[00:00:00] Speaker 00:
against Georgia Expo.

[00:00:02] Speaker 00:
Mr. North.

[00:00:05] Speaker 00:
This is the attorney fee case, is that right?

[00:00:07] Speaker 03:
Excuse me?

[00:00:07] Speaker 00:
This is the attorney fee issue?

[00:00:09] Speaker 03:
Yes, ma'am.

[00:00:10] Speaker 00:
Proceed.

[00:00:11] Speaker 03:
Thank you.

[00:00:14] Speaker 03:
We respectfully submit that after the district court entered summary judgment on all three claims, patent, trademark, and copyright,

[00:00:26] Speaker 03:
um, all granted summary judgment in my client's favor, um, on all these grounds that it erred when it, um, denied the request for attorney's fees under Section 285 exceptional case.

[00:00:41] Speaker 03:
Suppose we reverse in the first case.

[00:00:44] Speaker 03:
What does that do to the attorney?

[00:00:48] Speaker 03:
The, uh, we seek $151,000 total, but

[00:00:53] Speaker 03:
under 285 for the patent case and those that are intertwined.

[00:00:58] Speaker 03:
It's only $15,000 that would be separate and non-intertwined for copyright and trademark.

[00:01:08] Speaker 03:
And so we believe that this court at this time... Would you be a prevailing party if we reversed in the first case?

[00:01:17] Speaker 03:
As to the patent claims, I believe we are, because they were empty from the beginning.

[00:01:23] Speaker 03:
And even if you reverse or send it back to the Ninth Circuit, and the Ninth Circuit disagrees with this interpretation of 1127, 1125, 1114, as to the patent claims under 285, that would not impact

[00:01:42] Speaker 03:
the baselessness of those claims as disposed of by the district court.

[00:01:48] Speaker 03:
And so I think the issue of whether there's an exceptional case under Section 285 is right for determination by this panel, by this court, even if it believes that clarification by the Ninth Circuit on the trademark issue would be useful.

[00:02:04] Speaker 00:
So is your argument that if, as to the trademark issue,

[00:02:09] Speaker 00:
We should, we have decided it, but if we should, perchance, decide in their favor that they're entitled to attorney's fees on the trademark issue?

[00:02:20] Speaker 03:
No, Your Honor.

[00:02:21] Speaker 03:
The reason for that is... Then why not?

[00:02:23] Speaker 00:
I mean, it would be the converse of what you're requesting, would it not?

[00:02:30] Speaker 03:
Well we believe, I don't believe so and this is why.

[00:02:34] Speaker 03:
We're not simply saying that there should be a grant of fees under the trademark statute which is interpreted now under Octane Fitness and I believe we agree on that.

[00:02:47] Speaker 03:
If this court believes that at a minimum that there was a good faith disagreement on what that statute means, 1127, then

[00:02:58] Speaker 03:
I don't think that would be a bad-faith application by either side.

[00:03:03] Speaker 00:
But you're requesting attorney's fees.

[00:03:05] Speaker 00:
Let's say that we do think there's a good-faith disagreement, but we decide in their favor.

[00:03:11] Speaker 00:
Your or if we decide on your favor, you say you get attorney's fees.

[00:03:16] Speaker 00:
So if we decide on their favor, don't they get attorney's fees?

[00:03:20] Speaker 03:
I think that the court would have, district court has not evaluated that question under octane fitness of whether, assuming that

[00:03:28] Speaker 03:
our reading and the district court's reading of 1127 is wrong, whether that gives rise to something that's worthy of attorney's fees under Octane Fitness.

[00:03:40] Speaker 01:
I don't see how win or lose on the trademark claim that there's a colorable claim to attorney's fees by you.

[00:03:50] Speaker 01:
I mean, surely their theory is a reasonable one, right?

[00:03:55] Speaker 03:
I believe that

[00:03:57] Speaker 03:
We thought, given the flip-flop in the position that, and given the district court's position, excuse me, Your Honor, that there was a basis there.

[00:04:09] Speaker 03:
But given the panel's discussion here, we're willing to give up our claim for attorney's fees on the trademark issue.

[00:04:16] Speaker 03:
But again, all but... Are you abandoning this appeal?

[00:04:21] Speaker 00:
Is that what you're telling us?

[00:04:23] Speaker 03:
No, I'm saying, Your Honor, that of the... Are you going to wait and see what happens?

[00:04:27] Speaker 03:
What I'm saying, Your Honor, is that there are... You really can't have it both ways.

[00:04:32] Speaker 00:
If you pursue this appeal, we'll have to consider whether, in fact, the trademark issue merits attorney's fees either way.

[00:04:42] Speaker 03:
Your Honor, I believe that the, again, that there are pieces of this attorney's fees appeal and that the bulk of it, all but 15,000, is directed towards the patent issues and intertwined issues.

[00:04:56] Speaker 00:
And so... It might be a set off, but they weren't pursued.

[00:04:59] Speaker 00:
They were dropped very early in the case.

[00:05:04] Speaker 00:
It looks from the record as if where the attorney time was spent was on the trademark issue.

[00:05:11] Speaker 03:
Is that correct?

[00:05:13] Speaker 03:
That is incorrect, Your Honor.

[00:05:14] Speaker 03:
We submitted three detailed declarations and that showed that the bulk of the fees were on, it was a patent case with a trademark issue and that's the motion to compel, that's what that was about.

[00:05:27] Speaker 03:
And it's only 15,000 of the 151 where it wasn't this overlapping work where it all could be recovered under 285 and so

[00:05:35] Speaker 03:
This was really a patent case, and there were some trademark issues attended to it.

[00:05:42] Speaker 03:
But the key question from the get-go was, well, when these flyers came out before the patent issued, and the district court found that there was no evidence whatsoever of a product after the patent issued that... Are you arguing the patent case now?

[00:06:00] Speaker 03:
I am that portion of that portion that is a large and what I'd say is on the range of this fees petition that 80 percent of it has to do with the baselessness of the patent issues and I believe

[00:06:13] Speaker 03:
that that is ripe for this Court's determination.

[00:06:16] Speaker 03:
And I think even if the Court disagrees with the trademark and rules in their favor on the construction, then the issue would be back for the district court to say, well, was this a position outside of the ordinary, as Octane fitness says, so that there should be an award under the trademark laws.

[00:06:37] Speaker 00:
It hasn't been briefed, has it?

[00:06:39] Speaker 03:
No, there has been no claim of attorney's fees based on our position under the trademark laws.

[00:06:45] Speaker 03:
And so that issue, even assuming you disagree with our construction, there is no record on that.

[00:06:51] Speaker 03:
We do have a complete record on the patent case, and I believe

[00:06:54] Speaker 03:
that is appropriate to be queued up today because the issue of the interpretation of whether 1127 applies to 1125 and 1114 is totally distinct from the factual issue raised by the fact that the district court acknowledged that there was not one iota of proof that there was any product issued after the patent came out in December.

[00:07:19] Speaker 01:
Why couldn't you infer that

[00:07:26] Speaker 01:
offer for sale of an infringing product before the patent issues can support an inference that they continued to sell or started to sell a product after the patent issue.

[00:07:37] Speaker 01:
I mean, isn't that enough to file a complaint to get the discovery on that?

[00:07:44] Speaker 03:
I would say two or three things on that.

[00:07:46] Speaker 03:
I think under the objective test, which they agree to, to start a patent case, you need to have a basic

[00:07:54] Speaker 03:
claim chart-like analysis under the patent claims.

[00:07:57] Speaker 02:
Yeah, but in this case, based on the flyer, it was their product that was illustrated, and there was no question that their product is covered by their patent.

[00:08:10] Speaker 03:
But they had to show that there was that product out there after the patent issued.

[00:08:15] Speaker 02:
Well, yes, that was, but, you know,

[00:08:20] Speaker 02:
On information and belief, one can reasonably say that if you distribute a flyer at a trade show that shows a product, that there is a product someplace ready to be sold.

[00:08:33] Speaker 02:
Well, I think that that is... And that's what you then explore in discovery, correct?

[00:08:42] Speaker 03:
no information came out through discovery of any product and in fact Magistrate Judge Gelderk said regarding this February trade show that there has been no evidence and this is an open market so you can see what's going on and there's no proof.

[00:08:57] Speaker 01:
I thought they were saying that they didn't get the discovery that they needed to show that you were selling the product.

[00:09:03] Speaker 03:
And they, Judge Jeldricks, reviewed what had come out during discovery and disclosures up to that point and said, is there any basis for me to let them get into... So they didn't get to discover it.

[00:09:15] Speaker 03:
They did not get into that discovery, but Judge Jeldricks said in his opinion that this is an open market with trade shows so everybody can see what is going on.

[00:09:26] Speaker 01:
And initially in their... That's an odd basis for denying discovery.

[00:09:30] Speaker 03:
Well, I think there...

[00:09:31] Speaker 01:
Is there any authority that you don't get discovery because it's an open market?

[00:09:35] Speaker 03:
Well, he contrasted it to perhaps a situation where the development is being done undercover, where you have an inability to see what's going on, and so you have some right to get discovery.

[00:09:47] Speaker 01:
So it's an alternative source there.

[00:09:49] Speaker 01:
You can't get the discovery because you could get it somewhere else?

[00:09:56] Speaker 01:
That's a pretty odd theory.

[00:09:58] Speaker 01:
I'm not familiar with any cases that say you can't get discovery because you have some alternative source that will give you the information outside of the reporter's privilege.

[00:10:08] Speaker 03:
Well, here they waived that argument, and the first issues in their appeal on the trademark actually got to the appeal of that.

[00:10:15] Speaker 01:
They waived the argument in a direct appeal from the denial of discovery, but we can consider that in connection with the attorney's case.

[00:10:23] Speaker 03:
I believe that under Octane Fitness that there needs to be, at some point, an objectively based case to keep going.

[00:10:31] Speaker 03:
And if the Court will reference that, we did not seek attorney's fees from the get-go here.

[00:10:39] Speaker 03:
And while we believe there needs always to be an objective basis to file a patent case, we understood that Judge Gelderz had some concern, exactly as you're saying.

[00:10:49] Speaker 03:
We might see some smoke here, and so there might be some inference that something's going on.

[00:10:54] Speaker 03:
But we did not seek attorney's fees until after April of 2016, when it's undisputed that we had approached them and said, we stopped.

[00:11:04] Speaker 03:
Once we saw the patent issued, nothing happened.

[00:11:07] Speaker 03:
We put it on ice.

[00:11:08] Speaker 03:
There was time for initial discovery, and there was nothing.

[00:11:11] Speaker 03:
it is time to stop this case but they kept going and going and even after the denial of the discovery ruling they kept going and going they didn't take any depositions well they didn't even bother to take the depositions of my clients because their goal has been to stretch this out at some point they requested discovery into our developmental products

[00:11:41] Speaker 03:
coming out with in the future, and they did this based on a trade show.

[00:11:47] Speaker 03:
And before Judge Geldberg's, and it's in the appendix as a picture of that, where you can see, actually, it was a changed profile from what was in that advertisement.

[00:11:56] Speaker 03:
So the only evidence was that, in fact, we had changed what we were doing.

[00:12:01] Speaker 03:
And it's interesting because when they characterize what they saw in February

[00:12:08] Speaker 03:
in their own brief, and I'm referring to their brief at page 8.

[00:12:13] Speaker 03:
All they could say was that this picture showed a modified but still similar product.

[00:12:20] Speaker 03:
Well, what does that mean?

[00:12:21] Speaker 03:
We put in our brief that the limitations of their patent claim fill a whole page.

[00:12:26] Speaker 00:
So whatever the reasons of the patent aspect, let's talk about the trademark issues that are before us and for which you are requesting attorney's fees.

[00:12:37] Speaker 00:
And you say that you're limiting the request to the trademark issue.

[00:12:42] Speaker 00:
Is that right?

[00:12:44] Speaker 03:
I'm saying that, yes, given the discussion here, that we will not be seeking attorney's fees for the trademark portion of the case.

[00:12:55] Speaker 00:
You're not seeking attorney's fees for the trademark portion?

[00:12:59] Speaker 03:
Correct.

[00:12:59] Speaker 02:
Just the patent portion.

[00:13:03] Speaker 00:
Just the patent portion.

[00:13:04] Speaker 02:
That's 151,000 minus the 15,000 or thereabouts.

[00:13:08] Speaker 03:
Yes, sir.

[00:13:09] Speaker 03:
And a small portion of that is copyright, too, but I don't think it's worth the time of this quarter of us to parse through that.

[00:13:15] Speaker 03:
So we'd agree that we are only seeking here on this separate appeal, attorney's fees for the patent portion, which is... So you're abandoning the trademark, perhaps in view of the colloquy that we're having

[00:13:28] Speaker 00:
that might have been prudent.

[00:13:31] Speaker 00:
However, doesn't that add weight to if in fact we should decide that they're correct on the trademark issue, that they're entitled to attorney's fees for the trademark aspect?

[00:13:44] Speaker 03:
Your Honor, I would disagree with that because I believe that in the first instance it's up for the district court to apply the octane fitness factors to see if

[00:13:52] Speaker 03:
what our argument was outside of the ordinary in arguing for 1127 to apply to 1115, 1125.

[00:14:02] Speaker 03:
And I suspect that because initially the magistrate judge and the district court judge agreed with our position, that they're going to say that, well, maybe now we know the Ninth Circuit disagrees, or maybe based on good argument, we disagree with it.

[00:14:16] Speaker 03:
But I really don't think that there is going to be a finding that our arguments were outside of the ordinary.

[00:14:22] Speaker 03:
when there is this language in the Ninth Circuit.

[00:14:24] Speaker 03:
And so I don't think it's a binary thing where either we win on these on trademark or they do.

[00:14:33] Speaker 03:
I think it's, well, through this colloquy, we agree that it's perhaps nuanced.

[00:14:39] Speaker 00:
I hadn't thought so either until I saw your appeal.

[00:14:43] Speaker 00:
And let's hear from the other side on this issue, and we'll save some more.

[00:14:47] Speaker 00:
You have a little rebuttal time left.

[00:14:49] Speaker 03:
OK, thank you.

[00:14:53] Speaker 00:
Mr. Cooper.

[00:15:00] Speaker 04:
One point just to go directly on what's been discussed here for as far as I understand the first time.

[00:15:08] Speaker 04:
to divide this case and to make the suggestions that Mr. North was making to you about how you might find for the patent side of the case versus the trademark side.

[00:15:18] Speaker 04:
The appellant's opening brief, George Espoir, talks about how the work in this case is intertwined and recognizes that we, versitopists, recognize that as well.

[00:15:29] Speaker 04:
I've never heard the idea

[00:15:31] Speaker 04:
from Mr. North until right now, or just before, that somehow there could be a distinction made here.

[00:15:37] Speaker 04:
And even if the trademark issue went a different way, somehow there'd be the ability to carve out an exceptional case just under 285 in the patent case.

[00:15:46] Speaker 04:
So just note that, and that's what went on in their opening brief.

[00:15:52] Speaker 04:
There were three opinions issued by the court, the district court in this case, on whether the case is exceptional and whether attorney fees should be awarded.

[00:16:03] Speaker 04:
And in each of those opinions, the court said no.

[00:16:06] Speaker 04:
In each of those opinions, the court applied all the octane fitness factors.

[00:16:11] Speaker 04:
There's no evidence anywhere in the record that the court did anything but that.

[00:16:18] Speaker 04:
Judge Brown,

[00:16:19] Speaker 04:
rather than simply approving Judge Sheldrake's, Magistrate Judge Sheldrake's, findings and recommendations, wrote her own independent opinion with her own independent basis for why the case was not exceptional under Octane Fitness.

[00:16:33] Speaker 04:
And then again, a reconsideration came back.

[00:16:36] Speaker 04:
So the record, I think, is very solid as to no abuse of discretion.

[00:16:42] Speaker 04:
Mr. North is not emphasizing abusive discretion, and it's as if almost you could look at this and decide, no, you know, we decide whether it's exceptional.

[00:16:50] Speaker 04:
But the point is, is there any, did it meet the standard, and is there any recognition in this record that the district court abused its discretion by applying active fitness?

[00:17:01] Speaker 04:
And we suggest that the answer is clearly no, that there is a complete exercise of discretion.

[00:17:09] Speaker 04:
There's two key actions that happened in this case that guide all of Versatop's behavior on patent, trademark, and copyright issues.

[00:17:18] Speaker 04:
Seeing the knockoff brochure and email in September and October of 2015 acting reasonably to do what it could to, this is fully in their industry, learn these things, see a picture of your own product and your trademark.

[00:17:38] Speaker 04:
being advertised by somebody.

[00:17:40] Speaker 04:
So they filed a complaint for trademark and copyright infringement, and a couple months later, right after their patent issues, filed a first-minute complaint for adding a patent infringement count.

[00:17:53] Speaker 04:
a couple months later at a February trade show, see that there's movement by the defendant, Georgia Expo, and there's some other version or some prototype that looks different from the brochure but still is competing.

[00:18:10] Speaker 04:
And then we got on our discovery path the point that Mr. North is noting about April 2016,

[00:18:20] Speaker 04:
is six months before the court denied our motion to compel on discovery.

[00:18:26] Speaker 04:
We were doing, Judge Dyke, exactly what you suggested.

[00:18:29] Speaker 04:
We were trying to get discovery to learn more about what Georgia Expo had been doing since it issued those brochures in September and October of 2015.

[00:18:41] Speaker 04:
And then, as we saw in the February 16 trade show, additional activity

[00:18:47] Speaker 04:
what's the product.

[00:18:48] Speaker 04:
We never got to the product.

[00:18:50] Speaker 04:
There would have been no reason to take a deposition of 30B6 or other of Georgia Expo until we get that information.

[00:19:03] Speaker 04:
When in the briefing, appellees spent some time trying to suggest that the court, and specifically Judge Jalderks, relied on subjective attempts

[00:19:14] Speaker 04:
This is at page nine of the appellee's opening brief.

[00:19:18] Speaker 04:
They have a quote from Judge Childrick saying, a party's failure to successfully persuade the court on the merits of its position does not render the party's motivation suspect, period.

[00:19:30] Speaker 04:
It inappropriately cuts off that full sentence, but it uses that carve out to talk about how somehow Judge Childrick's relied on subjective intent.

[00:19:40] Speaker 04:
But the completion of that sentence is,

[00:19:43] Speaker 04:
does not render that party's motivation suspect, its claims frivolous, or its litigating position objectively reasonable.

[00:19:51] Speaker 04:
So again, my point is throughout Judge Gelberg's closely followed all the factors of the Octane Fitness case, Judge Brown then, in her own opinions, did the same thing.

[00:20:09] Speaker 04:
As you know, while Georgia Expo in its brief is focusing on the patent case, almost completely recognizes, makes no statement as to a frivolous claim as to the trademark.

[00:20:24] Speaker 04:
And again, that up till today, I've never heard the idea that somehow there's a carve out of patent versus trademark.

[00:20:33] Speaker 04:
The idea that

[00:20:35] Speaker 04:
so much time was spent just on patent and that you could carve out doesn't make any sense based on what happened in this case.

[00:20:43] Speaker 04:
Because of what Georgia Expo chose to do by not releasing the accused product when they clearly were on a path to do it because of our activity there was a chess game that obviously went on and on the discovery side they were successful with that procedure.

[00:21:00] Speaker 04:
But that didn't mean that this case blew up and became some

[00:21:04] Speaker 04:
80% of their time on patent issues, just simply couldn't.

[00:21:09] Speaker 04:
And it is inevitable intertwined.

[00:21:11] Speaker 04:
This case is about both of these issues because of the facts of this case.

[00:21:22] Speaker 04:
I note the Federal Circuit's view engineering standard for infringement.

[00:21:27] Speaker 04:
Again, just to point out what Judge Lynn, what you noted, we didn't feel that we mechanically had to do a claim chart when we saw a photograph of our client's product in order to

[00:21:41] Speaker 04:
provide the reasonable basis we needed to file that patent infringement complaint.

[00:21:46] Speaker 04:
Another part of why this is not an exceptional case, another part of why Judge Brown and Magistrate Judge Gelder ruled that way in our favor.

[00:22:10] Speaker 04:
And lastly, I note that the, where Mr. North was talking about a statement that Judge Jeldricks made at one point in the, I believe it was through discovery about how nothing had happened since the brochure.

[00:22:27] Speaker 04:
In his findings and recommendation, Judge Jeldricks notes furthermore, in February 2016, after its patent issue, Versatot became aware that Georgia Expo was offering some form of prototype coupler product.

[00:22:40] Speaker 04:
So point again, from, from our, uh, from first tough reasonable activity, when it first learned about these, uh, September and October, uh, 2015 brochure and email filed a complaint, a first cemented complaint went to a trade show was pursuing evidence to show that this knockoff brochure was really, the intent was there and they wanted to see what was, what was happening.

[00:23:05] Speaker 04:
And unfortunately we were unable to get that.

[00:23:08] Speaker 04:
but that does not make this some type of exceptional case under a patent or a trademark law.

[00:23:15] Speaker 04:
That's all I have.

[00:23:19] Speaker 00:
Thank you.

[00:23:20] Speaker 00:
Mr. North, you have a couple of minutes for rebuttal.

[00:23:22] Speaker 03:
Thank you, Judge Newman.

[00:23:24] Speaker 01:
Don't we have a situation here where your attorneys feel the appeal on the trademark issue is frivolous?

[00:23:34] Speaker 03:
No, Your Honor.

[00:23:37] Speaker 03:
Why not?

[00:23:38] Speaker 03:
Carl Stortz, Ninth Circuit has applied.

[00:23:43] Speaker 01:
The question on the attorney's fees.

[00:23:48] Speaker 01:
Are you suggesting their position on the trademark issue is so frivolous that you should get attorney's fees from them?

[00:23:56] Speaker 01:
That strikes me as itself a frivolous proposition.

[00:24:00] Speaker 03:
I would disagree because they started out

[00:24:03] Speaker 03:
applying the same test that we're applying.

[00:24:05] Speaker 03:
And so by their own conduct, they said it's reasonable to apply 1127 to 1125.

[00:24:11] Speaker 03:
That is the position they took before the magistrate judge.

[00:24:15] Speaker 01:
And so their position about the construction of the statute is so unreasonable that attorney's fees could be awarded.

[00:24:22] Speaker 01:
That seems like a very difficult road up.

[00:24:26] Speaker 03:
Well, I believe under the authority that we've set forth and given the findings of the magistrate judge and the district court that, especially given their changes in position when they had lost, that is emblematic of the fact that it was a good-faith, reasonable application, and that the fact that they changed it shows that it was a position that wasn't worthy of support.

[00:24:48] Speaker 03:
And indeed, I come back to it.

[00:24:50] Speaker 03:
What they've been arguing, they never cite rescue com.

[00:24:53] Speaker 03:
But they've been trying to adopt the rescue comm argument throughout without letting this Court know that.

[00:24:58] Speaker 03:
And I believe that therefore for us to challenge that conduct on appeal is not a frivolous appeal on that, Your Honor.

[00:25:07] Speaker 03:
It's our view.

[00:25:07] Speaker 03:
And we believe, given this discussion, that we will not press on that.

[00:25:11] Speaker 03:
But I think the corollary is not that our seeking fees on that portion of the total amount is frivolous by itself.

[00:25:23] Speaker 03:
There is no, if I may quickly loop back on the patent stuff and then I'll close my book.

[00:25:28] Speaker 03:
The, there is no evidence in the record but that.

[00:25:32] Speaker 00:
Is this in the briefs about the patent question?

[00:25:36] Speaker 03:
There, there is, let me just see if there's one thing that was not there and I will address that only if that's acceptable.

[00:25:47] Speaker 03:
All, all I would close with, thank you for the extra time.

[00:25:50] Speaker 03:
your honor is that the course of conduct was they did not respond to summary judgment on copyright they did not object on patent they did not appeal patent they changed their trademark only at the district court they dropped one aspect of their appeal that is of the discretionary order here and so we've had to do a lot of work about what turns out to be nothing and for these reasons thank you your honors we believe that it's appropriate here today under the

[00:26:20] Speaker 03:
to say that at least the patent case never had a basis after the patent issue, and we shouldn't have had to spend money defending that.

[00:26:29] Speaker 03:
We appreciate your time today.

[00:26:30] Speaker 00:
Thank you.