[00:00:02] Speaker 00:
We have an appeal here and our appeal is just solely based on if we if you vacate or reverse on our merits appeal as a statutory matter They will no longer be a prevailing party That's a legal issue you reviewed de novo, and it would and the judge the fees portion should be reversed I know it's unusual, but I know it is the 285 is the only basis that the fee was awarded on

[00:00:30] Speaker 00:
They only sought it, actually, in district court.

[00:00:32] Speaker 03:
Well, isn't the other side arguing in their brief that we ought to open that up and look at inherent authority and also other statutory authority?

[00:00:41] Speaker 00:
They do argue that, and there are at least three reasons why you should reject that here, Judge Clevinger.

[00:00:46] Speaker 00:
One, they didn't make this argument below.

[00:00:48] Speaker 00:
So they sought fees only under, they sought these fees only under Section 285.

[00:00:52] Speaker 00:
And it's not an alternative ground for a firm that's already something.

[00:00:55] Speaker 03:
Or there's an expert fee sought under the other statute.

[00:00:57] Speaker 00:
The expert fees were, Your Honor, but that actually just kind of proves my point, which is they knew there were these other sources of authority, yet they didn't seek it.

[00:01:04] Speaker 00:
And so that's the first reason.

[00:01:05] Speaker 03:
You can't... Those fees are not in dispute.

[00:01:08] Speaker 03:
Expert fees under the other statute.

[00:01:14] Speaker 00:
That's part of their appeal, I believe, Your Honor.

[00:01:16] Speaker 00:
The judge rejected their expert fees.

[00:01:19] Speaker 00:
So there's no alternative basis to affirm because they didn't make it below.

[00:01:24] Speaker 00:
Two, you couldn't affirm even if they had because the judge didn't make the necessary findings.

[00:01:31] Speaker 00:
The inherent authority in Section 1927 required bad faith.

[00:01:34] Speaker 00:
The judge made no findings of bad faith.

[00:01:36] Speaker 00:
And three, because the record wouldn't support findings of bad faith.

[00:01:40] Speaker 00:
The disqualification order was entered under an objective test.

[00:01:44] Speaker 00:
The only evidence in that hearing was

[00:01:47] Speaker 00:
But from on this issue was declarations from both Mr. Bass and the CEO of Balsam saying they had no intent to cause judge org's recusal, nor did they anticipate that it would happen.

[00:01:59] Speaker 00:
Judge also offered UCP a chance to have an evidentiary hearing on that point, and they declined, suggesting that intent wasn't necessary.

[00:02:06] Speaker 00:
And Judge also declined to apply a subjective test, applied an objective test, and granted their disqualification motion.

[00:02:14] Speaker 00:
And we went back to Judge Orr.

[00:02:16] Speaker 00:
So there is no basis on this record to have granted these fees under Section 1927 or inherent authority.

[00:02:26] Speaker 04:
Can I ask you this question?

[00:02:27] Speaker 04:
And I realize this is kind of anticipating this is your response to their appeal.

[00:02:34] Speaker 04:
You set up a 10-5, so we kind of have- Right, or I'm happy to sit down and let her go first.

[00:02:38] Speaker 04:
It's unusual.

[00:02:39] Speaker 04:
But I guess I wanted to ask this.

[00:02:43] Speaker 04:
As I read Judge York's opinion, it was not completely clear to me whether he was saying as to the work done in the front gate litigation, that he thought he was legally precluded

[00:02:58] Speaker 04:
from considering that work as part of a 285 award in this case, or whether he was saying, in addition to that, or anyway, independently from that, look, I don't in the end think that the arguments, you, Balsam, though you have lost, were kind of beyond the pale as a shorthand.

[00:03:21] Speaker 04:
They were not exceptionally weak, but I wasn't

[00:03:26] Speaker 04:
If I had doubts about whether a legal principle would be correct if it said you can never look to the earlier litigation if you weren't a party, which is a bit what he suggests, do I have the independent basis to say even if I joined Judge Oreck in disagreeing with you on the merits, the arguments just don't meet the exceptional case standards?

[00:03:56] Speaker 00:
So I think Judge Orrick understood that he could potentially award fees in another case.

[00:04:01] Speaker 00:
He distinguished the cases in which this court has done that.

[00:04:04] Speaker 00:
And on page 4058, he concludes, UCP provides no basis on the facts of this case to support an award under section 285 for fees incurred in Frontgate, which concluded before this case was filed and where UCP was not a party.

[00:04:18] Speaker 00:
So I take it to be a fact-specific holding in the end.

[00:04:22] Speaker 00:
And in any event, to award fees in that other

[00:04:24] Speaker 00:
Case you would have to first conclude that this case was exceptional beyond the recusal event which he didn't do so sort of I'll see the podium and wait and reply to her appeal.

[00:04:38] Speaker 01:
Thank you Your honor UCP cross-appealed the fees award on the grounds of

[00:04:52] Speaker 01:
that the judge didn't make a specific factual finding about the litigation conduct.

[00:04:59] Speaker 01:
The court's order says that there was no, well, on the merits of the litigation positions.

[00:05:07] Speaker 01:
So on the merits prong of the fees analysis, the court says Balsam's litigation positions aren't weak because, one, they weren't

[00:05:18] Speaker 01:
required to roll over and play dead, and two, because they relied on an expert with a solid CV.

[00:05:25] Speaker 01:
And our position is that in terms of doing a fees analysis, the court needed to make something on the record about his conclusions about why their litigation position wasn't

[00:05:43] Speaker 01:
substantially weak.

[00:05:44] Speaker 01:
Our position was that it was.

[00:05:47] Speaker 04:
In addition to the recusal causing conduct... Is it enough if in all of our work on and deliberations about the case you just finished arguing, whatever we conclude... Let's suppose we, by assumption here, to continue the assumption of your being prevailing, that that one is a firm.

[00:06:13] Speaker 04:
Can we take into account our own, let's call it, struggles with a series of four or five issues ultimately?

[00:06:22] Speaker 04:
And if we think, yeah, you're right, but really, there was a lot to debate here.

[00:06:28] Speaker 04:
Don't we then automatically say, of course, there's no abuse of discretion in saying that this is not an exceptional case?

[00:06:41] Speaker 01:
I don't think so, Your Honor.

[00:06:42] Speaker 04:
Do you think the district court has to run through all of that?

[00:06:44] Speaker 01:
I think so.

[00:06:45] Speaker 01:
I think that the district court is the finder of fact.

[00:06:48] Speaker 01:
And this was an issue in a justicam, I believe, where one court wanted to rely on fact finding that was done by its predecessor.

[00:06:58] Speaker 01:
This court had remanded the case back for fact finding.

[00:07:03] Speaker 01:
And the second judge didn't do the fact finding.

[00:07:05] Speaker 01:
I think that that is the role of the district court.

[00:07:08] Speaker 01:
The district court needed to give us some fact-finding on the merits prom, and there wasn't any.

[00:07:15] Speaker 02:
Supposing we take the opposite tack in the first case and reverse the district court, does your argument here go away?

[00:07:24] Speaker 01:
Some of it does.

[00:07:26] Speaker 01:
On the merits piece, I think that it would be very difficult for us to argue.

[00:07:35] Speaker 03:
On the merits piece, I think the litigation... Any 285 bases is gone.

[00:07:40] Speaker 01:
Yes, right.

[00:07:41] Speaker 03:
But I think on the... So why would we resuscitate other bases when you hadn't even argued them below?

[00:07:48] Speaker 01:
Well, we did argue 1927.

[00:07:52] Speaker 01:
We argued it for expert fees and we did.

[00:07:55] Speaker 01:
We did.

[00:07:56] Speaker 01:
And we raised it for expert fees and I think.

[00:08:02] Speaker 01:
What the case law says is that if Section 285, because of how it's framed and you can only be a prevailing party, then if that's not sufficient to reach bad conduct, then the court should use its inherent authority

[00:08:20] Speaker 01:
or another section that would reach it.

[00:08:23] Speaker 02:
Only if it finds it.

[00:08:26] Speaker 01:
If it finds it.

[00:08:27] Speaker 01:
And this court did.

[00:08:28] Speaker 01:
He talked about the judicial recusing conduct as tantamount to bad faith.

[00:08:35] Speaker 01:
And Judge Alsop, who heard the recusal.

[00:08:38] Speaker 04:
Didn't you get fees for that episode?

[00:08:41] Speaker 01:
Yes, for that specific episode, right.

[00:08:43] Speaker 01:
And so what I'm saying is, if the whole basis of

[00:08:47] Speaker 01:
of the attorney's fee award were reversed by this court.

[00:08:53] Speaker 01:
And I hope that doesn't happen.

[00:08:54] Speaker 01:
And it was sent back.

[00:08:56] Speaker 01:
The fact that we couldn't get the other fees that we're asking for as a non-prevailing party, if those fees are tied to this conduct, and I think the district court erred in not looking at the other conduct and the totality of what happened here, then we could recover those fees even outside of Section 285.

[00:09:19] Speaker 01:
And then I wanted to, Judge Toronto asked a question about the District Court's view of the prior Frontgate case.

[00:09:26] Speaker 01:
It is clear.

[00:09:27] Speaker 04:
How do you read Judge Oreck's opinion?

[00:09:29] Speaker 01:
It's clear in Judge Oreck's opinion that he says UCP was not a party to the Frontgate case and therefore can't be a prevailing party in the Frontgate case.

[00:09:44] Speaker 01:
He spends a section of his

[00:09:47] Speaker 03:
Do you challenge that?

[00:09:51] Speaker 01:
Yes, I do challenge that.

[00:09:53] Speaker 03:
And so... UCP can be a prevailing party even though it wasn't a party.

[00:09:58] Speaker 01:
So the issue is is that UCP is a prevailing party in this case, in the DJ case.

[00:10:06] Speaker 01:
And so the question isn't whether or not it's a prevailing party.

[00:10:09] Speaker 01:
It is.

[00:10:10] Speaker 01:
The question is, as the prevailing party, what is the scope of the fees that it's entitled to?

[00:10:17] Speaker 01:
And our position was that this court's case law says that you're entitled to all fees that are related to the case, or that in our case, we did all of the claims construction in the Frontgate case.

[00:10:35] Speaker 01:
And as a result, we were two summary judgment within seven weeks in the DJ case.

[00:10:40] Speaker 01:
And so those fees were paid by UCP, and they substantially aided and facilitated the DJ action.

[00:10:49] Speaker 01:
So if we're a prevailing party and we're entitled to the fees that got us there, those fall within that definition.

[00:10:57] Speaker 02:
You prevailed because Frontgate settled and was happy with its settlement.

[00:11:07] Speaker 01:
no UCP prevailed in the DJ action because we proved that you're seeking the fees incurred leading to the front gate settlement because the the we're not seeking front gates fees front gate settled front gate wages fees front gate paid its own fees in relation to some other

[00:11:32] Speaker 01:
claims in the case.

[00:11:35] Speaker 01:
It's been undisputed that on the infringement matters, UCP paid the fees.

[00:11:41] Speaker 02:
And... You had an indemnity agreement.

[00:11:42] Speaker 01:
Right.

[00:11:43] Speaker 02:
And the indemnity agreement no longer was in effect once Frontgate settled.

[00:11:51] Speaker 02:
Isn't that correct?

[00:11:53] Speaker 01:
That's correct.

[00:11:53] Speaker 02:
So to that extent, you prevailed because of the settlement.

[00:11:56] Speaker 02:
You no longer had to indemnify.

[00:11:59] Speaker 01:
Well, we were no longer indemnifying, but prevailing in this litigation, we prevailed in the DJ action on the claims in dispute of non-infringement because we filed the DJ and filed the no evidence summary judgment motion.

[00:12:14] Speaker 01:
And Balsam couldn't prove that our tree infringed the patents.

[00:12:19] Speaker 01:
They came forward with no evidence.

[00:12:21] Speaker 01:
So we prevailed in the DJ action.

[00:12:24] Speaker 01:
When we prevailed in the DJ action, we asked for our fees.

[00:12:28] Speaker 01:
And our reading of this court's case law and the statute is those fees should include the money that we spent to get the Markman order that allowed us to prevail on summary judgment.

[00:12:44] Speaker 01:
Any other questions from the court?

[00:12:56] Speaker 00:
The district court acted well within its discretion in denying the fees that they seek here.

[00:13:01] Speaker 00:
Every bit of that inquiry is an abuse of discretion standard, and it was very familiar both with this litigation and the Frontgate case.

[00:13:09] Speaker 00:
And it concluded that although Balsam did not prevail, its arguments were not so beyond the pale or outside the ordinary course.

[00:13:19] Speaker 00:
that it found this case to be exceptional, with the limited exception of the recusal event.

[00:13:26] Speaker 00:
And this court should affirm that conclusion.

[00:13:30] Speaker 00:
I'm happy to answer any questions.

[00:13:34] Speaker 02:
We've gone far enough.

[00:13:35] Speaker 00:
Thank you, Your Honor.

[00:13:36] Speaker 03:
You nearly set a record.

[00:13:39] Speaker 02:
Certainly you did in a case where I was resigning.