[00:00:18] Speaker 05:
Ms.

[00:00:18] Speaker 05:
Dury.

[00:00:22] Speaker 00:
Thank you, Your Honors.

[00:00:23] Speaker 00:
Good morning and may it please the Court.

[00:00:25] Speaker 00:
This case presents the distinction between sanctions awarded against a client under Section 285 and sanctions awarded against attorneys under Section 1927.

[00:00:38] Speaker 00:
Those two sanctioning regimes have different standards because they reflect the different roles of clients and lawyers

[00:00:47] Speaker 00:
in our system.

[00:00:49] Speaker 05:
In the blue brief at 52, Alpha Cap argues, quote, it was successful in defeating Gust's argument about improper venue and lost only on convenience factors.

[00:01:02] Speaker 05:
In the red brief at 51, Gust contends that the district court declined to reach that issue and cites to a page I don't find in the record.

[00:01:12] Speaker 05:
Can you please point to where in the record you defeated Gust on improper venue?

[00:01:22] Speaker 00:
Gust did not pursue its argument for improper venue.

[00:01:28] Speaker 00:
It only proceeded in its reply brief to argue for the convenience factors.

[00:01:33] Speaker 00:
I don't believe it is disputed that venue was in fact proper as a matter of the governing law at the time, and Gust has not contended

[00:01:42] Speaker 00:
otherwise in its briefing before this court.

[00:01:45] Speaker 00:
And therefore, the only issue for the district court in Texas was convenience.

[00:01:52] Speaker 05:
In the blue brief, you say that Guthrie Safier, is that how it's pronounced?

[00:01:59] Speaker 05:
Safier.

[00:02:00] Speaker 05:
Safier was, quote, ethically obligated to respect its client's settlement.

[00:02:09] Speaker 05:
I don't dispute that the decision

[00:02:12] Speaker 05:
settle lies solely with a client.

[00:02:16] Speaker 05:
But did the firm consider an attorney's duties as an officer of the court or the duty to withdraw if the client insists on taking unreasonable or repugnant action?

[00:02:31] Speaker 00:
I agree, Your Honor, that the proper course, if the client insists on a course of action that is unethical, is to seek to withdraw.

[00:02:41] Speaker 00:
But here, there was nothing in the course of conduct that appropriately merited that act.

[00:02:49] Speaker 00:
The only thing that Gust has pointed to is maintaining the action that was filed in view of Gust's argument that it was frivolous under section 101.

[00:03:01] Speaker 00:
First, to the extent that the complaint was frivolous, the rule for testing the frivolity of a complaint is rule 11.

[00:03:08] Speaker 00:
that has procedural protections for the lawyers in terms of both the timing of that motion and the opportunity to withdraw the pleading?

[00:03:16] Speaker 03:
Sure, but we're not just looking at filing the complaint.

[00:03:19] Speaker 03:
We're talking about maintaining the suit not only in the Eastern District of Texas, but once it's been transferred to the New York court after repeated suggestions by Gus that this is a frivolous suit under 101, right?

[00:03:34] Speaker 03:
So it is correct that what Gust is pointing to is... So if you maintain a frivolous suit, isn't that properly compensable under 1927?

[00:03:46] Speaker 00:
No.

[00:03:46] Speaker 00:
Section 1927 relates to the multiplication of proceedings.

[00:03:51] Speaker 03:
and simply maintaining the complaint that was filed is not... Well, isn't it multiplying the proceedings by requiring them to respond to a frivolous opposition to a motion to transfer and by undergoing discovery and not dismissing what is clearly a frivolous complaint under 101?

[00:04:11] Speaker 03:
So that multiplies the proceedings.

[00:04:13] Speaker 03:
I know you disagree that this wasn't a colorable complaint.

[00:04:16] Speaker 03:
We can get to that, but let's assume that it was not colorable.

[00:04:21] Speaker 03:
Why isn't the failure to dismiss it as soon as Gus brings it up enough to warrant 1927 sanctions?

[00:04:30] Speaker 00:
Because to the extent the issue is the frivolity of the complaint, rule 11 is the vehicle

[00:04:36] Speaker 03:
But it's not just the complaint, it's continued actions after the complaint.

[00:04:41] Speaker 03:
Because the Alice stuff makes this fuzzy.

[00:04:45] Speaker 03:
Let's assume, and this isn't going to work because this is a defense, not an actually cause of action, but it's what comes to mind.

[00:04:53] Speaker 03:
Let's say somebody, but we can just flip the things.

[00:04:56] Speaker 03:
Let's say somebody had a latches defense and properly filed it in their answer to the complaint after the Supreme Court's decision in SCA.

[00:05:06] Speaker 03:
which said latches is no longer available.

[00:05:09] Speaker 03:
If the plaintiff sent a letter and said, you have to withdraw the latches defense or you're not going to rely on it.

[00:05:13] Speaker 03:
And they said, no, we want discovery.

[00:05:16] Speaker 03:
We want to continue our litigation of this latches defense.

[00:05:20] Speaker 03:
Wouldn't that be enough to get sanctioned under 1927?

[00:05:24] Speaker 03:
It would be continuing to litigate a completely non-colorable legal argument.

[00:05:31] Speaker 00:
So I would argue in that circumstance, the appropriate course of action would be to seek Rule 11 sanctions with respect to the filing of the pleading that included... But are 1927 and Rule 11 exclusive?

[00:05:44] Speaker 00:
I think that they are different and they apply in different circumstances and Rule 11 crucially includes protections that are substantive as well as procedural because it allows for arguments for a good faith extension of the law.

[00:05:57] Speaker 00:
And I think 1927 can't be used to circumvent those procedural and substantive protections that are in Rule 11.

[00:06:04] Speaker 00:
As an attorney, the role of the lawyer is to advocate for the client's interests within the boundaries of the law.

[00:06:11] Speaker 00:
And Rule 11 is one of those boundaries.

[00:06:13] Speaker 05:
And within the rules of the game.

[00:06:15] Speaker 00:
Absolutely.

[00:06:16] Speaker 00:
And Your Honor asked about the venue motion and the opposition to the motion to transfer venue.

[00:06:23] Speaker 00:
We have cited cases in our brief in which

[00:06:27] Speaker 00:
the Texas court had denied transfer motions under similar factual circumstances, where witnesses were dispersed.

[00:06:35] Speaker 00:
And here there was evidence that the former chief technology officer and other witnesses were in Vancouver.

[00:06:40] Speaker 00:
When the Texas forum was closer to the California plaintiff than the New York forum would have been, when the evidence that was proffered of the witnesses in New York was not detailed, but was general and superficial, and when there were some witnesses in the district.

[00:06:56] Speaker 00:
I don't have to persuade this court that the opposition to transfer was meritorious or that it should have prevailed.

[00:07:05] Speaker 00:
The question is simply whether it was entirely without color, given that this was a discretionary multi-factor test.

[00:07:16] Speaker 00:
One of the factors is the plaintiff's choice of form.

[00:07:19] Speaker 00:
Given the evidence that had been proffered, the fact that the district got stipulated to and the district court authorized

[00:07:26] Speaker 00:
discovery to test the evidentiary record, and that discovery turned up.

[00:07:29] Speaker 05:
Let's turn to some other practice by Guthrie Safier.

[00:07:37] Speaker 05:
They cite Mr. Juarez's declaration, which is 1339, in which he essentially says, the defendants harassed me.

[00:07:49] Speaker 05:
They contacted my employer, and the employer threatened

[00:07:54] Speaker 05:
to insinuate that he would fire me if I continued in this kind of conduct.

[00:08:00] Speaker 05:
I've read this thing.

[00:08:05] Speaker 05:
What foundation is in there?

[00:08:07] Speaker 05:
How is the declaration possibly admissible under the federal rules of evidence?

[00:08:11] Speaker 00:
I think what matters with respect to the declaration is that it was Mr. Juarez's decision to settle the other actions early because he perceived

[00:08:22] Speaker 00:
that he was suffering.

[00:08:23] Speaker 05:
Wait, wait, wait, wait.

[00:08:25] Speaker 05:
You're telling me he perceived this, right?

[00:08:27] Speaker 00:
What I'm saying is that what matters for these purposes is his state of mind and the instructions that you gave.

[00:08:33] Speaker 05:
How do we know his state of mind?

[00:08:34] Speaker 00:
Because he testifies to it in his declaration.

[00:08:36] Speaker 05:
No, he doesn't.

[00:08:37] Speaker 05:
What's his foundation?

[00:08:39] Speaker 05:
It's his state of mind.

[00:08:40] Speaker 05:
Why?

[00:08:41] Speaker 00:
What I'm saying is the testimony is as to his state of mind and the reason.

[00:08:46] Speaker 05:
Are you listening to what I'm saying to you?

[00:08:48] Speaker 00:
I am, Your Honor.

[00:08:49] Speaker 00:
Okay.

[00:08:51] Speaker 05:
How is this cognizable evidence?

[00:08:53] Speaker 05:
I'm not saying his state of mind is irrelevant.

[00:08:57] Speaker 05:
I'm saying, how does this show his state of mind?

[00:09:00] Speaker 00:
Because it is a declaration from him.

[00:09:02] Speaker 05:
He drafted it.

[00:09:04] Speaker 05:
His attorney did not.

[00:09:07] Speaker 00:
I don't know who put words to the computer or who typed it, but it is a declaration from him.

[00:09:15] Speaker 05:
And it's a declaration which contains no admissible statement.

[00:09:20] Speaker 00:
I would suggest, Your Honor, that a declaration from a witness is competent as to that witness's state of mind.

[00:09:27] Speaker 05:
Not unless it tells you the underlying foundational statements of evidence.

[00:09:33] Speaker 00:
But I would say here what matters is not whether his perception was correct.

[00:09:38] Speaker 05:
No, no.

[00:09:38] Speaker 05:
What you're saying is what

[00:09:41] Speaker 05:
doesn't matter is whether it was admissible evidence.

[00:09:43] Speaker 05:
Is that what you're telling me?

[00:09:44] Speaker 00:
No, Your Honor.

[00:09:46] Speaker 00:
What I'm saying is that a declaration from a witness as to the witness's state of mind is admissible as to that subjective state, even if the witness is wrong and even if the witness has no foundation for the predicate facts giving rise to that mental state.

[00:10:01] Speaker 00:
What matters here about the declaration is simply that it confirms that the decision to settle the other actions was made by Mr. Juarez, not by the lawyers.

[00:10:11] Speaker 00:
And likewise, that the authority here to settle the case and to grant a covenant not to sue was squarely within the client's domain and not the lawyer's domain.

[00:10:21] Speaker 05:
And it would... You're telling me that the arguments that were made by the law firm that the client was threatened relate solely to the client's state of mind and not to the statements that my employer insinuated that he would fire

[00:10:41] Speaker 05:
For example, that only goes to his state of mind.

[00:10:43] Speaker 05:
It doesn't matter if it actually happened.

[00:10:45] Speaker 00:
So I'm saying that the witness is a competent witness as to what the employer, what he understood the employer to have insinuated.

[00:10:53] Speaker 00:
And he is testifying to that.

[00:10:55] Speaker 04:
Really?

[00:10:56] Speaker 04:
He is testifying to that?

[00:10:58] Speaker 04:
Tell me who, what, when, where, why?

[00:11:00] Speaker 00:
Well, what the declaration says from Mr. Juarez is that what he took from what the employer said.

[00:11:07] Speaker 05:
He doesn't say what the employer said.

[00:11:09] Speaker 00:
No, it says that what he understood by it, he took it to be an insinuation.

[00:11:14] Speaker 05:
And again- No, it doesn't.

[00:11:16] Speaker 05:
It says, my employer insinuated it.

[00:11:19] Speaker 00:
Right.

[00:11:19] Speaker 05:
And he's saying, I was there- So you're saying any statement, if I say the ceiling is green, then that relates to my state of mind.

[00:11:31] Speaker 00:
No, Your Honor.

[00:11:31] Speaker 00:
No, Your Honor, I'm not.

[00:11:33] Speaker 00:
Because what the employer actually said and the truth of it

[00:11:38] Speaker 00:
is not being proffered to the court.

[00:11:39] Speaker 00:
I agree that would be hearsay.

[00:11:41] Speaker 00:
Its only relevance is for its effect on Mr. Juarez.

[00:11:45] Speaker 00:
And the only relevance of that is that Mr. Juarez says he was the one who made the decision.

[00:11:53] Speaker 01:
OK, let me ask you this.

[00:11:55] Speaker 01:
It's his perception of what might have transpired, and it's his understanding of where he stood vis-a-vis his employer.

[00:12:03] Speaker 00:
Correct.

[00:12:04] Speaker 00:
And that is all that we are proffering it for.

[00:12:07] Speaker 00:
The point, the only point that I want to make with respect to Mr. Juarez's declaration is that he confirms that the settlement, the ultimate settlement authority was his.

[00:12:18] Speaker 05:
In the blue brief at nine, you allege that, quote, Guest counsel acknowledged that this unreasonable demand, i.e.

[00:12:26] Speaker 05:
to request ownership of the patents in suit, reflected Guest's desire to, quote, do a touchdown dance.

[00:12:34] Speaker 05:
The Juarez declaration actually says

[00:12:36] Speaker 05:
It was Mr. Juarez who said the words, it appeared that Gus wanted to do a touchdown.

[00:12:42] Speaker 00:
I think that is also reflected in Mr. Safir's declaration, which was submitted at the same time as Mr. Juarez's declaration.

[00:12:50] Speaker 05:
But again, I think... Not based on knowledge.

[00:12:54] Speaker 00:
No, the conversation was with Mr. Safir.

[00:12:57] Speaker 00:
That statement was made directly to Mr. Safir.

[00:13:00] Speaker 00:
But I think, again, what matters for these purposes

[00:13:06] Speaker 05:
is that it is uncontested that the settlement demand... In your citation to the record at page 10, where you say, Guest counsel admitted during this discussion that Guest principal was unreasonable and that he was willing to make Guest counsel the beneficiary of his unreasonableness by racking up cost and fees.

[00:13:32] Speaker 05:
You cite to a pleading at 488.

[00:13:35] Speaker 00:
I apologize, Your Honor.

[00:13:37] Speaker 05:
You cite to a pleading?

[00:13:38] Speaker 00:
Correct.

[00:13:39] Speaker 00:
The evidence that was put before the court to that effect.

[00:13:43] Speaker 05:
A pleading?

[00:13:44] Speaker 00:
Yes.

[00:13:45] Speaker 00:
And again, but Your Honor, what I would say is that what matters here is that the demand for settlement from Gust was an alpha cap hand over its patents.

[00:13:56] Speaker 00:
The lawyers cannot compel their client to do that.

[00:14:00] Speaker 00:
And sanctions against lawyers who are acting as agents

[00:14:05] Speaker 00:
on behalf of their client cannot, as a matter of law, be predicated on actions over which the lawyers do not have authority.

[00:14:14] Speaker 00:
Sanctions against the lawyers under 1927 are limited to multiplying the proceedings vexatiously, conduct for which lawyers are responsible.

[00:14:25] Speaker 05:
I'll tell you something, counsel.

[00:14:26] Speaker 05:
When I practiced law, one of my partners came into me and said, thanks a lot, because I had told his client he was fired as a

[00:14:34] Speaker 05:
as a client of the firm, and I said, you'll thank me in the future.

[00:14:38] Speaker 05:
You better reserve the rest of your time.

[00:14:40] Speaker 00:
I will do so, Your Honor.

[00:14:41] Speaker 00:
Thank you.

[00:14:50] Speaker 02:
May it please the court.

[00:14:51] Speaker 02:
The district court properly grants attorney's fees under section 1927 in this case, based on the appellant's course of conduct throughout the litigation.

[00:14:59] Speaker 03:
Can I ask you about the colorable nature of this claim?

[00:15:02] Speaker 03:
I mean, I think if this had been filed today,

[00:15:05] Speaker 03:
there'd be no doubt that this is a frivolous lawsuit under Alice.

[00:15:09] Speaker 03:
It was filed five months after Alice.

[00:15:13] Speaker 03:
There hadn't been any discussion of Alice, I think, by this court by then.

[00:15:17] Speaker 03:
I mean, since then, we've rejected dozens of claims just like this, most of them in Rule 36 affirmances.

[00:15:24] Speaker 03:
But how do we know when Alice is directed to one specific business method and do it on the computer

[00:15:34] Speaker 03:
that that was necessarily going to encompass these kinds of mercury, mercury, mercury, sorry, I have, I have plastic braces in my mouth.

[00:15:43] Speaker 03:
Apparently that word can't be said with them in.

[00:15:46] Speaker 03:
These kind of claims.

[00:15:48] Speaker 02:
I agree.

[00:15:48] Speaker 02:
There were a handful of decisions before this case was filed.

[00:15:52] Speaker 02:
And as the case progressed and matured, more cases came out.

[00:15:57] Speaker 02:
And our argument and the district court agreed is that these claims are so bad that no

[00:16:04] Speaker 02:
attorney or client could have had a reasonable chance of success.

[00:16:07] Speaker 01:
Why was there no rule 11 or early rule 12th motion filed?

[00:16:13] Speaker 02:
The answer to that is not on the record.

[00:16:18] Speaker 02:
I can say that my client was preparing section 101 challenge during the litigation.

[00:16:26] Speaker 02:
Specifically, I believe it was in March of 2016

[00:16:29] Speaker 01:
Well, it seemed to me, I mean, you make the argument that this was so frivolous that the fairly extraordinary award of attorney's fees against the attorneys under 1927 was appropriate.

[00:16:47] Speaker 01:
And fundamental to that is the whole idea that this whole case shouldn't have been filed in the first place.

[00:16:54] Speaker 01:
But yet no attempt to file

[00:16:57] Speaker 02:
uh... rule eleven motion there was no rule of the motion filed there was a rule and that eleven motions threatened by my client against the pounds but not even a rule twelve motion either no rule twelve motion i mean even the eastern district of texas started granting rule twelve motions on cases like this after alice that's correct there was no rule twelve motion there was a fourteen oh four fourteen oh six motion filed in terms of nineteen twenty seven terms of unreasonably or vexatiously multiplying proceedings

[00:17:27] Speaker 01:
It seems to me that part of the reason why this litigation continued was that your client was not satisfied with the proposal to just walk away that insisted not only for attorney's fees, which is understandable, but then an assignment of all of the patents, which sort of threw up an incredible roadblock to any reasonable

[00:17:56] Speaker 01:
settlement at that point.

[00:17:58] Speaker 02:
Well, Your Honor, I believe that a reasonable settlement would have been for them to walk away, which they could have done at any time, despite what we counter offered.

[00:18:07] Speaker 01:
Well, they tried to do that, but that proposal was refused.

[00:18:11] Speaker 02:
That's not true.

[00:18:11] Speaker 02:
There was nothing preventing them from filing a covenant not to sue at any time during litigation, which would have killed all of their claims and all of our counterclaims.

[00:18:20] Speaker 01:
Well, covenant not to sue is different from just walking away.

[00:18:25] Speaker 02:
Perhaps, but at the end of the day, that's what they filed, which was a covenant not to sue.

[00:18:30] Speaker 03:
But they waited until they got to New York.

[00:18:32] Speaker 03:
They didn't do it while they were still in Texas.

[00:18:34] Speaker 05:
That's right.

[00:18:35] Speaker 05:
The patents, from your view, were valueless.

[00:18:39] Speaker 02:
That's correct.

[00:18:40] Speaker 02:
My client desired to have them to prevent them from being asserted against others in his field.

[00:18:46] Speaker 01:
Well, that's a significant demand, which it seems to me was as responsible for the continued

[00:18:55] Speaker 01:
nature of this litigation than anything else.

[00:18:59] Speaker 02:
So my client did that with the understanding that at that point in the case, it could have ended.

[00:19:07] Speaker 02:
My client had no counterclaims.

[00:19:09] Speaker 02:
They had DJ, I'm sorry, they had counterclaims for invalidity and non-infringement in Texas.

[00:19:16] Speaker 02:
There was no case filed in New York.

[00:19:18] Speaker 02:
The appellants and their client could have walked away at that point and cut their losses, filed a covenant not to sue, and all of this would have ended.

[00:19:25] Speaker 02:
And yet they continued to litigate for a full year and a half until the case was ultimately transferred.

[00:19:30] Speaker 05:
The reason your client was seeking ownership of all those patents was some sort of public altruism, right?

[00:19:39] Speaker 02:
That's correct.

[00:19:41] Speaker 05:
Well, if that's the case, why should opposing counsel pay for that?

[00:19:49] Speaker 05:
I mean, it is altruism after all.

[00:19:52] Speaker 02:
Our argument in the district court agreed

[00:19:55] Speaker 02:
is that they looked at the course of conduct throughout the litigation.

[00:19:58] Speaker 02:
They looked at the filing of the complaint, but more specifically, they identified 11 specific acts that took place throughout the course of the litigation, which triggered sanctions under 1927.

[00:20:08] Speaker 03:
You can go ahead.

[00:20:13] Speaker 03:
What really concerns me here is that this clearly is a case for 285 fees.

[00:20:18] Speaker 03:
There's no doubt that the district court was right.

[00:20:20] Speaker 03:
Those would be sustained, and that the problem is

[00:20:24] Speaker 03:
that the defendant or the plaintiff in this case is now judgment-proof and you can't get those.

[00:20:32] Speaker 03:
And so the district court has used 1927 as a way to get those fees paid because she refused to pierce the veil against the principal and the like.

[00:20:45] Speaker 03:
But that sets, I think, a very bad precedent because 1927 really

[00:20:51] Speaker 03:
because of the sanction on the attorneys for their own conduct require something more.

[00:20:56] Speaker 03:
And I'm just not sure, given this state of the record and five months after Alice, that it was completely non-colorable for them to file this complaint.

[00:21:09] Speaker 03:
I mean, frankly, for five years or a decade before, these kinds of complaints were getting filed and were getting settled out all the time.

[00:21:19] Speaker 03:
Ben and Alice made this so clear that this kind of complaint would be considered not only non-memoritorious, but so frivolous that to pursue it would endanger the attorneys, not just the company, the attorneys to 1927 fees.

[00:21:35] Speaker 02:
I understand your point.

[00:21:37] Speaker 02:
The district court treated the 1927 analysis separate from the 285 analysis.

[00:21:41] Speaker 02:
And I would argue that 1927 was not granted because the plaintiff was judgment-proof, but rather because

[00:21:48] Speaker 02:
the attorney's behavior was so bad.

[00:21:50] Speaker 02:
And one of the things we pointed out earlier was the declaration of Richard Juarez, where he says he needed to drop the cases to preserve his job.

[00:21:58] Speaker 02:
Well, if that were true... What's the basis for that?

[00:22:04] Speaker 02:
Even assuming it were true, why did the case continue for another year against my client?

[00:22:09] Speaker 02:
It appears from that, and the district court determined, that the clients and the attorney's interests were somehow opposed.

[00:22:16] Speaker 02:
The client wanted to drop the cases against the defendants because it was being threatened by his employer.

[00:22:21] Speaker 02:
He did drop it against nine of them for nuisance value fees, but he maintained the case against my client that he could have dropped.

[00:22:29] Speaker 01:
If that's true... Well, but he was concerned he wanted to drop the case.

[00:22:34] Speaker 01:
They proposed walking away, but they couldn't do it without getting into

[00:22:39] Speaker 01:
a bit of a hassle about attorney's fees and about the assignment of the patents.

[00:22:44] Speaker 02:
He could have filed a covenant not to sue.

[00:22:46] Speaker 02:
It would have been that simple.

[00:22:47] Speaker 02:
It was the single piece of paper they filed in New York a year and a half later.

[00:22:51] Speaker 02:
It would have ended the whole thing.

[00:22:52] Speaker 02:
But the district court determined that apparently the interests of the plaintiff, the patent owner, and its law firm were misaligned somehow.

[00:23:02] Speaker 02:
And that's why the case continued.

[00:23:04] Speaker 01:
Well, if they had filed a covenant not to sue, the attorney fee question would still be in play.

[00:23:11] Speaker 01:
I think that what they were proposing is just to walk away.

[00:23:15] Speaker 01:
And you kept arguing, well, they could have walked away at any time.

[00:23:19] Speaker 01:
They should have walked away.

[00:23:20] Speaker 01:
They unduly multiplied proceedings under 1927.

[00:23:26] Speaker 01:
And I'm trying to point out to you

[00:23:29] Speaker 01:
that you're ignoring the fact that the attorney fee dispute was still in play and would have been in play even with a covenant.

[00:23:37] Speaker 02:
But the attorney fees would not have grown for another year and a half.

[00:23:41] Speaker 03:
And I assume wouldn't have been attributable directly to the attorneys under 1927.

[00:23:47] Speaker 03:
That's right.

[00:23:50] Speaker 02:
And so the case continued.

[00:23:52] Speaker 02:
And the court identified additional bad acts on behalf of the appellant throughout the case.

[00:23:59] Speaker 02:
There were 11 of them specifically.

[00:24:03] Speaker 02:
One thing I'd like to also mention is prejudgment interest.

[00:24:07] Speaker 02:
Excuse me?

[00:24:08] Speaker 04:
Yes, go ahead.

[00:24:09] Speaker 02:
Prejudgment interest.

[00:24:10] Speaker 02:
Appellant argues here for the first time that prejudgment interest is not available under 1927.

[00:24:16] Speaker 02:
Appellant did not raise this issue with the district court.

[00:24:19] Speaker 02:
And so for that reason, it should be waived.

[00:24:22] Speaker 02:
In fact, in its motion for reconsideration,

[00:24:25] Speaker 02:
the appellants admitted the prejudgment interest was permissible under 1927 and only argued about the date by which it should begin to accrue.

[00:24:34] Speaker 02:
And so because the appellant did not argue this in the district court, the court here should not consider this issue, and the appellant should have it waived it.

[00:24:43] Speaker 05:
Assuming that we look at the law, if there's no guidance in 27 and the Second Circuit

[00:24:53] Speaker 05:
doesn't seem to have any authority on it.

[00:24:56] Speaker 05:
Can we look at Mathis v. Spears, our case where we can award fees pursuant to 285?

[00:25:08] Speaker 02:
Absolutely.

[00:25:09] Speaker 02:
It's certainly reasonable that what we believe they are, the policy is the same.

[00:25:16] Speaker 05:
What's your best authority to support the argument that we should allow state prejudgment interest in a

[00:25:25] Speaker 02:
There's nothing that precludes it from happening.

[00:25:27] Speaker 02:
That's my best argument.

[00:25:28] Speaker 02:
There's no case to the contrary, and you'll be the one making the law if you decide otherwise.

[00:25:38] Speaker 05:
You sound like Robert F. Kennedy.

[00:25:41] Speaker 05:
Why not?

[00:25:48] Speaker 02:
Anything further, counsel?

[00:25:49] Speaker 02:
Nothing further for me.

[00:25:50] Speaker 02:
Do you have any further questions?

[00:25:52] Speaker 04:
Thank you, counsel.

[00:25:57] Speaker 00:
I would like briefly to make three points.

[00:25:58] Speaker 00:
First, what you just heard is an argument for a good faith extension of the law.

[00:26:02] Speaker 00:
That is precisely the type of arguments that lawyers have to be authorized to make.

[00:26:07] Speaker 00:
DDR had come down the month before the complaint in this case was filed.

[00:26:11] Speaker 00:
DDR expressed the uncertainty in the state of 101 jurisprudence at the time, the difficulty in determining what was an abstract idea.

[00:26:18] Speaker 00:
That was the backdrop against which this complaint was filed.

[00:26:23] Speaker 00:
You heard that Gus should have walked away from the case.

[00:26:26] Speaker 00:
Not only was that complicated by the demand to the client for handing over the patents, but Gus then turned around while the motion to transfer was pending before the briefing was complete and filed the duplicative action in New York.

[00:26:39] Speaker 00:
There was no reason to do that other than concern that they were going to lose the transfer motion in Texas and a desire to complicate the settlement process when AlphaCap had said what it wanted to do was walk away and offered immediately after the filing of that New York action

[00:26:54] Speaker 03:
to a walk away settlement, which got- You pointed DDR and you're right, DDR came down very shortly after Alice, but within six to 12 months after DDR, there were slews of decisions affirming the rejection of claims like this.

[00:27:11] Speaker 03:
So maybe, I think you're probably completely right that filing the complaint itself was not frivolous, but after this court repeatedly rejected claims just like this,

[00:27:22] Speaker 03:
Didn't it at some point become privileged to continue to pursue this case?

[00:27:27] Speaker 00:
No, Your Honor.

[00:27:28] Speaker 00:
And I would point to Berkheimer as an example as to why.

[00:27:32] Speaker 00:
When you're practicing at the district court level, you have to look not only at what the law is today, but what you predict it may be two years from now.

[00:27:39] Speaker 03:
Berkheimer's not going to help you with this case.

[00:27:41] Speaker 03:
I think you can move on from that argument.

[00:27:43] Speaker 03:
Well, you can't move on too far.

[00:27:45] Speaker 03:
Your time's up.

[00:27:46] Speaker 05:
Sorry.

[00:27:48] Speaker 00:
Thank you.

[00:27:54] Speaker 05:
The matter will stand submitted.

[00:27:55] Speaker 05:
Thank you.