[00:00:01] Speaker 00:
Good morning, ladies and gentlemen.

[00:00:04] Speaker 00:
We have five cases before the court today.

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The last was submitted on the papers.

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The first four are going to be argued this morning.

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The first case before the court is Sociedad Espanol versus Blue Ridge X-Ray Company, case number 171551, an appeal from the Western District of

[00:00:30] Speaker 00:
North Carolina.

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There is a cross appeal in this case.

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So I understand the parties want to divide up the argument to allow for that.

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And we will try to do that to the extent that the issues are appropriately raised at the appropriate times.

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And we'll try to give you the rebuttal that you've asked for.

[00:00:53] Speaker 00:
We can't always promise that.

[00:00:57] Speaker 00:
OK.

[00:00:58] Speaker 00:
Mr. Rademacher, is that how you pronounce that?

[00:01:01] Speaker 03:
It is, Your Honor.

[00:01:02] Speaker 03:
Thank you.

[00:01:03] Speaker 00:
You may proceed.

[00:01:05] Speaker 03:
And opening reference plaintiff is Sociedad Espanol.

[00:01:11] Speaker 03:
I often refer to it as CEDECL, which is the acronym for the company name.

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So I just want to make sure there's not any confusion when I say CEDECL today.

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May I please report.

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The district court views its discretion in denying enhancement

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by making an air of judgment and or erroneous factual conclusions in three different ways.

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First, the court focused on late conjured defenses by the defendant, defenses at trial rather than taking instruction from Halo and focusing upon the conduct of the challenged activity.

[00:01:54] Speaker 01:
We're not talking about

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willfulness, that has been determined.

[00:01:59] Speaker 01:
So the question is enhancement, separate aspect, if you will, and why aren't all the circumstances, the totality of circumstances, appropriate to consider in whether a case is exceptional?

[00:02:17] Speaker 03:
Certainly, as Halo would tell us, the totality of circumstances.

[00:02:21] Speaker 01:
Or egregious, I should say.

[00:02:23] Speaker 03:
Pardon?

[00:02:23] Speaker 01:
Egregious.

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The egregiousness in this case harkens back to what the court turned a blind eye to, frankly.

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And that is the willful copying, the purposeful planned effort to copy the technology and functionality of Cedicle's patented product, knowing it was patented.

[00:02:51] Speaker 04:
But she accepted that willfulness finding from the jury.

[00:02:53] Speaker 04:
She was, or he was, I'm sorry.

[00:02:56] Speaker 04:
He accepted the finding from the jury and then he went on as Halo, I think, instructed him to do and still consider in addition to that willfulness finding whether this was an exceptional case and or egregious enough to warrant enhanced damages.

[00:03:19] Speaker 03:
True.

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And we're here to determine whether or not that was abuse of discretion in what the court looked at, looking at the evidence that was available in trial.

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With respect to egregiousness, let's go back to where you started.

[00:03:34] Speaker 00:
In Halo, the court said we're to look to the point in time when infringement occurs.

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And Halo never mentions the word willfulness, so is it

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saying, look to the point in time when infringement occurs for purposes of determining willfulness or for purposes of determining egregiousness?

[00:03:54] Speaker 03:
Well, I read Halo, as well as how this court seems to have interpreted Halo under certain circumstances, such as in the Whitsurf case.

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But I read Halo as saying that was before Halo.

[00:04:09] Speaker 03:
But you look for egregious conduct, not run-of-the-mill cases.

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or allegations where it's run-of-the-mill cases.

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And I believe Wood-Server is one of the cases that sometimes this court has presented, or when there's alleged to be a culture of copying, or there's copying of other products.

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Here, there is direct evidence of, at the inception, when, after knowing about Cedicle's product was patented, at the inception of forming DRGAMs for the product,

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One product, a generator that would copy Cetikos technology.

[00:04:47] Speaker 01:
Sorry, egregiousness would certainly encompass litigation misconduct.

[00:04:53] Speaker 03:
Sure, but it doesn't absolve litigation.

[00:04:56] Speaker 01:
No, no, but my point is that that is activity that takes place during the course of the litigation, not prior to the suit.

[00:05:05] Speaker 03:
It certainly is activity in the course of the litigation

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The part that I'm focusing on, the copying, happened back in 2006.

[00:05:15] Speaker 01:
I'm with you on that, but the point I'm trying to make is that there may be different considerations to take into account when considering egregiousness in terms of an award of

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enhanced damages as compared with just a determination that there was willful conduct.

[00:05:38] Speaker 03:
Well, there's two problems with what the court did.

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The first is what I was highlighting, that the court is turning a blind eye to that which occurred that shows that this is not just egregious.

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This is the pirate that Halo was talking about.

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But also, the court erred in just its factual conclusions.

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We have to look at what the court said.

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that the defendants pressed legitimate defenses at trial, and that were based on evidence and opinions of qualified patent attorney, and found that to be something that was indicative of attorney forgetting about the pirate that stole the technology, it seems.

[00:06:18] Speaker 03:
So the fact is, though, all of us.

[00:06:20] Speaker 00:
Well, let me go back to the Bynum report.

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Is it Bynum or Byum, Byon?

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The first, the pre-suit.

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The jury had that before it, right?

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The viewing report, as they call it, we had filed a motion to eliminate it.

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The court allowed it to wait to hear what the testimony would say.

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But we had sworn testimony of the CEO, the sole decision maker, that he never saw it.

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that he never saw it.

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So the jury knew it existed.

[00:07:04] Speaker 03:
Yes.

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The jury knew he never saw it.

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The jury was aware of all of that circumstance when it found Willfulness.

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And in fact, the witness came to trial, recanting his prior testimony, seeing the document again, or whatever he did, suddenly remembered that that's how he based his decision to go ahead and ship product that he had copied.

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It was, that's part of the absurdity of the situation to find that credible where the court said that it was, you know, that there was this evidence that a reasonable investigation had been done and a good faith belief based upon this reasonable investigation that it's invalid or not in French.

[00:07:52] Speaker 03:
First of all, that's not what the document shows.

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Evidence showed that it never reached the decision maker.

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And I submit.

[00:08:01] Speaker 04:
But didn't you just say that he changed his testimony at court and said it did reach him?

[00:08:06] Speaker 03:
Right.

[00:08:06] Speaker 04:
I mean, I get you.

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It seems a little fishy to me.

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But he testified to that.

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The district court was there.

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Isn't that a clear error standard?

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And if there's testimony to support his decision, then what can we do?

[00:08:21] Speaker 04:
You're asking us to overturn what sounds to me like a credibility determination.

[00:08:28] Speaker 03:
No, it's a totality of the circumstances, and it's looking at the evidence.

[00:08:34] Speaker 00:
Well, here's what I'm trying to get to.

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There is a credibility determination that the jury made, right?

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So the jury obviously must not have believed this changed testimony.

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So my question is, is it your view that the court is allowed

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to reject that credibility determination and make a different credibility determination in the context of 284.

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That's what I'm trying to figure out.

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What is the flexibility that the court has?

[00:09:02] Speaker 03:
Judge O'Malley, that is a poignant question because I'm troubled with the jury getting instructions.

[00:09:08] Speaker 03:
What were the then standard instructions, which included clear and convincing evidence, included instructions as to objective reasonableness when determining willfulness,

[00:09:21] Speaker 03:
the jury handily found willfulness, willful infringement.

[00:09:26] Speaker 03:
The judge came back on enhanced damages and made seeming factual determinations entirely contrary to that.

[00:09:35] Speaker 03:
First of all, several of the factual determinations he's stating are wrong.

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There was not good faith arguments brought to trial that were the same as in the opinion of counsel that was post suit opinion.

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Setting aside the factual determinations, it does seem that the district court went out of its way to, running contrary to how the jury must have determined the facts in order to find willfulness, turned a blind eye to the pirate that stole this technology and built a company from four people to now one of the largest manufacturers.

[00:10:16] Speaker 03:
They developed the infringing product in a matter of weeks.

[00:10:21] Speaker 00:
Are you into your proposal?

[00:10:23] Speaker 03:
I would like to reserve some.

[00:10:24] Speaker 03:
Okay.

[00:10:25] Speaker 00:
Thank you.

[00:10:29] Speaker 00:
Mr. Magley?

[00:10:30] Speaker 02:
Yes, Your Honor.

[00:10:32] Speaker 02:
May it please the Court, Richard Magley on behalf of Defendants DRGEM Corp, DRGEM USA, and Blue Ridge X-ray.

[00:10:39] Speaker 00:
All right.

[00:10:39] Speaker 00:
Let me ask you some questions about how this is supposed to work.

[00:10:44] Speaker 00:
Halo says you're supposed to look, for purposes of determining egregiousness, you're supposed to look at the point of infringement.

[00:10:52] Speaker 00:
All right, so if that's the case, then of what relevance is litigation conduct or litigation defenses to the overall inquiry?

[00:11:02] Speaker 02:
In HALO, they said there's no rigid rule, there's no rigid formula, and courts after HALO, this court, have applied the three factors.

[00:11:10] Speaker 02:
Infringement, we take a different view.

[00:11:11] Speaker 02:
They say, well, infringement, you only have to look at 2006 and 2007, which is years before they introduced the product to the use market.

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And they're seeking egregiousness

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2010 to 2015, they're seeking enhanced damages for that time period.

[00:11:25] Speaker 02:
And logically, one of the things they really ignore is the fact that the district court initially granted summary judgment in the defendant's favor, finding non-infringement and invalidity.

[00:11:35] Speaker 00:
Right.

[00:11:35] Speaker 00:
But, you know, the district court was wrong.

[00:11:38] Speaker 00:
Correct.

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And so that's the problem.

[00:11:39] Speaker 00:
You can't, a district court can't say, I don't like the fact that the federal circuit overturned me, so I'm going to go back and say I was right all along.

[00:11:47] Speaker 00:
And some of that smacks of this, doesn't it?

[00:11:50] Speaker 02:
No, I think what it smacks of is the fact that this was a run-of-the-mill patent case where there was an open question on whether there was infringement or not.

[00:11:57] Speaker 02:
In most patent cases, oftentimes it comes down to claim interpretation.

[00:12:02] Speaker 02:
What does two insulated chambers mean?

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Does it require physical insulation?

[00:12:06] Speaker 00:
Well, the jury didn't seem to think it was much of an open question.

[00:12:09] Speaker 02:
Right, because that claim interpretation had already been decided.

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And as a note, once there was that adverse ruling,

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DRGEM removed the product from the market.

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They stopped importing.

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They didn't continue selling.

[00:12:21] Speaker 02:
There was no verdict.

[00:12:22] Speaker 02:
There was no judgment of infringement, yet they removed the product.

[00:12:27] Speaker 02:
And so taking to a logical conclusion, in January 2015, they're seeking enhancement for sales of, say, DRGEM made in January 2015.

[00:12:35] Speaker 02:
The status of the case at that time was they had a judgment from a district court of non-infringement and invalidity.

[00:12:40] Speaker 02:
But they're saying, you should be subject to trouble damages, potentially, because you're an egregious pirate.

[00:12:47] Speaker 00:
The jury found it to be willful, correct?

[00:12:49] Speaker 02:
Correct.

[00:12:50] Speaker 00:
And the jury had before it the biome report, correct?

[00:12:56] Speaker 02:
Correct.

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But they did not have the district court's ruling of summary judgment in favor of the argument.

[00:13:01] Speaker 00:
But the question is, does the district court have the right to basically say, I am going to make different credibility determinations than did the jury?

[00:13:15] Speaker 02:
Well, first of all, I think two answers to that.

[00:13:19] Speaker 02:
Number one, I think on credibility, I think the district court will observe the witnesses directly are in better- Better than the jury?

[00:13:30] Speaker 02:
No, but asking this court to reevaluate the credibility, yes.

[00:13:34] Speaker 02:
And number two, I think to answer your question, there's two cases.

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First of all, Juergens, a Federal Circuit decision from this court that said that a district court can weigh factors like closest of the case that were not considered by the jury.

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So even though the jury, and then there's another case, AIA America, it came out after briefing was completed in this case.

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The site is 866 Fed 3rd at 1369.

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It says inequitable issues like enhancement, when there's sort of collateral issues separate and far from the decision on the merits, a district court can exercise discretion in deciding.

[00:14:08] Speaker 04:
Even if Halo and our precedent gives the district court some room to

[00:14:14] Speaker 04:
make differing or additional views, shouldn't the court at least be required to explain why, despite the willfulness finding, which covers all of these basic issues, that the court's coming to a different conclusion?

[00:14:30] Speaker 02:
And we believe the court did, in this case, for example, explain not only the summary judgment.

[00:14:34] Speaker 02:
But he didn't.

[00:14:35] Speaker 04:
I mean, he just said the exact opposite without explaining why.

[00:14:41] Speaker 02:
Well, if you look at it, he did

[00:14:44] Speaker 02:
look at what would be sort of read factors.

[00:14:46] Speaker 02:
First of all, there's three that really aren't challenged.

[00:14:48] Speaker 02:
No litigation misconduct.

[00:14:50] Speaker 02:
No attempt to conceal.

[00:14:52] Speaker 00:
Have we said specifically that the read factors still apply after HALO?

[00:14:57] Speaker 00:
Has this court actually said that?

[00:14:59] Speaker 00:
We've referred to the read factors in passing, but we have never actually addressed the question of whether they continue to apply in full force after HALO and after COMIL.

[00:15:11] Speaker 02:
That's, I think,

[00:15:14] Speaker 02:
I'm trying to remember whether Presidio applied the read factors or not.

[00:15:19] Speaker 02:
I think there are cases since HALO that have found willfulness but no enhancement, Presidio being... Clearly, we've said that that's possible.

[00:15:28] Speaker 02:
And in fact, Setikoff, they actually criticized the judge for not applying the read factors.

[00:15:33] Speaker 02:
In the district court's decision, they said, we're not going to just... There's no rigid formula.

[00:15:39] Speaker 00:
care what they criticize the court for.

[00:15:41] Speaker 00:
I'm trying to figure out what the law is.

[00:15:43] Speaker 00:
Have we ever said the read factors in their original form still apply after HALO and KAMEL?

[00:15:50] Speaker 02:
I'm not aware off the top of my head whether, since HALO, this court has addressed the issue of whether read still applies after that.

[00:16:02] Speaker 00:
And what about KAMEL?

[00:16:05] Speaker 00:
I mean, in KAMEL, the Supreme Court very clearly said that

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validity and good faith belief in validity does not relate to the question of infringement.

[00:16:16] Speaker 00:
They went out of their way unanimously to tell us there are two separate sections of the statute and the one doesn't impact the other except to wipe out liability at the end of the day.

[00:16:26] Speaker 00:
But whether infringement occurs and whether you have an intent to induce infringement is a different animal.

[00:16:35] Speaker 00:
Why wouldn't that apply to our willfulness jurisprudence?

[00:16:40] Speaker 02:
in the sense that, in the sense of willfulness or egregious, I guess I'm not understanding.

[00:16:46] Speaker 00:
In other words, if your question is, was the infringement willful?

[00:16:50] Speaker 00:
Why is it relevant if there is a good faith belief that you might have a decent validity defense?

[00:16:57] Speaker 02:
I guess it goes into whether or not you're egregious or not.

[00:17:01] Speaker 02:
There are two separate issues, but if you are, you know, if you look and you

[00:17:07] Speaker 02:
form a good faith belief and a reasonable belief that this patent is invalid, then the question is whether or not you're willful.

[00:17:16] Speaker 02:
The question is whether you're an egregious infringer, you're an egregious pirate to the point where you should be subject to potentially trouble damages.

[00:17:24] Speaker 02:
And the fact of the matter is if this is a run-of-the-mill patent case where you believe that the patent reasonably is invalid and you have legitimate question about the validity,

[00:17:36] Speaker 02:
I don't think that should subject you to potential egregiousness.

[00:17:39] Speaker 00:
I didn't think it should affect inducement either, but the Supreme Court reversed me and others on that issue.

[00:17:47] Speaker 02:
In READ, even in READ itself, it said these factors may apply.

[00:17:51] Speaker 02:
And in district courts, I'm not sure about the Fed Circuit, but in district courts, they have been since HALO been applying READ factors.

[00:18:00] Speaker 02:
And even this court in looking at, the district court in looking at egregiousness and weighing egregiousness,

[00:18:06] Speaker 02:
looked at, well, he said, I don't need to rigidly apply the read factors.

[00:18:11] Speaker 02:
He did apply things like litigation misconduct, closeness of the case that fit into a read factor.

[00:18:16] Speaker 00:
When you say closeness of the case, you don't dispute copying, do you?

[00:18:21] Speaker 02:
I don't dispute that copying, he acknowledged copying in his opinion.

[00:18:25] Speaker 02:
Personally, I don't think there was copying.

[00:18:27] Speaker 02:
I think they tried to make their product different.

[00:18:28] Speaker 02:
But in the district court's opinion, he acknowledged that there was a willfulness finding.

[00:18:32] Speaker 02:
He acknowledged that there was copying.

[00:18:34] Speaker 02:
And then he went through and acknowledged HALO and case law, and then went through and did explain why he was denying in his discretion enhancement.

[00:18:44] Speaker 00:
The jury deliberated for 20 minutes before it found infringement, right?

[00:18:48] Speaker 02:
Right.

[00:18:48] Speaker 00:
But I think that- That sort of indicates that the case wasn't that close.

[00:18:53] Speaker 02:
But at that time, the product had been rude for market.

[00:18:56] Speaker 02:
And quite frankly, when the case really came down to his claim interpretation.

[00:19:00] Speaker 02:
And once there was an adverse ruling against my client,

[00:19:03] Speaker 02:
They took the product off the market.

[00:19:05] Speaker 02:
Now, they did still assert some defenses, one of which is it was their burden to prove infringement.

[00:19:10] Speaker 02:
And they moved for a jam all because their expert during trial testified that to really confirm infringement, you'd have to power up one of these transformers to the full power to know if it did what the PAC claims that it would.

[00:19:22] Speaker 02:
And he said he never did it.

[00:19:24] Speaker 02:
And that was sort of a close call.

[00:19:25] Speaker 02:
So they did have defenses there.

[00:19:27] Speaker 02:
But in terms of looking at, this was really a run-of-the-mill case that depended on claim construction.

[00:19:33] Speaker 02:
And in this court's prior opinion, it said these claims were no model of clarity.

[00:19:37] Speaker 02:
Clear claim drafting would have been more helpful.

[00:19:40] Speaker 02:
And that's true.

[00:19:41] Speaker 02:
There was an open good faith question as to whether insulated chambers required physical insulation or electrical insulation.

[00:19:49] Speaker 02:
There was an open question whether two magnetic cores meant entire cores or a subset.

[00:19:54] Speaker 01:
What do you have to say about your cross appeal?

[00:19:57] Speaker 02:
On the damages, I think the first red flag is that the jury awarded nearly three times the amount of the only quantitative evidence in the record, which was the testimony of Mr. Jeffords.

[00:20:07] Speaker 01:
There was some discussion that the award was based on a cost savings theory.

[00:20:13] Speaker 02:
I think we refer to that in the brief as reimagined testimony.

[00:20:17] Speaker 02:
Even that cost savings, part of the problem we have with Jeffords is he started with the end.

[00:20:23] Speaker 02:
He never really gave a starting point.

[00:20:25] Speaker 02:
He said, here's, you know, it's $500, at least $500, and then kind of did, similar to Witser, a superficial analysis of the Georgia Pacific factors.

[00:20:34] Speaker 01:
Did he submit an expert report?

[00:20:36] Speaker 01:
He did, yes.

[00:20:37] Speaker 01:
So I couldn't find it anyplace in the record.

[00:20:40] Speaker 02:
I don't think that was submitted on appeal.

[00:20:44] Speaker 02:
So he did submit it.

[00:20:46] Speaker 00:
And my understanding is that these generators, I mean,

[00:20:51] Speaker 00:
there were actual individual replacement sales, right?

[00:20:55] Speaker 00:
Correct.

[00:20:55] Speaker 00:
So putting aside the whole question of whether you look at the full product or you look at the individual piece, the individual piece was not often, it wasn't regularly sold, but for replacement was sold, correct?

[00:21:06] Speaker 02:
Correct.

[00:21:07] Speaker 00:
And there was a range of numbers for those sales.

[00:21:11] Speaker 00:
Correct.

[00:21:12] Speaker 00:
And this number falls within that range, correct?

[00:21:18] Speaker 00:
The jury number.

[00:21:19] Speaker 02:
No, the jury number is actually

[00:21:20] Speaker 02:
The jury number is 1432, and the sales are actually like the revenue, the entire revenue, not profit, the entire revenue of a transformer.

[00:21:30] Speaker 00:
But it was higher than 1492.

[00:21:32] Speaker 02:
By a few dollars, yes.

[00:21:34] Speaker 00:
Well, 18 something, right?

[00:21:35] Speaker 02:
I thought, well, it could be.

[00:21:37] Speaker 02:
I think the loan was 1459, and then it was up to 1800.

[00:21:40] Speaker 00:
So they were all above the jury number.

[00:21:42] Speaker 02:
Correct.

[00:21:43] Speaker 02:
But then you're portioning 100% of the revenue to a transformer, and there's no support in the record for that.

[00:21:49] Speaker 02:
I see I made my rebuttal time.

[00:21:51] Speaker 04:
No, I just want to clarify.

[00:21:52] Speaker 04:
Those sales numbers, they're for the price of the entire generator, not for the... So the price was for the transformer component.

[00:21:59] Speaker 04:
So they're for a replacement transformer.

[00:22:01] Speaker 00:
Yeah, for the component itself.

[00:22:03] Speaker 02:
Correct.

[00:22:05] Speaker 02:
If there's no further questions, I'd like to reserve a few minutes for rebuttal.

[00:22:08] Speaker 02:
Thank you.

[00:22:15] Speaker 00:
Can you start with the cross appeal?

[00:22:20] Speaker 00:
We'll let you get back to your other point.

[00:22:24] Speaker 00:
How do you respond to the fact that the jury reached a number that was higher than the proposal from your expert, Mr. Jeffords?

[00:22:36] Speaker 04:
Almost three times the number.

[00:22:38] Speaker 03:
Yes.

[00:22:39] Speaker 03:
I want to start with the criticism of Mr. Jeffords, what he provided the jury.

[00:22:44] Speaker 03:
Now, perhaps this is a different case than counsel or what you all sometimes see.

[00:22:49] Speaker 03:
This was an expert that used as his baseline, said he never gave a starting point.

[00:22:55] Speaker 03:
Yes, he did.

[00:22:56] Speaker 04:
He used something that is... Well, can you just get to the point?

[00:22:59] Speaker 04:
He testified that there was a floor, and then I guess you point to some arguments that

[00:23:04] Speaker 04:
Here are additional considerations that may increase the price, but he didn't give any kind of range or guideline.

[00:23:11] Speaker 04:
How is that a permissible way of computing damages?

[00:23:14] Speaker 03:
Because he did give guidelines.

[00:23:16] Speaker 03:
What he gave was cost savings, which is just the bare bones, the materials and the shipping of the transformer, which is same as the generator.

[00:23:23] Speaker 04:
But he didn't give any quantitative guidelines, did he?

[00:23:26] Speaker 03:
He gave the number as the cost savings, and he looked at the Georgia Pacific factors and apportioned

[00:23:34] Speaker 03:
He said, so it would be at least $500 based on these points.

[00:23:39] Speaker 03:
He was sequestered from trial.

[00:23:41] Speaker 03:
All witnesses were sequestered from trial.

[00:23:43] Speaker 03:
He didn't have the benefit of the record showing the value of this patented technology, which, dear Jim, Full knows well the value that they acquired from it.

[00:23:54] Speaker 00:
And they didn't offer any expert testimony.

[00:23:56] Speaker 03:
They did not.

[00:23:56] Speaker 03:
And frankly, they never filed a Daubert motion criticizing after the fact.

[00:24:04] Speaker 03:
some of the ways in which Jeffords provided guidelines.

[00:24:08] Speaker 04:
But there still has to be some support in the record for that number.

[00:24:11] Speaker 03:
Oh, I submit that there is support in the record for that number, Your Honor.

[00:24:16] Speaker 03:
There was explanation.

[00:24:18] Speaker 04:
But not from him.

[00:24:19] Speaker 03:
Yes, from him.

[00:24:21] Speaker 03:
Now, he did not provide a percentage royalty.

[00:24:25] Speaker 04:
I mean, it seems oddly

[00:24:26] Speaker 04:
a very odd way of providing an export report on damages say, here is the starting line, you can go upwards, feel free.

[00:24:34] Speaker 04:
I mean, if he had gone to $10,000, clearly that would be reverse, if they had gone to $10,000, that would be reversible error, wouldn't it?

[00:24:40] Speaker 03:
Honestly, as we see it, he gave guidelines and assistance to the jury, and it is the jury's determination based on all the evidence of which Mr. Jeffords was not going to have available and didn't have available.

[00:24:51] Speaker 00:
Right, so all that other evidence with respect to the numbers and how much they sold the transformer as individual units for, that was, the jury had that.

[00:25:00] Speaker 03:
And, sorry to interrupt, but the fact that we had evidence showing that they were discounting theirs to go 6,000 below setical no matter what, $6,000.

[00:25:09] Speaker 03:
They were dumping in the market.

[00:25:11] Speaker 03:
We had evidence of that.

[00:25:13] Speaker 03:
They had copied.

[00:25:14] Speaker 03:
They didn't have any cost of R&D.

[00:25:16] Speaker 03:
All of this the jury heard, the jury heard the relationship, the commercial relationship, the parties, and heard from Mr. Jeffords, these are the things from the Georgia Pacific vectors that you should look to.

[00:25:26] Speaker 03:
I don't have that because I wasn't here, unfortunately, said Mr. Jeffords.

[00:25:31] Speaker 03:
Now I heard counsel say that this was like a closed case and it was a run of the mill case.

[00:25:38] Speaker 03:
This was not a run of the mill case.

[00:25:40] Speaker 03:
This was so blatant that the evidence came in such a blatant copy.

[00:25:46] Speaker 03:
and jumping into the market.

[00:25:48] Speaker 03:
And frankly, there could have been damage theories of lost profits, price erosion.

[00:25:55] Speaker 03:
And now, after the fact, to come back and say, oh, well, we're not happy because we don't like how Mr. Jeffords calculated this when they didn't provide any evidence contrary.

[00:26:06] Speaker 03:
And there's evidence that the Transformers, those are replacement sales to customers that already bought one.

[00:26:12] Speaker 03:
That's not fair market value of that product.

[00:26:15] Speaker 03:
What Mr. Jeffords did was explain to the jury, I'm going to find the value of that technology.

[00:26:22] Speaker 03:
All I have before me is cost savings right now.

[00:26:26] Speaker 03:
Then the jury heard what the value of the technology is.

[00:26:28] Speaker 00:
Did Mr. Jeffords have before him the evidence of the dumping?

[00:26:32] Speaker 03:
No.

[00:26:33] Speaker 03:
He didn't have evidence of the, what I would call, price erosion.

[00:26:39] Speaker 03:
He didn't have, we had located- Well, undercutting price is what I'm talking about.

[00:26:44] Speaker 00:
Undercutting price.

[00:26:45] Speaker 00:
in the trade context, but that's essentially what you're saying, right?

[00:26:49] Speaker 00:
That they dumped it into the market below price in order to capture the market.

[00:26:56] Speaker 03:
I would have to look back to whether or not he saw a deposition testimony where we were examining the witness, but frankly the witness never would really admit too much, but I don't know if he had that.

[00:27:11] Speaker 03:
Okay.

[00:27:13] Speaker 03:
If there are any other questions with regard to

[00:27:17] Speaker 03:
the cross field.

[00:27:20] Speaker 03:
I would like to just jump back for one moment.

[00:27:22] Speaker 00:
Yeah, you only have about 45 seconds, so go ahead.

[00:27:25] Speaker 03:
First, I would like to get a question of where do we look in time.

[00:27:28] Speaker 03:
I asked the court to look back to WPIP case, where it is observed by this court that timing does matter.

[00:27:38] Speaker 03:
According to HALO, we need to go back to the time that this began.

[00:27:42] Speaker 03:
And I heard counsel say, oh, they're trying to get trouble damages during 2015.

[00:27:48] Speaker 03:
This case continued with infringement for seven years.

[00:27:52] Speaker 03:
They had infringed for seven years.

[00:27:53] Speaker 03:
The case went on for five years.

[00:27:56] Speaker 03:
Frankly, $850,000 is a drop in the bucket for what these companies, what DRGEM gained from continuing his infringement, all the while telling us that they had a quick fix.

[00:28:10] Speaker 03:
that they could have done in a month, and they finally did late in the day.

[00:28:14] Speaker 03:
They traded on setical technology, which gave them reliability, which gave them a jump in the market, directly undercut and dumped on pricing, and paid $850,000.

[00:28:24] Speaker 03:
And now they are the pirate that should be punished.

[00:28:36] Speaker 02:
Your Honor, before addressing damages, I do want to get back to one point you asked me about a case from this court where the read factors were post-halo.

[00:28:47] Speaker 02:
It's an unpublished decision, but in this court's exigent case that came out in March of this year, this court indicated we cannot conclude that the district court abused its discretion in applying the read factors and declining to enhance

[00:29:05] Speaker 02:
Excuse me, declining to award enhanced damages.

[00:29:08] Speaker 02:
So I knew there was a case.

[00:29:11] Speaker 00:
In a non-precedential opinion?

[00:29:12] Speaker 02:
It's a non-precedential opinion, but it is a case from this court.

[00:29:16] Speaker 02:
On switching back to damages, for Jeffers on price erosion, I don't understand why he couldn't have talked to his clients and say, well, how much have you dropped your price since then?

[00:29:30] Speaker 02:
I don't know why any of that couldn't have been.

[00:29:33] Speaker 02:
This qualitative evidence, why it couldn't be considered.

[00:29:35] Speaker 02:
Most of it came from the CEO of Setacal or the marketing manager of Setacal.

[00:29:40] Speaker 02:
So why they couldn't have done, why they couldn't have done.

[00:29:44] Speaker 00:
Why didn't you submit an expert report?

[00:29:47] Speaker 02:
Because quite frankly, their own experts said this was less than a $300,000 case, given what experts cost.

[00:29:54] Speaker 02:
From a cost standpoint, it's their burden of proof.

[00:29:57] Speaker 02:
And it just didn't make economic sense, given that it's

[00:30:00] Speaker 02:
Quite frankly, there was only 595 units sold.

[00:30:03] Speaker 02:
There wasn't that many.

[00:30:05] Speaker 02:
And then if you're looking at correctly, the transformer and the profits from the transformer, it's a small dollar case.

[00:30:13] Speaker 04:
But why isn't the replacement transformers a sufficient number for the jury to rely on?

[00:30:19] Speaker 02:
Because it is.

[00:30:20] Speaker 02:
Just like we think in laser dynamics where they said you should have

[00:30:24] Speaker 02:
perhaps relied on the upcharge of $29 for FaceTime.

[00:30:27] Speaker 02:
This is actual revenue going to the actual patented product, a transformer.

[00:30:34] Speaker 02:
It's not on a generator, it's on a transformer.

[00:30:36] Speaker 02:
And I actually, quite frankly, if anybody's ever bought anything, when you get a replacement part, actually the cost typically is higher because you need the replacement.

[00:30:44] Speaker 02:
You can't bargain for it.

[00:30:46] Speaker 00:
Aside from the fact that that's not in the record, I think that logically that doesn't make a lot of sense, that you charge your already existing clients more for a replacement part than you would if you were going to sell it on the open market.

[00:30:58] Speaker 02:
In my experience, that's a common… Okay.

[00:31:01] Speaker 00:
Well, your experience and my experience apparently are not the same, and they don't matter.

[00:31:04] Speaker 02:
But getting back to the point is there is revenue.

[00:31:09] Speaker 02:
Both parties had sold replacement transformers, so they know what the revenue is.

[00:31:13] Speaker 02:
Set-A-Call certainly would know what profit they made on those replacement parts.

[00:31:16] Speaker 00:
You're not objecting to any of the jury instructions as it relates to damages, are you?

[00:31:20] Speaker 02:
No.

[00:31:21] Speaker 02:
We're just saying that the record doesn't support the award that the jury provided or made.

[00:31:32] Speaker 02:
They make up the point about the Dauber motion.

[00:31:34] Speaker 02:
Two cases that come to mind, both laser dynamics and Lucent.

[00:31:39] Speaker 02:
In Lucent, there was no Dauber motion.

[00:31:41] Speaker 02:
there still was found not to be sufficient evidence, and the jury verdict was vacated.

[00:31:45] Speaker 02:
In laser dynamics, they found there was no pre verdict challenge, but again, they vacated the damages award.

[00:31:50] Speaker 02:
So we don't think that's a conclusion.

[00:31:52] Speaker 02:
We filed a Rule 58 motion challenging the sufficiency.

[00:31:55] Speaker 02:
So we think we've preserved another fourth circuit law.

[00:31:58] Speaker 02:
If there's any other questions.

[00:32:00] Speaker 00:
No, I think you're out of time anyway.

[00:32:01] Speaker 00:
Great.

[00:32:02] Speaker 00:
Thank you.

[00:32:02] Speaker 02:
One second.

[00:32:04] Speaker 00:
Thank you.

[00:32:39] Speaker ?:
Okay.