[00:00:04] Speaker 02:
The next case for argument is 171601 ZUP versus Nash Manufacturing.

[00:00:41] Speaker 01:
Good morning.

[00:00:43] Speaker 01:
Good morning, Your Honors.

[00:00:44] Speaker 01:
Matt Warsen for Zupp LLC.

[00:00:48] Speaker 01:
I'd like to start, if I may, by highlighting very quickly the key facts that we believe requires a reversal of the grant of summary judgment below.

[00:01:03] Speaker 01:
And those facts are these.

[00:01:06] Speaker 01:
That what you have here is a defendant that is highly sophisticated.

[00:01:11] Speaker 01:
in the field of invention.

[00:01:13] Speaker 01:
Nash manufacturing, and the record evidence shows this, has been in the business for over 50 years.

[00:01:22] Speaker 01:
The evidence also shows that Nash has developed many products in this field of invention and has obtained patents on those inventions.

[00:01:34] Speaker 01:
And Nash approached Zupp, the plaintiff here, and acknowledged

[00:01:41] Speaker 01:
and this is record evidence, acknowledged a long felt need, acknowledged on a telephone conference that there is a challenge within this industry of being able, the athletic and the non-athletic, to get up out of the water into a water skiing position.

[00:02:05] Speaker 01:
The parties talked about this with a hypothetical.

[00:02:10] Speaker 01:
Wally Weekender, a middle-aged man, perhaps just like myself, who wants to enjoy water sports with his kids.

[00:02:24] Speaker 04:
Are you saying that this case comes down to long-felt need that all the pieces were in the prior art otherwise?

[00:02:36] Speaker 01:
That is not our position, Your Honor.

[00:02:38] Speaker 04:
No, but you've got foot bindings and handles and toe hook and all this stuff is in the prior art.

[00:02:47] Speaker 04:
So what's the big deal about putting them all together?

[00:02:51] Speaker 01:
Well, so the district court's analysis is, as we say in the brief, hindsight defined.

[00:02:59] Speaker 01:
What the district court and it expressly in its analysis essentially says that the inventor here, Glenn Duff,

[00:03:09] Speaker 01:
reviewed the prior art, found these three components, and just combined them.

[00:03:15] Speaker 01:
But of course, this court has many decisions.

[00:03:18] Speaker 01:
That's a faulty analysis.

[00:03:22] Speaker 04:
But they all relate to water boards.

[00:03:27] Speaker 04:
Correct.

[00:03:27] Speaker 04:
And so there are a limited number of things you can do with a water board for stability and enjoyment.

[00:03:35] Speaker 01:
I'd like to train attention on page 270 of the appendix where the examiner finds that none of the prior art had these three components that a user, a non-athletic user or a user could simultaneously engage to get up out of the water.

[00:04:03] Speaker 01:
So, for example, if we go to the district... Well, I don't think that's disputed.

[00:04:07] Speaker 02:
I think there's several things here that aren't disputed.

[00:04:10] Speaker 02:
One is, I don't think you're disputing, as Judge Laurie pointed out, that all of the individual elements existed in the prior art.

[00:04:18] Speaker 02:
I didn't think that was an issue of dispute.

[00:04:20] Speaker 02:
I thought the issue of dispute was really whether or not there was an adequate motivation to combine those pieces of prior art.

[00:04:27] Speaker 01:
I would, and perhaps it's quibbling, but... Well, so tell us what wasn't in the prior... Well, the handles, for example.

[00:04:35] Speaker 01:
The side-by-side handles were not... And if the court looks at the Clark reference and the 1939 stunt board that was excluded from evidence, that provided the handles.

[00:04:58] Speaker 01:
But there are no handles, and the district court makes a finding from earlier in the prosecution of this patent when the claims were much more broad and where there were no handles.

[00:05:16] Speaker 01:
And so the examiner made a finding that, well, the way this claim is drafted, Clark

[00:05:25] Speaker 01:
is invalidating of the death pat.

[00:05:30] Speaker 01:
So the district court can't then use that as obviousness analysis and say, well, I get the handles with Clark.

[00:05:39] Speaker 01:
And again, perhaps it's quibbling.

[00:05:42] Speaker 01:
But I think it underscores that there is a disputed issue.

[00:05:49] Speaker 01:
And certainly, it's not the province of the district court judge

[00:05:54] Speaker 01:
to call shots on that.

[00:05:56] Speaker 01:
And if I can get back to Longfellow Need, I mean, we have it in the record that this defendant has been in the industry for 50 years and approaches up and says, you have a great idea here.

[00:06:13] Speaker 01:
It's a challenge in the industry to get full participation in this endeavor.

[00:06:20] Speaker 01:
Now, we don't stop there.

[00:06:23] Speaker 02:
What does it mean, you said, to get full participation in this endeavor?

[00:06:30] Speaker 02:
Are you talking about combining individual elements or are you talking about something else?

[00:06:33] Speaker 01:
I'm talking about very simply just the ability to get up out of the water when you water ski.

[00:06:40] Speaker 01:
It requires a lot of athleticism and strength.

[00:06:44] Speaker 01:
And so this invention is born out of the inventor here, Glenn Duff,

[00:06:51] Speaker 01:
wanted full participation in this fun activity with his church group so that non-athletic kids, athletic kids, they could all fully participate.

[00:07:05] Speaker 01:
And so that's where this invention was born.

[00:07:08] Speaker 01:
And its simultaneous engagement of the toe hook, the side-by-side handles, and the side-by-side foot bindings

[00:07:20] Speaker 01:
which the examiner here, and again, 270 of the appendix, made a finding that deserves deference, that none of the prior art had these three elements to be simultaneously engaged.

[00:07:48] Speaker 01:
To move on to the contributory infringement issue, the district court applied the Sony case, the copyright Sony case, to hold that there is a substantial non-infringing use here, because like the Sony case, a VCR could be used to record a non-copyrighted program.

[00:08:18] Speaker 01:
We believe strongly that the Rico case applies.

[00:08:23] Speaker 01:
This court's Rico case, which holds that a defendant cannot bundle infringing and non-infringing components.

[00:08:34] Speaker 01:
And in this case, the configuration of the Versa board, which is the accused device, in a manner with the tow hook, with the side-by-side handles,

[00:08:47] Speaker 01:
and with the side-by-side foot bindings, that is configured.

[00:08:51] Speaker 01:
That is a component that is infringing and that can be only used to infringe.

[00:08:58] Speaker 01:
And what we have in the record is a YouTube video which demonstrates direct infringement of claim nine of the 681 path.

[00:09:11] Speaker 01:
And to distinguish Sony, I would

[00:09:16] Speaker 01:
I would give the following example.

[00:09:19] Speaker 01:
A user in Sony uses the device in the same way when he infringes or when he doesn't infringe.

[00:09:33] Speaker 01:
He plugs in the VCR and he hits the record button.

[00:09:40] Speaker 01:
We don't have that here.

[00:09:41] Speaker 01:
What we have is use of the patented device

[00:09:47] Speaker 01:
in a manner that infringes.

[00:09:50] Speaker 01:
And that's how we distinguish the Sony case.

[00:09:56] Speaker 01:
Unless the court has further questions, I'll reserve for the rest of my time.

[00:10:00] Speaker 01:
Thank you.

[00:10:06] Speaker 00:
Thank you.

[00:10:06] Speaker 00:
Mr. Cleveland.

[00:10:08] Speaker 00:
Thank you, Your Honors, and may it please the court.

[00:10:09] Speaker 00:
Good morning.

[00:10:10] Speaker 00:
My name is Joe Cleveland.

[00:10:11] Speaker 00:
I represent the Appalachian Nash Manufacturing

[00:10:15] Speaker 00:
In my remarks this morning, I would like to focus on two key points.

[00:10:19] Speaker 00:
First, to explain how claims one and nine of the patent are obvious and how the mere presence of secondary factors or considerations.

[00:10:27] Speaker 04:
I think you mean were obvious.

[00:10:29] Speaker 00:
Yes, sir.

[00:10:29] Speaker 00:
Rather than are.

[00:10:30] Speaker 04:
We're not talking about now.

[00:10:31] Speaker 00:
Right.

[00:10:32] Speaker 00:
We're talking about would have been obvious to a person who would have stole the art.

[00:10:35] Speaker 00:
And second, I'd like to demonstrate how Zupp failed to prove Nash contributory infringed the patent.

[00:10:42] Speaker 00:
This is a textbook obviousness case.

[00:10:46] Speaker 00:
I thought that it was undisputed that all the limitations of the 681 patent.

[00:10:49] Speaker 00:
Well, your friend says that the handles weren't in the prior art.

[00:10:52] Speaker 02:
So is that a disputed issue of fact?

[00:10:54] Speaker 00:
I don't believe so, Your Honor, because it's in the Fleischmann patent, and it's in the Stewart patent.

[00:11:00] Speaker 00:
The Fleischmann patent has two side-by-side handles on the front of a water recreational device.

[00:11:06] Speaker 00:
And the Stewart patent has two side-by-side

[00:11:13] Speaker 00:
palm grips, I think it's described in specs, that the district court said were functionally equivalent to side-by-side handles.

[00:11:23] Speaker 00:
So I don't think there's any dispute that all the claimant limitations of the 681 patent were found in the prior art.

[00:11:31] Speaker 00:
And there are limited, finite, as you mentioned, Judge Laurie, a number of things that could be done to stabilize the board and to make it

[00:11:38] Speaker 00:
easy to use.

[00:11:39] Speaker 02:
Yeah, but if we assume this seems like a good idea and it seems like your company thought it was a good idea or at least expressed that to your friend on the other side at some point, isn't that sort of probative at least that some long-felt need that no one else had come up with, even assuming that the element, the prior art contained all the individual elements, no one thought to combine that prior to Mr. Nash?

[00:12:08] Speaker 00:
Just because there's a long period of time that no one thought to combine this doesn't mean that it's not obvious.

[00:12:13] Speaker 00:
I mean, that's in the case law.

[00:12:15] Speaker 00:
But with respect to the comment that was made by my client, I think it was they were starting a business relationship.

[00:12:22] Speaker 00:
And actually, the record shows that Zupp approached Nash about manufacturing a board for them.

[00:12:30] Speaker 00:
And I think there was a comment that was made in the beginning of a business relationship.

[00:12:38] Speaker 00:
evidence of a long felt need, because there was no long felt need that was unresolved in the industry.

[00:12:45] Speaker 00:
I mean, there's a lot of products out there that in its reference in the specs of a lot of the prior art that's out there that talks about these various elements that the engineers and designers were motivated to use to stabilize the board, to stabilize positions on the board, to allow riders to do simultaneous positioning on the boards at various

[00:13:08] Speaker 00:
points in time during the ride.

[00:13:09] Speaker 00:
So I think that was all available in the prior art.

[00:13:12] Speaker 00:
Wasn't there considerable commercial success with this product?

[00:13:15] Speaker 00:
There's about $1.2 million or so in sales.

[00:13:18] Speaker 02:
I don't know where that stands relative to the sales.

[00:13:20] Speaker 00:
We don't either.

[00:13:20] Speaker 00:
I mean, that's the record.

[00:13:22] Speaker 00:
The record is that there's no evidence of what share of the market that is or what that represents.

[00:13:28] Speaker 00:
And the case law that this court has held is that there has to be some nexus between the gross revenues and the

[00:13:38] Speaker 00:
claimed invention, and there is no evidence of any connection or nexus between those gross revenues and the claimed features.

[00:13:47] Speaker 03:
That's now explained to me why setting aside whether there was or wasn't a long felt need, but it was observed by your client that there's a possible market for such a device, why not just make one of the devices in the prior art rather than adopt

[00:14:08] Speaker 03:
the changes, large or small, which this patentee made for the purpose of facilitating standing up.

[00:14:19] Speaker 00:
Right.

[00:14:20] Speaker 00:
Well, it's not an exact replica.

[00:14:23] Speaker 00:
The Versa board, my client's board, is not an exact replica of the patent.

[00:14:30] Speaker 03:
It's not exact, but it certainly isn't an exact replica of what's in the prior art.

[00:14:35] Speaker 03:
So there were changes made that

[00:14:38] Speaker 03:
were told and the record helps to support in the direction of what this person did.

[00:14:46] Speaker 03:
They say it took them four years of experimentation to decide just what innovations or changes would be useful.

[00:14:57] Speaker 00:
The changes my client made to the prior art was he made the different components of the board

[00:15:06] Speaker 00:
You could remove them.

[00:15:08] Speaker 00:
You could remove the handles.

[00:15:09] Speaker 00:
You could change the positioning of the footings to where you could skate board or you could ski.

[00:15:16] Speaker 00:
And so that was the changes my client made to the Parhard.

[00:15:19] Speaker 00:
It was not contemplated by the 681 patent.

[00:15:22] Speaker 00:
So there were changes in my client made to the Parhard.

[00:15:24] Speaker 00:
They were not an exact replica of what the 681 patent discloses.

[00:15:30] Speaker 03:
No, but it does seem that a fair amount of their product

[00:15:36] Speaker 03:
is the same in your product?

[00:15:42] Speaker 00:
Well, the interchangeability of the parts is certainly a significant factor that's a difference between the VersaBoard product and the product disclosed in the 681 Pack.

[00:15:51] Speaker 00:
That's a significant change.

[00:15:53] Speaker 00:
That's a change, incidentally, that when we did the survey of customers that purchased the VersaBoard, they found that to be the most important feature

[00:16:03] Speaker 00:
why they purchased the board was the interchangeability of the different components of the board because they're pre-drilled holds on the board that allows for parts to be removed or moved in different places.

[00:16:16] Speaker 00:
So there is a significant difference between the versa board and that was what was disclosed in the prior art.

[00:16:25] Speaker 00:
It was not just an assembly, but I think

[00:16:28] Speaker 00:
The 681 patent, however, takes components such as the Clark teaches a bow aboard, a tow hook, and a handle similar to the handle that's on the Zup board.

[00:16:39] Speaker 00:
It was a single handle, but it was a handle.

[00:16:42] Speaker 00:
The Fleischman teaches side-by-side handles.

[00:16:46] Speaker 00:
The Parton triple zero patent teaches side-by-side footings.

[00:16:52] Speaker 00:
And there's abundant references in the prior art that would

[00:16:57] Speaker 00:
that would suggest that there was a motivation, there could be a motivation of a person of ordinary skill to combine these limited number of prior pieces to come up with the invention disclosed in the 681 pad.

[00:17:13] Speaker 00:
If I may, could I, unless there are further questions on obviousness, I'd like to turn to the contributory infringement.

[00:17:22] Speaker 02:
Now, was that an alternative holding by the district court judge?

[00:17:26] Speaker 00:
If there was a finding that there was no non-infringing, then you also found it.

[00:17:30] Speaker 02:
Yeah, which is not necessary, obviously, if she's correct on the invalidity finding.

[00:17:40] Speaker 00:
So with respect to the contributory infringement claim, this court has repeatedly held that a plaintiff must prove that the accused product had no substantial non-infringing uses.

[00:17:56] Speaker 00:
But in this case, the versa board, the accused product, can be used for purposes other than infringement.

[00:18:02] Speaker 00:
As I mentioned, the summary judgment record shows the handles and the foot bindings in the Nash versa board has a variety of substantial non-infringing uses.

[00:18:12] Speaker 00:
The foot bindings may be placed side by side to ski.

[00:18:15] Speaker 00:
They may be placed in different positions to water ski or wake surf.

[00:18:21] Speaker 00:
The handles may be attached to allow somebody to get onto the board to

[00:18:26] Speaker 00:
to kneeboard, and they may be removed.

[00:18:29] Speaker 04:
But you're saying that the pieces may be used differently, but this is an apparatus claim consisting of all of these pieces.

[00:18:38] Speaker 04:
How can that be used differently?

[00:18:40] Speaker 00:
Well, it's an apparatus claim and a method.

[00:18:42] Speaker 04:
And a method, right.

[00:18:45] Speaker 04:
It is a method of writing the apparatus.

[00:18:48] Speaker 04:
How do you use that total apparatus differently?

[00:18:54] Speaker 00:
Well, I think that the plaintiff has to prove there's a substantial non-infringing use.

[00:18:58] Speaker 00:
In other words, that there is not some fanciful or arbitrary or some unreasonable use of the product.

[00:19:05] Speaker 00:
It has to be a substantial non-infringing use to warrant finding a contributory infringement.

[00:19:11] Speaker 00:
And I'm pointing out.

[00:19:12] Speaker 04:
Is that the plaintiff's burden or your defense?

[00:19:14] Speaker 00:
That is the plaintiff's.

[00:19:16] Speaker 00:
That is the plaintiff's burden to prove.

[00:19:18] Speaker 00:
Really?

[00:19:18] Speaker 02:
I mean, you may be right, but on contributory infringement, doesn't the defendant have to establish that there's a substantial non-infringing uses?

[00:19:26] Speaker 00:
I don't believe so, Your Honor.

[00:19:28] Speaker 02:
Why would the plaintiff want to establish that?

[00:19:31] Speaker 02:
They want to establish there's infringement.

[00:19:33] Speaker 00:
It's only the infringer that wants to.

[00:19:36] Speaker 00:
I'm sorry.

[00:19:37] Speaker 00:
I misspoke.

[00:19:38] Speaker 00:
They had to prove that there has to prove that there is direct infringement.

[00:19:43] Speaker 00:
And they knew of the patent.

[00:19:45] Speaker 00:
and that its actions would lead to infringement of the patent by the third party.

[00:19:48] Speaker 00:
Right.

[00:19:49] Speaker 02:
But it's up to the defendant to establish that there were substantial non-infringing uses.

[00:19:53] Speaker 02:
They don't have to prove the negative.

[00:19:55] Speaker 00:
Yes, they are.

[00:19:55] Speaker 00:
Right.

[00:19:56] Speaker 00:
And so that's what we proved in this case.

[00:19:58] Speaker 03:
That would affect the method claim, but it wouldn't affect the product claim, would it?

[00:20:04] Speaker 00:
It would affect both claims, because they were being fed.

[00:20:06] Speaker 03:
How?

[00:20:06] Speaker 03:
If the product is crossing, I would appreciate that there's an issue of obviousness.

[00:20:13] Speaker 03:
But if the product claim

[00:20:15] Speaker 03:
survived, then why would contributory infringement be a factor?

[00:20:21] Speaker 00:
Because the pieces and parts of the versa board can be used in a non-infringing manner.

[00:20:30] Speaker 03:
They can be configured.

[00:20:33] Speaker 03:
I appreciate that the method of use claimed perhaps if you don't stand up, you're not infringing.

[00:20:39] Speaker 03:
But I'm not at all sure.

[00:20:43] Speaker 03:
I don't understand how that applies to the product, which is the same no matter what.

[00:20:48] Speaker 00:
Well, like you said, the product can be used in a non-infringing manner if you simply have the side by side.

[00:20:56] Speaker 03:
But what's the infringing manner is the method claim, not the product claim.

[00:21:00] Speaker 00:
Let me restate that the product is sold in a non-infringing manner when the foot bindings are positioned in a perpendicular manner to the board.

[00:21:13] Speaker 00:
and the handles are placed.

[00:21:15] Speaker 00:
It doesn't look the same.

[00:21:16] Speaker 03:
You have a product, you have the toe hook, you have the foot bindings, you have the protruding rails.

[00:21:23] Speaker 03:
You're saying, what difference does it make how it's used if the product is the same?

[00:21:29] Speaker 00:
Well, with respect to the product, the product is sold in a configuration that is non-infringing.

[00:21:38] Speaker 00:
It is not sold with side-by-side

[00:21:40] Speaker 00:
footings and handles in a perpendicular position.

[00:21:43] Speaker 00:
It's sold with handles and the bindings in a different position that it's a non-infringing position.

[00:21:50] Speaker 00:
In fact, the product on the face of it says, do not put the handles on the board with the foot bindings in a side-by-side position because of safety concerns.

[00:22:02] Speaker 00:
And it wasn't fringe.

[00:22:04] Speaker 00:
That's correct as well.

[00:22:08] Speaker 00:
That's right.

[00:22:10] Speaker 00:
So I think the case that Zev relies upon is this RICO case.

[00:22:16] Speaker 00:
And in RICO, there were infringing drives in a larger product with some separable features.

[00:22:26] Speaker 00:
But the defendant in that case claimed that there were substantial non-adringent use based solely on the additional features.

[00:22:33] Speaker 00:
In this case, the heart of the Nash's Versaboard is the multifunctionality and movability of all the parts.

[00:22:39] Speaker 00:
It's not some product that is an infringing product that's wrapped into non-infringing features.

[00:22:46] Speaker 00:
It's the multifunctionality and movability of all the parts that makes the Versaboard unique.

[00:22:53] Speaker 00:
And because there are substantial non-infringing uses of that Versaboard, there is just no evidence that NASH contributory infringed the 681 pattern.

[00:23:06] Speaker 00:
And therefore, the Nash request that the court affirm the judgment of the district court.

[00:23:11] Speaker 00:
Let's hear further questions.

[00:23:13] Speaker 00:
Thank you.

[00:23:13] Speaker 00:
Thank you.

[00:23:14] Speaker 00:
Thank you, Your Honor.

[00:23:24] Speaker 01:
I'd like to devote the rest of my time to obviousness, but I do want to clear up something on the contributory point.

[00:23:32] Speaker 01:
Zupp is asserting claim nine in the method

[00:23:36] Speaker 01:
this defendant designed around the apparatus claim and put on, and within the apparatus claim, claim one, there's a limitation regarding the rails which the defendant designed around.

[00:23:52] Speaker 01:
So the only claim asserted is the method, claim nine.

[00:23:57] Speaker 01:
With respect to obviousness,

[00:24:01] Speaker 01:
I didn't address in my opening remarks, it's not that we're just relying on this defendant to prove long felt need.

[00:24:11] Speaker 01:
We also put in expert testimony, Mr. Jim Emmons.

[00:24:15] Speaker 01:
And so I direct the court's attention, just for the record, that's at 414 of the appendix.

[00:24:25] Speaker 01:
So here we do have the defendant's own conduct.

[00:24:30] Speaker 01:
to establish long-felt need.

[00:24:31] Speaker 01:
But Mr. Emmons expertly declares that there was this long-felt need.

[00:24:40] Speaker 01:
Beyond that, we're also dealing with the presumption of validity.

[00:24:45] Speaker 01:
And so it's almost impossible if the plaintiff comes forward with any evidence.

[00:24:55] Speaker 01:
So let's say we only had two pieces of evidence.

[00:25:00] Speaker 01:
this defendant put in no evidence on secondary considerations.

[00:25:06] Speaker 01:
And so under the law of this court, in touch, for example, cited in the briefs, that in and of itself is reversible error.

[00:25:18] Speaker 01:
So Nash retained an expert who opined on obviousness, yes, but put in no evidence, no testimony about secondary considerations.

[00:25:30] Speaker 01:
basis of reversal right there.

[00:25:35] Speaker 01:
If the court has further questions, I'm happy to answer.

[00:25:41] Speaker 02:
Thank you.

[00:25:41] Speaker 01:
Thank you.

[00:25:42] Speaker 02:
We thank both sides and the case is submitted.