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We have a busy morning this morning.

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We have five cases that we're considering.

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Four cases are set for oral argument here, and one case has been submitted on the briefs.

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So let's get started with the first case, General Electric Company versus United Technologies Corporation 17-2497.

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Mr. Ferguson.

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Thank you, Your Honor.

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You reserved six minutes of your time and your 15 minutes from both, correct?

[00:00:33] Speaker 00:
That's correct, Your Honor.

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Okay, you may proceed.

[00:00:36] Speaker 01:
Thank you.

[00:00:37] Speaker 01:
Good morning, and may it please the Court.

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The Board committed legal error in its obviousness analysis of Claims 7 through 11 of the 605 Patent.

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Can you start with the jurisdictional question, which I at least personally find to be quite serious?

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Yes, Your Honor.

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So the issue in this case is whether GE has standing to have its appeal heard.

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and in particular whether GE has shown an injury in fact.

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Now, while we agree that in many of this Court's decisions regarding standing in the IPR context, the focus has been on the likelihood that the petitioner would face a patent infringement lawsuit.

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But it is also clear under both this Court's precedent and the Supreme Court precedent that the specter of a lawsuit is not the only form of injury sufficient for standing.

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economic injuries and competitive injuries are also basis for finding standing.

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Here GE has suffered economic and competitive harm due to the existence of the 605 patent in the board's erroneous IPR decision.

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Is that harm actual or immediate?

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It is your honor.

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GE has already suffered that harm.

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And the reason for this is because of the very unique nature of the particular market, the particular engine

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turbofan engine market that we're dealing with you have demonstrated dollar-loss is that what you're saying correct your honor we've demonstrated dollar-loss and we've also demonstrated competitive harm now on the dollar-loss determine I mean we're relying on your declaration right because that's all we have correct your honor where in the declaration does it say you demonstrated dollar-loss Mr. Long GE's declarant said specifically in a paragraphs 15 and 16 for example that the

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the existence of the 605 patent has caused GE to suffer economic injury in the form of increased research and development costs that are specific to the 605 patent because GE has, in this particular instance, already designed a engine that includes technology like the variable area fan nozzle here.

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that implicates the 605 patent.

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As a result, because of the very long development periods that... Can I just ask you about that?

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Did you just say that you have in the works an engine that might infringe this patent?

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It's not even in the works, Your Honor.

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It was already designed.

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Does this declaration say that specifically somewhere?

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it does in the paragraphs that discuss the Quixy engine.

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This is paragraph 14, for example, which includes the picture of the actual Quixy engine that GE previously had developed.

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As a result of that previous development work, GE actually has this type of technology, this variable area fan nozzle technology in its design toolbox.

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And when the 605 patent issues... This was designed in the 70s, right?

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It was, Your Honor.

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But still, the point is that this is now an option the GE has when it is determining whether to design a particular engine for a particular customer.

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I mean, if this was designed in the 70s, how could you possibly risk infringement for this specific design from a later patent?

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It's not this particular design that would face an infringement lawsuit.

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It's not this engine.

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We agree with that, Your Honor.

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What it is is it's the result of the fact that GE has this technology.

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But you've led us to this engine with the statement that this is the infringing engine.

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No, it's not infringing, Your Honor.

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If I said that, I did not mean to say that.

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What is your immediate and actual harm?

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The immediate and actual harm is caused by its economic injuries.

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It's caused by the fact that when this, a patent like the 605 patent issues, GE must take it into account when it is considering its design options for new and future engine designs.

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You've had this engine on the shelf now since the 70s.

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Yes.

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And GE has chosen not to move forward with this engine for all those years, 40, 50 years.

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But it still is an option that GE has that it can provide to its customers.

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Now it can no longer do that because of the existence of the 605 patent.

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I mean, that can't literally be true.

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You certainly can provide the very thing you created 40 years ago because that can't possibly be an infringement of this patent.

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Not the exact engine, correct, Your Honor, but we have

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no guarantee as to how UTC could in the future interpret the 605 patent.

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It's a variable area fan nozzle that can be used to adjust the pressure ratio of the fan.

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That's very broad technology.

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When you say there's a long lead time, can you give me some sense of the lead time, the time involved in designing, making, testing, selling?

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Are we talking three years?

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Are we talking 12 years?

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What are we talking about?

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No, it can take up to a decade, Your Honor, and that is what Mr. Long... To get to the last of those points, namely selling to Boeing or somebody?

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It is, it's literally, the process is the engine or the aircraft makers will come to the engine designers and say, we are planning to introduce a plane, say, in 2025.

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We're going to need engines for that plane.

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That process can begin as early as 2015 or could have began as early as 2015.

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There is so much research and development cost associated with building these planes, designing them, testing them, then getting them certified.

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All that has to occur before they can even offer them or sell them to a... Given the claims at issue here, at what point in that process

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would an activity covered by 271A take place?

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Not just drawing it, obviously, not doing computer simulations.

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At what point is there a making, using, selling, importing?

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It could very well be in the making because GE is a United States company.

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It would make at least a test engine that would be in the United States.

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That could invoke 271A.

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So it could be as early as making the first test engine and that could be somewhere in the middle of that process.

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One of the, this is switching topics just a little bit, well one of the striking things I guess, striking to me things about the paragraph 15 and 16 and then I guess was it 22 at the end.

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Yes.

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Nothing is said here along the lines of we have had airframe manufacturers come to us, ask us to consider

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various designs, we have thought in the context of a specific potential customer about a design of a sort that would, I think what's the word we've used, implicate the patent.

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This is all, as a general matter, we like to keep our options open.

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And that sounds rather like JTECT, something that we said was insufficient.

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I believe, Your Honor, it is much more like the biotechnology industries case that this court ruled on.

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In that case, that's 496 F.

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3rd, 1362.

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In that case, the District of Columbia enacted a statute or an act that addressed a way to control patented drug prices within the district.

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And that act is actually analogous to the 605 patent.

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In finding standing in that case,

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This court said that whether the act is enforced or not, its presence is highly likely to cause pharmaceutical manufacturers to incur costs in an effort to avoid running afoul of its broadly worded provisions.

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How can that apply here when the engine, you have no engine in development, you don't have an engine on the shelf that's fully engineered that could possibly even infringe?

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because as Mr. Long declared, it is necessary that GE incur costs in making sure that it designs around any concern with respect to the 605 patent at all in order to avoid running afoul of the broadly claimed 605.

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You may decide to do that or you may not.

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No, Mr. Long has declared that GE has already incurred these types of economic costs as a result of having to design

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make to ensure that its designs do not run afoul of these broadly worded claims.

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He says that but he doesn't, it's hard to link that to the claims at issue here.

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I mean I'm honestly pretty sympathetic but we have language in JTEC that says you have to establish concrete plans for future activity and

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I don't see that in your declaration.

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I mean, maybe that standard is too stringent, but we're bound by JTEC.

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So how does your declaration show concrete plans for future activity?

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It seems to me, what one of my colleagues has said, that what you've said is these patents create a potential barrier for us and essentially limit our toolbox.

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And so even though we don't have specific plans now,

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that limitation of our toolbox is itself enough damage, but that seems inconsistent with the standard we've required in JTEC.

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When I read JTEC at your honor, it appears to me that the only allegation that the petitioner made in that case was that there was the likelihood or threat of a patent infringement lawsuit.

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There are, as the Supreme Court has said, there are other bases for finding standing, such as suffering economic

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and competitive harm.

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And that's where we believe, in this case, GE has shown, through Mr. Long's declaration, which has not been rebutted, that it has incurred research and development costs, expenses.

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So the narrowing of the toolbox, if that's an appropriate analogy, is in itself an injury, in fact, that causes economic harm?

[00:11:51] Speaker 01:
It is a competitive injury, that's correct, Your Honor, and an economic injury, but it's certainly a competitive injury, too, because

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as this court said in Canadian lumber, competitor standing constitutes an injury in fact when the government acts in a way that increases competition or aids the plaintiff's competitors.

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And that's the case here.

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The issuance of the 605 patent.

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Can I ask you a hypothetical about this?

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I mean, this is obviously not the facts of your case.

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But suppose you have a brand new company that's never done aircraft engines before.

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I know that's probably completely unrealistic, but bear with me.

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And they decide before they want to even spend any startup money or anything at all, they're going to go try to clear out pre-existing patents from legacy makers.

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And they go to the board, which they're entitled to do.

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They lose and they appeal.

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Is it enough for them to say, we're suffering economic damage because we want to enter this market and our toolkit is narrowed by these patents?

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I believe that that would be a fair assessment.

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a competitor who is entering the market, who is being prudent with respect to making sure that they don't endure, which GE has said, it costs hundreds of millions of dollars to design these engines.

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And if you were to ignore a patent, like the 605 patent here, where GE already has that design in its toolkit, if you were to ignore it and introduce that engine and then get sued,

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It's commercial catastrophe.

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You will have lost hundreds of millions of dollars because in a market like this, where you only have three competitors, the risk is an injunction.

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Let me change the hypothetical a little bit.

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And instead of a potential competitor, you have some kind of consumer group that says, there's only two manufacturers out here.

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That creates monopolistic effects.

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The government's not doing enough.

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We think these patents aren't good.

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And we want to clear away patents

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and make it easier for others to enter the market.

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Would that consumer group have standing on appeal?

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That consumer group itself may not.

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But the Supreme Court case law is such that in these situations like that, if a specific member of that consumer group is able to show that it has suffered an injury specific to it, then it's possible.

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But the consumer group is smart and gets a bunch of airline travelers frequent

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flyer people and says, you know, because of this monopoly on engines, the engine prices are too high.

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I mean, you can go down a string of things, but I just wonder where it stops.

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I mean, we clearly said in Consumer Watchdog, consumer groups standing alone don't have standing.

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And I agree with that, Your Honor.

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And I think it a little bit further in Phigenics and said, essentially, a non-practicing entity with pretty conclusory assertions didn't have standing.

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Right.

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And then we went even further in JTEC.

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It seems to me that you're either at the JTEC line or we might be pushing it a little bit further still.

[00:15:04] Speaker 03:
But I am troubled by that concrete language.

[00:15:07] Speaker 01:
Well, I would again say that the difference in all those cases is that what this court looked to was the threat of a lawsuit.

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That is not the only basis for standing.

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The other point I want to make

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I'm going to stop you there because we've led you through almost all of your time, your lot of 15 minutes, so can you take just a couple of minutes and go through the motivation to combine this and then I'll give you back some rebuttal time, not the whole time.

[00:15:37] Speaker 01:
I appreciate that, yes.

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With respect to the merits here, the problem that the board's error was a legal error because what the board did was it required GE to show

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that the Willis and Doosler combination would have solved a problem of reverse thrust that the 605 patent does not claim, doesn't even describe, and certainly itself does not solve.

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The claims, when we look at the claims themselves, they are completely agnostic as to any reverse thrust requirement.

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An engine that practices reverse thrust could infringe those claims, and an engine that doesn't practice reverse thrust

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can infringe those claims.

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So we need the board erred because it did not take into account the scope of the claims when it considered the obviousness of the Duesler-Willis combination.

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So tell me what's wrong about thinking about it this way.

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First, that what the claims cover is different, is a different question from what your particular theory of motivation would be.

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you could have said that somebody not interested in short runway planes would be looking at Willis and taking from Willis a bunch of stuff not dependent on use on a short runway.

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And therefore, that person would have been motivated to combine it with a different, you know.

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VVAN.

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Whatever that is, yes.

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Yeah, right.

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that might not, in fact, have worked so well on short runway engines.

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But you really didn't say that.

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That is, your petition and supporting declaration concentrated really pretty much, this is what I want you to respond to, really pretty much only on somebody interested in Willis for the kind of plane Willis was describing.

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And therefore, it's simply a failure of proof, not a logical problem.

[00:17:49] Speaker 01:
Well, two things, Your Honor.

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With respect to the merits on the proof, our expert said specifically that there was a motivation to combine because it was known that the axially movable sleeve in Doosler was more lightweight, it was simple structurally, and in particular, it solved the problem of the radial flaps that were the clamshell flaps.

[00:18:18] Speaker 01:
that had air airflow leakage through them.

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He said there were some virtues to that.

[00:18:23] Speaker 01:
Yes.

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But the question is, did he say a person of skilled in the art would be looking at Willis for a purpose other than a short runway plane?

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Because if he didn't, and I'm not sure he did.

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There's one parenthetical where maybe he did, the parenthetical referring to military planes, but I don't know how long their runways are.

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that he pretty much concentrated on, I'm looking at Willis for the purposes Willis designed its engine for.

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And then there's an offsetting their benefits, there are deficits, and the board, it seemed to me at that point, had a basis for saying, you didn't show that a skilled artisan would have a motivation to choose those benefits at the risk of incurring the deficits.

[00:19:17] Speaker 01:
I believe that our expert looked at the Willis engine in the context of what the scope of the survey claims here, the 605 patent claims were.

[00:19:26] Speaker 01:
The 605 claims are, again, completely agnostic as to short haul engines, as to the lengths of the runway.

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They don't need to be commercial.

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It doesn't need to be a commercial engine at all.

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So what our expert focused on was correct.

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He focused on the actual scope of the claims.

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And what the board came back with was an analysis that, well, maybe this combination wouldn't work as well to land on a runway of 2,000 feet, et cetera.

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But that is contrary to what this court has said in, for example, Inre Mutet, where this court says specifically, when we look at the issue of principal operation, it has to be vis-a-vis the actual claim that is at issue.

[00:20:10] Speaker 01:
And in Mutet, what the court found was that,

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the combination would still be operable, vis-a-vis the broad scope of the claim that was the subject of the rejection.

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And I think that's the exact case here.

[00:20:28] Speaker 00:
OK.

[00:20:28] Speaker 01:
I think we have your argument on that.

[00:20:30] Speaker 01:
Thank you, Your Honor.

[00:20:30] Speaker 01:
I appreciate the extra time.

[00:20:35] Speaker 04:
Dr. Balanick.

[00:20:38] Speaker 04:
Good morning, Your Honors.

[00:20:39] Speaker 04:
Mike Valake for United Technologies Corporation.

[00:20:44] Speaker 04:
As we transition from the Article 1 proceeding in front of the Patent Office to this Article 3 court, we, UTC, challenge standing based on some public statements that GE had made.

[00:21:00] Speaker 04:
In particular, in September of 2014, GE's chief technology officer said, quote, they had considered the gear and very consciously decided not to take that approach.

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And this was building on years earlier, they had said the gear was a bad idea.

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And so based on those public statements, it looked like GE had decided they weren't going to be in this space.

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And so we challenged standing.

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And at that point, their burden was clear.

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And the court standard, based on the Phigenix case, there's three avenues you can pursue, the substantial risk of infringement, whether

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They're an actual or prospective licensee.

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And the third category, whether they have taken action that implicates the claims here, claims 7 through 11 of the 605 patent.

[00:21:55] Speaker 03:
And why does it have to go so far as they have taken specific actions?

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Why can't economic harm resulting from the existence of the patent and making them increase their R&D costs in other avenues to get around these patents

[00:22:12] Speaker 03:
be sufficient for Article III standing?

[00:22:15] Speaker 04:
If they pursue the economic loss theory a few points, Your Honor.

[00:22:21] Speaker 04:
First, in their instance, based on the facts in this record, there isn't a controversy of sufficient immediacy in reality as the court... I wasn't really going for a factual answer.

[00:22:35] Speaker 03:
I was asking

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Because we, in our earlier cases, have looked at different theories.

[00:22:41] Speaker 03:
And it seems to me that, you know, particularly when we're looking at risk of infringement, that's one thing, but that can't be the only avenue.

[00:22:48] Speaker 03:
I mean, that to me sounds like the same standard for declaratory judgment.

[00:22:52] Speaker 03:
And it seems like Article 3 standing here, I may be wrong, or my colleagues disagree, but should not have to rise to the level of a declaratory judgment standard.

[00:23:04] Speaker 03:
So those cases don't help me as much as

[00:23:07] Speaker 03:
Is there, if there's economic injury and you know, economic injury in the terms of what he, your friend described, what's described in paragraphs 15 of his declaration, why isn't that enough?

[00:23:21] Speaker 04:
First, that economic injury needs to be tied to some type of action they've taken that implicates this.

[00:23:31] Speaker 03:
This paragraph said it's impeded their ability to

[00:23:35] Speaker 03:
to consider a geared turbofan engine.

[00:23:39] Speaker 04:
But that's no different than what any company, if you have a competitive industry, you have company A, you have company B. As we sit here today, companies are constantly evaluating another company's patent portfolio.

[00:23:53] Speaker 04:
And certainly, there are going to be instances where company A thinks company B has an overly broad patent and says, jeez, I might have to design around this.

[00:24:05] Speaker 03:
Exactly.

[00:24:06] Speaker 03:
Why isn't that enough?

[00:24:08] Speaker 03:
Because this is not like Phigenics.

[00:24:10] Speaker 03:
This is not like consumer watchdog.

[00:24:12] Speaker 03:
These are two specific competitors in a very specific business dealing with each other in their patent portfolios.

[00:24:20] Speaker 03:
Why isn't that enough?

[00:24:21] Speaker 03:
When they say, look, they've got this invalid patent out there.

[00:24:24] Speaker 03:
We're going to go challenge it.

[00:24:26] Speaker 03:
And when they get a adverse decision, why can't they appeal and say, look, this is harming our potential business?

[00:24:34] Speaker 04:
because this case is Phigenics with the sole distinction being we are competitors.

[00:24:41] Speaker 03:
I think that Phigenics is not helpful at all.

[00:24:43] Speaker 03:
I mean, it is essentially a troll.

[00:24:48] Speaker 03:
GE is not a troll.

[00:24:49] Speaker 04:
We can take JTEC then.

[00:24:50] Speaker 04:
JTEC, they were competitors.

[00:24:52] Speaker 03:
And so in J... JTEC really looked at whether they were developing products that would infringe.

[00:24:59] Speaker 03:
That's not the theory here.

[00:25:01] Speaker 04:
So, but if we stick with JTEC at least,

[00:25:05] Speaker 04:
the competitive point, which is how they're distinguishing.

[00:25:09] Speaker 03:
I get you.

[00:25:09] Speaker 03:
J-Tech is a very hard case for GE.

[00:25:11] Speaker 03:
But let's assume I read J-Tech just only talking about the theory of potential infringement.

[00:25:17] Speaker 03:
And there's still this other potential harm of economic harm because their R&D is narrowed and the costs are increasing and the like.

[00:25:27] Speaker 03:
Is that just, in your view, not a legally sufficient basis to show Article III standing?

[00:25:34] Speaker 04:
They have to do more.

[00:25:36] Speaker 04:
And the court standard, I mean, the third prong here, they've taken concrete action that somehow implicates the claims.

[00:25:45] Speaker 04:
And so they're sitting back and we focused on paragraphs 15 and 16 of their chief of intellectual properties declaration.

[00:25:53] Speaker 03:
I'm not sure I understand whether you agreed that that was a legally sufficient article and are now just arguing a lack of facts or that you just think that's not legally sufficient.

[00:26:03] Speaker 04:
That's not standing alone based on the fact.

[00:26:06] Speaker 03:
So if somebody comes in with an undisputed statement from the company and says our R&D costs are being increased because of this invalid patent that we have to design around, even though they specifically said our costs are increasing because of this, in your view that's not sufficient for legal standing.

[00:26:29] Speaker 04:
Standing alone.

[00:26:30] Speaker 04:
based on that hypothetical, no, it's not enough.

[00:26:34] Speaker 04:
There needs to be more.

[00:26:36] Speaker 04:
It needs to move in a direction where you have a controversy of sufficient immediacy in reality.

[00:26:43] Speaker 04:
And what would that be?

[00:26:46] Speaker 02:
It's going to be highly fact-specific, but the courts... If they had said, if Mr. Long had said, we have had conversations with potential customers

[00:27:00] Speaker 02:
in which the issue has arisen whether we should have a geared turbofan engine and we have, partly because of the worry about this patent, steered away from that.

[00:27:20] Speaker 02:
That seems concrete enough.

[00:27:24] Speaker 04:
I don't think then we're at a line to create Article 3 standing.

[00:27:29] Speaker 04:
If we just take simple conversations between air framers and jet engine manufacturers, those happen every day.

[00:27:37] Speaker 04:
And so it's not just going to be the 605 path.

[00:27:41] Speaker 02:
Conversations about the technology claimed and a reaction within GE to

[00:27:52] Speaker 02:
continuing that conversation that's partly dependent on worries about infringement.

[00:28:00] Speaker 02:
There is, in fact, nothing said in paragraph 15 at that level of specificity, but maybe the quite general assertion about economic harm is a generalization of that idea which, if it were specific enough, feels like it ought to be enough.

[00:28:22] Speaker 04:
But in paragraph six of the declaration that's before the court, we saw, and you asked Mr. Ferguson about, there's a long development time here, at least eight to 10 years.

[00:28:34] Speaker 04:
And so we're at the point of conversations with air framers.

[00:28:39] Speaker 04:
We haven't even at that point started that eight to 10 years, because you're just having conversations whether a particular engine is going to work on a certain platform.

[00:28:49] Speaker 04:
That happens even before that eight to 10 year

[00:28:52] Speaker 04:
clock even starts.

[00:28:53] Speaker 04:
And so if we just stick with conversations, boy, we're still eight to 10 years for design, testing, certification with the FAA.

[00:29:03] Speaker 00:
So at what point, excuse me, sir?

[00:29:05] Speaker 00:
It would be very difficult to find standing then in any case involving an industry in which there is a significant lead time for production.

[00:29:16] Speaker 04:
That's why I went back to it's going to be highly

[00:29:19] Speaker 04:
fact-specific and their burden here was at least to demonstrate if there were economic harm, to tie that to these claims at issue and put something concrete and substantial before the court to say, we've made a decision, we're going to develop this particular engine.

[00:29:42] Speaker 04:
Indeed, in JTAC, they- That can't be the standard.

[00:29:45] Speaker 03:
There's language from Supreme Court cases that say,

[00:29:48] Speaker 03:
You don't have to start investing money and put yourself at risk for damage just to get Article III standing.

[00:29:57] Speaker 03:
I mean, that's just too far.

[00:29:59] Speaker 03:
I just don't understand why if a customer came to them and said, look, we'd like that UTC engine or something like that.

[00:30:07] Speaker 03:
Can you design it for us?

[00:30:08] Speaker 03:
And they say, we'd like to, but we can't.

[00:30:11] Speaker 03:
And I know, I'm not saying that that's what this declaration says.

[00:30:16] Speaker 03:
that that's not a sufficient demonstration of economic loss.

[00:30:20] Speaker 03:
They're turning away potential business because of a patent.

[00:30:24] Speaker 03:
Isn't that Article III standing?

[00:30:26] Speaker 04:
No, Your Honor.

[00:30:27] Speaker 04:
And in fact, we have many, many patents.

[00:30:30] Speaker 04:
GE has many, many patents.

[00:30:32] Speaker 04:
That conversation isn't going to be confined to just this 605 patent.

[00:30:37] Speaker 04:
There might be many other patents that are implicated.

[00:30:40] Speaker 04:
We can't do this.

[00:30:41] Speaker 04:
We can't do that.

[00:30:43] Speaker 04:
So all of a sudden, in the matter of a conversation, all of a sudden we have our prestanding threshold issue.

[00:30:49] Speaker 03:
I mean, you still get the merits.

[00:30:52] Speaker 03:
I mean, you're not going to lose your patents if they're valid patents.

[00:30:55] Speaker 03:
They're not going to lose their patents if they're valid patents.

[00:30:58] Speaker 03:
You're two companies competing in a very competitive industry.

[00:31:02] Speaker 03:
And every kind of action you take regarding patents and not

[00:31:07] Speaker 03:
choose is going to affect the other one in certain ways.

[00:31:10] Speaker 03:
I just don't understand how when there's a clear correlation, and maybe they have not written a sufficient affidavit, there's a clear correlation between business decisions, covering patents, and R&D goals, that that's not enough for Article III standing.

[00:31:29] Speaker 03:
And can you cite me a Supreme Court case that would suggest that that's not enough?

[00:31:33] Speaker 03:
I know JTEC helps you a lot.

[00:31:36] Speaker 03:
But besides that, I mean, that seems to me to be taking standing doctrine even further than the Supreme Court has.

[00:31:44] Speaker 04:
Well, I mean, the Lujan case where it talks about it being the irreducible constitutional minimum, this Article III court requires that injury in fact requires the concrete and real.

[00:31:59] Speaker 04:
And when you're into the conjectural and the hypothetical, which conversations

[00:32:05] Speaker 04:
that are taking place every day would be, were all of the sudden moving that needle significantly.

[00:32:11] Speaker 02:
Can I ask you a question about your view of that?

[00:32:14] Speaker 02:
Suppose I thought that the kind of things said in paragraph 15 here, if we're more specific, might well be enough.

[00:32:27] Speaker 02:
But I'm really not sure whether this is some kind of theoretical generality by the lawyer

[00:32:34] Speaker 02:
without any actual basis in any actual business decisions of the R&D people.

[00:32:40] Speaker 02:
And I thought, I wonder if it would be worth giving GE another opportunity to be more specific.

[00:32:47] Speaker 02:
Any thoughts about that?

[00:32:50] Speaker 04:
We have the record that they've chosen to submit.

[00:32:54] Speaker 04:
This is a bit unique in the sense they control the facts.

[00:32:57] Speaker 04:
They control what their plans are.

[00:33:00] Speaker 04:
And so they've put the record before the court that it's, in their view, sufficient

[00:33:04] Speaker 04:
to demonstrate standing, to give them another bite at the apple, to say something different.

[00:33:11] Speaker 04:
I mean, they chose not to offer any declarations from engineers that are actually involved in jet engine development.

[00:33:19] Speaker 04:
And to go back to them and say, these are the words you need to say, I don't think the court needs to give them that opportunity.

[00:33:27] Speaker 00:
So did I hear you correctly to say that lost opportunity cost is sufficient to satisfy

[00:33:34] Speaker 00:
Uh, but take her life harm.

[00:33:38] Speaker 00:
Did I hear you?

[00:33:38] Speaker 00:
No, no, not if law separate opportunity costs in response to your question, or you said, well, this is a very fact specific analysis, correct?

[00:33:51] Speaker 00:
Yes.

[00:33:51] Speaker 00:
So, so is, do you see a situation where a, um, a lost opportunity cost could be sufficient depending on the facts?

[00:34:02] Speaker 04:
depending on the facts, and in particular, if somehow it's tied to concrete plans that are implicating our specific claims at issue.

[00:34:13] Speaker 00:
If there's that type of... Well, they're in the business of developing aircraft engines.

[00:34:19] Speaker 00:
And it would seem to me that this patent is occupying a space there.

[00:34:25] Speaker 00:
And they can't design directly to the claims, right?

[00:34:30] Speaker 00:
They have to design around them.

[00:34:33] Speaker 00:
That takes lead time.

[00:34:35] Speaker 00:
Yes.

[00:34:35] Speaker 00:
So the question of whether they would ultimately infringe or not and whether they can design around is something that can only be determined by the company if they initiate R&D.

[00:34:52] Speaker 00:
That is correct.

[00:34:53] Speaker 00:
Okay.

[00:34:54] Speaker 00:
So the decision to initiate R&D can be based on the validity of this patent.

[00:35:03] Speaker 04:
That's their decision to make.

[00:35:06] Speaker 04:
That's a lost opportunity cost.

[00:35:10] Speaker 04:
But that's standing alone.

[00:35:12] Speaker 00:
If they make a decision... Why is it that immediate?

[00:35:16] Speaker 00:
The decision to push a button to begin R&D, it seems to me to be just as immediate, perhaps, as yesterday we had a case involving a Santa Claus outfit.

[00:35:27] Speaker 00:
There's no lead time there.

[00:35:29] Speaker 00:
The decision to either build your Santa Claus outfit or not.

[00:35:33] Speaker 00:
It's immediate.

[00:35:34] Speaker 00:
But in this industry, you've got significant lead time.

[00:35:37] Speaker 00:
Why isn't the decision to push the button to engage in R&D, why can't that represent the lost opportunity cost?

[00:35:46] Speaker 04:
Because it's standing alone.

[00:35:48] Speaker 04:
It's simply an economic harm.

[00:35:51] Speaker 04:
We have a valid patent.

[00:35:52] Speaker 00:
Well, that's what we're talking about, economic harm.

[00:35:55] Speaker 04:
An economic harm standing alone just based on... Lost opportunity cost is not economic harm?

[00:36:02] Speaker 04:
It is economic harm.

[00:36:07] Speaker 03:
Then I don't understand what you've been talking about for the last 15 minutes, because we've been asking you hypotheticals about potential customers coming to them and saying, can you develop this?

[00:36:18] Speaker 03:
And them saying, we can't.

[00:36:19] Speaker 03:
And you saying that that's not enough for standing, even though that's, I think the point of those hypotheticals was to suggest their foregoing opportunities, i.e.

[00:36:28] Speaker 03:
lost opportunity costs.

[00:36:30] Speaker 03:
And you keep saying that that's not enough for standing.

[00:36:33] Speaker 04:
that they need to demonstrate more than simply they have an economic harm that they suffered because they've told the prospective air framer, I can't do this.

[00:36:44] Speaker 03:
So even though they demonstrated economic harm in the category of lost opportunity cost, that's not sufficient for Article III standing?

[00:36:55] Speaker 04:
No.

[00:36:56] Speaker 03:
Okay.

[00:36:56] Speaker 03:
Can I ask, I know you're over time, but I want to

[00:36:59] Speaker 03:
And I'm probably overgeneralizing these cases.

[00:37:02] Speaker 03:
But there's cases involving competitor cases from the DC Circuit, I think, and maybe other circuits.

[00:37:09] Speaker 03:
I don't know.

[00:37:10] Speaker 03:
Where when an agency action increases competition, the target of that agency action has standing.

[00:37:18] Speaker 03:
Why isn't this the flip side?

[00:37:19] Speaker 03:
The agency action here has decreased competition.

[00:37:24] Speaker 03:
Why isn't the person who's suffering from

[00:37:27] Speaker 03:
the inability to compete, why shouldn't they have standing?

[00:37:31] Speaker 04:
Because going into the patent office proceeding, the 605 patent was a valid patent.

[00:37:38] Speaker 04:
They took their challenge.

[00:37:40] Speaker 04:
They took their best shot.

[00:37:42] Speaker 04:
Claim seven through 11 were upheld.

[00:37:45] Speaker 04:
And so the agency here hasn't made a decision that decreased competition.

[00:37:50] Speaker 04:
In fact, the agency uphold certain claims.

[00:37:53] Speaker 04:
Other claims went away.

[00:37:55] Speaker 02:
But that's why Judge Hughes asked the question in the form about why isn't this the flip side of that?

[00:38:03] Speaker 02:
When the government protects one competitor against another, that's a government exercise of power that the unprotected, the inhibited competitor

[00:38:17] Speaker 02:
if actually about anywhere near to doing something would be harmed by.

[00:38:24] Speaker 02:
That's why I'm not sure this changes the fundamental inquiry.

[00:38:29] Speaker 02:
How near to doing something involving the patent are they?

[00:38:33] Speaker 02:
I think all those competitor standing cases, it was perfectly plain.

[00:38:36] Speaker 02:
Somebody was going to come in and they're going to be vastly more competitors in a market that prices were going to go down.

[00:38:43] Speaker 02:
I don't remember any of them involving

[00:38:45] Speaker 02:
a serious question about the actuality of the normal competitive forces being at work, harming somebody.

[00:38:54] Speaker 02:
To me, the central point is, the central question is here, do we really have enough to know that GE is anywhere near suffering an actual harm by this quite general statement in paragraph 15?

[00:39:09] Speaker 04:
Well, they haven't made it specific whether they're suffering an actual economic

[00:39:14] Speaker 04:
harm in paragraphs 15, 16, the record evidence.

[00:39:19] Speaker 04:
But the competition hasn't changed.

[00:39:23] Speaker 04:
In other words, the patent here was valid, and we are entitled, based on that validity, to exclude.

[00:39:32] Speaker 04:
And when they appell claims 7 through 11 or confirm the patentability of those claims,

[00:39:37] Speaker 04:
There wasn't an increase or decrease in competition.

[00:39:40] Speaker 04:
It's not the flip side.

[00:39:42] Speaker 02:
Can I ask you a merits question, I realize?

[00:39:44] Speaker 02:
Yes.

[00:39:45] Speaker 02:
Yes.

[00:39:45] Speaker 02:
That might have been what you were planning to talk about.

[00:39:49] Speaker 02:
Why is it not right that the petition, particularly at, what, page 203A of the Joint Appendix, which is almost identical to the attached affidavit from, was it Dr. Abhari?

[00:40:04] Speaker 02:
Is that his name?

[00:40:04] Speaker 02:
Dr. Abhari.

[00:40:07] Speaker 02:
seems to refer to a person of ordinary skill in the art being interested in these engines and interested in looking at Willis for purposes that are not limited to the Willis purposes, the short runway engine.

[00:40:28] Speaker 02:
And I think it is fair to say, more than fair to say, that the board's decision turns entirely

[00:40:36] Speaker 02:
on restricting the field of motivation to skilled artisans interested in serving the Willis purpose, which if that's all there had been in Abare's declaration and the petition, would seem to me a fair point, but I'm not sure it is.

[00:40:55] Speaker 02:
Tell me why the petition and the declaration have to be viewed as telling a motivation narrative dependent on the Willis purposes.

[00:41:06] Speaker 04:
Well, to look at Dr. Abari's declaration specifically, he talked about the thrust vectoring, which is really a military application.

[00:41:16] Speaker 04:
He referred to size, weight, and cost as a possible motivation.

[00:41:22] Speaker 04:
But then what he really talked about was the improved axial airflow and airflow leakage in the Doosler reference.

[00:41:33] Speaker 04:
Looking at that, his motivation was the improved airflow.

[00:41:38] Speaker 04:
That's why the person with ordinary skill would make this combination.

[00:41:43] Speaker 04:
And then in looking at Willis, and when you get specific as to the airflow, it's a unique engine in terms of it has that variable pitch fan where the air comes in the front and goes out the back, but then it has those radio flaps that open quite widely

[00:42:02] Speaker 04:
to allow that what was an outlet to become an inlet.

[00:42:07] Speaker 04:
So taking his motivation, he looked at the Willis reference, said it's going to be this airflow leakage.

[00:42:16] Speaker 04:
And I think based on the record evidence, he's just simply wrong.

[00:42:21] Speaker 04:
Our expert offered substantial evidence of Dr. Abari not considering the reverse thrust characteristics of Willis.

[00:42:30] Speaker 04:
Got it wrong.

[00:42:35] Speaker 00:
Okay, thank you.

[00:42:40] Speaker 00:
Mr. Ferguson, hold on, I'll restore you back to four minutes.

[00:42:42] Speaker 01:
Thank you very much, your honor.

[00:42:45] Speaker 01:
With respect to the standing issue, Mr. Vileik's statement that economic injury is not enough is just directly contrary to what the Supreme Court said in Clinton versus New York.

[00:42:55] Speaker 02:
If you had an additional opportunity for Mr. Long or somebody else at GE,

[00:43:02] Speaker 02:
to get more specific about the possibility of customers having inquired about or had discussions about these geared to ROFAN structures.

[00:43:14] Speaker 02:
Do you know?

[00:43:15] Speaker 02:
Can you say, and the answer may be you can't say at this point, would you have anything more to say?

[00:43:19] Speaker 01:
I can't sit here today and say I know one way or the other.

[00:43:22] Speaker 01:
But if the court gave us that opportunity, we would try to address it.

[00:43:29] Speaker 01:
And if we can't, we obviously would not

[00:43:32] Speaker 01:
make something up.

[00:43:34] Speaker 01:
With respect to, as your honor, Judge Raina said, this is a lost opportunity cost for GE.

[00:43:44] Speaker 01:
Paragraph 16, Mr. Long declares, the existence of UTC's overly broad patents, including the 605 patent, restricts GE's design choices for new engines and it forces GE to expend additional research and development money.

[00:43:59] Speaker 01:
That is economic loss.

[00:44:01] Speaker 01:
That fits into the Supreme Court's decisions in Monsanto, and it fits into this Court's decision in biotechnology industries.

[00:44:13] Speaker 01:
The other point I wanted to make on standing is one that relates to the Supreme Court's decision in oil states where they declared that patents are public rights.

[00:44:24] Speaker 01:
This decision came out after briefing was complete in this case, but we think it is significant because standing

[00:44:32] Speaker 01:
in the context of an issue involving public rights, requires that the appellant have a personal stake in the matter as distinguished from a general member of the public.

[00:44:43] Speaker 01:
And that's to ensure that the matter is presented in an adversarial context.

[00:44:46] Speaker 01:
The Supreme Court said that in the Flost versus Cohen case, 392 US 83.

[00:44:52] Speaker 01:
And GE clearly meets that standard here.

[00:44:54] Speaker 01:
GE is not simply... But that's not the only standard.

[00:44:58] Speaker 01:
It is not.

[00:44:59] Speaker 02:
You have to distinguish yourself from the great mass of the public, but you also have to have something concrete and actual and non-speculative.

[00:45:08] Speaker 02:
So the fact that they easily satisfy one requirement doesn't mean they satisfy the other.

[00:45:13] Speaker 02:
And the central question is concreteness and actuality of the harm that you're asserting.

[00:45:19] Speaker 01:
It does.

[00:45:20] Speaker 01:
And it goes back to what we believe Mr. Long has established with respect to the specific economic and competitive injuries that it suffered.

[00:45:28] Speaker 01:
as a result of the existence of the 605 patent in the board's decision.

[00:45:32] Speaker 01:
With respect to the issue on the merits and to address Judge Toronto, your point, when we look at Dr. Abari's declaration, he does not focus on the short haul short.

[00:45:46] Speaker 01:
For example, at appendix 2462.

[00:45:57] Speaker 01:
Dr. Abare is addressing the Quixy engine against claim one.

[00:46:03] Speaker 01:
And in, for example, paragraph 64, he discusses that Willis discloses a turbofan engine, which is a type of gas turbine engines.

[00:46:11] Speaker 01:
And that is directly related to what the scope of the 605 patent is.

[00:46:16] Speaker 01:
It's not limited to any type of engine that is only going to fly on short runways or for short haul.

[00:46:23] Speaker 01:
With respect and then with respect to the motivation to combine you know he did provide that within the discussion on at paragraphs at paragraph 77 and 78 which is appendix 2469 to 2470 where again he does not focus on the specific ability of the quicksy engine to land on a short runway for example he focuses on the

[00:46:52] Speaker 01:
Advantages that a person of already skill in the art would have understood the doosler V fan provided over the The clamshell flaps of the Willis design and I see I'm running out of time Okay, counselor.

[00:47:08] Speaker 00:
Thank you very much for your arguments.

[00:47:09] Speaker 00:
Thank you your honor