] Speaker 03:
May I provide the site that the counsel asked me about?

[00:34:41] Speaker 03:
The Torgerson deposition is cited in page 55 of our opening brief.

[00:34:46] Speaker 03:
It's appendix 21853.

[00:34:48] Speaker 03:
The Linn testimony is appendix 22750 to 22757.

[00:34:55] Speaker 02:
Our next case for today.