[00:00:00] Speaker 04:
One case this morning, which is number 13-1527, Western Gecko LLC versus Ion Geophysical.

[00:00:10] Speaker 04:
And as our department deputy, I think, told you we wanted to do the argument in the same order as the briefing, so Mr. Quinn would go first.

[00:00:32] Speaker 01:
Thank you, Judge Dyk, and may it please the court, John Aucoin on behalf of Western GCO.

[00:00:36] Speaker 01:
I'd like to start by addressing the two questions from the court's October 19th order and then turn to some of the other issues that ION has raised since the Supreme Court's limited remand in this case.

[00:00:47] Speaker 01:
First, assuming the Supreme Court does not grant review and reverse in the IPR appeals, then Claim 23 would be the only claim that would support the entirety of the lost profits award.

[00:00:58] Speaker 01:
And it does support that award, just as in Crystal Semiconductor, and just as Judge Bryson explained for this Court in Tevo v. EchoStar, 516, F3, 1290, upholding a lost profits award even when some claims were found not infringed on appeal because all of the accused devices were found to infringe all of the remaining, were found to infringe the remaining claim in that case.

[00:01:24] Speaker 05:
Ayan argues that you're improperly seeking greater than full compensation.

[00:01:28] Speaker 05:
because they say at page 9, you, quote, already obtained recovery from the third parties who actually conducted the competing surveys.

[00:01:38] Speaker 05:
Is that an accurate statement by ION?

[00:01:41] Speaker 01:
It is not, Judge Wallach.

[00:01:42] Speaker 01:
I mean, there are three different entities they could potentially be referring to.

[00:01:46] Speaker 01:
One is Fugro.

[00:01:47] Speaker 01:
Fugro was, of course, in this trial with ION originally.

[00:01:51] Speaker 01:
The surveys that involved Fugro, the devices that involved Fugro were carved out.

[00:01:56] Speaker 01:
And if ION didn't think that that was done appropriately, it could have ejected a trial and it didn't do so.

[00:02:01] Speaker 01:
With respect to an entity called Polarkis, there was a credit that was agreed to between the parties.

[00:02:08] Speaker 01:
It was a stipulated $3 million offset in an April 23, 2014 stipulation at Docket 685.

[00:02:18] Speaker 01:
And then with respect to PGS,

[00:02:20] Speaker 01:
Yes, there has been a confidential settlement with PGS.

[00:02:23] Speaker 01:
I can't really speak about the terms of that in court, but suffice it to say, it's certainly our position that it does not affect any of the issues in this case.

[00:02:31] Speaker 01:
And to the extent that ION disagrees, the appropriate course of action for them would be to file a Rule 60 motion in the district court.

[00:02:39] Speaker 01:
Now, I don't think they will.

[00:02:40] Speaker 01:
Mr. Burrell, who is counsel for ION now, was counsel for PGS in the IPR cases.

[00:02:47] Speaker 01:
and in the PGS case, and I think is aware of the terms of that.

[00:02:51] Speaker 01:
So I don't think we'll see such a Rule 60 motion.

[00:02:53] Speaker 04:
Would you agree that there can't be double recovery?

[00:02:56] Speaker 01:
I agree that there can't be double recovery, yes, Judge Dyke.

[00:02:58] Speaker 01:
And there's not double recovery being sought in this case.

[00:03:02] Speaker 05:
Was ION's liability somehow limited to damages for the infringing device rather than the full value of the survey?

[00:03:09] Speaker 01:
No, and that would be inconsistent with Supreme Court precedent, Judge Wallach, and indeed inconsistent with the Supreme Court's ruling in this case.

[00:03:17] Speaker 01:
I think the Supreme Court was very clear in deciding this case that the measure, of course, of damages is full compensation.

[00:03:26] Speaker 01:
And under Section 284, damages are adequate to compensate for infringement when they place the patent owner in as good a position as he would have been in if the patent had not been infringed.

[00:03:36] Speaker 04:
Let's go back to Claim 23 and the question of whether Claim 23 can support the damages award.

[00:03:43] Speaker 04:
Yes, Judge Day.

[00:03:46] Speaker 04:
there were a number of other claims which for present purposes we have to assume are invalid.

[00:03:53] Speaker 04:
So you rely on the testimony of Mr. Simms as saying that the infringement of each claim would support the damages award because each claim was necessary for lateral steering and lateral steering was necessary

[00:04:14] Speaker 04:
to get the serving contracts, right?

[00:04:19] Speaker 01:
So there's that.

[00:04:19] Speaker 01:
I think that as you also walk through the Panduit factors with respect to... Well, let's just stick with that for a moment.

[00:04:25] Speaker 04:
Okay.

[00:04:26] Speaker 04:
But so I've read a good deal of the record here before the trial court, and it seems to me that that statement by Sims is an assumption

[00:04:40] Speaker 04:
that he makes and he says that he's not a technical expert.

[00:04:46] Speaker 04:
In other words, he's not in a position to be able to tell whether claim 23 is necessary for the performance of these survey contracts.

[00:04:58] Speaker 04:
Would you agree that that's an accurate statement of what

[00:05:02] Speaker 04:
the record shows?

[00:05:04] Speaker 01:
I don't think it was just an assumption, Judge Dyke.

[00:05:06] Speaker 01:
I think that he was reflecting things that he had learned in the record in terms of the value of the various claims of the asserted patents.

[00:05:16] Speaker 04:
He was relying on Walker, right?

[00:05:18] Speaker 01:
He was relying on Walker, but I think he was also relying on, for example, ION's own documents, which for example, and this you can see at the trial transcript at

[00:05:28] Speaker 01:
2216 and also at PTX 214, ION itself estimated in its marketing materials for this that the value of the turn mode itself, just the turn mode, was $6.4 million per year per vessel, which that calculates to be $96 to $128 million per year, which is more than the lost profits being asserted.

[00:05:50] Speaker 04:
Is that connected in the record to claim 23?

[00:05:54] Speaker 04:
That's the problem I'm having.

[00:05:56] Speaker 04:
Oh, yes.

[00:05:56] Speaker 04:
I had my clerk

[00:05:58] Speaker 04:
look through the search of the record for references to Claim 23.

[00:06:03] Speaker 04:
And I don't see, and I may be mistaken about this, I don't see any testimony that Claim 23, the technology of Claim 23, was necessary for the survey

[00:06:18] Speaker 01:
Oh, it absolutely was, Judge Zeig.

[00:06:22] Speaker 01:
And the words to be looking for, I don't know that Claim 23 was referred to as Claim 23.

[00:06:26] Speaker 01:
It would have been referred to as line changes or as turn mode or as turn control mode.

[00:06:33] Speaker 01:
And in terms of the value of it and the necessity of it, you don't have to take my word for it.

[00:06:38] Speaker 01:
Let's look at what Eye on itself said about it.

[00:06:43] Speaker 02:
I'm not going to take your word for it.

[00:06:44] Speaker 04:
So I think what you need to do is tell me where in the record there is testimony by a technical expert who says that this Claim 23 technology as opposed to the technology of the invalidated claims is necessary to get the survey contracts.

[00:07:08] Speaker 04:
Where would I find that in the record?

[00:07:10] Speaker 01:
Sure.

[00:07:11] Speaker 01:
So let me point to a few things.

[00:07:12] Speaker 01:
First, if you look at JA 8082, that is ION's own business plan.

[00:07:20] Speaker 01:
And the business plan is one of the most important.

[00:07:22] Speaker 04:
What is the site to that?

[00:07:23] Speaker 01:
JA 8082.

[00:07:24] Speaker 01:
8082.

[00:07:24] Speaker 01:
8082.

[00:07:25] Speaker 01:
That's in 8?

[00:07:28] Speaker 01:
In volume.

[00:07:30] Speaker 01:
It's in volume 2.

[00:07:32] Speaker 01:
Volume 2 of the Joint Appendix.

[00:07:34] Speaker 01:
So this is ION's own business plan.

[00:07:36] Speaker 01:
And one of the things that

[00:07:39] Speaker 01:
Ion specifically refers to as a requirement for its product.

[00:07:44] Speaker 01:
This is something that customers were expecting, was to minimize the time required to complete line changes.

[00:07:53] Speaker 01:
That is what the turn control mode is all about.

[00:07:55] Speaker 01:
It is minimizing the time required for line changes.

[00:08:01] Speaker 01:
And indeed, there was certainly...

[00:08:07] Speaker 04:
Maybe what you're saying is that the record talked about a particular aspect of this which is reflected in Claim 23.

[00:08:19] Speaker 04:
That's what I understand you'd be saying.

[00:08:21] Speaker 04:
But the trouble is there isn't any, would it be fair to say there isn't any testimony directly that directly says that the Claim 23 technology is necessary for the surveys.

[00:08:35] Speaker 01:
Dr. T testified... I'll just try to answer my question.

[00:08:39] Speaker 04:
Is it true that there isn't any testimony in the record specifically tying Claim 23 technology in those terms to something that's essential for the surveys?

[00:08:54] Speaker 01:
I don't think that it's true to say that there's nothing in the record that ties it.

[00:08:59] Speaker 01:
I don't think that it ties it necessarily with having, for example, the damages expert

[00:09:04] Speaker 01:
refer to claim 23 or refer to specifically to the testimony of the technical expert on claim 23.

[00:09:11] Speaker 01:
But you had the technical expert walk through.

[00:09:14] Speaker 04:
So let me see if I can understand what you're saying.

[00:09:18] Speaker 04:
There isn't any testimony in the record specifically focusing on claim 23 technology and saying that that's necessary.

[00:09:24] Speaker 04:
But what you're saying is that without using the, making a specific reference to claim 23,

[00:09:31] Speaker 04:
there is material in the record showing that the technology that is covered by Claim 23 is necessary for the surveys.

[00:09:39] Speaker 01:
Yes, the technology that's covered by Claim 23, there's testimony and there's evidence in the record that the technology that is covered by Claim 23 was something that was required by customers.

[00:09:53] Speaker 01:
In other words, without it you wouldn't have had an acceptable non-infringing alternative, which brings us back to

[00:09:59] Speaker 01:
What is the PANDUA test?

[00:10:00] Speaker 01:
And of course, the PANDUA test, the question on whether or not there is demand, it doesn't look to the specific claim features.

[00:10:07] Speaker 01:
It looks to the product as a whole.

[00:10:09] Speaker 01:
And then the question is, are there acceptable non-infringing alternatives?

[00:10:13] Speaker 01:
And there is meticulous test.

[00:10:15] Speaker 04:
But I mean, is there this link provided in the testimony that claim 23

[00:10:23] Speaker 04:
is the claim that covers what?

[00:10:25] Speaker 04:
You called it the turn mode?

[00:10:27] Speaker 01:
Yes.

[00:10:28] Speaker 04:
And that the turn mode is necessary to getting the survey contracts, right?

[00:10:37] Speaker 01:
Well, it is that the claim that there is testimony that links claim 23 to the turn mode.

[00:10:45] Speaker 01:
That is what claim 23 covers.

[00:10:47] Speaker 01:
And then in terms of the ability to get the contracts,

[00:10:51] Speaker 01:
The question you're asking is not quite what the Pandoit factors ask, and so I want to come back to what the Pandoit factors ask, because they are satisfied, and they're satisfied with respect to Claim 23.

[00:11:03] Speaker 04:
No, but we have cases from keying on, including Ferguson and Verizon, that say that you've got to show the but-for causation here.

[00:11:16] Speaker 04:
There has to be but-for causation, but-for

[00:11:20] Speaker 04:
the ability to use the Claim23 technology, they wouldn't have gotten the survey contract.

[00:11:27] Speaker 01:
That's right.

[00:11:27] Speaker 01:
I mean, the question is, is one of but for causation, but for their infringement, would we have gotten the surveys?

[00:11:36] Speaker 01:
That's absolutely right.

[00:11:37] Speaker 01:
And we prove that through the PANDAWID factors and the idea that if they weren't on the market with their product, then there would have been, we would have won those surveys.

[00:11:48] Speaker 04:
This is a two.

[00:11:49] Speaker 04:
That's exactly the problem when you say on the market with their product.

[00:11:53] Speaker 04:
The problem is their product includes a lot of technology other than Claim23, some of which was previously covered by your other patents.

[00:12:02] Speaker 01:
But Judge Dyke, that's going to always be true.

[00:12:04] Speaker 01:
And it's never been.

[00:12:05] Speaker 01:
That is, every product is going to be covered by things that are beyond the patented technology.

[00:12:11] Speaker 01:
And this court has never suggested in the application of the Panduit test that that means that you can't recover full compensation.

[00:12:17] Speaker 01:
Indeed, quite the opposite.

[00:12:18] Speaker 01:
In mentor graphics, it was.

[00:12:21] Speaker 01:
Mr. O'Quinn, I want to interrupt you.

[00:12:22] Speaker 01:
Thank you, Judge Wallach.

[00:12:25] Speaker 05:
Why, you're welcome.

[00:12:29] Speaker 05:
You're in the fortunate position.

[00:12:31] Speaker 05:
of going first, which means you get some rebuttal time afterwards.

[00:12:37] Speaker 05:
And I would be comfortable with what you're saying if you can point us to somewhere in the record where 23 is referred to as turn technology and one other place where your damage is exportable incorporates it in some fashion.

[00:12:56] Speaker 05:
Just draw that line for us and I'd be comfortable with it, but you have the

[00:13:00] Speaker 05:
the unique, given that we change things, opportunity to do that.

[00:13:05] Speaker 01:
No, I appreciate that.

[00:13:07] Speaker 01:
And with respect to the latter, let me answer that now.

[00:13:10] Speaker 01:
Because if you look at transcript 2289, Mr. Sims, the damages expert, says 2289 of the transcript.

[00:13:18] Speaker 01:
The damages expert says that acceptable alternatives, and that's what this comes down to, is acceptable alternatives.

[00:13:23] Speaker 01:
Acceptable alternatives would provide the same benefits.

[00:13:27] Speaker 01:
That means all of the same benefits,

[00:13:29] Speaker 01:
as the patented steering system.

[00:13:31] Speaker 01:
So I think that's where he links up.

[00:13:32] Speaker 04:
There's a problem there.

[00:13:32] Speaker 04:
He's not a technical expert.

[00:13:34] Speaker 04:
He said he's not.

[00:13:36] Speaker 04:
And the testimony that you quote in your brief and rely on so heavily is based just on an assumption and by information that he has gleaned from Walker, as I understand it.

[00:13:53] Speaker 04:
So it seems to me your damages expert is not in position

[00:13:57] Speaker 04:
to give the technical support for the notion that the Claim 23 technology is necessary for the survey.

[00:14:06] Speaker 01:
Judge Dike, respectfully, you keep asking the wrong question when you say necessary for the survey in the sense of the question when you apply the Pandoit factors is to say whether there were acceptable non-infringing alternatives.

[00:14:21] Speaker 01:
And this Court has made clear that whether there are acceptable non-infringing alternatives

[00:14:25] Speaker 01:
is a question that depends on the specific individuals in the case.

[00:14:30] Speaker 04:
That is, people who are- But I think you're giving the wrong answer.

[00:14:33] Speaker 04:
I take that from the- In order to sustain this verdict, which was based on the infringement of a number of claims, some of which have now been found to be invalid, we have to be able to parse this out

[00:14:53] Speaker 04:
so that we can figure out whether the Claim 23 technology is sufficient in and of itself to support the $100 million or $90 million lost profits award.

[00:15:06] Speaker 04:
And sort of the generalized notion of the

[00:15:11] Speaker 04:
uh... and really doesn't answer that question because we're just trying to figure out what did the jury do here we do have a jury finding that each of these claims was infringed the jury didn't tell us specifically whether it found that each of the claims uh... was necessary to get the surveys and we're trying to figure out whether the the uh... record uh... supports a verdict that each of the claims was necessary

[00:15:41] Speaker 04:
of each of the technology was necessary to perform the surveys.

[00:15:47] Speaker 04:
And it's difficult.

[00:15:48] Speaker 04:
The briefing has not been very detailed or very clear or, in fact, all that helpful on this point.

[00:15:57] Speaker 04:
And it may be that we can't figure it out today in the oral argument, but I think we're looking for something in the record that would support the notion that claim 23 was necessary for the surveys.

[00:16:11] Speaker 05:
Yeah, what I was saying was, I want a reference to your technical expert.

[00:16:15] Speaker 05:
You know, you're saying, I said both, and you tried to give me the second one.

[00:16:19] Speaker 05:
But the court is, give me a reference to your technical expert.

[00:16:24] Speaker 05:
We'll look at it, and make sure you give us the right one.

[00:16:27] Speaker 01:
No, no, I appreciate that, Judge Wallach.

[00:16:29] Speaker 01:
And I will endeavor to give you that today if I can.

[00:16:32] Speaker 01:
And if I can't, with the court's leave, I'll submit a letter in which I simply refer you to specific

[00:16:39] Speaker 01:
specific pages from the trial transcript referencing the technical expert and where the technical expert discusses Claim 23 and tying it to the issues here.

[00:16:48] Speaker 01:
But I think that with respect to the jury verdict, of course, all reasonable inferences have to be drawn in favor of the jury's verdict.

[00:17:00] Speaker 01:
And the evidence is, of course, viewed in the light most favorable to us and to the extent that what ION is arguing now, and that's really what it's arguing now, is that

[00:17:09] Speaker 01:
its own devices would have been an acceptable non-infringing alternative if some of the claims were found not to be infringed.

[00:17:19] Speaker 01:
Now, that was a live issue at trial, because at trial, there was one claim that was already found to be infringed.

[00:17:28] Speaker 01:
They were arguing the rest of the time.

[00:17:29] Speaker 01:
That was in the jury instructions, wasn't it?

[00:17:31] Speaker 01:
That one of the... If any one, yeah.

[00:17:33] Speaker 01:
Yes, no, that's exactly right.

[00:17:35] Speaker 01:
And my point is, it wasn't like they were arguing that these all rise and fall together.

[00:17:38] Speaker 01:
But we addressed, as the Panawhit factors required, we addressed whether there were any acceptable, non-infringing alternatives.

[00:17:46] Speaker 01:
And you can see, for example, this is a trial transcript, 2293.

[00:17:50] Speaker 04:
It doesn't necessarily have to be alternatives.

[00:17:53] Speaker 04:
It may be that the Claim 23 technology simply just isn't necessary at all.

[00:17:58] Speaker 04:
It doesn't have to be an alternative.

[00:18:01] Speaker 04:
They point out to some reference or some comment that you made in connection with the IPRs, which I don't think is all that helpful.

[00:18:09] Speaker 04:
I think we've got to decide this question based on the record that was made at the trial, not the record of the IPR.

[00:18:18] Speaker 04:
Could I shift you for a minute here to the question of apportionment?

[00:18:22] Speaker 04:
Because under the Ferguson case,

[00:18:27] Speaker 04:
cited in the briefs, it would seem as though where you have technology which is reflected in a number of different patents and if one of the patents or more than one of the patents in this case is invalid that you have to apportion the amount that can be recovered between the technology represented by the valid patent and the technology

[00:18:53] Speaker 04:
represented by the invalid pass.

[00:18:55] Speaker 04:
That's one apportionment issue.

[00:18:56] Speaker 04:
Is that not the case?

[00:18:58] Speaker 01:
Well, Judge Dyke, first, let me, going back to the prior line of questioning and kind of coming into this one, there's certainly been a lot that's been said by ION to try to minimize the value of Claim 23 and to suggest that this was some minor feature.

[00:19:14] Speaker 01:
That is a very different tune than they were singing in the district court.

[00:19:19] Speaker 04:
when they were arguing that they didn't infringe Claim 23 and they argued this is their... We've got a different situation here now because of the invalidation of these other patents.

[00:19:28] Speaker 01:
Well, what they said, Judge Dyke, is, quote, this turn mode is one of the most important benefits of the patents, end quote.

[00:19:35] Speaker 01:
That's docket 562 at page 29.

[00:19:38] Speaker 01:
And of course, in this court's decision in mentor graphics, the court is clear there can be any number of features that might be important

[00:19:47] Speaker 01:
But as long as only one party can provide all of the features that are required by the consumers of the product, then there are no acceptable non-infringing alternatives.

[00:20:02] Speaker 01:
And that's mentor graphics at page 1289.

[00:20:04] Speaker 01:
And that's what you have here.

[00:20:05] Speaker 01:
There were multiple features that are covered by the claims.

[00:20:10] Speaker 01:
All of those features were necessary.

[00:20:13] Speaker 04:
were required and the way that you know that is again partly from ION's own business plan at 8082 of the joint appendix as well as the fact that... We have the entire market value rule and I think you yourself have referenced that as an analogy here but so another entire market value rule if

[00:20:40] Speaker 04:
what is being sold has other valuable features.

[00:20:43] Speaker 04:
I mean, here the technology represented by the invalidated patents, the provision of the bunk itself.

[00:20:52] Speaker 04:
Why under that line of cases wouldn't there have to be some apportionment between the other valuable features and the features of claim 23, even if claim 23 were essential to the service?

[00:21:07] Speaker 01:
Sure, so Judge Stike, I think that this is in many ways captured by this court's opinion, per your honor, in Warsaw versus Newvasive at 778, F3rd at 1374.

[00:21:19] Speaker 01:
And this court was clear.

[00:21:21] Speaker 01:
Lost profits and reasonable royalties measure damages differently.

[00:21:25] Speaker 01:
Lost profits are a measure of damages intended to make the party whole.

[00:21:29] Speaker 01:
A reasonable royalty is intended to compensate the patentee for the value of what was taken from him, the patented technology.

[00:21:35] Speaker 01:
And so when you start talking about

[00:21:36] Speaker 01:
apportionment, yes, you're talking about what is the value of the technology.

[00:21:42] Speaker 01:
And it makes sense to talk about that in the context of a reasonable royalty.

[00:21:45] Speaker 01:
But when you're talking about damages intended to make the party whole, the Supreme Court has been clear that is any pecuniary loss suffered by the patent owner because of the infringement.

[00:21:57] Speaker 01:
And I think that proof of but for causation vindicates apportionment principles.

[00:22:04] Speaker 01:
And this court said that in right height, en banc,

[00:22:07] Speaker 01:
56 F third at 1548, the concern that lost profits must be related to the intrinsic value of the patent is subsumed within the but for analysis, end quote.

[00:22:18] Speaker 01:
And I think that that principle is absolutely vindicated here, and it's vindicated by application of the Pandoit factors, which were, of course, found to satisfy any apportionment concerns

[00:22:29] Speaker 01:
by this court in mentor graphics.

[00:22:32] Speaker 01:
Those factors were properly applied here, and the application of those factors means that the but-for causation has been satisfied and means that the values of apportionment have been vindicated.

[00:22:50] Speaker 04:
Let me ask you one question about delinear.

[00:22:52] Speaker 04:
If I understand it from the record,

[00:22:56] Speaker 04:
that you weren't awarded a reasonable royalty on the sales to the people who conducted the surveys as to which lost profits is being sought.

[00:23:10] Speaker 04:
Am I correct about that?

[00:23:13] Speaker 01:
I'm sorry, were a reasonable royalty asked to whom?

[00:23:16] Speaker 04:
Well, the Glenair case says that you can't get both reasonable royalty

[00:23:22] Speaker 04:
in the lost profits, that once you create a reasonable royalty, you're essentially licensed to do the thing.

[00:23:30] Speaker 04:
As I understand the record, and correct me if I'm wrong, that your position is that there was no award of reasonable royalty with respect to the sales for the surveys as to which lost profits is being

[00:23:49] Speaker 01:
Yet there was no award of reasonable royalties for devices as to which loss profits are claimed.

[00:23:57] Speaker 01:
That is our position.

[00:23:59] Speaker 01:
The jury was specifically instructed, this is a JA 11087, that Western GECO may require either loss profits or reasonable royalty, but not both.

[00:24:09] Speaker 01:
Mr. Sims explained that damages were separate for separate acts.

[00:24:14] Speaker 01:
This was an issue, whether there was a double counting here or an attempt at double recovery was an issue that ION raised at Jamal.

[00:24:23] Speaker 01:
The district court specifically considered that argument and rejected it.

[00:24:27] Speaker 01:
That's a JA35, and they did not appeal.

[00:24:30] Speaker 01:
So it is our position that with respect to lost profits, we were not compensated for those by the reasonable royalty, and so we're not in the situation presented in Glenair.

[00:24:44] Speaker 01:
ask if there are questions with respect to the reasonable royalty award, which is itself the subject here of a separate final judgment, which has been executed.

[00:24:54] Speaker 01:
Indeed, the reasonable royalty amount was paid two years ago.

[00:24:59] Speaker 01:
There have been suggestions in the briefing that that can be reopened at this stage.

[00:25:02] Speaker 01:
We respectfully submit that it cannot.

[00:25:05] Speaker 01:
ION, of course, agreed to entry of a final judgment, and it received benefits in conjunction with that.

[00:25:13] Speaker 01:
That part of the case is completely final, pursuant to this court's original mandate back in 2016.

[00:25:18] Speaker 04:
Okay, well let's hear what they have to say about that, and you'll be able to address that again in the reply.

[00:25:24] Speaker 04:
Unless my colleagues have any further questions, we'll give you three minutes for a revival.

[00:25:31] Speaker 04:
Thank you, Judge Stein.

[00:25:44] Speaker 03:
Good morning, your honors.

[00:25:45] Speaker 03:
May it please the court, David Burrell for ION Geophysical.

[00:25:49] Speaker 03:
If I may start with some of the questions that the court was asking.

[00:25:52] Speaker 04:
Why don't we start with the last question, which is fresh in our mind.

[00:25:57] Speaker 04:
Having paid the judgment reflected by a reasonable royalty, how is it possible that you can get that back?

[00:26:05] Speaker 03:
A final judgment for purposes of this court's decision in Fresenius

[00:26:10] Speaker 03:
is a final judgment that entirely concludes the litigation.

[00:26:14] Speaker 03:
This court was clear about that and relied on the Supreme Court's decision in Simmons v. Greer.

[00:26:20] Speaker 04:
Yeah, but Mob Moffett also says if you've been paid, you can't get the money back, right?

[00:26:26] Speaker 04:
I mean, what case says that having paid a judgment that you can get the money back?

[00:26:31] Speaker 03:
Respectfully, I don't think Moffett quite says that.

[00:26:33] Speaker 03:
Moffett was addressing a surrender issue where the patent wasn't void ab initio as opposed to a cancellation, which is what you had.

[00:26:40] Speaker 04:
in the Simmons case and what you have here but the fact is that you can get the money back.

[00:26:45] Speaker 03:
Well, I think United States versus Morgan suggests that you can get the money back if it was pursuant to a court order and the Qualcomm case that we cite addresses that standard from the Supreme Court in the United States versus Morgan.

[00:26:59] Speaker 03:
We attempted to do so.

[00:27:03] Speaker 03:
Your Honor, the reality here is that we have intervening controlling authority, as this Court put it in the context of its prior case law.

[00:27:12] Speaker 03:
We wouldn't be here asking for the money back, obviously, if the claims hadn't been invalidated.

[00:27:17] Speaker 03:
But the law is clear that there was no final judgment in the sense of a final judgment

[00:27:24] Speaker 03:
adjudicating entirely on the merits, as Simmons versus Greer from the Supreme Court says.

[00:27:29] Speaker 03:
And so that judgment is not fun.

[00:27:32] Speaker 03:
So a party loses a case.

[00:27:34] Speaker 05:
They pay the judgment.

[00:27:37] Speaker 05:
Sometime later, the law changes.

[00:27:40] Speaker 03:
They can come in?

[00:27:41] Speaker 03:
Absolutely not.

[00:27:42] Speaker 03:
Absolutely not.

[00:27:43] Speaker 03:
Because that is a final judgment that conclusively and finally decides the case.

[00:27:48] Speaker 03:
The litigation is entirely concluded, as this court put it in Fresenius.

[00:27:52] Speaker 03:
And the Supreme Court put it in Simmons versus Greer.

[00:27:54] Speaker 03:
That has not happened here.

[00:27:56] Speaker 03:
I'd submit that Simmons versus Greer is a much harder case than this one.

[00:27:59] Speaker 03:
In that case, there were two claims.

[00:28:02] Speaker 03:
There was a patent claim, and then there was an unfair competition claim.

[00:28:05] Speaker 03:
And in that case, the patent claim had been finally adjudicated, pursuant to an appellate decision, and was concluded on the merits.

[00:28:14] Speaker 03:
But there remained, unadjudicated, the unfair competition claim.

[00:28:17] Speaker 03:
But judgment hadn't been paid in that case.

[00:28:19] Speaker 03:
But, respectfully, I don't think the question in Simmons v. Greer or its progeny is whether the judgment had been paid.

[00:28:25] Speaker 03:
The question is whether there's a final judgment that conclusively and finally adjudicates all claims on the merits, and here that's missing.

[00:28:32] Speaker 03:
The fact that we paid the judgment rather than, for example,

[00:28:35] Speaker 03:
Posting a bond on appeal which had the had the judgment been vacated.

[00:28:40] Speaker 03:
We would have received that is really of no moment That's just a question of whom we pay we paid pursuant to a court order which the Supreme Court explained in the United States versus Morgan and then the Qualcomm case further addresses

[00:28:53] Speaker 03:
is sufficient to ask for restitution.

[00:28:56] Speaker 03:
It's not as if we paid out of charity or out of our goodwill.

[00:29:00] Speaker 03:
It was pursuant to a court order requiring the sureties to pay.

[00:29:03] Speaker 03:
And the law is clear, whether Western GECO thinks it's fair or unfair, that we're entitled to litigate at this stage anything that is in the case because the case is not over.

[00:29:14] Speaker 04:
But you set it up yourself so that you would pay the judgment.

[00:29:17] Speaker 04:
It wasn't as though the court said,

[00:29:19] Speaker 04:
I'm not going to delay payment of this judgment.

[00:29:21] Speaker 04:
You stipulated to a final judgment and agreed to pay, right?

[00:29:25] Speaker 03:
After the court ordered that the sureties have to pay the judgment.

[00:29:29] Speaker 03:
So it was under the Qualcomm case, which analyzes Morgan and its progeny, the question is whether the payment was pursuant to a court order or as a result of a court order.

[00:29:37] Speaker 03:
And this clearly meets that test.

[00:29:40] Speaker 04:
The sureties were required to pay the... Where is the order requiring the sureties to pay?

[00:29:45] Speaker 05:
I believe that is...

[00:29:50] Speaker 05:
Were they required to pay it immediately or at the close of the case?

[00:29:58] Speaker 03:
There was not a suggestion that they could pay it later.

[00:30:02] Speaker 03:
Would it be asked for it to be paid later?

[00:30:05] Speaker 02:
I'm just confused as to why you paid when you knew these IPRs were going on.

[00:30:11] Speaker 02:
If they were successful, that might result in a reappraisal of the reasonable royalty rate.

[00:30:16] Speaker 03:
Well, we tried not to pay it.

[00:30:19] Speaker 03:
And we advanced that argument to the district court that we shouldn't have to pay it and that it should be delayed.

[00:30:24] Speaker 03:
And the court ordered that the sureties have to pay the award.

[00:30:27] Speaker 02:
So you didn't appeal from that decision.

[00:30:30] Speaker 02:
I mean, you could have appealed and said it was improper to make us pay because of the ongoing IPR proceedings.

[00:30:37] Speaker 02:
But you didn't.

[00:30:38] Speaker 02:
You actually paid and you stipulated to no appeal.

[00:30:41] Speaker 03:
well we we still do it i think mister jacob mischaracterizes that situation we did not stipulate to no appeal of reasonable royalty just enhancement of damage is sure to that you know we we did not button but but again neither did the parties in for senior's appeal the non the the infringement determination but this is a little bit i i i i i i i i i i i i i i i i i i i i i i i

[00:31:08] Speaker 02:
It seems curious to me that you even agreed to or didn't try to get it stayed while CERT was ongoing in the case because we sent that back.

[00:31:18] Speaker 02:
That part of the case that we sent back hasn't come back to us.

[00:31:23] Speaker 02:
But you're arguing parts of that even though you didn't appeal it.

[00:31:27] Speaker 03:
Right.

[00:31:27] Speaker 03:
And again, as in Simmons v. Greer, there's no requirement that the issue remains appeal or live or even unpaid.

[00:31:36] Speaker 03:
That's not the distinction.

[00:31:37] Speaker 03:
The question is, is the case a final decree in the words of Simmons v. Greer?

[00:31:42] Speaker 03:
And a final decree is one that finally adjudicates the entire case on the merits, and that's missing here.

[00:31:48] Speaker 04:
Where's the order that Shorty set?

[00:31:57] Speaker 03:
I believe the district court docket number is 725.

[00:32:02] Speaker 03:
I'll check that.

[00:32:04] Speaker 03:
725 and 750.

[00:32:04] Speaker 03:
I do not believe that is in the Joint Appendix.

[00:32:10] Speaker 05:
Before the district court, you made a double-counting argument and an apportionment argument in relation to royalties.

[00:32:18] Speaker 05:
Yes.

[00:32:19] Speaker 05:
Did you make that argument in the context of lost profits before the district court?

[00:32:24] Speaker 03:
Well, it was, it was

[00:32:25] Speaker 03:
an argument that the reasonable royalties cannot be awarded on Digifin devices that were used in lost profit surveys.

[00:32:35] Speaker 03:
So it was the same argument that those cannot be double counted.

[00:32:39] Speaker 03:
And Western GCO suggests that the jury didn't do that because the jury wasn't instructed to do that.

[00:32:44] Speaker 03:
But what the record reflects here is that there was no identification

[00:32:49] Speaker 03:
for the jury of which Digifins were used in the lost profit surveys.

[00:32:54] Speaker 03:
So that the jury was not able to say, well, here were the devices used in the lost profit surveys.

[00:33:00] Speaker 03:
Here were the devices used in the non-lost profit surveys.

[00:33:04] Speaker 03:
We'll award reasonable royalties for one set.

[00:33:06] Speaker 03:
and lost profits for the other and thereby ensure that there's no double counting, as Glenn Arrow would require.

[00:33:13] Speaker 03:
It was impossible for the jury to do that.

[00:33:16] Speaker 04:
Western GECOs... It was impossible for them to do it, according to you, but in fact they were instructed to do that, right?

[00:33:22] Speaker 04:
They were told that they couldn't award those profits for

[00:33:26] Speaker 04:
the surveys as to, I mean, they couldn't have more reasonable royalty for the surveys as to which lost profit.

[00:33:31] Speaker 03:
That's true, they were told that, but they certainly weren't equipped to do it and they couldn't possibly have done it.

[00:33:35] Speaker 03:
They could have been told to solve, you know, solve cold fusion while they were at it too.

[00:33:39] Speaker 03:
That doesn't mean they were equipped to do it.

[00:33:41] Speaker 03:
There's no evidence in the record about which Digifins were used in the lost profit survey, which would be a requirement not to double count.

[00:33:48] Speaker 03:
What Western GECO relies on is that the jury gave Western GECO less money in the reasonable royalty than they asked for.

[00:33:56] Speaker 03:
And they say, well, this may have reflected their effort to avoid double counting.

[00:34:01] Speaker 03:
Maybe, but certainly not in any accurate way, because the jury, again, didn't have the evidence it would have required in order to report it.

[00:34:09] Speaker 03:
The district court disagreed with you.

[00:34:10] Speaker 03:
The district court said they were told to not double count.

[00:34:13] Speaker 05:
They clearly worded to avoid double counting and that ION did not object to the jury instructions at trial.

[00:34:19] Speaker 03:
Indeed, they were told not to double count.

[00:34:21] Speaker 03:
That doesn't mean that they, in fact, didn't double count.

[00:34:23] Speaker 03:
There was no evidence that they could have used to stop from double counting.

[00:34:27] Speaker 03:
That's the simple point.

[00:34:29] Speaker 02:
Did you raise this double counting argument on your first appeal?

[00:34:32] Speaker 03:
We raised the unavailability of damages as a whole and lost profits as a whole, but with particularity, no.

[00:34:39] Speaker 02:
Right, this argument would have been available to you.

[00:34:42] Speaker 02:
on your first appeal.

[00:34:44] Speaker 03:
As a subsidiary argument, that is in fact true.

[00:34:46] Speaker 03:
And you didn't make it.

[00:34:47] Speaker 03:
We did not directly make this argument.

[00:34:48] Speaker 03:
We did note that if any of the infringement or other determinations were changed, that a remand would be necessary to redetermine damages.

[00:34:57] Speaker 03:
But you're right, Judge, with respect to this particular question, this was not specifically mentioned.

[00:35:02] Speaker 05:
I don't understand.

[00:35:03] Speaker 05:
Here's the instruction.

[00:35:08] Speaker 05:
If you find that Western Gecko has established infringement, Western Gecko is entitled to at least a reasonable royalty to compensate it for that infringement.

[00:35:17] Speaker 05:
If you find that Western Gecko has not proved its claim for lost profits, or has proved its claim for lost profits for only a portion of the infringing sales, then you must award Western Gecko a reasonable royalty for all infringing sales, for which it has not

[00:35:33] Speaker 05:
been awarded loss, profits, damages.

[00:35:36] Speaker 05:
You didn't object to that, and it seems pretty clear to me.

[00:35:40] Speaker 03:
There's nothing wrong with the instruction.

[00:35:42] Speaker 03:
There's nothing to object to.

[00:35:43] Speaker 03:
That's right.

[00:35:43] Speaker 03:
They shouldn't have double counting, and they're instructed.

[00:35:48] Speaker 05:
Did you argue to the jury that it didn't have enough information to follow that instruction?

[00:35:52] Speaker 03:
We argued that to the court in our JML motion.

[00:35:56] Speaker 03:
I didn't ask you that question, did I?

[00:36:00] Speaker 03:
We argued double counting.

[00:36:01] Speaker 03:
We did argue double counting to the jury as well.

[00:36:03] Speaker 03:
And like, excuse me?

[00:36:05] Speaker 05:
Right.

[00:36:06] Speaker 05:
You gave the jury information that it should avoid double counting.

[00:36:13] Speaker 05:
Is that correct?

[00:36:14] Speaker 03:
That's true.

[00:36:15] Speaker 03:
And the jury was instructed... Went off willy-nilly and disregarded you.

[00:36:21] Speaker 03:
Presumably.

[00:36:22] Speaker 03:
But that certainly doesn't mean that there was evidence in the record that would support its doing so.

[00:36:26] Speaker 03:
And the question here, where I think we clearly have a need to remand this case for a redetermination of damages, given the invalidation of all of Western GECO's broad lateral steering claims, is whether the district court should get it right this time.

[00:36:40] Speaker 03:
And if we're actually to avoid double counting, as Glen Air and the law requires,

[00:36:45] Speaker 03:
It should be required that Western GECO identify the digifins that were used in the Lost Profits Award and ensure that they don't recover reasonable royalties for those same digifins again.

[00:36:56] Speaker 03:
That's simply what the law requires.

[00:36:58] Speaker 05:
Don't your own records reflect the necessity of the utilization covered by Claim 23?

[00:37:09] Speaker 03:
No, they don't at all.

[00:37:10] Speaker 03:
So let me parse this because it's very, very important.

[00:37:13] Speaker 05:
Yes, it is.

[00:37:14] Speaker 03:
And so my colleague talked about turn control mode and line changes as if that's synonymous with claim 23 and so that he can sort of... Could you do it without claim 23?

[00:37:28] Speaker 03:
You could absolutely do it without claim 23.

[00:37:30] Speaker 03:
The entire

[00:37:32] Speaker 03:
basis of Western GECO's lost profits claim, and you can see this from the portion of the testimony they cite in their brief on page 14, is that without the patented technology, lateral steering cannot be used by IONS customers, and lateral steering was required for the surveys.

[00:37:48] Speaker 03:
Those broad claims to lateral steering are gone.

[00:37:51] Speaker 03:
Those are like claim 15 of the 967, claim 18 of the 520, those are all gone.

[00:37:56] Speaker 03:
What's left is a narrow claim.

[00:37:59] Speaker 03:
It's the runt of their patent livery.

[00:38:01] Speaker 03:
and all it claims is one particular way of doing turn control mode.

[00:38:06] Speaker 03:
It's not synonymous with turn control.

[00:38:09] Speaker 03:
If you look at claim 23, it requires a particular series of steps as to how you steer during a turn, to throw out streamers in one direction, to throw them back and then steer them in another direction, and not just do that, but do them in a way so that it returns to something called feather angle mode.

[00:38:25] Speaker 03:
That is one and only one way of- Which of the other claims that were invalidated

[00:38:31] Speaker 04:
talk about the turn control mode?

[00:38:33] Speaker 03:
Well, claim 18 talks about doing either turn control mode, which is, again, not even done during data collection, feather angle mode, which is done during data collection and is really the key mode for streamer steering during a survey.

[00:38:48] Speaker 04:
Claim 18 talks about the turn control?

[00:38:50] Speaker 03:
Yes.

[00:38:50] Speaker 03:
So it's a much broader claim where you can do turn control.

[00:38:53] Speaker 04:
Let's look at claim 18.

[00:38:54] Speaker 04:
Sure.

[00:38:55] Speaker 04:
This is one of the invalidating claims.

[00:38:57] Speaker 04:
It is.

[00:39:01] Speaker 04:
So this is on 536.

[00:39:07] Speaker 03:
Yes.

[00:39:12] Speaker 03:
And what you see in claim 18 is that it's a broad claim that covers using turn control mode,

[00:39:19] Speaker 03:
feather angle mode, or streamer separation mode.

[00:39:21] Speaker 03:
Streamer separation mode is also very important because that is what prevents the streamers from getting tangled with each other, which is a disaster if that happens during a survey such as when you have bad weather.

[00:39:33] Speaker 03:
So that's the broad claim.

[00:39:35] Speaker 03:
And what the PTAP found, again, obviously, since affirmed by this court, is that streamer separation mode is, in the prior art, invalid.

[00:39:48] Speaker 03:
the key mode, this feather angle mode, which is what you use when you're actually collecting data in a survey.

[00:39:53] Speaker 03:
And that's what these companies really wanted, which is accurate data collection.

[00:39:57] Speaker 03:
That's what these surveys are all about.

[00:39:58] Speaker 03:
That's invalid, too.

[00:40:00] Speaker 03:
And so the jury operated in a world where one could not do streamer steering without practicing Western GECO's claims.

[00:40:08] Speaker 04:
Who testified as to the need for the turn control mode technology

[00:40:17] Speaker 04:
for the surveys as to which lost profits were awarded?

[00:40:23] Speaker 03:
No one.

[00:40:25] Speaker 03:
No one said that you had to do that.

[00:40:26] Speaker 03:
I think Your Honor was asking the right question, respectfully, and the answer to the question of whether there's any evidence in the record that Claim 23 was necessary in the award of these surveys

[00:40:41] Speaker 03:
Is that there is no such evidence tying claim 23 and there has to be under this court's case law in mentor graphics and going all the way back to the non-incringing alternative analysis has to be done.

[00:40:53] Speaker 03:
on a patent claim by patent claim basis and a customer by customer basis.

[00:40:57] Speaker 03:
So with respect to each of these surveys, they would have to show that the customer would not have bought the survey but for the technology of claim 23, and that they wouldn't have bought a survey either without any turn control at all or with a different turn control mode that doesn't infringe claim 23.

[00:41:13] Speaker 03:
That evidence is absolutely lacking in the record, and it forecloses any award of lost profits in this case.

[00:41:23] Speaker 03:
You can ask them to come up with evidence.

[00:41:25] Speaker 03:
There is none.

[00:41:26] Speaker 03:
They can try to put together turn control mode or line changes and the importance of that with the surveys.

[00:41:33] Speaker 03:
But again, claim 23 does not cover all turn control modes.

[00:41:37] Speaker 03:
It claims one particular feature.

[00:41:39] Speaker 03:
And that's why we cited the IPR evidence, which is evidence from Western GCO saying, listen, the reason our patent survives and the PTAB should not even institute trial here is that

[00:41:51] Speaker 04:
the prior are recognized term control problems problems recurrence and provided one term control mode that's different art i think we've got a look at the record was made before district court in addressing this question or causation

[00:42:08] Speaker 04:
and not the record of the IPR.

[00:42:11] Speaker 03:
And I agree, Your Honor, but the question is who bears the burden, and obviously Western GECO bears the burden of showing this causation, and whether there's any evidence in the district court record of the sort that you were requiring, connecting not turn control mode generally, not line changes generally, but specifically the features of Claim 23 to the award of each of the lost properties.

[00:42:35] Speaker 05:
You're wrong.

[00:42:36] Speaker 05:
The question is, is there sufficient evidence in the record for the jury to make that determination?

[00:42:43] Speaker 05:
That's the question.

[00:42:44] Speaker 03:
And the answer to that question is absolutely there's not.

[00:42:49] Speaker 03:
Do you agree with that?

[00:42:51] Speaker 03:
Well, I think it's actually a little different under Verizon.

[00:42:55] Speaker 03:
I think the question that you have to ask, this is not a normal sufficiency standard, given the invalidation of all the broad claims.

[00:43:00] Speaker 03:
The question is, what did the jury conclude?

[00:43:04] Speaker 03:
Can we determine why the jury awarded the damages it did and whether those damages were attributable to the sole claim that remains?

[00:43:11] Speaker 03:
And that's why the normal rule in those cases is to send the cases back.

[00:43:16] Speaker 03:
That's the normal rule.

[00:43:16] Speaker 03:
And the only two cases that are not sent back that Western GECO cites in its brief, the Crystal Semiconductor case and Becton Dickinson case,

[00:43:23] Speaker 03:
Both of those cases involved situations where both parties agreed that it shouldn't be sent back and didn't ask for a remand, which obviously we're here asking for a remand.

[00:43:33] Speaker 03:
So the normal rule here is to say, listen, if we have a general verdict like we have here, we look and try to figure out what did the jury do, and generally you can't figure that out because the jury was operating under an assumption that ION's customers could not do lateral steering full stop.

[00:43:50] Speaker 03:
That assumption is now gone.

[00:43:53] Speaker 03:
The lateral steering claims are void ab initio, and so as a normal rule, we send it back unless there's some particular reason not to, and there certainly is no such reason here.

[00:44:02] Speaker 05:
They can take your, the jury can take your client's word that turn control was vital.

[00:44:11] Speaker 03:
Well, again, it has to be done on a customer-by-customer basis.

[00:44:13] Speaker 04:
I think the... Wait, wait, wait.

[00:44:17] Speaker 04:
I thought you were...

[00:44:18] Speaker 04:
point here was that turn control is covered by other claims, for example, claim 18, and that claim 23 is only one aspect of turn control, one subset of it.

[00:44:31] Speaker 03:
One way of doing turn control mode.

[00:44:34] Speaker 03:
Yes.

[00:44:36] Speaker 03:
That's right.

[00:44:36] Speaker 03:
And so they would have to

[00:44:39] Speaker 03:
I mean, the document that was cited respectfully doesn't say anything like that.

[00:44:43] Speaker 03:
It just talks about line changes as a feature.

[00:44:46] Speaker 03:
So I don't think any such evidence is in the record.

[00:44:48] Speaker 03:
The jury would have to find, again, as Metrographic said, as Judge Dyke was asking before.

[00:44:54] Speaker 05:
I seem to recall seeing it.

[00:44:56] Speaker 05:
There was discussion.

[00:44:58] Speaker 05:
Not of the term control mode of Claim 23.

[00:45:00] Speaker 05:
No, no, no, no.

[00:45:02] Speaker 05:
But there was discussion, internal discussion from your company about sales.

[00:45:07] Speaker 05:
That's what I'm remembering.

[00:45:09] Speaker 03:
That's right, but again, the jury would have to find that Claim 23 was the basis for the sales on a customer by customer basis, and those sales would not have been made absent the features of Claim 23.

[00:45:22] Speaker 03:
The customers would not have accepted either something that didn't practice Claim 23 because it didn't have term control at all, or a different kind of term control, a non-infringing alternative.

[00:45:33] Speaker 03:
Absent that showing, there's no lost profits.

[00:45:36] Speaker 03:
That's from grain processing on forward, the black letter law.

[00:45:40] Speaker 03:
And so that's what Western GCO would have to show.

[00:45:43] Speaker 03:
They certainly didn't show that below.

[00:45:44] Speaker 03:
There's no evidence in the record tying claim 23 to the decision by these customers to

[00:45:50] Speaker 03:
by these surveys from ION's customers.

[00:45:55] Speaker 03:
And so Western GECO basically is at a place where they have no evidence in the record to support the jury verdict on claim 23, which wasn't even the basis, of course, for the jury's determination, given that the jury rendered a verdict under the assumption that lateral steering was not possible.

[00:46:11] Speaker 03:
Exactly what Western GECO's

[00:46:13] Speaker 03:
Experts told them, in the then existing world, where Western Chico's other claims were valid, which is of course what the jury thought.

[00:46:19] Speaker 04:
Could we turn to the apportionment question, unless you have another question?

[00:46:22] Speaker 04:
Yeah.

[00:46:22] Speaker 04:
Let's turn to the apportionment question.

[00:46:26] Speaker 04:
Let's assume that there are, hypothetically, that there is but four causation.

[00:46:32] Speaker 04:
Does there have to be apportionment among the various features

[00:46:39] Speaker 04:
of the technology, since some of the claims have been invalid, and apportionment of the profits attributable to the division of the vote.

[00:46:48] Speaker 04:
And that's point one.

[00:46:49] Speaker 04:
Point two is, did you argue this?

[00:46:51] Speaker 03:
Well, let's talk about point one first and then we'll get to point two.

[00:46:55] Speaker 03:
The answer to point one first is absolutely there has to be apportionment.

[00:47:00] Speaker 03:
The Supreme Court has made clear for 150 years that the patentee in the name of full compensation, which is what the Supreme Court said again in this Western GECO case this year, must

[00:47:13] Speaker 03:
In all cases separate or a portion between the patented feature and the other features of the product that was the garrison versus Clark case in 1884 and the later cases like Dobson.

[00:47:25] Speaker 03:
and Blake versus Ferguson and Seymour, they all say the same thing, that you have to conduct an apportionment analysis that it is overcompensating a patentee if you give him more than the value of the patented feature, because they're not allowed to profit from the now invalidated features, let alone the features that they never patented that were relevant to the surveys, including, for example, the vessel itself.

[00:47:52] Speaker 03:
the data analysis from the survey, the streamers themselves.

[00:47:56] Speaker 03:
These devices are one small component of enormous surveys and given what remains of the patent portfolio, the detritus of claim 23, the notion that that should somehow support an award of lost profits for the entire survey is contrary to

[00:48:14] Speaker 03:
more than a century of Supreme Court case law.

[00:48:16] Speaker 03:
Did you raise the issue?

[00:48:17] Speaker 03:
Well, we raised the issue that lost profits were per se unavailable because of the direct competition requirement.

[00:48:25] Speaker 03:
We raised that issue before the Court.

[00:48:26] Speaker 03:
That issue remains and... No, no, apportionment.

[00:48:29] Speaker 04:
Did you raise the argument that apportionment was necessary?

[00:48:34] Speaker 04:
Well... I mean, the apportionment issue is not created by the invalidation of these other claims because, as you mentioned, there are other features

[00:48:43] Speaker 04:
that go into the survey, the provision of the boat, the provision of the streamers.

[00:48:47] Speaker 04:
And so the apportionment argument exists even before the invalidation of the other claim.

[00:48:53] Speaker 03:
It's quite different now, given that lateral steering is off the table.

[00:48:57] Speaker 03:
But I grant you that.

[00:48:58] Speaker 03:
But I would submit that in arguing that lost profits are unavailable because of the absence of direct competition here.

[00:49:06] Speaker 03:
That says Loft's profits are completely off the table, and the direct competition is relevant to the apportionment analysis as well in this Court's decision in Mentor Graphics, where the Court basically tries to address the question of whether apportionment is required

[00:49:25] Speaker 03:
and says creates an exception into which this case does not fit and says that there can be in such cases only one award of lost profits because you have two companies they are mentor graphics and synopsis competing for the same sales and a party shows the patentee shows that but for the infringement it would have made that sale so in that particular case mentor graphics says you have this direct competition and so apportionment is not required we submit that

[00:49:54] Speaker 03:
That standard is not met here.

[00:49:57] Speaker 03:
ION does not directly compete for the same customers with Western GECO.

[00:50:01] Speaker 03:
Therefore, lost profits are completely off the table.

[00:50:03] Speaker 03:
And as a subsidiary point to that, absent direct competition, there can be no excuse to avoid the 150 years of consistent Supreme Court precedent requiring apportionment between patented and non-patented features.

[00:50:17] Speaker 03:
And this case screams out for that.

[00:50:19] Speaker 05:
Explain to me how you deal with your experts

[00:50:24] Speaker 03:
uh... tested testimony that he based his uh... damages model infringement on quote at least one valid claims and i'm glad you asked me that because i think i think that's that that that's uh... perfect example where the record is being over read if you look at that police and i looked at well indeed and so if you look at that it's d k t five oh seven at twenty six six at forty six fifty six here what he says is that i see it at twenty seven

[00:50:54] Speaker 03:
And what he says precisely is that lost profits are unavailable for several reasons.

[00:51:03] Speaker 03:
So he articulated the view to the jury, and let's be clear, the jury completely rejected what he said.

[00:51:09] Speaker 03:
So it certainly wasn't the basis for anything the jury did.

[00:51:12] Speaker 03:
But what he says was lost profits were zero, whether you had five Biddleston claims valid or infringed, zero Biddleston claims valid or infringed, or one Biddleston claim valid and infringed.

[00:51:23] Speaker 03:
zero all the time.

[00:51:24] Speaker 03:
The notion that that's somehow an admission, that a lost profits award of 93 million dollars is appropriate when one narrow claim is valid and infringed, respectfully is mind-boggling.

[00:51:37] Speaker 03:
He admitted no such thing.

[00:51:39] Speaker 03:
He simply admitted that his model has to be... He said his model assumed at least one valid claim.

[00:51:45] Speaker 03:
That's right.

[00:51:46] Speaker 03:
As all lost profits... What was his model?

[00:51:49] Speaker 03:
Well, his model was how much would Western GCO have lost?

[00:51:53] Speaker 03:
with the infringement.

[00:51:54] Speaker 03:
And so he was attacking various aspects of the SIMS model and SIMS analysis, which said, here's my analysis, and you can't do streamer steering without invalidating the claims.

[00:52:08] Speaker 03:
And so he basically said, these 10 surveys all require streamer steering, so Western GECO gets lost profits for them.

[00:52:16] Speaker 03:
our expert assumed as every single damages expert in every lost profits case around the country does every day.

[00:52:23] Speaker 03:
that one claim is valid and infringed, at least one, because otherwise you, of course, have no lost profits and you have no damages.

[00:52:31] Speaker 03:
So every one of these non-technical experts says, that's the assumption I'm making.

[00:52:35] Speaker 03:
I'm not getting into the details of the claims or any of the technical analysis.

[00:52:39] Speaker 03:
I'm just making that assumption.

[00:52:41] Speaker 03:
And what he says is, lost profits under any scenario are zero.

[00:52:45] Speaker 03:
Zilch.

[00:52:46] Speaker 03:
He never suggested that lost profits should be $93 million, but only claimed 23 of the 520 patents is upheld, and nor did Mr. Sam's Western GECO's expert.

[00:52:58] Speaker 03:
He just, of course, assumed that all the claims survived, not all, sorry, all the patents survived, because each one would prevent

[00:53:07] Speaker 03:
Ion's customers from using lateral steering, not that one claim survives.

[00:53:11] Speaker 03:
And Western GECO sort of changes the phraseology between its first brief where it actually quotes the testimony and its reply.

[00:53:19] Speaker 03:
Yeah, I don't have any more.

[00:53:21] Speaker 03:
OK, all right.

[00:53:23] Speaker 04:
Thank you, Mr. O'Brien.

[00:53:24] Speaker 04:
Thank you very much.

[00:53:26] Speaker 04:
Mr. Burrell, you have three minutes here.

[00:53:32] Speaker 01:
Thank you, Judge Dyke.

[00:53:33] Speaker 01:
Again, John O'Quinn on behalf of Western GECO.

[00:53:35] Speaker 04:
Let me start with... What about the Morgan case and the question of whether it's possible if a district court orders a judgment to be paid, orders the sureties to pay the judgment that there's a possibility of recovering it?

[00:53:49] Speaker 04:
Is that correct?

[00:53:50] Speaker 01:
Yeah, so Morgan deals with the question of restitution.

[00:53:53] Speaker 01:
And restitution, of course, is ultimately an equitable... A separate lawsuit or what?

[00:53:57] Speaker 01:
Well, it was the idea that you could then go back and use... What happened in Morgan, in other words?

[00:54:03] Speaker 01:
I haven't read the case.

[00:54:04] Speaker 01:
I don't recall the specifics of what happened in Morgan, Judge Dyke, but my understanding is that what the court said was that potentially you could have a claim for restitution, restitution being an equitable doctrine.

[00:54:16] Speaker 01:
And here, of course, you have a situation where Ion agreed to the entry of final judgment

[00:54:22] Speaker 04:
And for that part of the case... They say it was done under compulsion because the district court ordered the sureties to satisfy the judge.

[00:54:30] Speaker 04:
Tell us what happened.

[00:54:32] Speaker 01:
So there are a number of different things that happened and Mr. Burl is kind of mushing them all together.

[00:54:39] Speaker 01:
This court, it rendered a final decision that remanded nothing to the district court in 2015.

[00:54:49] Speaker 01:
In 2016, following the Supreme Court's GVR, this court remanded the issue only with respect to enhancement.

[00:54:58] Speaker 01:
This court never remanded, and to this day has never remanded, the issue of reasonable royalty, which, as we talked about before, there's no double counting.

[00:55:06] Speaker 01:
That goes to different distinct acts of patent infringement.

[00:55:10] Speaker 04:
One issue at a time.

[00:55:11] Speaker 01:
Sorry.

[00:55:11] Speaker 01:
No, no, no.

[00:55:13] Speaker 01:
They're related only in the sense that under Hazelquist and Aspects I wear,

[00:55:18] Speaker 01:
Those are, of course, distinct acts of patent infringement.

[00:55:22] Speaker 01:
So the only thing that the district court had before it ever on remand was the issue of enhancement.

[00:55:29] Speaker 01:
Now, on remand, we sought to execute, following this court's precedent in King v. Otari, which made clear that this court can render a decision that renders part of the case final while part of the case is still open, we sought to execute

[00:55:43] Speaker 01:
on the reasonable royalty because there was nothing to be done vis-a-vis reasonable royalty.

[00:55:49] Speaker 01:
That part of the case was over, finished, final, and could never be appealed back to this court.

[00:55:55] Speaker 01:
And the district court ultimately granted execution.

[00:55:58] Speaker 01:
Now, at the same time, you had the remand from this court with respect to the enhancement.

[00:56:04] Speaker 04:
So they say that they agreed to the payment of the satisfaction of that part of the judgment.

[00:56:11] Speaker 04:
under compulsion from the district court.

[00:56:13] Speaker 04:
Is that correct then?

[00:56:14] Speaker 01:
Well, only in the sense that there was nothing else left to be done.

[00:56:19] Speaker 05:
Compulsion in the sense that you could collect.

[00:56:20] Speaker 01:
Right.

[00:56:21] Speaker 01:
Exactly.

[00:56:21] Speaker 01:
Correct.

[00:56:22] Speaker 01:
There was nothing else left to be done in terms of execution.

[00:56:25] Speaker 01:
This court had a firm with respect to the reasonable royalty.

[00:56:28] Speaker 02:
Sure, but that's the same thing that happened in Fresenius, too.

[00:56:31] Speaker 01:
But it's not Judge Hughes.

[00:56:33] Speaker 01:
I mean, the difference here is they paid.

[00:56:35] Speaker 01:
I think there are two fundamental differences.

[00:56:37] Speaker 01:
Yes, there is the difference that they paid.

[00:56:40] Speaker 01:
But second, in Fresenius, this court actually had issued a general remand.

[00:56:45] Speaker 01:
And indeed, that's how this court distinguished the DC Circuit's decision in Qualcomm.

[00:56:49] Speaker 01:
This court had issued a general remand.

[00:56:51] Speaker 01:
And on remand, there was a motion for a new trial on damages, because some of the claims had been found to be either infringed or not invalid, and some of the claims had not.

[00:57:01] Speaker 01:
And the court below in Fresenius denied execution.

[00:57:06] Speaker 01:
And it denied execution, saying even though it was denying the motion for a new trial, that it was appropriate to seek a new trial because of the remand.

[00:57:12] Speaker 01:
This court's decision, both in 2015 and in 2016, remanded nothing with respect to the reasonable royalty.

[00:57:20] Speaker 01:
2015 remanded nothing at all.

[00:57:22] Speaker 01:
In 2016, only the issue of enhancement.

[00:57:25] Speaker 01:
That then brings us to docket entry 769 and 770, which is the entry of final judgment with respect to the issues that remain in front of the district court.

[00:57:35] Speaker 01:
And that's where you actually had an issue litigated in front of the district court on enhancement.

[00:57:41] Speaker 01:
And the parties then did agree, and not just to not appeal enhancement, but agreed to the entry of a final judgment from which no appeal was taken.

[00:57:51] Speaker 01:
And I think that is absolutely dispositive with respect to all of the issues which this court had affirmed or had remanded because no appeal was taken.

[00:58:01] Speaker 01:
as to the remand.

[00:58:01] Speaker 01:
And that makes this fundamentally different from Fresenius, where things had been remanded that were then back in front of this court, and from E+, where things had been remanded and then were back in front of this court.

[00:58:11] Speaker 01:
Because there the issue was that the injunction wasn't final.

[00:58:14] Speaker 01:
With reasonable royalty and underlying acts of patent infringement, it absolutely was final.

[00:58:19] Speaker 01:
And it would be one way you could think about what the district court ultimately did here, of course, is consistent with the Fifth Circuit line of cases that you can sever parts of cases.

[00:58:28] Speaker 01:
That's United States versus O'Neill.

[00:58:30] Speaker 01:
709 F second 361 and in entering a final judgment with the things that the district court had before it.

[00:58:37] Speaker 01:
It was her second before that.

[00:58:40] Speaker 01:
Well it's like there wasn't a 54 B judgment and I don't know how the district court.

[00:58:45] Speaker 05:
Was there a 54 B certification.

[00:58:47] Speaker 01:
Yeah.

[00:58:48] Speaker 01:
And I don't know how there would have been because that the district court was resolving literally everything that it had in front of it at the time when it entered into the final judgment which again

[00:58:58] Speaker 01:
Ion agreed to, and Ion got benefits from that.

[00:59:01] Speaker 04:
We agreed... Where is the final judgment that was entered with their agreement?

[00:59:05] Speaker 04:
Where in the record is it?

[00:59:07] Speaker 01:
769 is the... Page 769?

[00:59:09] Speaker 01:
No, no, it's a docket entry.

[00:59:11] Speaker 04:
Is it in the Joint Appendix?

[00:59:12] Speaker 01:
It's not in the Joint Appendix, because this post-dates the Joint Appendix.

[00:59:16] Speaker 01:
769 is the docket entry with the joint motion for entry of judgment and includes the party's agreement.

[00:59:25] Speaker 01:
as an attachment.

[00:59:26] Speaker 05:
And what you will see is that agreement specifically... I know you're excited, Mr. O'Quinn, but are you going to tell us... Are you going to tell us where in the record we can find Claim 23?

[00:59:39] Speaker 01:
So if I may judge well, let me just finish this one thought and then I'll turn to that and then I want to come back to the issue of apportionment.

[00:59:48] Speaker 01:
So 769 and then 770 is the entry of the judgment

[00:59:52] Speaker 01:
And to be clear, they entered that weeks before argument was scheduled to be had in this court in the IPR appeals.

[00:59:58] Speaker 01:
It wasn't like the IPRs came out of nowhere and surprised them.

[01:00:02] Speaker 01:
They entered knowing full well about that with no reservation of rights whatsoever.

[01:00:06] Speaker 01:
And it was not raised.

[01:00:07] Speaker 01:
And it was not raised.

[01:00:08] Speaker 01:
And the same is true on apportionment.

[01:00:12] Speaker 01:
I promise I'll come to the question on the record.

[01:00:15] Speaker 01:
But vis-a-vis apportionment, they never asked, for example, for their expert

[01:00:20] Speaker 01:
or for any of their witnesses to address apportionment at trial, and they did not appeal apportionment to this court.

[01:00:27] Speaker 01:
You can look through their original briefs in this case.

[01:00:30] Speaker 01:
You won't find the word apportionment.

[01:00:32] Speaker 01:
It is not in there.

[01:00:33] Speaker 01:
They didn't raise it, and the Supreme Court's limited remand on the issue that remained in the case does not open up the argument for them to be able to take on and address apportionment at this point in time.

[01:00:46] Speaker 01:
Now, coming back

[01:00:49] Speaker 01:
Judge Wallach, let me share what I have, and then I'll tell you what I don't have.

[01:00:53] Speaker 01:
What I don't have with me is the entirety of our technical experts' testimony.

[01:01:01] Speaker 01:
Is that Walker?

[01:01:03] Speaker 01:
It's Dr. Trifil.

[01:01:06] Speaker 01:
He's your infringement expert?

[01:01:07] Speaker 01:
Transfilio.

[01:01:08] Speaker 04:
He's the infringement expert?

[01:01:09] Speaker 01:
He is a technical expert, addresses infringement, and I can't help.

[01:01:14] Speaker 04:
But he doesn't address the surface, right, and the necessity for the

[01:01:19] Speaker 04:
the technology for the survey.

[01:01:20] Speaker 01:
And that's Walker, right?

[01:01:23] Speaker 01:
It's Walker, I believe, who talks about the surveys.

[01:01:26] Speaker 01:
And I don't have the entirety of the transcript of him with me.

[01:01:30] Speaker 01:
And with the court's permission, I'll submit a very straightforward, non-argumentative letter on Monday that just cites what we think are the best transcript sites that we have from the record in which they reference claim 23.

[01:01:44] Speaker 01:
What I can provide you today are a couple of things.

[01:01:48] Speaker 01:
First, the inventor, Biddleston, does discuss the benefits of his invention, and he is discussing the benefits of turn control mode at JA 1531.

[01:01:58] Speaker 04:
Yeah, but what they're saying, and I think this is what you need to respond to, is that the turn control mode is claim 18, which is invalidated, and that claim 23 is not the entirety of the turn control mode, but just one limited S.

[01:02:15] Speaker 01:
That is entirely false, Judge Dyke.

[01:02:19] Speaker 01:
Claim 18 doesn't claim some broader turn control mode.

[01:02:24] Speaker 01:
It does refer to turn control, doesn't it?

[01:02:29] Speaker 01:
It does, but what it is referring to is then what is claimed in claim 23.

[01:02:35] Speaker 01:
Claim 18 talks about a system that has one or more of the following features.

[01:02:41] Speaker 01:
Then claim 19

[01:02:43] Speaker 01:
which was feather angle mode, is describing one of those and specifically claiming one of those features in the same way claim 23 is then claiming the turn mode, the turn control mode feature.

[01:02:56] Speaker 01:
And the question ultimately, of course, doesn't have to be, and I think mentor graphics is expressly clear about this, it doesn't have to be that that was the sole basis for the sale.

[01:03:12] Speaker 01:
The question has to be, would we have made the sale but for the infringement?

[01:03:18] Speaker 01:
And you have the witnesses going through and addressing what were the alleged non-infringing alternatives and whether or not they were acceptable.

[01:03:31] Speaker 01:
And they weren't.

[01:03:32] Speaker 01:
And that's, for example, at trial transcript 2293, 2290, 1073 to 75.

[01:03:41] Speaker 01:
And indeed, Ion itself identified no alternatives to Western GECO system.

[01:03:46] Speaker 04:
But I'm not sure that he's talking about alternatives.

[01:03:48] Speaker 04:
I'm not sure that that's the question.

[01:03:50] Speaker 04:
The question is whether this additional feature was necessary to perform the surveys.

[01:03:57] Speaker 04:
To be sure, if there were an alternative, that would be relevant.

[01:04:00] Speaker 04:
But I don't think that the absence of an alternative to that is necessarily dispositive, because you might not need the feature at all.

[01:04:09] Speaker 01:
Well, Judge Dyke, the turn mode... 18 is the apparatus.

[01:04:16] Speaker 05:
23 is how you use it.

[01:04:19] Speaker 01:
No, 23 is an apparatus claim, too.

[01:04:21] Speaker 01:
It covers a system that is configured to use the specified turn control mode.

[01:04:25] Speaker 01:
So it runs to the entire apparatus.

[01:04:28] Speaker 01:
The claim is to the entirety of the apparatus.

[01:04:31] Speaker 01:
While Mr. Burrell colorfully described it as being the runt of the litter, I would refer you to Docket 562 of page 29, this turn control mode.

[01:04:43] Speaker 01:
I understand they're the latest counsel, but they said this turn mode is one of the most important benefits of the patent.

[01:04:51] Speaker 01:
And the turn mode was discussed at trial, again, Biddleston at 1531 to 32.

[01:04:56] Speaker 04:
There's a fact witness... Whether that turn control mode is Claim 18 or whether it's Claim 23.

[01:05:06] Speaker 01:
Well, Judge Dyke, there's no suggestion that it's Claim 18.

[01:05:09] Speaker 01:
I mean, again, when you look at how... I heard him suggest that it was.

[01:05:12] Speaker 01:
I don't understand that that purported reading of the patent, because the way the patent is written,

[01:05:24] Speaker 01:
Claim 18 is an apparatus comprising an array of streamers, and then it goes on to say, you know, a control system configured to use a control mode, selected from a feather angle mode, a turn control mode, a streamer separation mode, and two or more of these modes.

[01:05:43] Speaker 01:
And then claim 23 goes on.

[01:05:45] Speaker 01:
to explain what the turn control mode was.

[01:05:47] Speaker 01:
And the court at claim construction defined control.

[01:05:51] Speaker 04:
I think we're about out of time.

[01:05:53] Speaker 01:
Well, if I may make two final points with your indulgence, Your Honor.

[01:05:58] Speaker 01:
One is that the court at claim construction construed one turn control mode, not different ones for different claims.

[01:06:04] Speaker 01:
And two, in terms of some additional testimony that I can point you to that is in the joint appendix, I would point you to JA 1282 and JA

[01:06:14] Speaker 01:
26-15, both of which are discussing what the importance of the turn control mode was, which is to get this turned around more quickly.

[01:06:24] Speaker 01:
The question is never can you turn a system around.

[01:06:26] Speaker 00:
I think that's about it.

[01:06:27] Speaker 00:
Thank you, Judge Duck.

[01:06:29] Speaker 00:
Thank you, Mr. O'Connor.

[01:06:30] Speaker 00:
Thank you, Mr. Burrow.

[01:06:30] Speaker 00:
The case is submitted.

[01:06:31] Speaker 00:
Thank you, Your Honor.