[00:00:00] Speaker 00:
Argument this morning is 181276, spinology versus right medical technology.

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

[00:00:34] Speaker 03:
Good morning.

[00:00:35] Speaker 03:
Good morning, Your Honors.

[00:00:36] Speaker 03:
May it please the Court, Anthony Fitzpatrick on behalf of the Appellate of Right Medical Technology.

[00:00:42] Speaker 03:
Your Honors, the district court abused its discretion in this case when it denied right medical's motion for exceptional case and attorney's fees.

[00:00:52] Speaker 00:
How is this different than all other cases?

[00:00:55] Speaker 03:
It's different than all other cases when one looks at the totality of the circumstances here.

[00:01:00] Speaker 03:
First of all, it's a circumstance where

[00:01:04] Speaker 03:
the plaintiff admittedly filed its case without a full proper pre-suit investigation.

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This was a situation where the parties had a prior relationship back in 2006.

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They had discussed a potential supply agreement whereby the plaintiff would supply the product.

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They couldn't reach agreement and so Wright purchased a limited number of the product from the plaintiff, then subsequently

[00:01:34] Speaker 03:
redesigned the product, acquired it from a different manufacturer.

[00:01:38] Speaker 03:
And the plaintiff then was upset when they learned about that.

[00:01:41] Speaker 02:
OK, but you've read our opinion on the merits, obviously.

[00:01:45] Speaker 03:
Yes.

[00:01:46] Speaker 02:
And do you disagree that their position about infringement was a reasonable one?

[00:01:55] Speaker 03:
Yes.

[00:01:56] Speaker 03:
We would submit that their position was not reasonable.

[00:01:59] Speaker 03:
Because?

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Because the

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The claim construction position, we submit, was not a tenable claim construction position.

[00:02:08] Speaker 03:
It was a claim construction position that they concocted because they filed this lawsuit because they contended that we copied their product, not because they had done a proper investigation.

[00:02:18] Speaker 02:
Could we say in the Merritt's decision that it was unreasonable?

[00:02:22] Speaker 03:
The Merritt's decision does not say that it was an unreasonable claim construction position.

[00:02:28] Speaker 03:
But I would submit the district court said

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this claim construction is contrary to, inconsistent with the claim language and the specification.

[00:02:40] Speaker 02:
Yeah, it was wrong.

[00:02:41] Speaker 02:
That's what you don't get at attorney's fees because someone was wrong.

[00:02:45] Speaker 03:
No.

[00:02:45] Speaker 03:
But this is a circumstance where it's not just the claim construction.

[00:02:51] Speaker 01:
Well, in fact, the district court didn't adopt your claim construction either.

[00:02:54] Speaker 01:
District court said you both got it wrong and adopted an entirely different construction.

[00:02:58] Speaker 03:
Well, I would submit, Your Honor, when you look at the district court decision, what the district court said in the Markman decision was, I don't think I need to construe this body claim term at this time.

[00:03:09] Speaker 03:
However, there are several pages of discussion in the Markman decision about the claim term.

[00:03:15] Speaker 03:
And the district court specifically says, I find the claim language of the independent claim and the dependent claims illustrative.

[00:03:23] Speaker 03:
And the district court went through the dependent claims, which the plaintiff said, you shouldn't do.

[00:03:29] Speaker 03:
You shouldn't look at the dependent claims.

[00:03:31] Speaker 01:
Did the district court reject your claim construction?

[00:03:33] Speaker 03:
The district court said, at that time, I'm not going to adopt either.

[00:03:38] Speaker 03:
Did he later adopt yours?

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Subsequently, yes.

[00:03:42] Speaker 00:
In summary judgment.

[00:03:43] Speaker 03:
At the summary judgment stage, she did.

[00:03:45] Speaker 00:
Yes, but there was no definitive ruling upon which the other side could rely.

[00:03:50] Speaker 00:
I mean, part of your argument for fees deals with damages issues, which were never even pressed or reached by the district court.

[00:04:01] Speaker 00:
And correct.

[00:04:03] Speaker 00:
Correct.

[00:04:04] Speaker 00:
So how would you evaluate it?

[00:04:05] Speaker 00:
I mean, some district courts have observed that under this attorneys' fees thing, lessively,

[00:04:11] Speaker 00:
They get rid of some cases early on summary judgment or motions to dismiss.

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And then they get hit with an attorney's fees request that requires, essentially, for them to litigate the entirety of the case from beginning to end in order to assess it.

[00:04:26] Speaker 00:
Is that your view of how the system is supposed to be working?

[00:04:29] Speaker 03:
Well, in this case, what happened was the case did get all the way to the end.

[00:04:36] Speaker 03:
So everything was litigated.

[00:04:38] Speaker 03:
We went all the way through the back end.

[00:04:39] Speaker 02:
Wait, wait, wait.

[00:04:40] Speaker 02:
The damages weren't litigated.

[00:04:42] Speaker 03:
It was litigated in the sense that there was fact discovery about it, there was expert discovery about it, and we filed a very detailed Daubert motion challenging their damages expert.

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But the court never reached it.

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And we submit that's part of the issue with respect to the totality of the circumstances.

[00:05:02] Speaker 03:
Octane Fitness says the district court has to exercise its discretion looking at the totality of the circumstances, and our position here is

[00:05:10] Speaker 03:
The judge did not look at the totality of the circumstances, and that's the error.

[00:05:13] Speaker 02:
The totality of the circumstances include every issue that was the subject of discovery, even though it wasn't ever resolved by the district court, or even addressed by the district court.

[00:05:23] Speaker 03:
But we would contend that that has to be looked at in this situation.

[00:05:28] Speaker 00:
In this situation, you have a- So we have to, more or less, adjudicate the merits of these claims, even though they were never adjudicated below, right?

[00:05:38] Speaker 03:
agreed, but the issue is they had to be litigated.

[00:05:44] Speaker 03:
We had to spend, our clients spent more than a million dollars litigating these issues.

[00:05:50] Speaker 01:
Yes, but do you see the absurdity in your request and why we may be disinclined to adopt as a rule of law that the district court is hellbound to basically resolve on the merits every issue all the way through damages

[00:06:05] Speaker 01:
even if he resolves the case at the early stage because you had to have discovery on it or you had to have expert declarations on it or even though he or she never looked at any of those and it never even reached semi-summary judgment on damages, you nonetheless want us to instruct district courts that we know you love patent cases so much that even when you resolve them early, we're gonna force you to resolve every single issue from start to finish that could have arisen

[00:06:34] Speaker 01:
in the context of assessing attorney's fees.

[00:06:36] Speaker 01:
To see why we may have just a tiny bit of reticence to go the way you're requesting.

[00:06:39] Speaker 03:
I understand the concern.

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I truly understand the concern.

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I would submit that this case is unusual, and I would submit exceptional, for the following reason.

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This is a situation where all of this ties together.

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All of these circumstances tie together.

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You have a plaintiff that's angry.

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They're upset.

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they think we copied their product.

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So they look around for a cause of action to assert.

[00:07:05] Speaker 03:
Aha!

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We've got a patent.

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We'll sue them for patent infringement.

[00:07:08] Speaker 03:
They don't do the proper pre-suit analysis.

[00:07:10] Speaker 02:
Then they submit... Suppose we were to adopt a rule that says totality of the circumstances does not include

[00:07:17] Speaker 02:
resolving issues that weren't presented to the district court.

[00:07:22] Speaker 02:
Would that be an appropriate approach to this?

[00:07:25] Speaker 03:
Perhaps.

[00:07:26] Speaker 03:
But in this case, the damages issue, for example, was presented to the district court.

[00:07:30] Speaker 03:
All of these issues were presented.

[00:07:31] Speaker 02:
How was it presented to the district court?

[00:07:33] Speaker 03:
By our Daubert motion.

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And this ties back, because the damages they were seeking, they specifically

[00:07:42] Speaker 03:
concocted a damages theory to seek damages for the bridge.

[00:07:46] Speaker 02:
Do you have to use words like concocted, really?

[00:07:48] Speaker 02:
I mean, come on.

[00:07:50] Speaker 02:
But Your Honor, if you know misrepresented, concocted, you know, you don't have to argue the case that way.

[00:07:56] Speaker 03:
Well, if I may, Your Honor, the damages case, they were seeking lost profits damages under the patent law.

[00:08:03] Speaker 03:
But the damages they were seeking were specifically the amount that they would have made under this contract that the parties never entered into.

[00:08:13] Speaker 03:
And their damages expert admitted he didn't have a single legal authority to support that position.

[00:08:17] Speaker 01:
Can I get you to go back to your pre-suit investigation?

[00:08:19] Speaker 01:
Is that OK to say?

[00:08:21] Speaker 01:
OK.

[00:08:21] Speaker 01:
Pre-suit investigation issue.

[00:08:23] Speaker 01:
So I see this sprinkled throughout your gray brief, in particular on pages five and six.

[00:08:27] Speaker 01:
Where in your blue brief did you make this argument?

[00:08:31] Speaker 01:
About whether or not spinology compared the extreme with the any claims of the 757, which has different claims than the what aid aid.

[00:08:41] Speaker 01:
Where did you make that argument about it?

[00:08:43] Speaker 03:
I think that it's in the reply brief principally because of the admission that the plaintiff makes in its brief.

[00:08:49] Speaker 03:
It makes an admission directly on page 4 of its brief that the allegation of infringement was based upon the fact that they had – that we had allegedly copied their product.

[00:09:01] Speaker 00:
Well, wait a minute.

[00:09:02] Speaker 00:
But we're talking about – if something comes up the first time on an appeal brief

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We're reviewing the district court for an abuse of discretion.

[00:09:10] Speaker 00:
She wasn't privy or he wasn't privy to this information.

[00:09:14] Speaker 00:
So we're supposed to count what they say here as influencing our analysis of whether she abused her discretion or not.

[00:09:23] Speaker 03:
This was also litigated and this was addressed in the briefing on the attorney's fees motion in the.

[00:09:28] Speaker 03:
Well, then it should have been in blue, right?

[00:09:30] Speaker 01:
So do you agree that nowhere in your blue brief did you raise the precinct investigation?

[00:09:38] Speaker 03:
If I may, Your Honor.

[00:09:39] Speaker 01:
Because you almost, you led with it here today.

[00:09:41] Speaker 01:
You kind of led with, this began because they didn't conduct an adequate pre-suit investigation, but I didn't see that argument in your blue brief.

[00:09:48] Speaker 01:
I saw it in your gray brief, but I didn't see it in your blue brief.

[00:09:50] Speaker 01:
Well, we certainly are.

[00:09:51] Speaker 01:
I'm wondering if you waived it.

[00:09:53] Speaker 03:
I don't believe we waived it, Your Honor.

[00:09:54] Speaker 01:
Well, show me where it is in blue.

[00:09:56] Speaker 03:
Certainly, in our opening brief, we argued that they had a litigation position that didn't have merit.

[00:10:02] Speaker 03:
That's at page five of our blue brief.

[00:10:06] Speaker 01:
And I think... Page five of your blue drape.

[00:10:08] Speaker 01:
Let's see.

[00:10:10] Speaker 01:
Sponology had a litigation condition that had objectively no merit.

[00:10:15] Speaker 01:
It should have been evident from the outset, just found... That is an argument by you that they didn't conduct a pre-suit investigation?

[00:10:25] Speaker 03:
Well, again... It's not.

[00:10:27] Speaker 01:
It's not an argument by you that they didn't conduct a pre-suit investigation, no matter how liberally I interpret it.

[00:10:33] Speaker 01:
I mean, I'm not sure what to do with that, but to conclude, you waived it.

[00:10:36] Speaker 03:
Well, again, Your Honor, if I may, the key is, I would submit, that they admitted that they sued us because they believed that we had copied their product.

[00:10:47] Speaker 02:
What's the matter with that?

[00:10:48] Speaker 02:
If the product is covered by the patent, you copied the product.

[00:10:53] Speaker 02:
Why isn't that sufficient?

[00:10:54] Speaker 03:
So what they say in their brief is that they relied upon

[00:11:02] Speaker 03:
the fact that their product was marked with the 188 patent number.

[00:11:06] Speaker 03:
But the 188 patent was a question.

[00:11:09] Speaker 02:
That's a limitation on the damages.

[00:11:12] Speaker 02:
I'm asking you, is it in terms of pre-suit investigation, if somebody copies a patented product, why isn't that a basis for selling?

[00:11:21] Speaker 02:
I mean, what are you talking about?

[00:11:22] Speaker 03:
But so if I may, Your Honor, that's not that 188 patent

[00:11:28] Speaker 03:
was not the patent that they asserted against us.

[00:11:30] Speaker 02:
That's the original patent.

[00:11:31] Speaker 02:
They concluded that their product was covered by this patent that we're talking about here, that you copied the product, and that they sued.

[00:11:39] Speaker 02:
What's the matter with that?

[00:11:41] Speaker 03:
Under normal circumstances, I'm not sure that there would be a problem with that.

[00:11:44] Speaker 03:
But in this situation, even their own product wasn't covered by the patent.

[00:11:48] Speaker 03:
Why don't we hear from the other side, Joe, in theory?

[00:12:06] Speaker 04:
Good afternoon, Randall Scar for Spynology.

[00:12:12] Speaker 04:
I'll start with the pre-suit due diligence.

[00:12:14] Speaker 04:
I think that's kind of an interesting issue here.

[00:12:17] Speaker 04:
I did it myself on the trial art.

[00:12:20] Speaker 04:
I determined which claims to assert.

[00:12:23] Speaker 04:
And we went through every claim limitation and did our claim construction and decided these were the ones we needed.

[00:12:29] Speaker 00:
Well, you're not testifying here, right?

[00:12:30] Speaker 04:
No, I'm just saying.

[00:12:31] Speaker 04:
I mean, because it's not an issue.

[00:12:33] Speaker 04:
Really I don't think I just want to let you know that it was done.

[00:12:36] Speaker 04:
I mean this wasn't done.

[00:12:38] Speaker 04:
It wasn't done because it was necessarily a copy.

[00:12:40] Speaker 04:
It was because it was done because it met all the claim limitations.

[00:12:44] Speaker 01:
Well just to be clear they allege that you conceded that you didn't compare the extreme with any claim limitation of the 757 path.

[00:12:51] Speaker 04:
I can't imagine where that admission came from.

[00:12:53] Speaker 04:
I have no idea.

[00:12:54] Speaker 04:
It's not true.

[00:12:55] Speaker 04:
We did.

[00:12:57] Speaker 04:
I think it's because we addressed the fact that that it was a copy was our primary

[00:13:02] Speaker 04:
argument in our brief, but in fact, not knowing this was an issue, we did it.

[00:13:09] Speaker 04:
It was part of the due diligence.

[00:13:11] Speaker 04:
And this case came down to a single claim term.

[00:13:14] Speaker 04:
It came down to body.

[00:13:16] Speaker 04:
And it's one of those difficult cases where body is not defined directly by the patent specification.

[00:13:23] Speaker 04:
We interpreted it to mean the shaft.

[00:13:25] Speaker 04:
District court disagreed, and we lost.

[00:13:27] Speaker 04:
And I think it's that simple.

[00:13:29] Speaker 04:
know, there was nothing extraordinary about this case.

[00:13:32] Speaker 04:
I've been doing it for 30 years.

[00:13:33] Speaker 04:
This is what happens.

[00:13:34] Speaker 04:
You lose client construction, you lose your case.

[00:13:37] Speaker 04:
And we appealed at the velocity of field.

[00:13:41] Speaker 04:
I'm not sure where the exceptional

[00:13:44] Speaker 04:
part of this case is.

[00:13:45] Speaker 01:
Well, what do you think about opposing counsel's argument that the district court and we should evaluate things that weren't actually litigated to any sort of resolution in order to figure out whether attorney's fees are warranted, like the damages theory you may or may not have presented below that the court didn't reach?

[00:14:06] Speaker 04:
We briefed the Daubert on the damage case, but there's nothing

[00:14:11] Speaker 04:
cod water damage theory.

[00:14:13] Speaker 04:
I don't think, since the court didn't actually reach a conclusion about it, I don't know how we... Did the court resolve the Daubert issue?

[00:14:20] Speaker 04:
No.

[00:14:21] Speaker 04:
It came to infringement and stopped.

[00:14:24] Speaker 01:
But as a matter of sort of law,

[00:14:27] Speaker 01:
process for us, do you think we ought to instruct the district courts that they are bound to sort of resolve all of those issues they didn't resolve in order to assess whether you were making reasonable claims in them as part and parcel of an attorney's fees case?

[00:14:44] Speaker 04:
It seemed to me to be an awful burden on the district court, David.

[00:14:47] Speaker 01:
And it would seem to be quite invasive into their control over their normal trial practice.

[00:14:52] Speaker 01:
I agree with that.

[00:14:54] Speaker 04:
Our damage theory was based on

[00:14:56] Speaker 04:
the sale we made.

[00:14:58] Speaker 01:
I don't know that you need to go through it.

[00:15:01] Speaker 04:
Thank you.

[00:15:08] Speaker 03:
If I may make just one point, Your Honors.

[00:15:11] Speaker 03:
With respect to this question of what factors or issues a district court ought to consider, octane fitness, the standard in octane fitness does specifically speak about

[00:15:24] Speaker 03:
a case that stands out from others with respect to substantive strength of a party's litigating position or the unreasonable manner in which the case was litigated.

[00:15:34] Speaker 03:
And so I understand the concern about practicality in terms of the scope of what a district court would have to consider.

[00:15:43] Speaker 03:
But the Supreme Court's decision, the holding specifically, includes consideration of whether or not the manner in which the case was litigated was reasonable or not.

[00:15:55] Speaker 03:
And we would contend for the reasons I've explained that really the litigation, the approach of the plaintiff in litigating this case was not reasonable.

[00:16:05] Speaker 03:
They did several things in the course of the case that we would submit were not reasonable.

[00:16:13] Speaker 03:
They misrepresented in the course of claim construction figures from the patent in an attempt to shoehorn their claim construction in.

[00:16:25] Speaker 03:
They disregarded their own documents and evidence that were inconsistent with their infringement position.

[00:16:30] Speaker 03:
They advanced these damages arguments, as I say, which were directly contrary to established law.

[00:16:39] Speaker 03:
And they made a last-ditch attempt to support their infringement position with not their engineering expert, but a physician expert having him in his deposition on the fly do measurements to try to support their

[00:16:53] Speaker 03:
their infringement position, and only withdrew those after we filed a Daubert motion against that expert.

[00:17:01] Speaker 03:
So again, as I say, I recognize the practical concerns, but in this case, given the continuum from the filing all the way through to the end, this case was not litigated reasonably.

[00:17:14] Speaker 03:
And that's a basis.

[00:17:16] Speaker 03:
Attorney, please.

[00:17:17] Speaker 00:
Thank you.

[00:17:17] Speaker 00:
We thank both sides.

[00:17:18] Speaker 00:
The case is submitted.

[00:17:19] Speaker 00:
That concludes our proceeding for this meeting.