[00:00:03] Speaker 05:
We have one case this morning.

[00:00:04] Speaker 05:
It's number 19-126, Kingway, Google.

[00:00:09] Speaker 05:
Mr. Schmidt.

[00:00:14] Speaker 03:
Thank you, Your Honor.

[00:00:15] Speaker 03:
May it please the court?

[00:00:17] Speaker 03:
Google's petition for mandamus presents the question whether a computer sitting on a shelf in a third party's facility in the Eastern District of Texas is a regular and established place of business for purposes of patent venue.

[00:00:30] Speaker 03:
We submit that the answer.

[00:00:31] Speaker 05:
Can we talk for a moment about whether

[00:00:33] Speaker 05:
regular established place of business requires a person to be there because in 1897 of course the the service of process statute was also enacted and that appears to assume that there be an employee or agent at the place of business so perhaps that was contemplated for purposes of the venue statute that would be the case

[00:01:01] Speaker 05:
So where does that lead us?

[00:01:04] Speaker 05:
I mean, does that mean that you can't have a robotic equivalent of a person?

[00:01:10] Speaker 05:
The ATM machine, for example, or the virtual grocery store?

[00:01:18] Speaker 05:
Yes, they wouldn't qualify as a

[00:01:21] Speaker 05:
person for service of process because the whole notice purpose of service of process couldn't be performed by service on a machine.

[00:01:30] Speaker 05:
But what about for venue purposes?

[00:01:32] Speaker 03:
Robotic equivalent of an of a person within the venue statute or not Our position is that a purely robotic equivalent would not be sufficient and otherwise you have to look at the text an ATM machine would not be sufficient well an ATM machine is a slightly different circumstance because there you would potentially have employees or agents present servicing the machine and we think that's a crucial difference so what you need is a regular and established place you need a regular presence from an employee which is to say

[00:02:01] Speaker 03:
regular, recurring, steady, as this court said in Prey.

[00:02:04] Speaker 01:
Not necessarily an employee.

[00:02:06] Speaker 03:
Doesn't necessarily have to be an employee.

[00:02:07] Speaker 03:
The language is agent.

[00:02:09] Speaker 03:
So it doesn't have to be directly employed by the defendant.

[00:02:11] Speaker 03:
But there does have to be somebody regularly there.

[00:02:14] Speaker 03:
In other words, you could imagine a non-robotic situation, like, say, a laundromat, which is a self-service kind of a store, where there are not employees present who are carrying out the business of cleaning one's laundry.

[00:02:24] Speaker 03:
It's a self-service facility.

[00:02:26] Speaker 03:
But there will be employees there who are running the store.

[00:02:29] Speaker 03:
We're servicing the machines and doing things like that.

[00:02:31] Speaker 05:
Or agents is your problem, because here the host on behalf of Google is servicing the machines.

[00:02:41] Speaker 05:
So why wouldn't that fit within your definition?

[00:02:45] Speaker 03:
So Your Honor, first of all,

[00:02:47] Speaker 03:
There's never been a claim in this case made that the employees of the ISP are Google's agents.

[00:02:53] Speaker 03:
So we think that is pretty clearly waived in this case.

[00:02:57] Speaker 03:
But moving on from that, if you look at the sudden link agreement itself.

[00:03:00] Speaker 01:
Right, the agreement is not dispositive as to agency.

[00:03:03] Speaker 01:
We've said that in the PG&E case.

[00:03:04] Speaker 01:
The restatement says that.

[00:03:06] Speaker 01:
That's true.

[00:03:06] Speaker 03:
So put that aside.

[00:03:07] Speaker 03:
OK, so the label's not dispositive, but it does disclaim an agency relationship.

[00:03:10] Speaker 03:
And if you look at schedule.

[00:03:11] Speaker 01:
The ISP is basically

[00:03:13] Speaker 01:
Answering the door of those customers who would like to get the content that Google has stashed for perfectly good business reasons on this server, taking the request to the server through equipment that it is required by the agreement to maintain, and then sending the requested information to the customer, why is that not

[00:03:44] Speaker 01:
acting as an agent for Google's business of supplying content from that server at that space, I guess is the word the agreement uses.

[00:03:53] Speaker 01:
Not just equipment, but space.

[00:03:55] Speaker 03:
So the question we think is whether the people who are there carrying out the ISP's business count as Google's agent, not whether the computers, in some sense, count as an agent.

[00:04:04] Speaker 03:
Because after all, a computer is just a machine, and we don't think that qualifies as a place of business under the statute.

[00:04:09] Speaker 02:
So the question is- So where do you lose an entire server from?

[00:04:11] Speaker 03:
Excuse me?

[00:04:12] Speaker 02:
Supposing it was an entire server farm, would that change your position?

[00:04:16] Speaker 03:
Yes, absolutely.

[00:04:17] Speaker 03:
For an entire server farm, then we would own potentially the real property underlying that farm.

[00:04:22] Speaker 03:
There would be employees there servicing the machines.

[00:04:24] Speaker 03:
That would be a very different circumstance.

[00:04:25] Speaker 02:
OK, let me take you into the future.

[00:04:27] Speaker 02:
Supposing that server farm was in corporeal, that is, that all the computations that are done are done with light, without machinery, and yet

[00:04:40] Speaker 02:
it functions as a server farm.

[00:04:43] Speaker 02:
Does that change your position?

[00:04:45] Speaker 03:
No, Your Honor, our position is still that you need, our position is that you need an employee present, right?

[00:04:49] Speaker 03:
So to the extent the server farm were 100% automated, we are way in the future, this were pure robotics, there would not be an employee.

[00:04:56] Speaker 03:
And it's served by pure robotics.

[00:04:59] Speaker 03:
Served by pure robotics, you have to apply the language of the statute, and this Court has said that again and again.

[00:05:03] Speaker 03:
As enacted in 1897, the statute said,

[00:05:06] Speaker 03:
The extent venue is grounded on a regular and established place of business, you can serve the agent conducting such business.

[00:05:12] Speaker 03:
And we think that's the text, and it requires an employee or agent present.

[00:05:17] Speaker 05:
Suppose the employee or agent is present, that there's a physical place of business, but all that the employees do is service equipment.

[00:05:27] Speaker 05:
Is that sufficient?

[00:05:29] Speaker 05:
Is that a regular established place of business?

[00:05:30] Speaker 03:
You might get into some nice questions about what regularly carrying out the employee's business is.

[00:05:34] Speaker 03:
We are getting into nice questions.

[00:05:37] Speaker 03:
Our position is that as long as that employee is regularly, they are carrying out some piece of the business.

[00:05:42] Speaker 03:
That is enough.

[00:05:43] Speaker 03:
Servicing equipment is enough.

[00:05:45] Speaker 03:
Yes.

[00:05:46] Speaker 03:
It could be in some circumstances.

[00:05:48] Speaker 03:
Servicing the equipment is enough.

[00:05:49] Speaker 03:
Just like in the laundromat, you would have a place of business even though those employees are not

[00:05:53] Speaker 03:
carrying out the business in the sense of doing the laundry, but servicing the machine.

[00:05:57] Speaker 03:
So that's enough.

[00:05:58] Speaker 03:
To get back to Judge Toronto's question about why these human agents at the ISP facilities are not agents as contemplated by the statute,

[00:06:05] Speaker 03:
Again, I think looking to the details of the agreement is helpful.

[00:06:09] Speaker 03:
Obviously, again, we think this is waived.

[00:06:11] Speaker 03:
Nobody's ever claimed that they're agents.

[00:06:13] Speaker 03:
The court can leave this question of what kind of agency relationship suffices for another day.

[00:06:17] Speaker 01:
Or if we thought it was relevant, we could deny mandamus with instructions to further consider the venue question in light of exploration of facts not fully explored.

[00:06:27] Speaker 03:
That's one conceivable disposition would be to say, this is the legal framework.

[00:06:33] Speaker 03:
You need real property present, and you need agents.

[00:06:35] Speaker 03:
Now, we think the real property point is dispositive.

[00:06:37] Speaker 03:
It's on its own.

[00:06:38] Speaker 03:
So we don't think a remand is necessary.

[00:06:40] Speaker 01:
There is real property.

[00:06:41] Speaker 01:
I mean, there's a building.

[00:06:42] Speaker 03:
Well, the ISP is real property, but it's not Google's real property.

[00:06:46] Speaker 01:
So what?

[00:06:47] Speaker 03:
Well, the three cray factors are you need a physical place of business.

[00:06:51] Speaker 03:
It needs to be regular and established.

[00:06:52] Speaker 03:
And the last one, it needs to be of the defendant.

[00:06:54] Speaker 03:
Well, they lease part of the building, right?

[00:06:58] Speaker 03:
I don't think that's a fair characterization.

[00:07:00] Speaker 05:
I suppose it is a fair characterization.

[00:07:02] Speaker 05:
Where does that leave you?

[00:07:04] Speaker 05:
If they leased a room to have the servers, that would be sufficient?

[00:07:13] Speaker 03:
Yes.

[00:07:13] Speaker 03:
A room and a building is sufficient.

[00:07:17] Speaker 03:
So if we focus on the text of the statute, the text is a place of business.

[00:07:21] Speaker 03:
In Cray, this court said a place of business is a building or a part of a building set aside for a purpose or quarters out of which business is conducted.

[00:07:28] Speaker 02:
But let me take you the other way, which I'm going to ask your friend on the other side.

[00:07:33] Speaker 02:
And that is instead of that one box, or you have that one box, but instead of Google using it, three small companies are sharing it.

[00:07:46] Speaker 02:
And they don't even know they're sharing it.

[00:07:48] Speaker 02:
Where does that put us?

[00:07:49] Speaker 03:
I think that's exactly the point, Your Honor.

[00:07:51] Speaker 03:
Then we wouldn't know whose place of business that is, and we think it would be absurd to claim that three companies are operating a place of business out of a single box.

[00:07:58] Speaker 03:
And honestly, this case is not that far from there.

[00:08:00] Speaker 03:
If you look at the photographs of the rooms with the servers, there are hundreds upon hundreds of servers and shelf after shelf after shelf.

[00:08:07] Speaker 03:
And if respondent's theory is correct, presumably each one of those servers could conceivably be a place of business.

[00:08:13] Speaker 03:
You have hundreds of places of business operating out of that single room.

[00:08:16] Speaker 01:
Can I explore this lease question a little bit?

[00:08:18] Speaker 01:
So I guess I was thinking of a farmer's market or a flea market.

[00:08:22] Speaker 01:
And let's say it's not just every Sunday.

[00:08:24] Speaker 01:
It's every other day.

[00:08:26] Speaker 01:
Make it every day.

[00:08:26] Speaker 01:
I don't think it matters.

[00:08:29] Speaker 01:
And the stamp seller or the bagel seller

[00:08:33] Speaker 01:
has an agreement with whoever is hosting it that I'm going to get this stall and maybe even it's not a binding contract, but year in and year out the bagel seller, the stamp seller is at that place.

[00:08:49] Speaker 01:
No lease.

[00:08:51] Speaker 01:
Is that not still a regular and established place?

[00:08:54] Speaker 03:
We think that would probably fit within the language of Cray and the reason for that is it's ultimately a kind of real property.

[00:08:59] Speaker 03:
It's an area

[00:09:00] Speaker 03:
of land.

[00:09:01] Speaker 03:
In other words, it's a reserve space where people can stand and carry out the business of the defendant.

[00:09:07] Speaker 03:
In other words, one piece of the relevance of the service statute is that we think it requires agents present.

[00:09:14] Speaker 03:
Another piece of it is that it shows the type of place that Congress had in mind.

[00:09:18] Speaker 05:
So if there was a specific shelf

[00:09:21] Speaker 05:
that they contracted to have their servers on in a particular room, that would be sufficient.

[00:09:26] Speaker 05:
And the problem here is that there's no specificity about where the server is.

[00:09:31] Speaker 03:
No, we would disagree with that, Your Honor.

[00:09:32] Speaker 03:
We don't think a shelf is a part of a building in the sense that this court used that phrase in Cray.

[00:09:38] Speaker 03:
Shelf is different from a table at a flea market.

[00:09:41] Speaker 03:
Yes, because a table at a flea market, again, is going to be, generally speaking, an area around which people can congregate and interact with customers.

[00:09:48] Speaker 03:
A shelf is just a shelf holding a piece of equipment.

[00:09:52] Speaker 03:
And we think when the court used the phrase

[00:09:54] Speaker 03:
building or part of a building, it essentially meant something that functions like a room.

[00:09:57] Speaker 02:
You want to distinguish between fixtures and non-fixtures?

[00:10:00] Speaker 03:
We don't want to get into the minutia of state real property law.

[00:10:04] Speaker 03:
We use the phrase real property in its somewhat colloquial sense, which is to say it needs to be a building or a part of a building set aside.

[00:10:11] Speaker 03:
So we don't think a light switch or a fixture, as Your Honor said, would technically qualify as a place of business, even though it's within a building.

[00:10:19] Speaker 03:
We think in this instance, you have to be

[00:10:21] Speaker 03:
You have to, to borrow Justice Scalia's words, in the Radlak's opinion for the court, we shouldn't be hyper literal and antithetical to common sense.

[00:10:29] Speaker 01:
We've got to bring some common sense to bear to it.

[00:10:31] Speaker 01:
But why isn't it common sense?

[00:10:34] Speaker 01:
Google stores a massive amount of wares that consumers want at a particular spot regularly.

[00:10:49] Speaker 01:
people get it from that spot, the fact that it is extremely small and doesn't require a physical hand attached to a body with physical feet standing near it to get it, why should that matter?

[00:11:03] Speaker 03:
Because we think the language is clear, a regular and established place of business.

[00:11:08] Speaker 03:
I mean, it may be that this equipment, we don't think on the facts of this case it is, as is exemplified by the fact that these machines have been taken offline.

[00:11:15] Speaker 03:
The fact that this might be important to delivering content to customers is not going to be dispositive because it's just equipment that carries it out.

[00:11:22] Speaker 03:
It's not that place of business.

[00:11:24] Speaker 03:
So a cell tower to a cell company is very... But that's not quite true.

[00:11:28] Speaker 01:
I mean, the equipment doesn't do anything unless the ISP is connecting the various wires.

[00:11:34] Speaker 01:
And I think, I don't know, Section 7 or 4 or something of the agreement specifically requires some... The crucial things that the ISP has to do is to

[00:11:44] Speaker 01:
supply connections both up to Google so that Google can keep storing stuff on it and connections to anybody basically on the internet who wants to get it.

[00:11:55] Speaker 03:
That's right, Your Honor.

[00:11:56] Speaker 03:
The ISP has to plug it in.

[00:11:57] Speaker 03:
But we don't think that changes it from fundamentally being a piece of equipment to being a place of business.

[00:12:02] Speaker 03:
It's still just a piece of equipment, like a cable box sitting in your home.

[00:12:06] Speaker 03:
After all, a user in one's home has to plug a cable box into the wall for it to operate.

[00:12:11] Speaker 03:
But the cable company owns the cable box.

[00:12:13] Speaker 03:
And just by virtue of that little activity, it doesn't convert a cable box in someone's home into a place of business.

[00:12:19] Speaker 03:
So you still have this requirement of a regular and established place of business.

[00:12:24] Speaker 03:
What are the implications?

[00:12:25] Speaker 02:
for the government's various trade positions relating to non-physical trade property, that is intellectual property, insurance, and so on, where there's no physical export of goods from the United States, and yet it's considered highly important.

[00:12:45] Speaker 03:
So we're just asking the court to interpret this phrase, regular and established place of business, in the context of this very particular law, which, as the Supreme Court has said, was passed for a specific purpose as a restrictive measure to narrow or limit patent venue, and in juxtaposition with the service statute.

[00:13:02] Speaker 03:
So we don't think the unique statutory context of this law will necessarily have big ramifications for other circumstances.

[00:13:09] Speaker 03:
So we don't think the court

[00:13:10] Speaker 03:
should be concerned about that.

[00:13:12] Speaker 03:
But getting back to this shelf point, Your Honor, I think there are two fundamental points.

[00:13:17] Speaker 03:
The first is that a shelf is not a building.

[00:13:20] Speaker 03:
A shelf is not a regular and established place of business in the way that that phrase was used in Cray.

[00:13:25] Speaker 03:
And we can see that both from the phrase place of business and the way that Cray defined that phrase.

[00:13:29] Speaker 03:
We can see it when we broaden the lens and look at the phrase regular and established place of business.

[00:13:34] Speaker 03:
The word established suggests, again, real property, something more than just a fixture in a

[00:13:40] Speaker 03:
building.

[00:13:41] Speaker 05:
That doesn't seem to me to be a very satisfactory way of analyzing it.

[00:13:46] Speaker 05:
And to a large extent, it's what they meant in 1897 about what constitutes conducting a business.

[00:13:59] Speaker 05:
And it looks as though dealing with customers would be conducting a business.

[00:14:02] Speaker 05:
It looks as though they contemplated that having a manufacturing facility would be conducting a business.

[00:14:09] Speaker 05:
else might be conducting a business isn't so clear and the dictionary definitions at the time don't really provide much help.

[00:14:20] Speaker 05:
I mean do you think for example in 1897 they contemplated if a railroad track ran through a state and there were no stations or no physical offices and that the only workers of the railroad who appeared in the state were doing track maintenance

[00:14:39] Speaker 05:
Would that be having an established place of business in the contemplation of the 1897 statute?

[00:14:47] Speaker 03:
Absolutely not, Your Honor.

[00:14:48] Speaker 03:
I mean, we would say that a railroad track running through a state is just the railroad's equipment.

[00:14:53] Speaker 03:
It's what allows the railroad to operate.

[00:14:55] Speaker 03:
But it's not a place of business, as that phrase was understood.

[00:14:59] Speaker 03:
That's what?

[00:14:59] Speaker 03:
They're not dealing with customers?

[00:15:02] Speaker 03:
They're not selling things to customers within the state?

[00:15:05] Speaker 03:
It's a number of factors.

[00:15:06] Speaker 03:
So you're not going to have regularly folks there servicing the equipment.

[00:15:11] Speaker 03:
Does the railroad have a real property interest?

[00:15:13] Speaker 03:
It would, probably.

[00:15:14] Speaker 03:
It'll have an easement or something like that.

[00:15:16] Speaker 03:
So that just goes to show you that having real property is not a sufficient condition.

[00:15:19] Speaker 03:
We think it's a necessary condition, though.

[00:15:21] Speaker 03:
But we think you have to look at, is this a regular and established place of business?

[00:15:26] Speaker 03:
Is this a building or a structure from which business is carried out?

[00:15:29] Speaker 05:
But what does business mean?

[00:15:31] Speaker 05:
That's what I'm asking you about.

[00:15:34] Speaker 05:
The place can be satisfied by leasing real property, but what kind of business has to be conducted using that real property to come within the statute?

[00:15:45] Speaker 03:
So Your Honor, as you pointed out, obviously interacting with customers is going to be business.

[00:15:51] Speaker 03:
Carrying out an analog business is going to be business.

[00:15:53] Speaker 03:
And we don't think that digital business is necessarily excluded from the statute.

[00:15:58] Speaker 03:
What we do think is excluded is digital business on its own.

[00:16:01] Speaker 03:
In other words, digital business per se.

[00:16:03] Speaker 03:
And that's just because of Cray.

[00:16:04] Speaker 01:
I'm not sure what that means.

[00:16:05] Speaker 03:
So Cray said you cannot just have a virtual space.

[00:16:08] Speaker 03:
That's all we mean by that.

[00:16:09] Speaker 01:
A computer to the extent... I wasn't even sure quite what.

[00:16:12] Speaker 01:
what that means.

[00:16:13] Speaker 01:
I mean, of course, virtual space is not physical space.

[00:16:16] Speaker 01:
There is a physical space at the Cable 1 facility and the Suddenlink facility.

[00:16:23] Speaker 01:
Some business is being conducted from that space called the space in the agreements.

[00:16:31] Speaker 01:
Why isn't it Google's?

[00:16:33] Speaker 03:
So, Your Honor, we think it's virtual space.

[00:16:36] Speaker 03:
So let me analogize it.

[00:16:37] Speaker 01:
No, it's real space.

[00:16:38] Speaker 01:
You can walk on it.

[00:16:39] Speaker 03:
So it's real space in the sense that you have equipment there.

[00:16:42] Speaker 03:
But to the extent business is being carried on, it's occurring in cyberspace.

[00:16:45] Speaker 03:
It's virtual.

[00:16:46] Speaker 01:
Let me try and make this a little clearer.

[00:16:49] Speaker 01:
I don't understand those words.

[00:16:52] Speaker 01:
There is physical space with a physical piece of equipment on it.

[00:16:55] Speaker 01:
Business is being conducted out of the machine at that physical space.

[00:16:59] Speaker 01:
And it's there in order to save various costs and time.

[00:17:03] Speaker 01:
Time on the customer's end, costs on the transmission end, so that the

[00:17:09] Speaker 01:
was it gameplay or the videos that Google says are very popular will get to customers without 400,000 transmissions with transmission costs.

[00:17:21] Speaker 01:
There's a physical space where somebody's conducting business, maybe both the ISP and Google, but the relationship between the content supplier, Google, and the customers sounds like Google's business, which then would lead me to the question, why isn't ISP an agent to conduct

[00:17:39] Speaker 03:
Right, so we think the physical space is just the space occupied by the equipment, and we don't think that turns it into a place of business.

[00:17:45] Speaker 03:
So again, come back to the cable box example.

[00:17:48] Speaker 03:
If you have a cable box in your home that is occupying physical space.

[00:17:52] Speaker 03:
It is conducting business in the sense that the cable company is using it to get television into your home.

[00:17:57] Speaker 03:
But we don't think every cable box in the United States can be a place of business.

[00:18:02] Speaker 01:
And on this point of virtual space versus- But what if the cable box was essentially open to the entire neighborhood making requests to get movies and other things?

[00:18:14] Speaker 01:
Then it seems to me it would be a place of business for whoever is

[00:18:21] Speaker 01:
responding to the request for the content.

[00:18:25] Speaker 03:
I don't think that's necessarily true, Your Honor, and I think that example that you just laid out is very similar to the cell tower example.

[00:18:31] Speaker 01:
The problem with the cell tower example is, and I do think that this is a hard distinction to make, but I guess that essentially storage incident to transmission, which may be a phrase that you recognize from the

[00:18:46] Speaker 01:
Communication Storage Act is distinguished from remote storage services under the act.

[00:18:51] Speaker 01:
It may not be the most precise distinction in the world.

[00:18:53] Speaker 01:
I gather there's litigation about things being on one side or the other.

[00:18:58] Speaker 01:
But it's a kind of common sense distinction, which would put aside the whole class of cases about essentially pure transmission facilities, even if the facilities have hops in them that have truly temporary storage for the usual purposes.

[00:19:16] Speaker 01:
But this isn't that, right?

[00:19:17] Speaker 01:
This is a warehouse with large capacity, but in a small space because you don't need a lot of space for large capacity.

[00:19:25] Speaker 03:
So we don't think this distinction is material for the reason that it just goes to the functioning of the equipment, not whether the equipment is a place of business.

[00:19:33] Speaker 03:
Now, you've analogized servers to a warehouse and there's a certain intuitive appeal to that analogy, but that's just to say that servers function like traditional places of business, not that they are traditional places of

[00:19:45] Speaker 03:
So if I could return to this virtual point.

[00:19:47] Speaker 01:
How much of your point, your refrain, kind of depends on the premise that the place, the only possible place here is the equipment, as opposed to the place where the equipment sits.

[00:20:03] Speaker 03:
We would concede that it would be a very different case if the equipment sat, again, in a data center, if it were a large facility.

[00:20:09] Speaker 01:
It sits somewhere.

[00:20:10] Speaker 03:
That's a place, right?

[00:20:13] Speaker 03:
Right just just by virtue of the fact that it occupies physical space and has to sit somewhere can't convert equipment into a place of business or every all of a sudden any piece of equipment could potentially.

[00:20:23] Speaker 01:
Depends what's being done with the equipment at that place if it's being if it's being used to store the wares.

[00:20:31] Speaker 01:
that the owner of the equipment will supply from that location to those who ask for it, why is that not, why is the place that the equipment sits not a place of business?

[00:20:45] Speaker 02:
And following Ohm's law or Moore's law, when in the not too distant future, the entire server farm is in that one small box, does that change your

[00:20:56] Speaker 02:
your response to the hypo.

[00:20:58] Speaker 03:
So taking those in reverse wouldn't change our response to the hypo for the reason that this court gave in Big Commerce, which is that this court has been presented over and over again with the argument that modern business realities have changed and that the statute should therefore be interpreted, quote, flexibly.

[00:21:13] Speaker 03:
But again and again, it has said you have to adhere to the language of the statute.

[00:21:16] Speaker 03:
This is a quote from Big Commerce.

[00:21:17] Speaker 03:
We cannot ignore the requirements of the statute merely because different requirements may be more suitable to a more modern business

[00:21:25] Speaker 03:
environment.

[00:21:26] Speaker 03:
So we think the fact that technology may develop in such a way that equipment grows more and more sophisticated and more and more powerful does not change the fact that fundamentally it is still equipment and not a place of business.

[00:21:37] Speaker 03:
Now getting back to this point about whether equipment can function as a place of business.

[00:21:42] Speaker 01:
No, no.

[00:21:42] Speaker 01:
Whether the place on which the equipment sits can function as a place of business.

[00:21:46] Speaker 03:
Right.

[00:21:46] Speaker 03:
So there are two responses to that.

[00:21:48] Speaker 03:
The first is on the level of law, which is that we don't think a

[00:21:52] Speaker 03:
We don't think a shelf on which a piece of equipment is sitting qualifies as a place within the meaning of Cray.

[00:21:57] Speaker 03:
And that's just a common sense point and a plain language point that an established place of business requires an establishment, requires a building, requires an area set aside.

[00:22:06] Speaker 03:
And we don't think a shelf counts.

[00:22:08] Speaker 03:
And if a shelf did count.

[00:22:09] Speaker 01:
Even though the shelf is set aside once selected by Suddenlink or Cable One, then Google can say, do not move this unless we give you permission.

[00:22:16] Speaker 03:
So Your Honor, we don't quite agree with that on the facts.

[00:22:19] Speaker 03:
The ISP receives.

[00:22:21] Speaker 03:
receives a computer in the mail, and its only obligation is to hang it on a shelf somewhere and notify Google where that happens.

[00:22:30] Speaker 03:
So the other obligation that Your Honor is referring to is that the host has to notify Google to the extent it wants to move the equipment.

[00:22:38] Speaker 03:
This is on page two of the sudden link agreement in paragraph two.

[00:22:41] Speaker 03:
And Google has to reasonably consider that request.

[00:22:44] Speaker 03:
So the only limitation on the equipment is that if the host wants to move it, there's no reason they can't.

[00:22:48] Speaker 03:
If you want to move it, just tell Google.

[00:22:50] Speaker 05:
And you have to give them service and equipment.

[00:22:54] Speaker 03:
They're doing routine service and maintenance of the equipment because it's sitting there in their ISP.

[00:22:58] Speaker 03:
And often that is just a matter of plugging it in and turning it on.

[00:23:05] Speaker 03:
And on this point about whether the shelves are Google's place of business, again, I think looking at the language of the service agreement is very helpful.

[00:23:13] Speaker 03:
We think, as a legal matter, a shelf can't count.

[00:23:15] Speaker 03:
But if you look at the language of the service agreement, the equipment is, and this is in paragraph 1 of the agreement, hosted in the host's facilities.

[00:23:23] Speaker 03:
So it's very clear that this is the ISP's facilities, not Google.

[00:23:27] Speaker 03:
Paragraph 8 on page 2 of the service agreement says the host is, quote, responsible for physical access to the equipment.

[00:23:34] Speaker 03:
And Google's only granted access if the agreement is terminated.

[00:23:38] Speaker 01:
And just to give you... What about the opening sentence of Schedule A?

[00:23:41] Speaker 01:
The host will provide the following facilities to Google for occupancy and use.

[00:23:46] Speaker 01:
Google's occupying that facility.

[00:23:49] Speaker 03:
So we think you have to look at the language of what's actually conveyed in the agreement.

[00:23:52] Speaker 03:
And all that it is is that

[00:23:54] Speaker 03:
the ISPs will put these servers on Rackspace.

[00:23:58] Speaker 03:
And we don't think that in any meaningful sense converts the place of business into Google's.

[00:24:04] Speaker 03:
And if you want a sort of colorful illustration of this,

[00:24:07] Speaker 03:
In the seven case, you'll notice there are photographs of these ISP facilities and the server rooms in the record.

[00:24:12] Speaker 03:
Those were obtained not because Google walked into its own place of business and took photographs.

[00:24:17] Speaker 03:
It's because seven served a third party subpoena on these ISPs to gain access to their facilities.

[00:24:23] Speaker 03:
Google couldn't get in.

[00:24:23] Speaker 03:
It doesn't have physical access.

[00:24:26] Speaker 01:
I thought there was something in the agreement that at least indirectly makes clear that Google does have

[00:24:34] Speaker 01:
have access.

[00:24:35] Speaker 01:
I guess it's sort of the negative pregnant of Section 4 of Schedule A that says if there are other Google-like stores using it, that the host has to ensure that the space provided to Google

[00:24:55] Speaker 01:
that access to that space is permitted only to authorized personnel of the host and authorized personnel of Google.

[00:25:02] Speaker 01:
And we may not have the keys, but it sounds like Google can get there if it wants.

[00:25:06] Speaker 03:
Your Honor, I think the best way to understand that provision is Google is just protecting its equipment.

[00:25:10] Speaker 03:
Again, Google has equipment in these facilities and it doesn't want folks accessing pieces of its network

[00:25:15] Speaker 03:
without knowing who it is.

[00:25:17] Speaker 03:
But that's very different than granting Google physical access to the space.

[00:25:20] Speaker 03:
And again, if you go through the agreement, we don't think that access is given.

[00:25:25] Speaker 03:
And again, there's one point in the agreement where physical access is granted.

[00:25:29] Speaker 03:
And that's in paragraph six on page two of the service agreement.

[00:25:32] Speaker 03:
And Google's only granted access there if the agreement is terminated and Google needs to recover its equipment.

[00:25:39] Speaker 01:
Can I just double check?

[00:25:40] Speaker 01:
You are not this time making the argument that

[00:25:44] Speaker 01:
the infringement has to be connected to the regular established place of business.

[00:25:50] Speaker 03:
That's correct.

[00:25:50] Speaker 03:
That's a separate issue that's not presented here.

[00:25:53] Speaker 03:
OK.

[00:25:53] Speaker 03:
All right.

[00:25:53] Speaker 05:
Thank you, Mr. Schmidt.

[00:25:54] Speaker 05:
We'll give a couple of minutes for rebuttal.

[00:25:57] Speaker 05:
Mr. Bregelon?

[00:26:30] Speaker 04:
May it please the court.

[00:26:31] Speaker 04:
The cash server in isolation.

[00:26:33] Speaker 05:
Let's assume that the shelf here is a place.

[00:26:37] Speaker 05:
It's a kind of physical place that you need.

[00:26:40] Speaker 05:
And let's assume that based on a reading of the service statute that there's a contemplation that business has to be conducted by persons or agents, employees or agents.

[00:26:59] Speaker 05:
the maintenance of equipment conducting business within the meaning of the statute.

[00:27:06] Speaker 05:
That seems to me not at all clear that that's what's contemplated by conducting business.

[00:27:16] Speaker 05:
Yes, if the employees or agents were selling something or manufacturing something, that would be covered.

[00:27:23] Speaker 05:
But is it really contemplated that maintaining physical property within the jurisdiction is sufficient for conducting business?

[00:27:36] Speaker 04:
Well, first of all, the assumption that you would have to have people in the first place in order to have a place.

[00:27:42] Speaker 04:
Of course, the statute refers to a place of business, a reasonable established place of business.

[00:27:47] Speaker 05:
But I'm just asking you to, for purposes of this discussion, assume that I read.

[00:27:52] Speaker 05:
The service statute is contemplating that there would be individuals conducting business, people conducting business within the jurisdiction.

[00:28:00] Speaker 05:
That may or may not be correct, but let's just assume that for a moment.

[00:28:04] Speaker 05:
Then are they conducting business when they merely service equipment?

[00:28:10] Speaker 04:
I think that depends on the facts of the case, perhaps.

[00:28:12] Speaker 04:
But I also think that the mere service of equipment, because of that relationship there, that reveals that

[00:28:21] Speaker 04:
There really should be no requirement that says that you have to have support personnel.

[00:28:27] Speaker 04:
Google actually uses the word support personnel.

[00:28:30] Speaker 04:
And I want to be clear.

[00:28:31] Speaker 04:
Under this agreement, we disagree with the access that Google has to this place.

[00:28:37] Speaker 04:
For example, the agreement refers to avoiding.

[00:28:42] Speaker 05:
You're getting away from my hypothetical.

[00:28:44] Speaker 05:
But there'll be time to explore these other things.

[00:28:47] Speaker 05:
But under my hypothetical and my assumptions, is the fact that agents, individual people acting as agents, service equipment, is that conducting business?

[00:29:01] Speaker 04:
I would say that to the extent that the court imposes a requirement that there be persons there, that ties from the idea that you would have to have somebody there to accept service process, perhaps.

[00:29:14] Speaker 04:
What they're actually doing there whether they're servicing the equipment if the equipment is actually doing the business of The defendant and you add a requirement that there be a person there are the individuals who are maintaining who are maintaining the equipment they conducting business So yes, I would say yes what they may not be themselves conducting business, but they're enabling the business that is conducted so

[00:29:42] Speaker 04:
In order for a machine to conduct that business, as was noted by my friend, you would have to have personnel available to enable that to happen.

[00:29:53] Speaker 01:
I don't remember, Mr. Schmitz, what he said on the bottom line for the laundromat situation.

[00:30:01] Speaker 01:
whether that was in or out but is that kind of what we're talking about here that somebody and presumably they're not exchanging money so there's the coin ops or you know just by machine but they're there to fix jams or something perhaps yes so to the extent you were to add a requirement that there be staffing we think that would suffice and that would meet that requirement but we don't have any case to do what in the laundromat providing change providing

[00:30:30] Speaker 05:
time on the machine.

[00:30:33] Speaker 05:
Yeah, maybe, but the hypothetical is all they're doing, all the employees, the individuals, or the agents are doing is servicing equipment.

[00:30:42] Speaker 04:
Well, if the equipment is actually conducting the business, then servicing becomes pretty important.

[00:30:48] Speaker 04:
If the equipment is actually conducting all the business, as Google's does in this case, then keeping that equipment going is a very important part of that business.

[00:30:59] Speaker 02:
Your position is that having that server running in the Eastern District of Texas is doing business in the Eastern District.

[00:31:09] Speaker 02:
Yes.

[00:31:10] Speaker 02:
Yes.

[00:31:11] Speaker 05:
Even though there's no people involved at all?

[00:31:13] Speaker 04:
Well, there certainly are people.

[00:31:15] Speaker 05:
No, no, no.

[00:31:17] Speaker 05:
You've got to assume the question, the premise of the question.

[00:31:20] Speaker 05:
Assuming there are no people there doing anything, it's still sufficient in your view.

[00:31:27] Speaker 04:
I understand.

[00:31:27] Speaker 04:
And thank you for the clarification.

[00:31:29] Speaker 04:
Yes.

[00:31:29] Speaker 04:
So say that is doing business.

[00:31:31] Speaker 02:
So that service doing business in the Eastern District by providing fast access to the

[00:31:38] Speaker 02:
I take this from the facts, the most requested data.

[00:31:46] Speaker 02:
Supposing the Texas power grid surges and that box burns out.

[00:31:55] Speaker 02:
But Google, through its computer system, continues to provide the service.

[00:32:00] Speaker 02:
Not as fast, but everybody in Texas still gets their whatever is popular

[00:32:07] Speaker 02:
video or data or whatever.

[00:32:09] Speaker 02:
Is it doing business in Texas or not?

[00:32:13] Speaker 04:
I would say so because the test looks at whether you have a place that is a regular and established place of business, but that doesn't mean that that place has to continually conduct the business.

[00:32:24] Speaker 04:
So in the example of a service outage,

[00:32:26] Speaker 04:
You might have a period of time where that place is not servicing the local customers, but you still have a place that's a regular and established place of business.

[00:32:36] Speaker 02:
So they've turned off those forward servers in the Eastern District of Texas.

[00:32:42] Speaker 02:
Are they no longer doing business in the Eastern District?

[00:32:45] Speaker 02:
District of Texas?

[00:32:46] Speaker 02:
I think that's correct.

[00:32:48] Speaker 04:
I believe that is correct.

[00:32:49] Speaker 04:
But if there's no servers there and they're not continuing, it's not a temporary average, I would say, absolutely.

[00:32:55] Speaker 02:
So what is it your position that Google does in the Eastern District?

[00:33:00] Speaker 04:
So Google locates its servers there.

[00:33:04] Speaker 04:
And first of all, there is a space.

[00:33:07] Speaker 04:
No, its servers are there.

[00:33:08] Speaker 04:
What does it do?

[00:33:09] Speaker 04:
What business is it?

[00:33:11] Speaker 04:
doing.

[00:33:11] Speaker 04:
So Google personnel access the server.

[00:33:15] Speaker 04:
In fact, they do it on a weekly basis, at least, and electronically interact with that server.

[00:33:21] Speaker 04:
They image the server.

[00:33:22] Speaker 04:
In the agreement, there is an allowance for Google to dispatch field service personnel.

[00:33:29] Speaker 04:
And it refers to, I'm actually on page six or seven of the Suddenlink agreement, to allow Google to dispatch field service personnel.

[00:33:38] Speaker 01:
But the agreement says it could.

[00:33:40] Speaker 01:
I gather the only record evidence we have is the affidavit of, was it McCallion or something that says, in fact, we haven't, or maybe slightly more precisely, I think he said he was not aware that we ever had.

[00:33:55] Speaker 02:
That's correct.

[00:33:56] Speaker 02:
So that's what their business is.

[00:33:58] Speaker 02:
So they have the potential to dispatch service personnel to a box.

[00:34:03] Speaker 02:
That's their business in the Eastern District of Texas.

[00:34:06] Speaker 04:
I agree with you.

[00:34:07] Speaker 04:
The place of business and the business that's being conducted is the service of ads and video data from that location.

[00:34:17] Speaker 04:
And it's actually cached there.

[00:34:18] Speaker 04:
So it's stored there.

[00:34:20] Speaker 04:
And it's stored there purposefully.

[00:34:21] Speaker 02:
Take my hypothetical that I asked your friend.

[00:34:24] Speaker 02:
Supposing instead of Google, it's some little computer companies that are offering a small amount of data and the service provider says, I'm going to put five of these on one box.

[00:34:38] Speaker 02:
Does that change things?

[00:34:40] Speaker 04:
It certainly could.

[00:34:41] Speaker 04:
Yes, because if you're analyzing it under all three of the cray factors, here Google

[00:34:46] Speaker 04:
reserved the entire server.

[00:34:49] Speaker 04:
It owned the server.

[00:34:49] Speaker 04:
And as this court said in ZTE, ownership of the equipment can be an important factor in determining whether a place is a regular and established place of business.

[00:35:00] Speaker 04:
So in that case, I'd want to know who owns the equipment.

[00:35:05] Speaker 04:
then have they held themselves out?

[00:35:07] Speaker 04:
Is it being their location?

[00:35:09] Speaker 04:
In this case, Google said, these are Google locations.

[00:35:13] Speaker 04:
These edge nodes are our location.

[00:35:15] Speaker 01:
Additionally... And just to make clear, it says that basically to the ISPs, the customers don't do... I mean, I guess it's on their websites.

[00:35:26] Speaker 04:
Yes, it's a publicly accessible website.

[00:35:28] Speaker 01:
But is that part of any kind of...

[00:35:31] Speaker 01:
I don't know if this is even the right terminology.

[00:35:34] Speaker 01:
Advertising that Google does to customers?

[00:35:36] Speaker 04:
I believe so.

[00:35:37] Speaker 04:
They're actually telling customers, we are bringing the data to you.

[00:35:41] Speaker 04:
And they're touting that as a benefit.

[00:35:43] Speaker 01:
Use us because we're faster because it's close.

[00:35:45] Speaker 04:
Absolutely.

[00:35:45] Speaker 04:
We're bringing that data to you.

[00:35:47] Speaker 04:
And also, they provide a map.

[00:35:48] Speaker 04:
It's an interactive map.

[00:35:50] Speaker 04:
And you can actually look on the map and see by dots where those edge servers are located.

[00:35:56] Speaker 04:
So they're identifying those as their regular and established places of business.

[00:36:02] Speaker 04:
So I do believe that yes, in that you would have to look at did the individual companies say,

[00:36:10] Speaker 04:
that's our regular and established place of business.

[00:36:12] Speaker 04:
I think that's why the cable box analogy doesn't work.

[00:36:16] Speaker 04:
There's no cable company out there in the United States that's saying that at the homes of each one of its subscribers... You're running down the void.

[00:36:25] Speaker 04:
cases is the line of business.

[00:36:29] Speaker 04:
Yes, they're not saying those are our regular and established places of business and representing that to the public, that would be ridiculous.

[00:36:37] Speaker 04:
In contrast though, it's absolutely the case that machines can and do conduct business under the America Invents Act.

[00:36:46] Speaker 04:
Section 18 C of that act Congress said for purposes of this statute 1400 be that ATMs could not be a regular and established place of business, but Only if it's actually not that's right only if a CBM.

[00:37:02] Speaker 04:
Yeah is is asserted exactly So I think the implication there is that if you're not asserting a covered business method patent then that can be

[00:37:12] Speaker 04:
qualify.

[00:37:13] Speaker 01:
That might just be a kind of belt and suspenders thing where these sorts of, you know, unmanned, largely unmanned places are uncertain for certain purposes and therefore, you know,

[00:37:29] Speaker 01:
the statute is basically for a particular industry and therefore we're going to just make absolutely sure.

[00:37:34] Speaker 01:
So I'm not sure that how much implication you get out of that.

[00:37:37] Speaker 04:
Well, I would characterize it as a carve out because what they're saying, they're not saying categorically that a machine cannot constitute a regular and established place of business.

[00:37:47] Speaker 04:
To the contrary, they're saying it can, but we're going to say that if you're asserting a covered business method patent,

[00:37:54] Speaker 04:
that we're going to exempt that.

[00:37:56] Speaker 04:
So Congress carved that out.

[00:37:57] Speaker 05:
I think about a hard time under the cases getting that much from it.

[00:38:01] Speaker 05:
I mean, it looks as though Congress was just responding to the banking community's concern that this might happen and doesn't necessarily reflect the judgment by Congress that it would have been within the statute if they hadn't created the exemption.

[00:38:17] Speaker 04:
I agree with that, Your Honor, but certainly if it was crystal clear.

[00:38:21] Speaker 04:
that a machine could never constitute a regular, established place of business.

[00:38:27] Speaker 01:
The problem, as you know, is that there isn't much that's crystal clear here, because we had a multi-decade period where this question didn't arise, and the world outside has changed a lot.

[00:38:39] Speaker 01:
So what do you do?

[00:38:40] Speaker 01:
This is not going to be a very precise question.

[00:38:42] Speaker 01:
Overhanging this is a quite legitimate concern

[00:38:49] Speaker 01:
It is not part of our task to adjust a perhaps outmoded notion from the 1897 statute to changes in the real world.

[00:39:03] Speaker 01:
And if there are going to be adjustments, that's for Congress.

[00:39:08] Speaker 01:
Why isn't your position one that effectively requires that kind of adjustment?

[00:39:15] Speaker 04:
So I would actually argue it's the opposite.

[00:39:17] Speaker 04:
We're trying to stay true to the statute.

[00:39:21] Speaker 04:
My friend, Google's counsel, has said that you should impose an additional requirement that virtual business or electronic business cannot be business.

[00:39:33] Speaker 04:
That's nowhere in the statute.

[00:39:35] Speaker 04:
The statute does not term on the type of business that's conducted.

[00:39:40] Speaker 04:
It's flexible.

[00:39:41] Speaker 04:
And it has endured.

[00:39:42] Speaker 02:
I gave your friend a quantum

[00:39:45] Speaker 02:
a sort of incorporeal hypo.

[00:39:50] Speaker 02:
So let me give you the opposite.

[00:39:51] Speaker 02:
Supposing that there's a nano-based device which can consist of a swarm of an uncountable number of nano-devices, all of which communicate.

[00:40:11] Speaker 02:
and work together as swarm intelligence covering the entire globe.

[00:40:16] Speaker 02:
Where are they?

[00:40:20] Speaker 04:
That's certainly a difficult question to analyze under the Cray test.

[00:40:25] Speaker 04:
First, I would look to the physical place.

[00:40:27] Speaker 04:
Is there a physical place?

[00:40:29] Speaker 04:
Everywhere.

[00:40:30] Speaker 04:
Like the Scarlet Pimpernel.

[00:40:32] Speaker 04:
So there would have to be something that ties it to a physical place, I think.

[00:40:37] Speaker 04:
And without knowing that, I couldn't tell you whether or not that there is a place that's a regular and established place of business.

[00:40:45] Speaker 04:
But let's assume the place was in fact in the Eastern District of Texas and there was equipment there that enabled this nano cloud to occur.

[00:40:56] Speaker 04:
Then you would want to see other factors.

[00:40:58] Speaker 04:
Okay, did Google say this is our nano cloud and we've located our equipment in the Eastern District of Texas?

[00:41:06] Speaker 04:
Did they publicly disclose that?

[00:41:09] Speaker 04:
So I think you'd want to know other factors, but you could make that determination.

[00:41:13] Speaker 04:
It seems like that would not be a place, especially something that's in the air, it's ethereal.

[00:41:19] Speaker 04:
It's hard to characterize that as a physical location by its definition.

[00:41:25] Speaker 05:
What about transmission lines?

[00:41:27] Speaker 05:
Suppose electric transmission lines, telegraph lines in the old days, telephone lines, would those be a place of business?

[00:41:36] Speaker 04:
I think you'd have to know more to analyze it under the Cray factors.

[00:41:40] Speaker 04:
But I want to note that in Cray, it said mirror.

[00:41:43] Speaker 05:
Wait, wait, wait.

[00:41:43] Speaker 05:
What's the answer?

[00:41:45] Speaker 05:
That's all you've got is that you've got transmission lines within the state.

[00:41:49] Speaker 05:
Is that sufficient?

[00:41:51] Speaker 04:
It's hard to see that that's sufficient.

[00:41:54] Speaker 04:
But what's the physical place?

[00:41:56] Speaker 05:
So what's the difference between that and this?

[00:41:59] Speaker 05:
The physical place is the structures on which the transmission lines are running.

[00:42:06] Speaker 04:
So the difference between your hypothetical and this is that Google specifically located a space.

[00:42:13] Speaker 04:
That space has to be actually reported back to Google.

[00:42:16] Speaker 04:
I don't understand that distinction.

[00:42:18] Speaker 01:
The telephone company put the wires in a deliberate place, presumably to get short distance or lowest installation and maintenance costs as possible.

[00:42:29] Speaker 01:
Those places are not God given.

[00:42:33] Speaker 04:
So if it's just merely communications transmission, Craig says that's not enough.

[00:42:40] Speaker 04:
You would have to have more.

[00:42:41] Speaker 05:
Even though it's done with physical structure, at least.

[00:42:48] Speaker 05:
So what's the difference between that situation and this one?

[00:42:52] Speaker 04:
So you'd have to have the physical structure, and then you would have to have the company.

[00:42:57] Speaker 04:
I don't know.

[00:42:59] Speaker 04:
Well, the difference, you asked me the differences between that case and this case.

[00:43:04] Speaker 05:
Why is this, in your view, a regular established place of business and the transmission lines are not?

[00:43:12] Speaker 04:
First of all, we have a space that Google has reserved to itself.

[00:43:17] Speaker 05:
I don't understand the difference.

[00:43:19] Speaker 05:
And under my hypothetical, the AT&T lines are the electric lines.

[00:43:24] Speaker 05:
They're built on structures.

[00:43:25] Speaker 05:
They're enormously expensive leases to allow them to put the transmission lines in.

[00:43:31] Speaker 05:
That's not a distinction.

[00:43:32] Speaker 04:
Well, is it transmitting only AT&T's data?

[00:43:36] Speaker 04:
Is it reserved?

[00:43:37] Speaker 05:
Yes, yes, yes.

[00:43:38] Speaker 05:
It's only the long distance line or the electric lines.

[00:43:42] Speaker 05:
We've agreed that those are not regular and established places of business.

[00:43:46] Speaker 05:
And so I'm asking what's the difference between that and this situation?

[00:43:50] Speaker 04:
So I would say that if that situation has all the characteristics that we have identified as being important and critical to this situation, a physical place that is set aside for AT&T and AT&T's use.

[00:44:04] Speaker 04:
And if AT&T's regular.

[00:44:06] Speaker 05:
You're changing your answer.

[00:44:08] Speaker 05:
Transmission lines.

[00:44:09] Speaker 05:
are a regular and established place of business?

[00:44:11] Speaker 04:
Respectfully, I don't think a hypothetical that just says transmission lines gives us enough information to analyze it under the Cray test.

[00:44:19] Speaker 02:
AT&T fails to repair one of its telephone poles, and it falls down and boinks somebody, and they file a tort action.

[00:44:30] Speaker 02:
And by the way, Google fails to, on its last inspection, tightly secure its server box, and it falls down and boinks one of the repair people.

[00:44:43] Speaker 02:
What's the difference?

[00:44:45] Speaker 04:
I'm not sure I see a difference there.

[00:44:49] Speaker 04:
in in each case if that's that party's equipment and they've established control over that equipment and that equipment.

[00:44:57] Speaker 02:
And it lies for the purposes of the tortec different statute of course.

[00:45:02] Speaker 04:
Of course, but assuming if we're talking about the exercise of control and what the ramifications are from that exercise of control I think at a very high level it's not materially different between... Let's assume that we we think that having transmission lines and

[00:45:20] Speaker 05:
that are physically located and based on these structures within the state does not constitute having a ready on established place of business.

[00:45:30] Speaker 05:
Let's just assume that.

[00:45:33] Speaker 05:
Is this situation different from that?

[00:45:35] Speaker 05:
And if so, how?

[00:45:38] Speaker 04:
I would say yes.

[00:45:40] Speaker 04:
And the how is that they have physical property there.

[00:45:46] Speaker 04:
We're just not talking about a conduit

[00:45:49] Speaker 05:
In my hypothetical, there's physical property.

[00:45:52] Speaker 04:
They're storing data there.

[00:45:54] Speaker 04:
It's a data warehouse.

[00:45:56] Speaker 04:
They're actually storing large volumes of information locally.

[00:46:01] Speaker 02:
What you're really saying is conducting business is doing things but not transmitting things.

[00:46:09] Speaker 04:
I think that's correct.

[00:46:09] Speaker 04:
And that distinction has actually been made in server cases.

[00:46:13] Speaker 04:
by some district courts.

[00:46:15] Speaker 02:
Well, that's the voice cases as well.

[00:46:16] Speaker 04:
Yes.

[00:46:17] Speaker 04:
Well, and CUP said, look, if you're just transmitting data to the cloud and you don't identify that as your server space, you don't own the equipment, and it's merely a conduit between users in the cloud, they said that's not a regular and established place of business.

[00:46:34] Speaker 04:
And so I think there are differences there.

[00:46:36] Speaker 04:
And that's why it's dangerous for this court to establish a one size fits all rule.

[00:46:42] Speaker 04:
For the same reason that in Rensselaer you have lockers and the court finds... You don't agree that providing some clarity in this area would be useful to everybody?

[00:46:53] Speaker 04:
I'm not saying that.

[00:46:54] Speaker 04:
What I'm saying is it's inappropriate for this court to reach out in a mandamus situation.

[00:47:00] Speaker 04:
and to say that there's been a usurpation of judicial power, in part because, as this court soundly did when it looked at this case just a little over a year ago, it said, we're going to wait and see if it percolates.

[00:47:11] Speaker 04:
Is this an issue of national importance?

[00:47:13] Speaker 04:
I would say, absolutely not.

[00:47:16] Speaker 04:
This has affected primarily Google and primarily only in the Eastern District of Texas.

[00:47:21] Speaker 01:
Can I ask a procedural question?

[00:47:25] Speaker 01:
Is the issue of venue in this case in the district court decided once and for all on this motion to dismiss or can it be reconsidered?

[00:47:39] Speaker 01:
Assuming we were to deny mandamus.

[00:47:44] Speaker 01:
Just as a procedural matter, is this issue over and done or because it was a motion to dismiss usually with motions?

[00:47:53] Speaker 01:
So usually with motions to dismiss, right?

[00:47:57] Speaker 01:
To deny them doesn't end the issue.

[00:47:59] Speaker 01:
There can be summary judgment.

[00:48:00] Speaker 01:
There can be a trial.

[00:48:02] Speaker 01:
But is this one of these motions to dismiss in which essentially this was the opportunity to present facts?

[00:48:08] Speaker 01:
The fact findings have been made.

[00:48:09] Speaker 01:
An answer has been given.

[00:48:10] Speaker 01:
We are not doing venue anymore.

[00:48:14] Speaker 04:
I think with a qualification, you can always bring a 12C type motion and you can ask for a judgment.

[00:48:19] Speaker 04:
on that basis that venue is improper.

[00:48:22] Speaker 04:
This can be taken up later, just as it can be assessed by this court following judgment.

[00:48:28] Speaker 01:
So other than that... Because one possibly relevant aspect of the issue that I just raised is whether you have waived an argument that Sunlink and Cable One are agents of Google by

[00:48:49] Speaker 01:
perhaps not having asserted that on the motion to dismiss, if the issue on venue was still open in the district court, that could, as a procedural matter, be an available assertion.

[00:49:05] Speaker 04:
Yes, so first of all, may I say, I think the waiver issue is inappropriate here because

[00:49:11] Speaker 04:
For that to be one of the check boxes that we have to check off, there has to be some rule of law that says that you have to show people there.

[00:49:22] Speaker 04:
You actually have to show agents.

[00:49:24] Speaker 04:
So absent that, for us to actually meet the requirement that is yet to be articulated as such in the law, I would say we can't have waived that.

[00:49:35] Speaker 04:
But there is sufficient evidence in the record from which the district court found that Google is directing the personnel of the ISP.

[00:49:46] Speaker 04:
They have to have step-by-step directions before they touch any of Google's servers.

[00:49:52] Speaker 04:
Before they tighten this group, so I don't believe that issue is waived I also think that for most purposes it is now concluded subject to For example a rule 12 C type motion, so I don't think it's necessarily the last word, but I do think

[00:50:09] Speaker 04:
that we've had the venue determination.

[00:50:12] Speaker 04:
I will say there was no hearing actually in this instant case.

[00:50:16] Speaker 04:
Instead, the court relied upon what the court had previously done in the seven networks case.

[00:50:22] Speaker 04:
So there was not an entirely new hearing.

[00:50:26] Speaker 04:
There was not any discovery in this case.

[00:50:29] Speaker 04:
Instead, we relied upon what it had done before for judicial efficiency.

[00:50:34] Speaker 04:
But I do think that it would be

[00:50:38] Speaker 04:
to answer the court's procedural question, should this court now impose new requirements or new clarifications to the venue statute?

[00:50:46] Speaker 04:
I do think it would be appropriate to remand the case back to the district court to allow the district court, just as this court did in ZTE, to assess

[00:50:56] Speaker 04:
Those and to consider those in light of its venue determination Because it could in this discretion transfer the case or it could dismiss Or it could also find that okay?

[00:51:09] Speaker 04:
I'm going to consider that and I'm going to find that venue is still appropriate and that there is a regular and established place of business Okay, thank you.

[00:51:19] Speaker 05:
Mr.. Regan.

[00:51:20] Speaker 05:
Thank you.

[00:51:21] Speaker 05:
Mr.. Schmidt.

[00:51:21] Speaker 05:
Yeah

[00:51:30] Speaker 03:
Thank you, Your Honor.

[00:51:33] Speaker 03:
I think the colloquy that you had on transmission lines perfectly exemplifies the problem with the decision below, which is that once you open this door and say equipment can potentially be a regular and established place of business, just about anything can that's used by a business to carry out its business.

[00:51:49] Speaker 03:
So this is not just a Google problem.

[00:51:51] Speaker 03:
I want to emphasize this.

[00:51:52] Speaker 02:
I asked your friend a question because I wanted to make him do it first.

[00:51:56] Speaker 02:
But I want to ask you this.

[00:51:58] Speaker 02:
What does Google do in the Eastern District?

[00:52:01] Speaker 03:
Do?

[00:52:03] Speaker 03:
I don't think Google actively does anything.

[00:52:05] Speaker 03:
In other words, there's no evidence of any employee or agent of Google in the declaration that Your Honor was talking about being present in the district.

[00:52:12] Speaker 03:
Now, there are other employees.

[00:52:14] Speaker 01:
I'm sorry.

[00:52:14] Speaker 01:
The declaration is restricted to employees.

[00:52:17] Speaker 01:
It doesn't say anything about agents.

[00:52:18] Speaker 03:
That's true.

[00:52:19] Speaker 03:
You're exactly right about that.

[00:52:20] Speaker 03:
Google said no employee go down there.

[00:52:22] Speaker 03:
We think that any agency relationship argument has been waived.

[00:52:25] Speaker 03:
But you make money there.

[00:52:27] Speaker 03:
Yes, Google makes money through the trends.

[00:52:30] Speaker 03:
So what do you do in the Eastern District?

[00:52:35] Speaker 03:
I have an answer in mind.

[00:52:38] Speaker 03:
I think you need a less abstract subject to that verb, I think.

[00:52:44] Speaker 03:
And what Google does in the district will depend on what the subject of that verb is.

[00:52:48] Speaker 03:
When you look at the service statute, the subject of that verb has to be employees or agents in the district, and there's no evidence of a Google employee or agent.

[00:52:55] Speaker 02:
Is it fair to say you provide information to customers?

[00:52:58] Speaker 03:
That is one aspect of Google's business, of course.

[00:53:00] Speaker 03:
We don't think that's its main or its only business, but that is one aspect of what Google does.

[00:53:06] Speaker 01:
Conducted in the Eastern District.

[00:53:08] Speaker 01:
until you left?

[00:53:11] Speaker 03:
Yes, Google users receive information through the Google network in the Eastern District of Texas.

[00:53:18] Speaker 03:
That is correct.

[00:53:19] Speaker 03:
But just because equipment is involved in that transmission does not make a regular and established place of business.

[00:53:24] Speaker 03:
And again, I think the transmission line hypothetical perfectly illustrates this.

[00:53:29] Speaker 03:
We have the amicus brief that's been submitted of 17 companies in the High Tech Inventors Alliance talking about how this has impacted them.

[00:53:36] Speaker 03:
If you look at page 12, note 3 in that brief, there are tons of suits in the Eastern District of Texas involving equipment-based theories.

[00:53:43] Speaker 03:
Google itself, as a result of the seven decision, is now fending off venue motions that are relying on

[00:53:49] Speaker 03:
fiber optic cable that Google uses in the district, or cell towers that Google uses in the district.

[00:53:55] Speaker 01:
So this is a very real problem, and the need for guidance, I think, is very... Were any of the other cases server cases in the amicus brief?

[00:54:04] Speaker 01:
I guess Judge Lin's case in the Northern District was a server case.

[00:54:11] Speaker 01:
I think maybe some tiny unpublished Virginia district court case was a server case, but otherwise no server case.

[00:54:18] Speaker 03:
Correct.

[00:54:18] Speaker 03:
Well, the very first case in that footnote in the amicus brief is a case against Netflix, which does rely on the presence of servers in the district.

[00:54:24] Speaker 03:
So this is very much a real problem.

[00:54:26] Speaker 03:
And Google is certainly not the only company that has servers in the district.

[00:54:32] Speaker 03:
The only distinction that my friend ultimately was able to point to between transmission lines in this piece of equipment is that this piece of equipment stores rather than simply as a pass-through for data, but we don't think that that distinction can possibly be relevant under the statute.

[00:54:47] Speaker 03:
This just goes to the functioning of the equipment, not whether or not it is an established place of business.

[00:54:53] Speaker 03:
It's hard to see how the storage of data makes something an establishment.

[00:54:57] Speaker 03:
Providing information isn't your

[00:55:00] Speaker 03:
principal business.

[00:55:01] Speaker 02:
What is?

[00:55:01] Speaker 02:
Gathering information?

[00:55:04] Speaker 03:
I mean, it's obviously an important piece of our business.

[00:55:07] Speaker 03:
I'm not up here to represent what Google's main or principal business is.

[00:55:11] Speaker 02:
No, but I want to know what they do in the Eastern District.

[00:55:15] Speaker 02:
I mean, if your business is gathering information, that's different than providing information, isn't it?

[00:55:23] Speaker 02:
Because then you're taking data out of the Eastern District.

[00:55:27] Speaker 03:
Your Honor, I don't think this distinction goes to whether or not a place of business, a regular and established place of business exists in the district.

[00:55:35] Speaker 03:
And if I could get back to this point about storage.

[00:55:38] Speaker 01:
I'm sorry.

[00:55:38] Speaker 01:
Can I just ask one very specific question?

[00:55:41] Speaker 01:
In the McCallion Declaration in A42, he twice says something about Google temporarily caching content.

[00:55:53] Speaker 01:
What does temporarily mean there?

[00:55:58] Speaker 01:
It's not the same as transmission, even transmission with some incidental servers attached to the routers.

[00:56:07] Speaker 01:
It's something longer than that, right?

[00:56:09] Speaker 03:
What does this mean?

[00:56:11] Speaker 03:
So I think what that means is a YouTube video that gets cached is not going to be the same YouTube video on every day.

[00:56:16] Speaker 03:
In other words, different content on the web becomes more or less popular on a changing basis.

[00:56:21] Speaker 03:
And what populates the GDC servers depends on what is popular and what users are requesting.

[00:56:26] Speaker 03:
So it's temporarily stored to that extent.

[00:56:28] Speaker 01:
So it's temporary in the same sense that a large warehouse of goods would be temporary because goods change.

[00:56:39] Speaker 01:
So that word is not really doing anything except to suggest this is a little bit like transmission, which doesn't sound quite right.

[00:56:46] Speaker 03:
I think that's right in a metaphorical sense, Your Honor, but I want to get back to this point about virtual versus real business.

[00:56:52] Speaker 03:
So an e-retailer sells goods through the Internet.

[00:56:56] Speaker 03:
If I access the e-retailer's website on my home, I'm looking at a computer, it is a physical thing, and it seems a lot like a place of business.

[00:57:04] Speaker 03:
It's functioning like a place of business.

[00:57:06] Speaker 03:
It's a virtual storefront.

[00:57:08] Speaker 03:
But that does not mean that the e-retailer has a place of business in my home because it's just a

[00:57:13] Speaker 03:
virtual place of business.

[00:57:14] Speaker 03:
And we think the exact same analysis would apply to a server.

[00:57:18] Speaker 03:
Metaphorically, in certain ways, it stores data that seems, again metaphorically, like it is a warehouse, but it's just a virtual warehouse.

[00:57:25] Speaker 01:
And we know from Craig... Except that it's full of terabytes of actual content.

[00:57:33] Speaker 03:
But again, we know from Cray that a virtual space is not enough, right?

[00:57:35] Speaker 03:
So any virtual space is going to be instantiated in circuitry.

[00:57:39] Speaker 03:
Just like in the e-retailer example, in my home, that store is going to be instantiated in the circuitry of my home.

[00:57:46] Speaker 03:
So the fact that a virtual place has some physical component or manifestation.

[00:57:50] Speaker 01:
That's not right.

[00:57:51] Speaker 01:
The store of stuff is somewhere else at some server farm.

[00:57:57] Speaker 01:
It's only something that we might call an index that tells you what you have available to you.

[00:58:03] Speaker 01:
The content is not, otherwise it would take forever to download even the front page.

[00:58:12] Speaker 03:
But I don't take my friend to be saying that a computer cannot be a physical place of business for purposes of the venue statute.

[00:58:19] Speaker 03:
I'm not sure on what basis, on their theory of venue, you would say that the computer in a user's home is not a physical place.

[00:58:26] Speaker 03:
Because after all, it is a physical box that carries out the business of the defendant, which is selling goods through the internet to customers.

[00:58:34] Speaker 03:
And it occupies physical space.

[00:58:35] Speaker 03:
So yes, you're right.

[00:58:36] Speaker 03:
The goods are somewhere else, but it is still a physical object.

[00:58:40] Speaker 03:
And the store is instantiated in the circuitry of a computer in a physical way in the person's home.

[00:58:46] Speaker 03:
But that is just a virtual place of business.

[00:58:49] Speaker 03:
And we think that's plainly insufficient under Cray.

[00:58:54] Speaker 02:
Are there any other questions?

[00:58:56] Speaker 02:
Yeah, I want to finish up on my line.

[00:58:58] Speaker 02:
Questioning, and that is, when you gather information from customers, which is part of your business, you agree,

[00:59:06] Speaker 02:
How does that get passed back to Google?

[00:59:09] Speaker 02:
It goes through the server?

[00:59:11] Speaker 03:
I'm not aware.

[00:59:11] Speaker 03:
There's nothing in the record that I'm aware of on that point, Your Honor.

[00:59:17] Speaker 05:
OK.

[00:59:17] Speaker 05:
All right.

[00:59:17] Speaker 05:
Thank you, Mr. Schmidt.

[00:59:18] Speaker 05:
Thank you, Mr. Brown.