[00:00:00] Speaker 01:
Is move at our versus real estate Alliance at our 2017 1463.

[00:00:08] Speaker 01:
Mr. Husek, when you're ready.

[00:00:17] Speaker 02:
May it please the court.

[00:00:18] Speaker 02:
Good morning.

[00:00:20] Speaker 02:
This more than 10-year-old case brings me back, and I feel, Your Honor, that we should be on almost a first name basis at this point.

[00:00:28] Speaker 02:
My name is Lawrence Husek, and I'm counsel for a real estate alliance called Real, whose major shareholder is the inventor, Mr. Tornetta.

[00:00:35] Speaker 02:
And this morning, I'd like to address three points.

[00:00:37] Speaker 03:
Let me ask you a little housekeeping question, OK?

[00:00:40] Speaker 03:
At page five of the blue brief, you say, you seek only to enforce the claims of the 989 patent against the primary defendant.

[00:00:49] Speaker 03:
and have abandoned any claims regarding infringement of 576 by move.

[00:00:56] Speaker 03:
If we find the 989 patent ineligible, do we need to address the divided direct infringement claims?

[00:01:04] Speaker 02:
Not with respect to the 989 patent, obviously, Your Honor.

[00:01:08] Speaker 02:
But with respect to the 576 patent, which has never been properly ruled ineligible, yes, you would.

[00:01:15] Speaker 03:
Did the complaint raise?

[00:01:18] Speaker 03:
a claim of divided direct infringement of the 576 patent by secondary defendants?

[00:01:23] Speaker 02:
Yes, it did.

[00:01:24] Speaker 02:
The second amendment complaint did, and the complaint against the secondary defendant.

[00:01:28] Speaker 03:
OK, where's that in the record, please?

[00:01:30] Speaker 02:
I don't have the exact record site.

[00:01:33] Speaker 02:
It is in the second amendment complaint file.

[00:01:35] Speaker 02:
You'll give that to me on reply, please.

[00:01:37] Speaker 02:
Thank you.

[00:01:38] Speaker 02:
At this point, I'd like to address the question of 101 eligibility, then waiver, then the joint direct infringement

[00:01:46] Speaker 02:
The district court has mischaracterized and continually mischaracterized the 989 and 576 patents.

[00:01:54] Speaker 02:
Those patents are in fact of the same type as this court dealt with in trading technologies because they solve problems in graphical user interfaces by claiming a structured user interface method with prescribed functionality.

[00:02:09] Speaker 02:
The patent itself in its technical field in the 989 patent specifically says

[00:02:15] Speaker 02:
that it is for the location of real estate properties through the use of an interactive graphical locator interface.

[00:02:22] Speaker 02:
As this court found in real one, the claims require that the properties and the maps be displayed on a computer screen and zoomed to show a higher level of detail, things that cannot possibly be accomplished on paper.

[00:02:39] Speaker 02:
And just because another mapping case has been heard in a district court in Virginia

[00:02:45] Speaker 02:
that seems facially similar, although with markedly different claims, the court jumped to the conclusion that anything dealing with a zoomable map must therefore fall into the same bucket as being ineligible.

[00:02:58] Speaker 02:
We submit that that is error.

[00:03:01] Speaker 02:
The 576 patent has been declared ineligible on what we can only call a I know it when I see it basis.

[00:03:08] Speaker 02:
The record is completely devoid of any reference

[00:03:12] Speaker 02:
of any argument, of any submission, and of any reasoning by the court with respect to 576, which said in its judgment that it was not declaring the 576 patent to be ineligible.

[00:03:27] Speaker 02:
With respect to waiver, this court has recently in in-ray micron technology on November 15 urged a common sense approach to waiver.

[00:03:38] Speaker 02:
And in the narrow aspect,

[00:03:41] Speaker 02:
of a Rule 12B motion has said that one must focus on an available argument at the time the argument is made to the district court.

[00:03:51] Speaker 02:
In this case, at the time the various arguments were made to the district court, Reel was dealing with at least four different standards for divided direct infringement under 271A.

[00:04:04] Speaker 02:
As the standards pronounced by the district court found

[00:04:09] Speaker 03:
that, quote, Real chose not to address the divided direct infringement issue in its non-infringement opposition and moves motion for a summary judgment.

[00:04:20] Speaker 02:
During a time when what was required was actual agency as an actual agency, that is the direction and control of a party performing some of the steps by a mastermind under BMC, during that time,

[00:04:37] Speaker 02:
Reel had no evidence of an actual agency existing.

[00:04:42] Speaker 03:
So you agree with the court that you did not do that?

[00:04:44] Speaker 02:
At that time, we could not have advanced that argument.

[00:04:48] Speaker 02:
The district court could not have found only evidence of record.

[00:04:53] Speaker 02:
And that's very scant, because remember, there's never been a trial here.

[00:04:57] Speaker 02:
But the district court could not have found and overridden the standard pronounced by this circuit.

[00:05:04] Speaker 02:
that there was divided infringement.

[00:05:06] Speaker 05:
Based on BMC, not based on muni auction that preceded BMC.

[00:05:10] Speaker 05:
That is correct.

[00:05:11] Speaker 05:
What about muni auction, which had broader language that talked about direction or control being something broader than an agency relationship?

[00:05:18] Speaker 02:
Again, the district court had found that the mere use of the website, which had terms and conditions, was not sufficient to find that the user's actions were chargeable to move.

[00:05:30] Speaker 02:
And the district court rejected our argument and our expert's testimony that MOVES computer systems performed all of the steps of the claim anyway, a direct infringement, not a divided direct infringement.

[00:05:44] Speaker 02:
Now, the district court had uncontroverted expert testimony that the MOVES system did it and chose to discount that testimony.

[00:05:53] Speaker 02:
It chose to exercise its discretion

[00:05:56] Speaker 02:
in disregarding uncontroverted testimony in the context of summary judgment.

[00:06:01] Speaker 02:
We think that is error as well.

[00:06:04] Speaker 02:
Under the controlling law of the time, we could not have, in good faith, made an argument to the district court because we lacked a document which established that master-servant relationship under BMC.

[00:06:17] Speaker 02:
And therefore, we did not make it.

[00:06:19] Speaker 02:
When the standard changed, we immediately made that argument to this court and to the district court.

[00:06:26] Speaker 02:
the last appeal, Reel 3, the standard changed between the time of the affirmance by the panel and the subsequent decision in Akamai.

[00:06:38] Speaker 02:
And so the case was sent back, but the court continued to ignore the evidence that the users were doing something that allowed the user's actions to be charged directly to move.

[00:06:51] Speaker 02:
In other words, what we have here is a joint divided

[00:06:55] Speaker 02:
direct infringement, but under the swirling standards, which Judge Stahl certainly knows very well, we were forced to make the arguments that were available to us at the time under controlling precedent of this circuit and of the Supreme Court and could do no more.

[00:07:14] Speaker 02:
The arguments on divided direct infringement during the time when it required an actual agency or a master servant or a mastermind

[00:07:24] Speaker 02:
control, we could not make those arguments to the district court.

[00:07:29] Speaker 02:
It would have controverted the law, which applied at the time.

[00:07:34] Speaker 02:
In travel sentry versus trod, the December 19th decision, this court said that one must look to the activity, the benefit, the manner, and the timing.

[00:07:45] Speaker 02:
And under the facts that are of record, and remember the record is thin because there has yet not been a trial, but under the facts that are of record,

[00:07:54] Speaker 02:
We know that the activity is searching a database by map for available properties.

[00:08:01] Speaker 02:
We know that the benefit conferred on the person doing the searching is to find all of the properties that meet the criteria that are specified, most particularly the geographic criteria specified on the map.

[00:08:15] Speaker 03:
The 989 patent was, you say, among the first to teach a dynamic zoom.

[00:08:20] Speaker 02:
Absolutely, yes.

[00:08:21] Speaker 03:
Where does the patent use the term dynamic zoom?

[00:08:23] Speaker 02:
The patent uses the term zoom to display a higher level of detail.

[00:08:30] Speaker 02:
That is how it was expressed in the patent.

[00:08:33] Speaker 02:
That is dynamic because any area of the map may be selected either by the system or by a user, as this court said in real one.

[00:08:43] Speaker 02:
It may then be expanded and zoomed and additional detail revealed on the map from the underlying data.

[00:08:50] Speaker 03:
What affirmative evidence

[00:08:52] Speaker 03:
demonstrates that 989 was among the first?

[00:08:56] Speaker 02:
The affirmative evidence is the Patent Office looking for any kind of prior art and finding none, as well as the testimony of Dr. Shasha, our expert, who says that that kind of Zoom was not in practice in the early 1980s when this invention was made, and the mid-1980s when it was reduced to practice and put into the market.

[00:09:19] Speaker 05:
Now, going to that idea,

[00:09:23] Speaker 05:
The idea of a double zoom seems to be in your patent.

[00:09:28] Speaker 05:
But where does your patent specification talk about, as a technical matter, how to implement it?

[00:09:35] Speaker 05:
In other words, I'm looking at the claims, I'm looking at the specification, and it seems to be describing what a user will see on a display screen, and not necessarily talking about the technical implementation and how you make that happen.

[00:09:52] Speaker 05:
So where would I find

[00:09:53] Speaker 05:
the technical implementation and the specification, something that's more than just an idea.

[00:09:59] Speaker 02:
If one reviews the file history, one sees that there is over 300 pages of source code appendix in both the 576 and 989 cases.

[00:10:09] Speaker 02:
And that source code appendix written in C and implemented on an early IBM PC, that is one that had two floppy drives and only 256K of memory.

[00:10:20] Speaker 02:
Where are you on the record?

[00:10:24] Speaker 02:
file history is part of the record of appeal of real one, and not included in the appendix of this appeal.

[00:10:36] Speaker 05:
So the technical explanation isn't part of the joint appendix that we're seeing.

[00:10:41] Speaker 05:
Is there a technical implementation details in the specification itself, the written description, not the appendix which has the code?

[00:10:49] Speaker 02:
The written description refers to the construction of what is called a world coordinate system, and then a use of that world coordinate system to affect the zoom so that a higher level of detail may be shown on the screen.

[00:11:05] Speaker 02:
It is described in the patent text itself in the disclosure, but is fully enabled and described in the source code appendix that was commonly included with patents in the mid-'80s when these were filed.

[00:11:18] Speaker 02:
And that's hundreds of pages of code.

[00:11:20] Speaker 02:
But that code can just as easily today be typed into a computer or scanned into a computer and will operate.

[00:11:27] Speaker 02:
And so it was described, it was disclosed, it was enabled, and that zooming to a higher level of detail was a critical part of being able to locate properties because when you have a dense database,

[00:11:42] Speaker 02:
Having everything there at once means that the screen becomes so cluttered that the user interface becomes unusable.

[00:11:50] Speaker 05:
My question, just so you know where my question is coming from, it's not coming from is your invention enabled.

[00:11:56] Speaker 05:
It's coming from the idea that we're supposed to look under step one of Alice and see whether the claims are directed to an abstract idea.

[00:12:05] Speaker 05:
And so one of the things I do is look to the specification to try to see if

[00:12:11] Speaker 05:
the specification has support for the idea that the claims aren't just directed to, oh, this is what I would like to see done on a computer.

[00:12:20] Speaker 05:
And instead, there's actual technical computer implementation.

[00:12:25] Speaker 02:
I understand, Your Honor.

[00:12:26] Speaker 02:
And what we have in the specification and its code appendix shows, and remember, we're dealing with the 1980s.

[00:12:33] Speaker 02:
There is no Google Maps.

[00:12:36] Speaker 02:
There are, in fact, no electronic maps of

[00:12:39] Speaker 02:
the relevant areas that are available.

[00:12:41] Speaker 02:
This inventor had to draw his own and code them into a computer data structure.

[00:12:47] Speaker 02:
There are no databases that have the geographic coordinates tagged to them in the real estate industry because realtors were jealous.

[00:12:56] Speaker 02:
They would not allow the actual property addresses there for fear that competing agents might steal their listings.

[00:13:04] Speaker 02:
And so this inventor

[00:13:06] Speaker 02:
gathered the property exact locations and coded them.

[00:13:10] Speaker 02:
All of this is described in the code appendix.

[00:13:13] Speaker 02:
This is a case in which the patentee describes an improvement in computer technology, a user interface that is not so cluttered that one cannot discern the information that is of true value.

[00:13:27] Speaker 05:
I have another question on the Akamai issue.

[00:13:30] Speaker 05:
If I remember correctly, there's something in the record where

[00:13:35] Speaker 05:
the plaintiff or the opposing party wanted to go ahead and stay the case because of Akamai to see how that was resolved.

[00:13:44] Speaker 05:
And the response was Akamai is not going to impact our affirmative infringement case.

[00:13:50] Speaker 05:
I mean, didn't you have to take affirmative steps maybe to preserve the Akamai argument knowing that the law was in a state of flux, particularly when it was pointed out by opposing counsel?

[00:14:02] Speaker 02:
At that point, Your Honor, we had been into the case for more than five years.

[00:14:07] Speaker 02:
There was an attempt to delay the case further.

[00:14:12] Speaker 02:
And we, as I said, were convinced that at trial, we could show that every step of the claims had been performed by the computer.

[00:14:23] Speaker 02:
That move itself ran.

[00:14:25] Speaker 02:
And so the question of what the users did versus what the computer did

[00:14:31] Speaker 02:
We believe that we could advance a direct infringement case, not a divided infringement case.

[00:14:37] Speaker 02:
But this court has said that once the law has changed, the argument becomes available.

[00:14:45] Speaker 02:
One should consider the argument at the time the argument can be made.

[00:14:50] Speaker 05:
But it sounds as if what you're saying is you thought you had a strong direct infringement case.

[00:14:54] Speaker 05:
But then when that didn't work out, you wanted to have your joint infringement case.

[00:14:58] Speaker 05:
which you had given up in order to have the litigation proceed more efficiently?

[00:15:01] Speaker 02:
No, absolutely not, Your Honor.

[00:15:03] Speaker 02:
We never gave up that argument.

[00:15:06] Speaker 02:
We never disclaimed that argument.

[00:15:08] Speaker 02:
What we did was merely characterize that we would advance the case on the direct infringement.

[00:15:15] Speaker 02:
But we never gave up the argument of divided infringement, knowing that the law was in flux, but that at that time, we could not make the argument to the district court.

[00:15:28] Speaker 02:
There are no further questions.

[00:15:29] Speaker 01:
We will save your time, Mr. Husek.

[00:15:32] Speaker 01:
Ms.

[00:15:33] Speaker 01:
McGrath.

[00:15:35] Speaker 01:
We move to the appellee.

[00:15:39] Speaker 00:
May it please the court.

[00:15:41] Speaker 00:
I will be addressing today on behalf of the primary defendant appellees, three of them, MOVE, NAR, and NHB.

[00:15:49] Speaker 00:
I'd like to reserve five minutes of the allotted 20 minutes of appellee's time for counsel for the secondary defendants

[00:15:56] Speaker 00:
who will be addressing the issues unique to those defendants.

[00:16:00] Speaker 00:
I want to start with the 101 issue, because we believe the district court correctly held that the claims are directed to an abstract idea.

[00:16:12] Speaker 00:
There's a whole spectrum of ways, Your Honors, that these claims in this case can be characterized as evidenced by the various ways they've been characterized to date.

[00:16:21] Speaker 00:
I really don't think it's important

[00:16:23] Speaker 00:
to get, or necessarily to get too hung up on the specific words that are used, what we should do instead is follow this court's guidance in electric power group versus Alstom.

[00:16:34] Speaker 00:
That in step one, we are to look at the focus of the claims, the character as their whole, and then leave the more detailed analysis of what the specific limitations add for step two.

[00:16:43] Speaker 00:
And when we do that, we see what we're really talking about here.

[00:16:47] Speaker 00:
is a computerized method for locating available real estate properties in a selected area, and then displaying those properties on the map.

[00:16:54] Speaker 00:
That's what the purpose of every one of the steps is, and that's what they are directed to.

[00:16:59] Speaker 00:
And when we look at the claims in this manner, what we see is that at their core, the claims are directed to collecting information, analyzing and manipulating the information, and then displaying the results of the analysis and manipulation.

[00:17:13] Speaker 05:
Did you at any point argue that they were directed to a business method?

[00:17:17] Speaker 05:
I'm just curious.

[00:17:18] Speaker 00:
Yeah, I mean, that's what it is.

[00:17:19] Speaker 00:
It's a fundamental business concept, which we argued is this concept of looking for real estate properties has been since the beginning of time.

[00:17:28] Speaker 03:
Taking the classifieds, turning to the real estate section, grabbing a map of the county in a pencil and circling them.

[00:17:36] Speaker 00:
That's exactly right.

[00:17:37] Speaker 00:
And once MLS computers came along back in as early as the 80s, it was just the process was computerized.

[00:17:44] Speaker 00:
These claims are directed to that same fundamental business concept.

[00:17:49] Speaker 00:
We talked a lot about, at least council for real talked a lot about this database and how it uses geographic coordinates and hand selected this.

[00:17:59] Speaker 00:
None of that's in the claims.

[00:18:01] Speaker 00:
The claims recite the creation of a database, just a generic database, albeit one directed to real estate content.

[00:18:09] Speaker 00:
But that's just the collection of data.

[00:18:12] Speaker 00:
Again, this court has consistently held to be an abstract idea.

[00:18:15] Speaker 05:
Do you think the specification provides details on how to create that database, the kind of implementation details that one of ordinary skill in the art would need to create it?

[00:18:24] Speaker 00:
It's interesting that you ask that, because this is the fourth appeal in this case.

[00:18:28] Speaker 00:
In the first appeal in this case, what we call real one, the database limitation was construed by the district court.

[00:18:34] Speaker 00:
And as originally construed, the district court gave it a lot of,

[00:18:38] Speaker 00:
context and different specifics as to what it needed to look like.

[00:18:44] Speaker 00:
This court rejected that and said there's no limitation whatsoever on the type of database, number one.

[00:18:50] Speaker 00:
Number two, this is a child patent of a parent patent, the 576 patent.

[00:18:56] Speaker 00:
So there's a lot of information in the specification that was actually in the claims of the 576 patent as construed by the district court.

[00:19:06] Speaker 00:
that the district court also tried to put into the claims of the 989 patent, but this court rejected and said, yeah, maybe in the specification, but it's not in the claim language used.

[00:19:17] Speaker 00:
So the claim language actually uses only a generic computer with no indication as to how that computer operates and a generic database that this court specifically held is not limited to any type of database.

[00:19:31] Speaker 00:
In addition, the focus of this claims, which is where we must look at,

[00:19:36] Speaker 00:
It's not on the, quote, means or method, unquote, for implementing the idea, which is the reason the court in McRoe versus Bandé-Namco upheld the claims as being valid.

[00:19:47] Speaker 00:
Instead, it's on the, quote, result or effect that is itself this abstract idea, and therefore under McRoe not patentable.

[00:19:57] Speaker 00:
And so that's the abstract concept prong.

[00:20:03] Speaker 01:
Isn't zooming in a physical step

[00:20:06] Speaker 00:
Is it a physical step?

[00:20:09] Speaker 00:
Perhaps, but it is not one that either improves the functioning of the computer, which it must do under NFISH to be a patentable limitation, I'm sorry, a patent eligible subject matter.

[00:20:20] Speaker 00:
But it also, it's merely, there's nothing in the claims that indicates, and Judge Tolle, you pointed this out, that indicates how the zooming is to be performed.

[00:20:32] Speaker 00:
It simply states that there is zooming, the result of a zooming.

[00:20:36] Speaker 00:
You get a higher level of detail.

[00:20:38] Speaker 00:
No technical manner indicating how it is to be done.

[00:20:41] Speaker 00:
And that is a clear distinction that this court has held in the past as being the reason why it's not an inventive concept.

[00:20:50] Speaker 00:
In fact, it was a district court case, but in X1 versus Uber Technologies, they specifically addressed this idea of a zoomable map and whether that provides the inventive concept.

[00:20:59] Speaker 00:
And the court held.

[00:21:00] Speaker 03:
Does a magnifying glass zoom in?

[00:21:02] Speaker 00:
I wish I could agree with you, it doesn't under the way the claims have been construed in this case, because magnifying glass merely enlarges what is already there.

[00:21:14] Speaker 03:
Okay, if I move my head closer to the screen.

[00:21:18] Speaker 00:
Again, you're seeing what's already there.

[00:21:20] Speaker 00:
And I wish I could agree with you, because I think I know where you're going with this.

[00:21:25] Speaker 01:
The judge is just asking questions, not stating a point of view.

[00:21:29] Speaker 00:
I understand that.

[00:21:30] Speaker 00:
Thank you for the clarification.

[00:21:33] Speaker 00:
This court on appeal, in real one, held that it actually has to do more than simply make bigger what is already there.

[00:21:39] Speaker 00:
It has to actually increase more details.

[00:21:42] Speaker 00:
But I think a good analogy would be, you have an atlas.

[00:21:45] Speaker 00:
And it's got a sub-map.

[00:21:47] Speaker 00:
I don't remember that.

[00:21:48] Speaker 00:
That's exactly right.

[00:21:49] Speaker 00:
So this is a pre-computerized business function that has been performed that we just are merely taking it and saying, let's put it on a computer now.

[00:21:59] Speaker 00:
And it doesn't give us any instructions on how to do that.

[00:22:02] Speaker 00:
In fact, again, if we look at what the district court did before the first appeal in this case, it actually construed both the selecting steps and the zooming steps to require specific tools for implementation.

[00:22:15] Speaker 00:
It required the selection and the zooming to be done, performed through what they called a boundary, superimposed on the map, and then these first and second area selection cursors, which is exactly how the 576 patent was construed.

[00:22:30] Speaker 00:
On appeal, this court said, no.

[00:22:32] Speaker 00:
There is no requirement.

[00:22:35] Speaker 00:
In fact, the exact quote is, there is no requirement for, quote, any particular tool, such as a selection cursor or a rubber band.

[00:22:43] Speaker 00:
And the court just held selecting means selecting, not in any way.

[00:22:46] Speaker 05:
El Rio seems to be arguing that their claims are directed to something that's not conventional or solving a technical problem that would have resulted by having this ability to do the double zoom, right?

[00:23:00] Speaker 05:
What is your response to that?

[00:23:02] Speaker 05:
Well, either under step one or step two.

[00:23:04] Speaker 00:
Sure.

[00:23:04] Speaker 00:
First, to put a finer point on it, it is actually a single zoom.

[00:23:08] Speaker 00:
It's not a double zoom.

[00:23:09] Speaker 00:
You zoom in one time.

[00:23:12] Speaker 00:
There was no problem with computers.

[00:23:16] Speaker 00:
No one ever said a computer doesn't have this ability to zoom.

[00:23:19] Speaker 00:
Perhaps, and I'm not conceding, but perhaps they were the first to actually implement that on a computer.

[00:23:25] Speaker 00:
That's very iffy, but the point being that what you're doing is taking existing computer capabilities and using it to implement or as a tool to implement this improvement.

[00:23:41] Speaker 00:
In Electric Power Grid versus Alston, the court sort of dressed this distinction, and it was talking about Enfish, and it said it upheld the claims in Enfish because the claims focused not on asserted advances in uses to which existing computer capabilities could be put.

[00:23:58] Speaker 00:
That's what this is.

[00:23:59] Speaker 00:
It's an existing capability that computers could do.

[00:24:01] Speaker 00:
In other words, what they didn't do is create a new way for this computer to zoom, a more efficient way for the computer to zoom, a better way.

[00:24:09] Speaker 00:
What they did is just say, zoom.

[00:24:11] Speaker 00:
Zoom and show more detail.

[00:24:13] Speaker 00:
However you do it.

[00:24:14] Speaker 01:
Switching to the other issue, why shouldn't we find that the trial court are on a joint infringement waiver issue?

[00:24:20] Speaker 00:
Sure.

[00:24:21] Speaker 01:
The law changed.

[00:24:22] Speaker 00:
The law changed many times during the course of this case.

[00:24:25] Speaker 00:
But interestingly, it did not change at any of the relevant points.

[00:24:29] Speaker 00:
And that's where timing becomes very important.

[00:24:32] Speaker 00:
Moon filed a motion for summary judgment in October of 2011 and put the issue of divided infringement squarely before the court.

[00:24:41] Speaker 00:
Reel came back and said, no, no, no, there's no divided infringement issue.

[00:24:44] Speaker 00:
It's just moved forward all the steps.

[00:24:46] Speaker 00:
At the time, there was the Muny auction standard, direction and control.

[00:24:50] Speaker 00:
That's Muny auction standards, what the district court called it.

[00:24:52] Speaker 00:
That's in October of 2011.

[00:24:55] Speaker 00:
Flash forward to the Reel 2 appeal.

[00:24:58] Speaker 00:
That's in March of 2012, briefed between May and July of 2012.

[00:25:03] Speaker 00:
Again, Muny auction standards.

[00:25:06] Speaker 01:
Of course, if you win on 101.

[00:25:08] Speaker 01:
It doesn't matter.

[00:25:09] Speaker 01:
It doesn't matter.

[00:25:10] Speaker 00:
Correct.

[00:25:11] Speaker 00:
But it is, so we got the appeal, the Muny auction standard.

[00:25:15] Speaker 00:
Again, we affirmatively move, affirmatively put forward the issue of divided infringement.

[00:25:20] Speaker 00:
Reel says this is just direct infringement.

[00:25:23] Speaker 00:
Move performs everything.

[00:25:24] Speaker 00:
Okay, now we flash forward to the third appeal in this case, the Reel 3 appeal.

[00:25:29] Speaker 00:
That was in July of 2014.

[00:25:32] Speaker 00:
Guess what?

[00:25:33] Speaker 00:
It was still the Muny auction standard.

[00:25:35] Speaker 00:
It had changed in between then, but at that point it was the Muny auction standard.

[00:25:39] Speaker 00:
And guess what Reel did?

[00:25:40] Speaker 00:
Reel argued that the standard for direction and control should be changed and that under the change standard, different standard, reliable.

[00:25:49] Speaker 00:
In other words, at the time of summary judgment and in Reel 2, the standard for divided infringement, when they didn't argue anything about divided infringement, the standard was the same as it was in Reel 2, I'm sorry, Reel 3, when they did argue for divided infringement.

[00:26:06] Speaker 05:
You said that in October 2011, the district court referred to the Muni auction standard.

[00:26:13] Speaker 05:
Correct.

[00:26:13] Speaker 05:
And what I heard today earlier by your adversary was a reference to the BMC standard.

[00:26:20] Speaker 05:
Was that discussed at the time?

[00:26:22] Speaker 00:
In terms of there being a distinction, no.

[00:26:25] Speaker 00:
I believe, I'm very certain that at the time of October of 2011, what Move argued was that under Muni auction, we did not

[00:26:35] Speaker 00:
direct or control the actions of the end users.

[00:26:40] Speaker 00:
And silence was the response from Reel.

[00:26:45] Speaker 00:
And when they argue that we were just presenting the facts as the law was, well, the law was the same in summary judgment.

[00:26:54] Speaker 00:
The law was the same in Reel 2.

[00:26:56] Speaker 00:
The law was the same at Reel 3.

[00:26:58] Speaker 00:
But they changed their arguments completely at that point.

[00:27:02] Speaker 00:
It wasn't a change of law, in other words.

[00:27:04] Speaker 00:
So the question becomes, why?

[00:27:05] Speaker 00:
Why did they argue for a change in the Muny auction standard in Reel 3 and not earlier?

[00:27:11] Speaker 00:
Because of what this court did in Reel 2.

[00:27:12] Speaker 00:
Your Honors remember, in Reel 2, this court held Moove did not perform all of the steps, and Moove did not direct or control the end user under the Muny auction standard.

[00:27:23] Speaker 00:
Those were decided issues.

[00:27:24] Speaker 00:
That really should have ended the case, but it didn't.

[00:27:27] Speaker 00:
So the only thing left for Reel to argue was that the standard needs to be changed, and Moove held liable under the standard.

[00:27:34] Speaker 00:
So then that leaves the question, why didn't they argue that point earlier in summary judgment or in Reel 2?

[00:27:43] Speaker 00:
And that's where the statements come in.

[00:27:44] Speaker 00:
I believe they were alluded to earlier.

[00:27:46] Speaker 00:
They told us why, because they believed that this court's construction in Reel 1 of the selecting steps rendered the issue of divided infringement moot.

[00:27:56] Speaker 00:
Why they believe that, I'm not quite sure, but their own statements make that clear.

[00:28:01] Speaker 00:
They said the court's construction of the selecting steps, quote, wholly undermined Move's request, and that through its construction of the selecting steps, quote, the Federal Circuit wholly rejected the specter of a divided infringement problem in this case.

[00:28:19] Speaker 00:
That's in the appendix on page 515.

[00:28:22] Speaker 00:
They believed there was no issue, notwithstanding that we continued to tell them there was an issue.

[00:28:28] Speaker 00:
So they decided not to argue.

[00:28:30] Speaker 00:
And that is what distinguishes this case from those cases where parties were allowed to argue in the light of a change in law.

[00:28:37] Speaker 00:
These statements were made when Akamai was before this court on bank, and we knew the law could change and could change in their favor.

[00:28:45] Speaker 00:
They made the intentional decision not to argue it.

[00:28:49] Speaker 00:
And when Council for Real argues that those were statements of preservation, my question becomes preserving for what?

[00:28:58] Speaker 00:
Usually you preserve

[00:28:59] Speaker 00:
to make the argument.

[00:29:01] Speaker 00:
But when we moved for summary judgment and said we don't infringe through divided infringement, they didn't make the argument.

[00:29:08] Speaker 00:
And the combination of those two things leads to a waiver.

[00:29:12] Speaker 00:
And unless your honors have any more questions, I will reserve the remainder of my time for counsel for the secondary defendants.

[00:29:20] Speaker 01:
And thank you.

[00:29:20] Speaker 01:
We'll hear from Mr. Parker.

[00:29:26] Speaker 01:
And we can give him six minutes.

[00:29:30] Speaker 04:
Thank you, Your Honor.

[00:29:32] Speaker 04:
Good morning, Your Honors.

[00:29:34] Speaker 04:
I'm here representing all of the secondary defendants.

[00:29:37] Speaker 04:
We join in everything the primary defendants have argued.

[00:29:40] Speaker 04:
We have, I guess, one or two issues that are specific to us that I'm addressing.

[00:29:45] Speaker 04:
The situation as a secondary defendant, I think, is rather simple, however.

[00:29:50] Speaker 04:
After the district court expressed a specific belief that he thought that perhaps both patents were invalid under 101,

[00:29:59] Speaker 04:
He then specifically instructed the parties, including the secondary defendants, to tell him, are there any issues left?

[00:30:08] Speaker 04:
Are there any issues left?

[00:30:09] Speaker 04:
In these two orders, the 101 as to the second patent and the waiver and divided infringement, I think maybe the other patent's gone.

[00:30:18] Speaker 04:
Are there any issues left?

[00:30:19] Speaker 04:
The parties, including Reel, submitted a joint status report.

[00:30:23] Speaker 04:
And in that, they specifically said, and Reel specifically said,

[00:30:27] Speaker 04:
that in order to pursue our fourth appeal, we joined in this report and we requested an entry of judgment of non-infringement and invalidity.

[00:30:36] Speaker 04:
No issues.

[00:30:36] Speaker 04:
All issues are effectively resolved.

[00:30:39] Speaker 04:
The district court, relying on a statement from all parties, said, okay, I'm going to enter a judgment.

[00:30:45] Speaker 04:
Did.

[00:30:47] Speaker 04:
That's pretty much the end of the story as the secondary defendants reel by responding to the district court's specific instructions to

[00:30:55] Speaker 04:
tell them what issues remained and saying there were none, put the secondary defendants effectively in the same posture as the primary defendants, such that if the primary defendants win affirmance of these issues that they've been appealing, we're going to win as well.

[00:31:14] Speaker 04:
There is no further issue that has to be resolved as to us.

[00:31:19] Speaker 05:
I would like to ask you a question or two.

[00:31:21] Speaker 05:
My understanding in looking at the record is that at this point,

[00:31:24] Speaker 05:
The two cases had been consolidated.

[00:31:26] Speaker 05:
Is that correct?

[00:31:28] Speaker 05:
I think it had been consolidated in 2008.

[00:31:29] Speaker 04:
They were consolidated early on in the case.

[00:31:31] Speaker 04:
And then there was a case management order that put the large majority of us off to the side while the three primary defendants tried most of the issues.

[00:31:42] Speaker 05:
So that's phase one versus phase two.

[00:31:44] Speaker 05:
But it's all the same case.

[00:31:47] Speaker 04:
Well, yes.

[00:31:49] Speaker 04:
There are two cases under the same caption, yes.

[00:31:52] Speaker 05:
the two cases were consolidated.

[00:31:54] Speaker 05:
So this order from the court was entered in the case in which the secondary defendants were in the case.

[00:32:01] Speaker 04:
Yes, Your Honor.

[00:32:02] Speaker 04:
That's absolutely true.

[00:32:03] Speaker 03:
Was it error for the district court to invalidate 576 rather than simply finding it not infringed?

[00:32:12] Speaker 04:
Your Honor, I don't think so.

[00:32:14] Speaker 04:
I think that because

[00:32:17] Speaker 04:
The district court specifically asked Reel whether there were any issues and specifically mentioned that patent, and Reel came back and said, nah, I think we're done here if the other issues are ruled against us, that Reel effectively conceded the validity of that patent.

[00:32:34] Speaker 04:
Now, that's a little unusual, and frankly, at a minimum, Reel conceded that it was not going to be coming after the secondary defendant.

[00:32:46] Speaker 04:
I think they conceded validity, but one way or the other, they conceded they weren't going to come after us.

[00:32:51] Speaker 05:
Are you aware of any cases in which that has been done where a party has conceded validity if their patent and judgment was entered on validity against them?

[00:33:00] Speaker 04:
No, I'm not, Your Honor.

[00:33:00] Speaker 04:
I will say I haven't specifically looked at that point, so I don't know one way or the other.

[00:33:06] Speaker 03:
What you're really saying is we win so we don't care?

[00:33:11] Speaker 04:
Yes.

[00:33:13] Speaker 04:
I do want to just briefly touch on

[00:33:16] Speaker 04:
Some of the arguments made by Reel in its reply brief, he spent a lot of time discussing the possibility that the judgment should have been a Rule 54B judgment.

[00:33:26] Speaker 04:
And I think that the simple answer there is that before the district court, they never asked for a 54B judgment.

[00:33:35] Speaker 04:
After the judgment was entered, they never asked to have it amended or corrected in any fashion.

[00:33:40] Speaker 04:
And in their opening brief to this court, they never mentioned Rule 54B either.

[00:33:44] Speaker 04:
There's plenty of case authority that says you have to ask for certification.

[00:33:49] Speaker 04:
Yes, Your Honor.

[00:33:53] Speaker 04:
And the one other point I would make on that, that real implies in its brief that it was appropriate to interpret the district court's December 1, 2016 order as instructing to talk about issues only related to phase one.

[00:34:13] Speaker 04:
that that really makes no sense if you look at that order because the district court had specifically mentioned the 576 patent and had specifically asked the secondary defendants to be involved.

[00:34:24] Speaker 05:
So the secondary defendants were only involved in the Phase II action.

[00:34:29] Speaker 05:
Is that correct?

[00:34:30] Speaker 04:
So I think your position is that because they were... They were going to be in Phase II.

[00:34:35] Speaker 04:
We've been sort of monitoring all along, but we have not actively participated in Phase I.

[00:34:41] Speaker 05:
I'm just trying to understand the importance of your argument.

[00:34:44] Speaker 05:
I think what you're saying is that by referring to the secondary defendants, that necessarily means that it was referring to the phase two litigants.

[00:34:51] Speaker 05:
Yes, Your Honor, yes.

[00:34:54] Speaker 05:
And then also by referring to the 576 patent, it also was just referring to the phase two because the 576 patent was no longer at issue in phase one.

[00:35:05] Speaker 04:
Yes, Your Honor, exactly.

[00:35:09] Speaker 04:
Unless you have other questions,

[00:35:12] Speaker 01:
Thank you.

[00:35:13] Speaker 01:
Thank you, Mr. Parker.

[00:35:14] Speaker 01:
Mr. Husek has almost five minutes.

[00:35:18] Speaker 02:
Your Honor, we've addressed all of these points on our brief, and I surrender the rest of the time.

[00:35:23] Speaker 01:
Thank you.

[00:35:24] Speaker 01:
Mr. Husek will take the case under advisement.