[00:00:08] Speaker 01:
Whenever you're ready.

[00:00:09] Speaker 00:
May it please the court, James Ferguson on behalf of Cooke Medical.

[00:00:13] Speaker 00:
In the proceedings below, Cooke argued that Respondent's litigating position stood out as extraordinarily weak in two fundamental ways.

[00:00:23] Speaker 00:
The first related to the weakness of patent claims.

[00:00:26] Speaker 00:
The second related to the weakness of the foreign choice.

[00:00:30] Speaker 00:
In making these arguments, Cooke relied on facts that were all undisputed.

[00:00:35] Speaker 00:
They were undisputed in the district court,

[00:00:38] Speaker 00:
they were undisputed on appeal.

[00:00:40] Speaker 00:
In the case of the patent claims, for example, it is undisputed that the inventor admitted at his deposition that he had copied from a Cook device the very element that he had cited to the PTO to establish novelty and to overcome two prior rejections on obviousness grounds.

[00:00:59] Speaker 00:
It is also undisputed that five pieces of prior art that Cook had cited early in the litigation

[00:01:07] Speaker 00:
each fully disclosed.

[00:01:08] Speaker 03:
When you say cited early in the litigation, you mean principally Leslie amidst a welter of other invalidity contentions that didn't even meet the local rules of specifying precisely what combinations fit which elements?

[00:01:32] Speaker 00:
Most respectfully, Your Honor, I would not characterize it that way.

[00:01:36] Speaker 00:
The welter of other references that we cited related to other limitations in the patent.

[00:01:44] Speaker 00:
With respect to the sheath movement element, we cited five references.

[00:01:49] Speaker 00:
We specifically identified those references.

[00:01:51] Speaker 00:
We specifically recited the prosecution history.

[00:01:55] Speaker 00:
And these were the same references that the PTAB relied on in granting our petition.

[00:02:00] Speaker 00:
So yes, they did include Leslie.

[00:02:02] Speaker 00:
And yes, they did include the other four.

[00:02:04] Speaker 00:
And there is no dispute.

[00:02:06] Speaker 03:
So kind of at the heart, as I read it, of Judge McKinney's opinion is this idea that if this is so darn clear, you really have an obligation to isolate the key thing, Leslie and the other parts, either or both, file a summary judgment motion or ask for permission to do so.

[00:02:32] Speaker 03:
or at least send a notice to the other side and say, this patent assertion is ridiculous on this very particular ground, and if you continue, you're going to be in trouble.

[00:02:48] Speaker 03:
And there was none of that.

[00:02:50] Speaker 00:
I think I agree with you that there is that theme in Judge McKinney's opinion.

[00:02:55] Speaker 00:
In order to understand the litigation realities that we were facing, it's important to put it in context.

[00:03:02] Speaker 03:
we recognize at particularly after the inventors deposition well this is in january right january of twenty sixty minutes deposition was jim and this was after you had done all the work to compile your invalidity contention that's correct you're almost earlier and after you had filed uh... claim construction proposals for twenty five claims which eventually withdrew most of

[00:03:29] Speaker 03:
If it was so obvious upon looking at this patent that if you take what's it Sugita, is that what it is?

[00:03:37] Speaker 00:
Correct.

[00:03:37] Speaker 03:
Sugita and then and Leslie or the, or the other things, um, why did you not make that very simple point either through a request to file a summary judgment motion?

[00:03:53] Speaker 03:
or at least in a letter to the other side so that it could focus on what you had decided was so compellingly clear that it was objectively unreasonable to proceed.

[00:04:05] Speaker 00:
Let me preface my answer by saying it was objectively clear that it was invalid, and the most compelling proof of that was their decision to cancel their patent rather than submit it to merit's determination before the PTAT.

[00:04:18] Speaker 00:
There's no question the patent was invalid.

[00:04:21] Speaker 00:
now here are the litigation realities we face we had a pending motion to transfer before the texas court that went undecided for ten months how many times did you have to go down to eastern district i had to go down to appear in court so what's the deal what i'm hoping to see litigation was not stopping right no litigation and all of them i've been perfectly transferable to to india of course

[00:04:51] Speaker 00:
But my point is that we had the pending motion to transfer before the court for 10 months.

[00:04:57] Speaker 00:
So when we're faced with the question, what is the pathway that is going to get us out most quickly from this litigation, given the compelling evidence of invalidity, the answer that did not seem to us would be to file an early summary judgment motion when there was a pending motion to transfer before the district court in Texas.

[00:05:17] Speaker 02:
But follow up on Judge Toronto's question to you.

[00:05:22] Speaker 02:
I practiced law for 20 years.

[00:05:25] Speaker 02:
I routinely would write to opposing counsel and say, say I've got your complaint here and you're missing an element.

[00:05:33] Speaker 02:
Here's the Supreme Court, state Supreme Court case that says you need that element.

[00:05:38] Speaker 02:
Why don't you just drop it so that we don't have to waste money on both sides?

[00:05:43] Speaker 02:
And by the way, if you don't, I'll attach this letter as an exhibit to my motion for attorney's fees.

[00:05:50] Speaker 00:
Because neither the Rule 11 nor the early summary judgment was going to give us an early exit.

[00:05:57] Speaker 00:
The district court in Texas... Why?

[00:06:00] Speaker 00:
Because the district court in Texas had a pending motion to transfer.

[00:06:05] Speaker 00:
So what?

[00:06:06] Speaker 00:
This court has directed the district courts to resolve the motion to transfer before it engages in any substantive decision making.

[00:06:14] Speaker 02:
But that doesn't mean that your opposing counsel can't take it and say, holy cow, and drop it.

[00:06:20] Speaker 00:
Well, let me... Was there communication?

[00:06:26] Speaker 00:
Well, there were communications, and we sent the prior art to them, and we sent the, I'm sorry, the prior art disclosures, even after we filed our petition with the PTAC in March, which laid out all of this.

[00:06:42] Speaker 00:
It resulted in no response from the other side.

[00:06:46] Speaker 00:
What we're arguing about here is litigation choices that we made, which the other side argues, and Judge McKinney apparently believed, showed that we really didn't believe that this patent was invalid.

[00:07:01] Speaker 00:
That's not true.

[00:07:02] Speaker 03:
Again.

[00:07:02] Speaker 03:
So one possibility, I'm not sure what Judge McKinney thought, one possibility is it took you rather a long time to figure out

[00:07:13] Speaker 03:
the invalidity rate, which tends, if that were the explanations, tends to suggest maybe it wasn't so glaringly obvious.

[00:07:22] Speaker 03:
Or maybe it was that you were using this as a test case to run up the costs so that you could ding the people that you're trying to get because you don't like the general practice of non-practicing entity litigation by these people or others.

[00:07:37] Speaker 03:
And there's some email that you included in December of 2016 suggesting

[00:07:43] Speaker 03:
that there may be other anyway.

[00:07:50] Speaker 00:
First, Your Honor, let me make very clear.

[00:07:52] Speaker 00:
my client had no interest in running up the cost.

[00:07:55] Speaker 00:
I'm not sure what email you're referring to.

[00:07:57] Speaker 03:
This is the email on page 1717 of the appendix when you said, we need to have you in the PTO seek an adverse judgment in the IPR.

[00:08:12] Speaker 03:
And I'm not going to seek you checks.

[00:08:14] Speaker 03:
I'm not going to elaborate on the reasons.

[00:08:17] Speaker 03:
Cook declines to share with SBI its strategic reasons for invalidating the patent, other than to note Cook's obvious interest in deterring other NPEs from filing baseless suits against Cook in the future.

[00:08:29] Speaker 03:
This is why Google, Hewlett Packard, and other major corporations require patent invalidation as a condition of IPR settlement of NPEs.

[00:08:38] Speaker 03:
Yes.

[00:08:38] Speaker 03:
That's what I was referring to.

[00:08:40] Speaker 00:
And that refers to Cook's interest in deterring future frivolous claims by NPEs.

[00:08:45] Speaker 03:
Have you had discussions with Google and Hewlett-Packard and others about this practice?

[00:08:53] Speaker 00:
No, I haven't.

[00:08:54] Speaker 00:
I haven't had discussions that I can disclose about deterring this practice.

[00:09:01] Speaker 00:
Google is a client of our firm, and Google has insisted my understanding is- These are potential

[00:09:07] Speaker 03:
buyers in licenses from NPEs that are coordinating?

[00:09:15] Speaker 00:
No, there's no coordination.

[00:09:18] Speaker 00:
These are companies that have been sued in baseless suits by NPEs.

[00:09:22] Speaker 00:
They have an interest in deterring that practice.

[00:09:26] Speaker 00:
That was our interest.

[00:09:27] Speaker 00:
We had no interest in running up the fees and indeed that was precisely why we chose the IPR route.

[00:09:33] Speaker 03:
Let me return to your- Why did you choose not to do what Judge Wallach was suggesting?

[00:09:39] Speaker 03:
Because- That is, you look at this patent, it may be- I mean, if you think you're talking to your own people, Cooke, and Cooke- I don't know how long it took Cooke to find the right time of its- time period for its basket, maybe not much at all.

[00:09:55] Speaker 03:
Why don't- and how long it took you to look at Leslie?

[00:09:58] Speaker 03:
There aren't that many patents listed on the-

[00:10:01] Speaker 03:
front of leslie's you know is it's an extraordinary piece of prior work it was issued three weeks before this patent or something and when you write to the other side and say we don't need to go through all this in that invalidity contention we don't need to do all this claim construction we don't need to go through the IPR or tell us why we're wrong in thinking this is glaringly obvious because it was our judgment that that was not going to lead to to the result we were seeking which was an early exit what would have been the harm

[00:10:30] Speaker 00:
There wouldn't have been a harm, but it wouldn't have been likely to achieve the early exit that we wanted.

[00:10:35] Speaker 00:
And it certainly did not reflect our view that this prior art was not compelling.

[00:10:41] Speaker 00:
You just acknowledged, Your Honor, that this was a compelling piece of prior art, among many others, let alone the admissions of the patentee, I'm sorry, the inventor in his deposition.

[00:10:52] Speaker 00:
Yes?

[00:10:53] Speaker 00:
To whom was that email directed?

[00:10:56] Speaker 02:
I'm sorry, Your Honor.

[00:11:00] Speaker 02:
1717 email in the record.

[00:11:04] Speaker 02:
It's 1717, 25 October 2016.

[00:11:08] Speaker 00:
Was it to Mr. Salmon?

[00:11:09] Speaker 00:
It says Al.

[00:11:11] Speaker 00:
Oh, it was to the SBI lawyers.

[00:11:15] Speaker 03:
Salmon was on it.

[00:11:17] Speaker 00:
Mr. Salmon was copied.

[00:11:20] Speaker 02:
Well, it seems to me that that's more or less the kind of letter I was talking about.

[00:11:25] Speaker 02:
I mean, it's not real friendly, but...

[00:11:29] Speaker 00:
I understand.

[00:11:31] Speaker 00:
And maybe we could have written a letter, but my professional judgment that it would have resulted in the exit.

[00:11:36] Speaker 02:
Well, what I'm saying is that email is sort of the kind of communication I'm talking about.

[00:11:42] Speaker 02:
That is, it says, we're not friends, but I'm telling you, if you don't drop this, in fact, you say, if you don't accept our settlement, then you're going to be sorry.

[00:11:57] Speaker 02:
I recognize that.

[00:11:58] Speaker 00:
I recognize that.

[00:11:59] Speaker 03:
let me return since it came very late and it did and the proceedings ended about six weeks later yes yes the proceedings ended six weeks six weeks later so why didn't you send something like that before?

[00:12:15] Speaker 00:
I didn't think it would produce the result we were likely to see and I think the proof of the pudding is even when we filed the PTAB petition laying everything out Leslie the inventor's deposition it didn't deter them from continuing in the litigation

[00:12:29] Speaker 00:
I can return to the motion transfer that was before the Texas court.

[00:12:35] Speaker 01:
They agreed there was an unopposed motion to stay pending the transfer.

[00:12:40] Speaker 00:
When did they agree?

[00:12:42] Speaker 01:
Well, ED Texas, they transferred it on March 28.

[00:12:50] Speaker 01:
And then there was a motion.

[00:12:54] Speaker 01:
The parties jointly moved to stay in June.

[00:12:59] Speaker 01:
right.

[00:13:00] Speaker 01:
Correct.

[00:13:02] Speaker 03:
Okay.

[00:13:02] Speaker 03:
Can I ask you a factual question?

[00:13:03] Speaker 03:
Sure.

[00:13:06] Speaker 03:
Leslie, was that provided to the examiner by Dr. Dinser or whoever was prosecuting the application or was that something that the examiner came up with and added?

[00:13:24] Speaker 03:
I haven't been able to find online the prosecution history.

[00:13:28] Speaker 00:
I don't recall

[00:13:29] Speaker 00:
I don't recall whether the examiner found it or whether it was provided by the applicant during the prosecution history.

[00:13:36] Speaker 00:
The prosecution history is extremely telling on that point though, Your Honor, because Leslie became relevant for our purposes only after the applicant added the sheath movement element to overcome the two prior rejections.

[00:13:54] Speaker 00:
In other words, when it was

[00:13:57] Speaker 00:
whether it was provided by the applicant or the examiner had discovered it, that was just as an example of a prior device in this field.

[00:14:06] Speaker 00:
Once the applicant added the sheath movement element and then persuaded the examiner that the sheath movement element conferred novelty on the invention, the applicant had an affirmative obligation to disclose that back to Leslie, particularly since we now know

[00:14:26] Speaker 00:
that the applicant had actually copied the same element from a cook device.

[00:14:32] Speaker 00:
He made no such disclosure.

[00:14:34] Speaker 00:
So the argument that Judge McKinney relied on, that this was one of these references was before the prior art, the record conclusively shows that the examiner never considered it from the standpoint of this chief movement element because the applicant had violated his duty of cantor.

[00:14:56] Speaker 00:
One other point I want to make.

[00:14:58] Speaker 03:
So just tell me if I'm wrong in understanding literally what happened.

[00:15:02] Speaker 03:
The only basis for the colloquy, the back and forth between the examiner and the applicant, was Sugita.

[00:15:12] Speaker 03:
Do I have that name right?

[00:15:13] Speaker 00:
You do.

[00:15:13] Speaker 03:
OK.

[00:15:15] Speaker 03:
And Sugita, the applicant said, that doesn't have the sheath moving.

[00:15:20] Speaker 03:
It has the wire moving.

[00:15:22] Speaker 03:
And as far as I can tell, that's true.

[00:15:28] Speaker 03:
there was never any discussion, even an assertion, though I suppose it might be.

[00:15:35] Speaker 03:
There was never any affirmative assertion.

[00:15:37] Speaker 03:
You can't find a moving sheath over a wire in any prior art.

[00:15:41] Speaker 03:
The discussion was entirely about sukkita, in which the applicant's grounded distinction not only was correct, but was adopted by the examiner by allowing insertion of new language into the... That's correct.

[00:15:56] Speaker 00:
That's correct.

[00:15:57] Speaker 00:
For your purposes, that exchange appears in the appendix of 1446-1447.

[00:16:03] Speaker 01:
Did you have one final point?

[00:16:08] Speaker 01:
I mean, your time has expired.

[00:16:10] Speaker 00:
Yeah.

[00:16:11] Speaker 00:
This case raises an issue that transcends the facts, transcends the parties.

[00:16:18] Speaker 00:
And that is, to what extent should individuals in the position of Messrs.

[00:16:23] Speaker 00:
Mitri and Salmon be held accountable

[00:16:26] Speaker 00:
for baseless litigation that they file across the country.

[00:16:32] Speaker 01:
Thank you.

[00:16:33] Speaker 01:
Thank you.

[00:16:42] Speaker 01:
Ready?

[00:16:45] Speaker 04:
May it please the Court.

[00:16:47] Speaker 04:
My friend addresses what he says was the litigation context that he's facing, but he doesn't properly place that context

[00:16:56] Speaker 04:
into the legal context that governs these matters.

[00:17:00] Speaker 04:
With respect to the idea of a letter or Rule 11 activity, Rule 11 requires that Rule 11 motions be made as soon as practicable, as early as possible in the process.

[00:17:15] Speaker 04:
And the whole point of that requirement is to avoid situations, like my friend says, are present here.

[00:17:25] Speaker 04:
Had he done

[00:17:26] Speaker 04:
what Rule 11 requires of a party who believes what he says he believed, he would have taken action immediately to submit a safe harbor motion.

[00:17:39] Speaker 03:
So what is your response to his statement, I think, that it was pretty reasonable for him to conclude that that would have been pointless since, among other things, you didn't cease the proceedings when presumably

[00:17:56] Speaker 03:
You saw Dr. Dinza at his deposition give the answers that he gave.

[00:18:02] Speaker 04:
So we disagree very strongly with that, Judge Toronto.

[00:18:05] Speaker 04:
There's a big difference between what happens when issues are being litigated on their merits, when parties are expressing their competing views, and when one officer of the court tells another that a claim falls so far below the standard that it should be dropped immediately.

[00:18:25] Speaker 04:
Now,

[00:18:26] Speaker 04:
If counsel were to have said that this case is frivolous, this case falls below that standard in a letter, as Judge Wallick suggested, or in a safe harbor motion, as required by Rule 11b, that creates a very different context than the ordinary interaction of litigation where parties exchange positions and fight about them.

[00:18:50] Speaker 02:
Go ahead.

[00:18:51] Speaker 02:
Mr. Mitty and Salmon, is that right?

[00:18:54] Speaker 04:
Mitry and Salmon, Your Honor.

[00:18:56] Speaker 02:
Are they officers of the court?

[00:18:59] Speaker 04:
They're both lawyers.

[00:19:01] Speaker 04:
They're not practicing at this point, Your Honor.

[00:19:04] Speaker 04:
Are they licensed?

[00:19:06] Speaker 04:
I don't know the current status of their licenses, but certainly in the past they have been licensed.

[00:19:13] Speaker 02:
So they have a pattern of conduct across the United States for which the appellate makes pretty good argument, don't they?

[00:19:25] Speaker 04:
Well, Your Honor, the evidence, the actual evidence of a pattern is that lawsuits have been filed.

[00:19:32] Speaker 02:
Without more, that's- Lawsuits have been filed by unique entities, each created to file that one lawsuit, and where attorney's fees are awarded, that one entity defaults.

[00:19:49] Speaker 02:
So that's not quite right, Your Honor.

[00:19:51] Speaker 02:
It's not.

[00:19:51] Speaker 02:
Have those entities paid those?

[00:19:54] Speaker 02:
those attorney's fees?

[00:19:56] Speaker 04:
The only evidence was that out of approximately 400 cases, there were two in which attorney's fees were ordered.

[00:20:04] Speaker 04:
And were those paid?

[00:20:06] Speaker 04:
I don't think there's anything in the record regarding that.

[00:20:09] Speaker 04:
One of those matters is active.

[00:20:11] Speaker 04:
The other was settled.

[00:20:14] Speaker 04:
But I don't think there was anything in the record.

[00:20:16] Speaker 04:
But Your Honor, with respect to the entities, I don't believe the number count supported the statement that you just made.

[00:20:22] Speaker 04:
I don't think the evidence was one case per entity.

[00:20:26] Speaker 04:
I don't believe that's in the record.

[00:20:28] Speaker 04:
I think the arithmetic is contrary to that.

[00:20:30] Speaker 04:
What is the arithmetic?

[00:20:31] Speaker 04:
What I recall is something on the order of a few dozen or a couple of dozen entities, and then the lawsuit count was much bigger.

[00:20:40] Speaker 02:
The number 57 sticks in my mind, but it's just popping in there.

[00:20:44] Speaker 04:
28 is the one in my mind, Your Honor, but I can't swear by that.

[00:20:48] Speaker 04:
So in other words, it wasn't one case per entity.

[00:20:51] Speaker 04:
That's not what happened.

[00:20:52] Speaker 04:
And of course, as Judge McKinney pointed out, there was no evidence that there was a pattern that should be of concern.

[00:21:01] Speaker 04:
The record showed only that lawsuits were filed, they weren't tried, and there were some defeats in some of the cases.

[00:21:09] Speaker 04:
But of course, as the Supreme Court... What do you mean?

[00:21:12] Speaker 03:
I thought that, how do you get some defeats without not, without trying at least something?

[00:21:18] Speaker 03:
Or do you mean literally go to a trial?

[00:21:20] Speaker 04:
What I meant, Your Honor, was defeats in the form of summary judgments, PTAB orders.

[00:21:26] Speaker 03:
I thought that there were a couple of invalidity rulings in that group of cases.

[00:21:33] Speaker 03:
No?

[00:21:33] Speaker 04:
There were some invalidity rulings.

[00:21:35] Speaker 04:
Yes, Your Honor.

[00:21:36] Speaker 04:
That's the kind of defeat I was speaking of.

[00:21:37] Speaker 04:
I didn't mean a trial defeat.

[00:21:39] Speaker 04:
The evidence was that there were no trials.

[00:21:41] Speaker 03:
So they went to the merits in at least some.

[00:21:43] Speaker 04:
Absolutely they did.

[00:21:44] Speaker 04:
And that's another distinguishing factor about this case.

[00:21:48] Speaker 04:
In the paradigm case,

[00:21:50] Speaker 04:
of nuisance value settlements, the pattern this Court has identified involves litigants who never test the merits of their claims, who, as in the New Age case, back down even though claim construction goes their way when it becomes clear that the adversary won't settle.

[00:22:08] Speaker 04:
That pattern is not present here.

[00:22:11] Speaker 04:
Indeed, to the contrary, the record shows the merits being contested, sometimes successfully, sometimes not.

[00:22:20] Speaker 04:
But in any event.

[00:22:21] Speaker 02:
Is that an obligatory for an attorney who purchases a patent to determine whether the patent was obtained by fraud?

[00:22:29] Speaker 04:
I think that's a case-by-case question, Your Honor.

[00:22:32] Speaker 04:
So for example, if a lawyer goes about buying a patent and he or she is aware of no facts suggesting fraud in the prosecution history, I don't think there's a duty to search for that absent a reason.

[00:22:47] Speaker 04:
Are these gentleman patent lawyers?

[00:22:49] Speaker 04:
Pardon me, Your Honor?

[00:22:50] Speaker 02:
Are these gentlemen patent lawyers?

[00:22:52] Speaker 04:
Yes, Your Honor.

[00:22:54] Speaker 04:
So if you have a situation where you're buying a patent, presumably one of the things that one might want to do in a given case is review the prosecution history.

[00:23:05] Speaker 04:
And in doing so, various things might come to one's attention.

[00:23:09] Speaker 04:
But the market for purchasing patents is very broad, and patents are purchased under different circumstances.

[00:23:17] Speaker 04:
It wouldn't necessarily be the case

[00:23:19] Speaker 04:
that in every instance, the diligence process would include a review of the prosecution history.

[00:23:27] Speaker 03:
Was one of the grounds, I don't remember in this case, the kind of lack of due diligence before bringing the suit that occurs in some other suits?

[00:23:41] Speaker 04:
That was not a particular point that was argued in this case, Your Honor?

[00:23:46] Speaker 03:
Because if I remember right, there's some evidence here of, let's call it, of due diligence, of looking into the bona fides of the patent, talking to the inventor.

[00:23:59] Speaker 04:
There is.

[00:23:59] Speaker 04:
That's right, Your Honor.

[00:24:01] Speaker 03:
So how does Leslie and Cook, Breyer, Art not jump out and scream there's a problem?

[00:24:11] Speaker 04:
Well, Your Honor, all of the art was before the examiner.

[00:24:14] Speaker 04:
So whatever might be said about a given piece of art or the art collectively, the fact of the matter is the art was known to the examiner and it was considered by the examiner.

[00:24:25] Speaker 04:
Now, in this context, whatever stands out, whatever comes to one's attention.

[00:24:30] Speaker 02:
Did the examiner know that the inventor copied that feature from Cook?

[00:24:35] Speaker 04:
So that's a disputed point, Your Honor.

[00:24:37] Speaker 04:
that whether the feature was copied.

[00:24:40] Speaker 02:
In the deposition, he seems to have said he did.

[00:24:42] Speaker 04:
Well, what he said was that the feature wasn't novel.

[00:24:46] Speaker 04:
Now, of course, that doesn't mean he copied the feature from Cook, and it doesn't mean that when the feature is combined with the other aspects of the invention, that it's necessarily invalidated.

[00:24:58] Speaker 03:
Did he say there are two features, one is a basket,

[00:25:05] Speaker 03:
And that, I guess I'm remembering, he said, I had the drawer use a Cooke model for the basket.

[00:25:13] Speaker 03:
But that's not actually the interesting feature here.

[00:25:15] Speaker 03:
The interesting feature is the movable sleeve over the wire.

[00:25:19] Speaker 03:
Did he say something about copying that from Cooke?

[00:25:21] Speaker 04:
Not that I recall, Your Honor.

[00:25:23] Speaker 04:
And what he said about the other feature, I believe that the way the record reads.

[00:25:27] Speaker 03:
The Cooke prior art does, in fact, have that feature, though.

[00:25:31] Speaker 04:
Yes, Your Honor.

[00:25:32] Speaker 04:
But Judge Wallach, I think what the record shows is

[00:25:35] Speaker 04:
that the inventor had the invention and turned to an artist.

[00:25:39] Speaker 04:
And the artist used the Cooke device for inspiration, illustration, explanation, rather than that the inventor had copied from Cooke.

[00:25:49] Speaker 04:
But on the other one, Judge Toronto.

[00:25:52] Speaker 02:
Who provided that Cooke patent to the artist for his inspiration or her inspiration?

[00:25:58] Speaker 04:
I don't remember that the record is clear on that point, Your Honor.

[00:26:01] Speaker 04:
And I'm not sure.

[00:26:03] Speaker 04:
But on the other issue, Your Honor, there was no suggestion that copying had taken place, that the testimony was simply.

[00:26:12] Speaker 03:
Do you know the answer to the question I asked your friend about?

[00:26:17] Speaker 03:
How did the Leslie patent get on the face of this patent, of your patent?

[00:26:26] Speaker 04:
I'm not recalling.

[00:26:26] Speaker 04:
I know there was a lengthy IDS that was provided, but I'm not sure, Your Honor.

[00:26:32] Speaker 04:
But the context we face here is that Judge McKinney was presented with a situation in which, as Judge Toronto was inquiring of my friend, there had not been specific identification of art.

[00:26:48] Speaker 04:
There had not been a claim that the case was frivolous.

[00:26:52] Speaker 04:
These issues had not been teed up.

[00:26:54] Speaker 04:
He took a look at those.

[00:26:56] Speaker 04:
Judge McKinney thoroughly evaluated the record.

[00:26:59] Speaker 04:
The standard of review is abuse of discretion.

[00:27:03] Speaker 04:
Judge McKinney's careful consideration does not involve an abuse.

[00:27:08] Speaker 04:
There's no suggestion of clearly erroneous fact finding.

[00:27:12] Speaker 04:
There's no suggestion that Judge McKinney otherwise abused his discretion.

[00:27:18] Speaker 04:
Now, one issue that underlies all of this and one particular failing by Cook is the notion that this was about a nuisance value settlement approach.

[00:27:29] Speaker 04:
The Court has seen this approach in other cases.

[00:27:34] Speaker 04:
Cook argued that this is an example of that.

[00:27:38] Speaker 04:
Judge McKinney considered the facts.

[00:27:41] Speaker 04:
He found the claim unproved.

[00:27:44] Speaker 04:
That finding by Judge McKinney, which was the foundation for just about everything that Cook says, is sufficient to support his determination.

[00:27:54] Speaker 04:
Now there was no evidence.

[00:27:56] Speaker 03:
That may be the foundation of just about everything that Cook says because they decided to use the general behavior of the people just behind SBI here as a principle argument.

[00:28:14] Speaker 03:
But that isn't the foundation of the two and a half pages or three pages in the fees motion about

[00:28:22] Speaker 03:
just how extraordinarily weak the validity defense is here.

[00:28:30] Speaker 04:
So the argument was made, Judge Toronto.

[00:28:32] Speaker 04:
But in the context of things, Judge McKinney evaluated that.

[00:28:38] Speaker 04:
And we have to consider the full context there.

[00:28:41] Speaker 04:
When it came time to defend the merits of the claim before the PTAB, and remember, this was, of course, just a preliminary patent-owner response.

[00:28:50] Speaker 04:
not necessarily the point at which all arguments would be martial.

[00:28:54] Speaker 02:
Did the filing before the PTAB indicate to the current patent holders that the patent might be frivolous?

[00:29:09] Speaker 04:
I wouldn't say that it did.

[00:29:10] Speaker 04:
And the argument that was made in response at the preliminary patent owner's stage shows that there was clearly a non-frivolous response.

[00:29:18] Speaker 04:
The response that was made at that stage, and of course... It's just the preamble.

[00:29:24] Speaker 04:
The preamble argument.

[00:29:25] Speaker 04:
That's the argument that was made.

[00:29:26] Speaker 03:
And that was that... What was that?

[00:29:30] Speaker 04:
That it doesn't... So the basic argument there is Sugita is not an endoscopic device.

[00:29:35] Speaker 03:
Right.

[00:29:36] Speaker 04:
Sugita is a catheter.

[00:29:37] Speaker 03:
But their petition was about lots of stuff besides Sugita.

[00:29:40] Speaker 04:
Well, it was, but that point, the point about the endoscopic device was made in response to the three arguments that succeeded.

[00:29:47] Speaker 04:
to each of them.

[00:29:49] Speaker 04:
And that argument was well-founded.

[00:29:51] Speaker 04:
There hasn't been a specific argument by Cook that there was something that fell below the bar in the argument that was made at the preliminary response stage.

[00:30:01] Speaker 04:
The argument was well-founded based on the characteristics of Seguida.

[00:30:05] Speaker 04:
It was well-founded based on what the preamble says.

[00:30:10] Speaker 04:
And the argument that the preamble was limiting was also reasonable.

[00:30:15] Speaker 04:
And there's no suggestion that that argument was frivolous.

[00:30:20] Speaker 04:
And if there were such a suggestion, it wouldn't be well taken.

[00:30:25] Speaker 04:
So when we come to even the point at which a preliminary position was to be taken, SBI marshaled a clearly non-frivolous response to the arguments that were being made.

[00:30:39] Speaker 04:
Now, the argument didn't succeed.

[00:30:42] Speaker 04:
As we've been told many times by this Court and by the Supreme Court, simply losing is not enough.

[00:30:50] Speaker 03:
And do we have in the Joint Appendix the preliminary response of the patent owner to the petition?

[00:31:15] Speaker 04:
I don't have that hand, Your Honor, but the preliminary response is identified in the institution decision.

[00:31:24] Speaker 03:
Right, but that's a simple summary in which the board says you have only one argument.

[00:31:36] Speaker 04:
That's right, Your Honor.

[00:31:37] Speaker 04:
That's the discussion to which I referred.

[00:31:41] Speaker 04:
And in closing, as my time is ending, what I'd like to say is that the idea that there is a pattern of misconduct was not proved.

[00:31:52] Speaker 04:
Judge McKinney explicitly found that allegation not to be proved, that finding was not clearly erroneous, and it's not subject to second-guessing.

[00:32:04] Speaker 04:
Kennedy Well, if it was clearly erroneous, it is subject to it.

[00:32:11] Speaker 04:
In other words, what he found was that Cook didn't prove what it said.

[00:32:16] Speaker 04:
That was not a clearly erroneous finding.

[00:32:19] Speaker 04:
And if you then look at the argument the way Cook described it, the argument inherently wasn't something that was going to be proved.

[00:32:28] Speaker 04:
Cook said the only inference that can be drawn is that a certain state of affairs applied.

[00:32:34] Speaker 04:
Well, Judge McKinney didn't draw that inference.

[00:32:37] Speaker 04:
It was reasonable for him to do so.

[00:32:39] Speaker 02:
Thank you.

[00:32:42] Speaker 02:
But I just want to add one thing.

[00:32:44] Speaker 02:
And that is, if I was a litigant who wasn't paid by a lawyer after attorney's fees were awarded, I'd be going after their ticket.

[00:32:57] Speaker 02:
So you ought to warn your clients about that.

[00:33:01] Speaker 04:
Your Honor, there are plenty of remedies that are available if the party has genuinely been subject to something that's abusive.

[00:33:10] Speaker 04:
There are many remedies under Rule 11.

[00:33:12] Speaker 02:
I said I'd be going after his license to practice law.

[00:33:18] Speaker 02:
Thank you.

[00:33:24] Speaker 00:
Thank you, Your Honor.

[00:33:25] Speaker 00:
I'd like to first address the claim that was made that Judge McKinney thoroughly evaluated the record on the invalidity point.

[00:33:33] Speaker 00:
You will search Judge McKinney's opinion in vain for any discussion of the prior

[00:33:39] Speaker 00:
He will search his opinion in vain for any discussion of the prosecution history.

[00:33:43] Speaker 00:
He made no mention of the undisputed fact that the PTO issued this patent based on false statements.

[00:33:52] Speaker 03:
What false statements?

[00:33:53] Speaker 00:
The false statements that the sheep movement element was novel.

[00:33:56] Speaker 03:
Where is that?

[00:33:57] Speaker 03:
I looked for that, and I didn't find it.

[00:34:00] Speaker 03:
I know that they kept saying it's not in Segeda, and that's a true statement.

[00:34:05] Speaker 00:
Yes.

[00:34:06] Speaker 03:
The... Where is there a statement, an affirmative statement?

[00:34:10] Speaker 03:
You made a different point in your opening argument about some sort of duty of candor that they were required to say something that they didn't.

[00:34:17] Speaker 03:
But now you just said that there's a false statement, which you also said in your brief, and can you just show me where that is?

[00:34:22] Speaker 00:
The pages that I cited earlier, they did not affirm, you're correct, they did not affirmatively state that this confers novelty, but that was the basis for their argument to the examiner to overcome the prior argument.

[00:34:36] Speaker 00:
Yes, it's correct that it distinguishes it from Sugita, but the implicit representation surely was it distinguishes it from all the prior art, including Leslie, which wasn't true.

[00:34:48] Speaker 00:
That wasn't true.

[00:34:50] Speaker 00:
My broader point, though, is simply going to Judge McKinney's analysis.

[00:34:54] Speaker 00:
He undertook no analysis of the prior art, never mentioned Leslie.

[00:34:59] Speaker 00:
He undertook no analysis of the prosecution history.

[00:35:02] Speaker 00:
He undertook no

[00:35:03] Speaker 00:
analysis of any of the really undisputed facts that we presented going to invalid.

[00:35:09] Speaker 03:
Secondly... So he was given, I forget how long your fees petition was, 30 pages, something like that?

[00:35:16] Speaker 03:
Two and a half pages was about the merits.

[00:35:19] Speaker 03:
Overwhelmingly what you wanted him to concentrate on was the way this was an instance of a general practice.

[00:35:28] Speaker 03:
Just how

[00:35:30] Speaker 03:
How much more should he have done on what was, I don't know, five percent or something of your petition?

[00:35:39] Speaker 00:
Governor, I don't have the pages in front of me, but I am very confident we devoted more than two pages to the invalidity of this patent.

[00:35:48] Speaker 00:
Just the statement of facts, we recited the prosecution history at length.

[00:35:53] Speaker 00:
And by the way, in that prosecution history, we included

[00:36:01] Speaker 03:
excerpts from the deposition of the inventor in which he... It's a twenty page petition and the background is a lot about how Mitri and Salmon are up to no good generally and then there's a little bit about the procedural history of this litigation and then the case is exceptional and the extraordinary weakness is from page twelve to page fourteen.

[00:36:29] Speaker 03:
On a fee request after litigation has been disposed of, is a judge supposed to write a 70-page decision essentially doing the merits that have just gone away?

[00:36:41] Speaker 00:
No, but when our – we made two primary arguments going to the extraordinary weakness of the case.

[00:36:48] Speaker 00:
One was the invalidity of the patent, which was based on prior art in the prosecution history.

[00:36:55] Speaker 00:
The other was the decision to file in the Eastern District of Texas, which had absolutely no connection with any of the witnesses, any of the parties, any fact relating to the case.

[00:37:06] Speaker 00:
At a minimum, under Rothschild, in order to conduct an adequate inquiry, the district court has to address the prior art.

[00:37:13] Speaker 00:
It has to address the prosecution history, when that is the predicate for our claim that this was an extraordinarily weak piece of litigation.

[00:37:24] Speaker 00:
None of that is in Judge McKinney's opinion.

[00:37:26] Speaker 00:
The decision to file in the Eastern District of Texas was indefensible.

[00:37:31] Speaker 00:
There was no connection with the Eastern District of Texas.

[00:37:35] Speaker 00:
We made that argument.

[00:37:36] Speaker 00:
We cited this court's decisions under 1404.

[00:37:39] Speaker 03:
That can't be quite right.

[00:37:41] Speaker 03:
I mean, there was undisputedly, at the time, 1406 venue.

[00:37:48] Speaker 00:
Yes.

[00:37:49] Speaker 00:
And they have the statutory venue.

[00:37:52] Speaker 03:
Right.

[00:37:52] Speaker 03:
And they have a very regular way of doing patent cases.

[00:37:57] Speaker 03:
And it's very fast.

[00:37:58] Speaker 03:
And if they're extremely experienced and knowledgeable.

[00:38:03] Speaker 03:
I didn't happen to know what time to trial or something or docket load is in Indiana compared to this.

[00:38:12] Speaker 00:
No.

[00:38:12] Speaker 00:
No.

[00:38:13] Speaker 00:
But under Nintendo, under Nintendo, this court made clear

[00:38:17] Speaker 00:
that if there's no connection between the district and the parties, the witnesses, the documents, or any of the evidence, it can't be filed in that district.

[00:38:27] Speaker 00:
When you were asking me earlier about our decision making, why didn't we file for an earlier motion for summary judgment?

[00:38:33] Speaker 00:
Because this motion to transfer was before the Texas judge for 10 months.

[00:38:39] Speaker 00:
One of the things we had to take into account was the possibility that we were going to mandamus.

[00:38:46] Speaker 00:
possibility that we had to take into account is that our motion would be granted as we – as it should have been, as indeed the Texas court ultimately did.

[00:38:58] Speaker 00:
So if we file a motion for early summary judgment, the – In the Texas court?

[00:39:03] Speaker 00:
In the Texas court.

[00:39:05] Speaker 00:
Our motion several months later is granted.

[00:39:08] Speaker 00:
And then we're going to be before a new court in Indiana where the

[00:39:13] Speaker 00:
Discovery is nowhere near completion.

[00:39:15] Speaker 00:
The likelihood that we were going to get an early summary judgment, in my professional judgment, approached zero.

[00:39:22] Speaker 00:
We thought that the IPR was going to be the fastest pathway to exit, and that's what the facts showed.

[00:39:30] Speaker 00:
We filed the IPR in March.

[00:39:31] Speaker 00:
We were out in December.

[00:39:33] Speaker 00:
One final point.

[00:39:36] Speaker 00:
Opposing counsel says that the evidence we presented did not show a pattern.

[00:39:41] Speaker 00:
400 cases.

[00:39:43] Speaker 00:
filed by more than 25 shell entities.

[00:39:46] Speaker 00:
In none of those cases did Metri and Salmon go to trial, test the merits of their claims.

[00:39:55] Speaker 03:
In none of those cases... Those are two different things.

[00:39:57] Speaker 03:
I thought in some of those cases the merits were in fact tested.

[00:40:02] Speaker 00:
In more than 130, the patent was found to be invalid and not infringed.

[00:40:09] Speaker 03:
That's a testing of the merits.

[00:40:11] Speaker 00:
I meant to trial.

[00:40:12] Speaker 00:
Forgive me if I misspoke.

[00:40:13] Speaker 03:
A tiny percentage of civil cases and probably even a small percentage of patent cases actually go to trial.

[00:40:19] Speaker 00:
I understand, Your Honor, but this is 400 cases and in none of those cases was there a judgment of patent infringement.

[00:40:28] Speaker 00:
Not one.

[00:40:29] Speaker 00:
Not one time.

[00:40:32] Speaker 00:
Council says that the facts of this case didn't show a nuisance settlement strategy.

[00:40:38] Speaker 00:
Let's go back to the point you were raising earlier.

[00:40:41] Speaker 00:
They knew

[00:40:42] Speaker 00:
as early as January that this patent was invalid.

[00:40:47] Speaker 00:
It became clear when we filed the PTAB that the patent was invalid.

[00:40:52] Speaker 00:
What prompted them to throw in the towel?

[00:40:56] Speaker 00:
It was only when Cook made clear to them that we're going to litigate this case before the PTAB, we're not going to pay a token settlement, only then did they cancel their own patent rather than test its merits.

[00:41:09] Speaker 01:
Thank you for your time.

[00:41:12] Speaker 00:
I appreciate it.