[00:00:00] Speaker 03: X2I versus Intel. [00:00:58] Speaker 01: Okay, please proceed. [00:01:00] Speaker 01: May it please the court. [00:01:01] Speaker 01: I'd like to start today by addressing the prejudice factor and in a moment the death of Bill Anthony. [00:01:09] Speaker 03: In the blue brief at 10, you say that following the denial of the petition for rehearing on Bonk in the ITC case in 2014, Alston and Byrd notified X2Y that, quote, would no longer represent X2Y in the state district court cases. [00:01:27] Speaker 03: And in the blue brief at 44, you say X to Y was not represented by council from 2014 to 2017. [00:01:35] Speaker 03: And then in the gray brief at six, you reiterate that X to Y was not represented for that period. [00:01:45] Speaker 03: The red brief at 31 says Alston and Byrd still represented X to Y during that time period. [00:01:54] Speaker 03: Is it your position, I want to be clear on this, your position that Alston Byrd and Byrd was not X2Y's counsel from 2014 right through 2017? [00:02:04] Speaker 03: That's correct, Your Honor. [00:02:06] Speaker 03: So there was no counsel during that time period? [00:02:09] Speaker 03: That's correct. [00:02:09] Speaker 03: Okay. [00:02:11] Speaker 03: You do understand that a corporation may not generally appear, pro se. [00:02:19] Speaker 01: That's correct. [00:02:20] Speaker 03: And you're aware that the Pennsylvania Supreme Court in Harkness says that the law is clear that a corporation may appear in court only through an attorney-at-law admitted before the court. [00:02:35] Speaker 03: So is it fair to say that during that time period where you say X2Y was not represented, that X2Y could not [00:02:47] Speaker 01: appear in court and could not maintain its state district court case that's correct your honor okay doesn't that on its own warrant dismissal no your honor the there there's nobody in the case there is no party there's a party your honor there's a party there's no representation there's no one appearing your honor when you lose counsel in a case you lose the ability to have somebody arguing in court [00:03:14] Speaker 03: as a member of the bar. [00:03:15] Speaker 03: Wait, wait, wait, wait, wait. [00:03:16] Speaker 03: The rules of civil procedure are written. [00:03:18] Speaker 03: For example, there is a requirement in local rules that counsel maintain an office from X period to Y period during these days in order for service to be affected, personal service to be affected, and so on. [00:03:33] Speaker 03: For a party opposing someone, they have to be able to have someone with whom they can deal on a court basis. [00:03:41] Speaker 03: But for that three-year period, [00:03:43] Speaker 03: The other side has no one. [00:03:45] Speaker 03: There is no entity that's in court. [00:03:49] Speaker 01: Your Honor, the entity still remains the company. [00:03:51] Speaker 01: The company was still a party to that lawsuit. [00:03:54] Speaker 01: The lawsuit was both stayed and administratively closed. [00:03:58] Speaker 01: If the case were active and X2Y had lost their counsel, they would at that point have to notify the court that I cannot proceed at this point in this active case until I find new counsel. [00:04:09] Speaker 01: But the loss of counsel, the loss of counsel does not [00:04:13] Speaker 03: Immediately and instantly dismiss the case against it require a dismissal of the case against the party The one brought by the in the blue brief at eight You explained that Alston and Byrd on its own decided narrow the scope of the investigation on its own without Consulting counsels that correct they didn't without consulting the client. [00:04:33] Speaker 01: Yeah, I'm sorry without consulting the client [00:04:35] Speaker 01: That is correct, Your Honor, and it's the result of how the protective orders work in those cases. [00:04:40] Speaker 01: As you know, Your Honor, ITC matters operate extremely fast, very intensely, and for the most part, the clients are barred from seeing all the confidential information. [00:04:50] Speaker 01: So when they're sitting there, you have 20 attorneys who are looking over these discovery responses, product prior art that they're not even allowed to show to their client, [00:04:58] Speaker 01: not to mention these confidential design files, the attorneys there made various decisions and they determined on their own that they couldn't consult with the client. [00:05:06] Speaker 01: It all moved too fast and in hindsight [00:05:09] Speaker 01: In hindsight, when my clients got to get bits and pieces of information about what had happened, they realized that the attorneys had made various mistakes in narrowing certain of those claims. [00:05:18] Speaker 03: You were aware of the improper corporation rule, of course, as a member of the Pennsylvania Bar, right? [00:05:27] Speaker 01: I'm not a member of the Pennsylvania Bar. [00:05:28] Speaker 03: Okay. [00:05:29] Speaker 03: Were you familiar with that law? [00:05:30] Speaker 01: I was familiar with the law, Your Honor, that says a corporation that doesn't have in-house counsel cannot represent itself in a district court action. [00:05:39] Speaker 03: So, despite that, you took three years negotiating the contract? [00:05:45] Speaker 01: Not exactly, Your Honor. [00:05:46] Speaker 01: We took two years and nine months to sign up this case as a new client. [00:05:51] Speaker 01: The period of time that amounted two years and nine months is described in our declarations. [00:05:56] Speaker 01: It included due diligence on the merits, and also a very substantial portion of that included the client renegotiating contracts with their prior counsel and with the litigation funder, contracts that we as the new counsel insisted on be renegotiated before we could take on the case. [00:06:13] Speaker 03: You say that Syria autumn, you learned, October 1, 2014, [00:06:21] Speaker 03: Alston tells X2Y it will not represent them in seeking certiorari. [00:06:27] Speaker 03: October 16, they contact your firm, 2014. [00:06:31] Speaker 03: Nine months later, you notify X2Y that you're interested in representing. [00:06:42] Speaker 03: October of 2015, you agree in principle to a retention agreement. [00:06:50] Speaker 03: And then these issues come up. [00:06:56] Speaker 03: The agreement that existed with Alston and Bird and so on. [00:07:04] Speaker 03: And what I'm driving towards is you argue that X2Y is not responsible for that delay. [00:07:13] Speaker 03: Am I correct? [00:07:14] Speaker 03: Yes, Your Honor. [00:07:18] Speaker 03: If they had told you at the beginning that those various agreements existed, you could have resolved them at that point. [00:07:26] Speaker 03: Am I not correct? [00:07:28] Speaker 01: You could have resolved them sooner. [00:07:29] Speaker 01: And I would say this, Your Honor. [00:07:31] Speaker 01: So how are they not responsible for that? [00:07:33] Speaker 01: Because we didn't ask them about those agreements, Your Honor. [00:07:35] Speaker 01: We didn't ask them about those agreements. [00:07:37] Speaker 01: Our firm is also a contingency firm. [00:07:40] Speaker 01: It would never occur to us that a prior firm [00:07:43] Speaker 01: It was attempting to maintain a stake in a litigation where they had dropped the client. [00:07:48] Speaker 01: It also was, especially not then, and certainly not for our firm, as common to have litigation funding, much less litigation funding where the terms put at jeopardy new counsel's representation. [00:07:58] Speaker 03: You said that in the blue brief, X2Y had no ability to move forward with the district court case in those three years before you signed. [00:08:08] Speaker 03: Couldn't they have sought other counsel? [00:08:11] Speaker 01: They could and they did unsuccessfully, Your Honor. [00:08:14] Speaker 01: This is not an easy case to take over. [00:08:16] Speaker 01: There are very few firms that after having seen the prior loss at the ITC, affirmed by this court, would take on this matter against a very sophisticated set of corporate defendants on a contingency fee basis. [00:08:28] Speaker 01: Now we all know there's plenty of firms that will take any case and file as many as they can, but that's not the kind of counsel that they needed for this case. [00:08:35] Speaker 03: So the court [00:08:39] Speaker 03: made a passing reference to something judges sometimes say about not passing the smell test. [00:08:46] Speaker 03: And you say in the blue brief at 27, the court's subjective ability to smell out the right result does not inspire confidence and should not be evoked, especially when something as serious as a case terminating sanction is being considered. [00:09:04] Speaker 03: What's your legal authority for that? [00:09:06] Speaker 03: Because I've seen reference to not passing the smell test. [00:09:09] Speaker 03: any number of times. [00:09:11] Speaker 01: Your Honor, it goes to assessing the credibility of the accusations. [00:09:15] Speaker 01: There was no basis for the court in reading our declarations, no basis to dispute the accuracy or truth of what we were saying. [00:09:22] Speaker 01: And when I read that statement in the order saying it doesn't pass the smell test from a district court who's never even seen the party stand in front of them, much less subject to cross-examination or questions at oral argument, what basis is the court reading those papers [00:09:38] Speaker 01: have to question the accuracy of those, and especially, Your Honor, when the other side. [00:09:42] Speaker 01: The other side didn't actually dispute the truth of our statements. [00:09:45] Speaker 01: They also didn't seek to take discovery or cross-examine us on this. [00:09:49] Speaker 01: And this comes back to the core abuse of discretion standard. [00:09:54] Speaker 03: One of the reasons... In three years, what if I said to you, gee, I don't think it passed the smell test? [00:10:02] Speaker 03: Are you going to say, [00:10:05] Speaker 03: that my ability to smell the right result is questionable? [00:10:09] Speaker 01: Your Honor, I would say that if you look at the factors that are required under POLIS, whether you pass the smell test or not, the factors require granting at least less [00:10:19] Speaker 01: severe sanctions. [00:10:20] Speaker 02: Okay let's turn to the factors in Poulos because this is a process thing but it's very significant to me and that is by the time we get to Gray you level kind of an accusation against your opposing counsel and it involves the use of ellipses which I take very seriously. [00:10:40] Speaker 02: There have been at least two occasions since I've been on the bench where we [00:10:45] Speaker 02: sanctioned someone and did something else to people for misusing ellipses. [00:10:50] Speaker 02: And here, there were ellipses used with respect to the second factor of Pulas. [00:10:56] Speaker 02: And you make a big deal of that in gray. [00:10:59] Speaker 02: And in gray, you say, among other things, Intel fully states all the other factors. [00:11:04] Speaker 02: But for the prejudice factor, Intel uses an ellipses. [00:11:07] Speaker 02: to omit the words, yadada. [00:11:10] Speaker 02: Intel did not do that to save space or to remove irrelevant or superfluous words from the test. [00:11:16] Speaker 02: The purpose, so we're talking about intent here, of Intel's edit was to delete a material part of the Pulas test that Intel cannot meet. [00:11:26] Speaker 02: Well, I took that accusation very seriously. [00:11:29] Speaker 02: And we went back through a lot of things, including Third Circuit opinions. [00:11:34] Speaker 02: Now, as you know, the district court also didn't use ellipses, but admitted the phrase that you think is so important. [00:11:41] Speaker 02: There have been numerous, there have been Third Circuit opinions since then, which I think Intel cites and read, that have really, you know, Pulas happened to do with a scheduling order or discovery. [00:11:53] Speaker 02: But nobody in the Third Circuit thinks that Poulos was necessarily limited to just those two process items. [00:12:01] Speaker 02: And indeed, there have been subsequent Third Circuit cases which have dealt with other matters, more comparable to this. [00:12:08] Speaker 02: So I guess I really think it goes a little too far to really make what is really kind of almost an ethical charge against someone for doing something improper where you can try to convince me otherwise, but I think the position they've taken and their use of ellipses in this case is entirely consistent with third circuit authority applying Pulas. [00:12:31] Speaker 02: That's my take. [00:12:32] Speaker 02: Tell me if you think I'm wrong or if you just want to take it back. [00:12:36] Speaker 01: I don't want to take it back, but I will say it was not leveled as an ethical accusation, Your Honor. [00:12:41] Speaker 01: That is absolutely how we read the case, and there is no basis for us to understand that ellipsis when they do not cite... Well, are you familiar with the Third Circuit case in Hildebrand versus Allegheny County? [00:12:52] Speaker 02: Are you familiar with Adams versus Trustees of New Jersey? [00:12:56] Speaker 02: And I can go on, but the Third Circuit has clearly not limited Poulos to this failure to meet a scheduling order or discovery, has it? [00:13:06] Speaker 01: In Adams, Your Honor, no, Your Honor, in Adams, I would direct Your Honor to the result in that case. [00:13:13] Speaker 01: That, like every other case in which there was not a violation of a discovery obligation or not a violation of a court order, the dismissal was always reversed or a decision not dismissed was always affirmed. [00:13:23] Speaker 02: Are you standing here today and saying that you think Third Circuit law and the Poulos test and that particular factor covers only prejudice with regard to the failure to meet scheduling order or discovery? [00:13:37] Speaker 02: Is that your reading? [00:13:38] Speaker 01: No, Your Honor. [00:13:38] Speaker 01: I'm not saying that. [00:13:40] Speaker 01: I'm saying that there is always only the case, all the cases that they cited where a dismissal under Poulos was affirmed involved a violation of a court order [00:13:50] Speaker 01: or a failure to comply with discovery obligations, and we do not have that here. [00:13:56] Speaker 01: And if I could return for a moment to the prejudice factor, they are required as the moving party to submit evidence to substantiate their claims of prejudice. [00:14:05] Speaker 01: With the exception of them pointing out that our inventor, Bill Anthony, died, everything else they submitted was mere speculation. [00:14:12] Speaker 01: Witnesses could be... Yes, Your Honor, do you have a question? [00:14:15] Speaker 03: No, I'm just dropping my jaw in awe at what you just said. [00:14:20] Speaker 03: It's mere speculation to say that after at least three years, and more like a lot more than that, that witnesses recollections will have dimmed. [00:14:32] Speaker 03: Is that mere speculation? [00:14:33] Speaker 01: Yes, it is, Your Honor. [00:14:35] Speaker 03: Are there a bunch of cases that say that? [00:14:37] Speaker 01: Your Honor, their own brief says it. [00:14:40] Speaker 01: Their own brief below [00:14:41] Speaker 01: told the district court that we can only speculate at this time because it's early in the case and we need to further figure out what their theories are before we can tell you here these witnesses have been lost. [00:14:51] Speaker 03: Now, if possible... Lost or unable to recollect, you can't tell me that a delay of that period does not impact a party's ability to litigate except for extraordinary circumstances where everything has already been fully preserved. [00:15:11] Speaker 01: I can, Your Honor. [00:15:12] Speaker 01: This is the one case among any other where that passage of time did not prejudice them. [00:15:17] Speaker 01: And if I could reserve the rest of my time for rebuttal, I'm well into my rebuttal, but that's okay. [00:15:20] Speaker 01: Okay. [00:15:21] Speaker 02: Thank you. [00:15:28] Speaker 00: Thank you, Your Honor. [00:15:29] Speaker 00: Michael Summerskill may please record. [00:15:31] Speaker 00: Michael Summerskill on behalf of Appellee Intel. [00:15:35] Speaker 00: This is a case in which we believe the district court properly exercised her broad discretion to dismiss, where X-2I delayed for nearly three years. [00:15:47] Speaker 00: In that time, two critical X-2I witnesses died, memories inevitably faded, and evidence, which was already 17 years old, became older and thus harder to locate. [00:15:58] Speaker 00: X2I admitted that it deliberately did not tell Intel or the court that it ultimately intended to try to reopen the case. [00:16:07] Speaker 00: X2I's delay followed what the ITC found was a nine-year strategic delay before bringing the case in the first place. [00:16:15] Speaker 02: What about your friend's last point about how you conceded that all of this parade of horribles was speculative? [00:16:21] Speaker 00: We certainly have not conceded that the prejudice is speculative. [00:16:27] Speaker 00: We've outlined in our brief very specific prejudice. [00:16:32] Speaker 00: I think I'll walk through that. [00:16:34] Speaker 00: The first is the death of two critical witnesses. [00:16:39] Speaker 00: One, the sole remaining inventor, Bill Anthony, [00:16:42] Speaker 00: who was also principal of the case, and two, Don Harris, who was the other co-founder of X2I. [00:16:48] Speaker 00: And so X2I is now a one-person company. [00:16:51] Speaker 00: There's one witness left. [00:16:53] Speaker 00: We've lost two of the critical witnesses. [00:16:56] Speaker 00: Now, this is also a patent case, as Your Honors know, and we've lost the sole remaining inventor. [00:17:02] Speaker 00: And an inventor plays an important role in a patent case, of course. [00:17:07] Speaker 02: But the patent has expired now, right? [00:17:09] Speaker 02: The patent has expired. [00:17:11] Speaker 02: And Intel has had a period of time where I assume, assuming theoretically that there was infringement here. [00:17:20] Speaker 02: You know, Intel has invested considerable funds, I assume, assuming that the patent was valid for the period it was in effect. [00:17:27] Speaker 00: Well, we certainly didn't assume validity or infringement. [00:17:30] Speaker 00: But yes, Intel has invested substantial funds both before the delay and after the delay. [00:17:39] Speaker 03: I have a question for you. [00:17:41] Speaker 03: It's a difficult question, because I'm going to refer you to page three of your red brief. [00:17:48] Speaker 03: And so I can't read it. [00:17:50] Speaker 03: That's why it's difficult. [00:17:51] Speaker 03: So much of it is highlighted as confidential. [00:17:54] Speaker 03: But you can read it to yourself, OK? [00:17:57] Speaker 03: So starting in the penultimate paragraph, right around [00:18:08] Speaker 03: Okay, there's a reference to appendix at 759, okay? [00:18:13] Speaker 03: So you have that long sentence that begins, X to Y is no innocent victim. [00:18:18] Speaker 03: And then it runs through all this confidential stuff. [00:18:22] Speaker 03: And you reference me to appendix 759. [00:18:30] Speaker 03: And I want you to look at that and tell me what the generation of that document is. [00:18:39] Speaker 03: If you can. [00:18:43] Speaker 03: Because I guess it has confidential information too. [00:18:46] Speaker 03: It says it contains business confidential information. [00:18:51] Speaker 03: How did it come into existence? [00:18:55] Speaker 00: This, Your Honor, was a document created by X2I. [00:18:58] Speaker 00: And I believe Bill Anthony was actually involved in the creation of this document. [00:19:05] Speaker 03: OK. [00:19:05] Speaker 03: And then you reference me. [00:19:08] Speaker 03: us to the same thing in another place, but it's the same document where you say X to Y presentation. [00:19:18] Speaker 03: Okay. [00:19:18] Speaker 03: That's why I asked that question. [00:19:20] Speaker 03: And then the appendix at 129 and 30. [00:19:23] Speaker 03: And I want you to look at that reference and then look at the blue brief. [00:19:32] Speaker 03: I told you this was convoluted at 40. [00:19:34] Speaker 03: Look at the reference at 129 and 30 I'm sorry audience, but we have to be careful on confidential stuff And 30 that's testimony okay, and then I want to take you to the blue brief at 40 I [00:20:03] Speaker 03: And to me, I get as bothered as the chief does on allegations that a lawyer is a liar. [00:20:20] Speaker 03: And so I look carefully. [00:20:22] Speaker 03: And there's that last full paragraph that ends, these assertions are irrelevant and false. [00:20:30] Speaker 03: And to me, these pages [00:20:33] Speaker 03: put the direct lie to that statement. [00:20:38] Speaker 03: And when I'm using that word, counsel, I mean the direct lie. [00:20:43] Speaker 03: So I want you to, as you can, and I'm sorry I made this so convoluted, but it's because you have to deal with the confidential stuff. [00:20:51] Speaker 03: I want you to discuss that. [00:20:54] Speaker 00: Well, Your Honor, I agree with you that the statement about this X-to-Y document is not true. [00:21:05] Speaker 00: And I agree with Your Honor that the allegations against us are not true. [00:21:09] Speaker 00: And I think that particular document [00:21:12] Speaker 00: And I think to find the right place on that, there was an extensive evidentiary hearing at the ITC, and the ITC made a specific finding on that. [00:21:24] Speaker 00: It's appendix 286. [00:21:26] Speaker 00: Again, I can't read it, but the sum and substance is that [00:21:29] Speaker 00: X2I was no innocent party. [00:21:31] Speaker 00: X2I strategically delayed bringing the lawsuit in the first place for nine years. [00:21:37] Speaker 00: And so here we have a delay for three years in the failure to prosecute this case, but that's compounded by a nine-year delay. [00:21:45] Speaker 00: And I think it also gives a little context in terms of the responsibility for the delay. [00:21:51] Speaker 00: You have the same type of thing happening where X2I admits that they deliberately did not come to Intel or to the court to say we're ultimately seeking to reopen this because they didn't want Intel to take any steps. [00:22:05] Speaker 00: In other words, they were aware that there could be some prejudice that was caused to us and they didn't want us to address that. [00:22:12] Speaker 00: And we think that's very significant. [00:22:16] Speaker 03: The prejudice... I have to tell you, I have to tell you, just... You've been accused of multiple things and I think it's very significant when somebody accuses an attorney or a firm of misconduct and I'm sorry for eating your time, but if you can't tell, I'm really frosted about it. [00:22:35] Speaker 00: Well, Your Honor, we agree. [00:22:37] Speaker 00: We were troubled by it. [00:22:39] Speaker 00: As a litigator, sometimes we receive things like that, and we move forward and focus on the merits for the client. [00:22:48] Speaker 00: And I want to emphasize here the prejudice piece, because I think it is very important. [00:22:57] Speaker 00: X2Y has argued that, well, we took Mr. Anthony's deposition in the ITC case, so why do we need it again? [00:23:04] Speaker 00: Well, we need it again because there are different issues that would come up in this subsequent case. [00:23:11] Speaker 00: Damages and the reasonable royalty analysis. [00:23:16] Speaker 00: That's something that would be an issue here, was not an issue there. [00:23:19] Speaker 00: Bill Anthony was directly involved in licensing discussions. [00:23:22] Speaker 00: That testimony would be highly relevant to a Georgia-Pacific analysis. [00:23:27] Speaker 00: Validity. [00:23:27] Speaker 00: In the new cases, we'd be entitled to raise new invalidity arguments and new [00:23:32] Speaker 00: prior art. [00:23:35] Speaker 00: Now, we can't, we won't have the opportunity, we wouldn't have the opportunity to take Mr. Anthony's deposition on new prior art and get admissions. [00:23:45] Speaker 00: Validity, as you're on it, is a fact issue. [00:23:47] Speaker 00: We wouldn't have the opportunity to get admissions based on what's in that prior art. [00:23:52] Speaker 00: That's both relevant to validity and very powerful trial testimony. [00:23:57] Speaker 00: And third, to the extent they tried to raise new infringement arguments or new infringement theory, we ought to have the ability to take the inventor's deposition on whether that theory is consistent with what he said he invented in the first place. [00:24:14] Speaker 02: Well, let me ask you, that goes to the point, I think, that the other side, one of their [00:24:19] Speaker 02: One of their criticisms of the district court is that they should have gotten an opportunity to have an alternative sanction, because this is at the most draconian end. [00:24:30] Speaker 02: So I think there is some noise made about how, well, they could limit certain things to [00:24:37] Speaker 02: ease the concerns that you raise with respect to the passage of time. [00:24:42] Speaker 02: Did they present any specific alternatives to the district court and arguments why that would mitigate the prejudice to you? [00:24:50] Speaker 00: They didn't present any of the alternative sanctions to the district court that they are arguing in their appellate brief. [00:24:57] Speaker 00: They did note that one possibility was dismissal without prejudice and argued that that shouldn't be implemented. [00:25:04] Speaker 00: So effectively, they didn't argue any alternative sanctions. [00:25:10] Speaker 00: We would submit that there are no alternative sanctions that could address the harm. [00:25:15] Speaker 00: And if you look at Third Circuit law and the Pulas case and the Windward case and then the Hyatt case, which is District of Columbia, [00:25:23] Speaker 00: All of those are consistent with what happened here, is where there is significant prejudice and that prejudice can't be undone, then an alternative sanction is not sufficient. [00:25:36] Speaker 00: Here, X to Y's choices caused this [00:25:39] Speaker 00: three-year delay. [00:25:41] Speaker 00: They deliberately chose not to tell Intel and the court what was going on. [00:25:46] Speaker 00: And again, that delay followed what the ITC found was a nine-year strategic delay. [00:25:50] Speaker 00: So now we're 20 years out from the priority date of the patent. [00:25:55] Speaker 00: So we're talking about 20-year-old evidence. [00:25:58] Speaker 00: And the result of that conduct is [00:26:01] Speaker 00: We've lost two critical witnesses. [00:26:03] Speaker 00: Memories have inevitably faded. [00:26:05] Speaker 00: And evidence such as product prior art, you know, old Intel systems, old Apple systems is just necessarily harder to locate, and it's harder to find witnesses who can speak to it. [00:26:18] Speaker 00: And those are precisely the circumstances where the Third Circuit has found alternative sanctions are not [00:26:23] Speaker 00: So the Windward case, I think, sums it up. [00:26:26] Speaker 00: Finds and costs cannot turn back the clock or restore blurred memories or missing files. [00:26:33] Speaker 00: And I think that's exactly what we have here. [00:26:38] Speaker 00: Now, Your Honor, Your Honors. [00:26:41] Speaker 00: I think the third factor to address is, well, so we've talked about the fact that there was significant prejudice. [00:26:49] Speaker 00: It's significant prejudice that can't be undone. [00:26:51] Speaker 00: Well, what was the cause of it? [00:26:53] Speaker 00: Who was responsible? [00:26:54] Speaker 00: And we'd submit that X to Y was squarely responsible. [00:26:58] Speaker 00: As the district court found, it was X2I who was specifically responsible for retaining new counsel. [00:27:05] Speaker 00: And it's just simply not reasonable to take three years to retain new counsel. [00:27:11] Speaker 00: This wasn't a situation where a plaintiff was just uninvolved and the lawyers caused the delay. [00:27:17] Speaker 00: X2I was the one directly responsible for the delay. [00:27:22] Speaker 00: And if they thought that their, the Devel firm was taking too long, they could have sought out other lawyers. [00:27:28] Speaker 00: Second, the courts have made clear, including the Link case, you know, they try to blame the litigation funder, they try to blame the lawyers, but in the Link case and in the Pulas case itself and the Windward case, courts have made clear you can't hide behind your lawyers. [00:27:46] Speaker 00: They're the ones who entered all of these contracts with the litigation funder with Austin and Byrd, which they now complain constrained their ability to act. [00:27:59] Speaker 00: And finally, they're not the innocent, helpless victim that they claim to be. [00:28:05] Speaker 00: They had a very sophisticated patent litigation firm. [00:28:09] Speaker 00: They had a sophisticated litigation funder, and they still have that litigation funder today. [00:28:16] Speaker 00: So, I'd close your honors with this. [00:28:21] Speaker 00: X2I, a corporate litigant backed by one of the biggest litigation firms in the country and backed by a litigation funder, was directly in the mix and responsible for the delay. [00:28:34] Speaker 00: That delay resulted in significant prejudice. [00:28:38] Speaker 00: There are no alternative sanctions that can undo that prejudice, that can undo the loss of witnesses, and X2I has already had its day in court. [00:28:48] Speaker 00: The ITC and this court have already considered and rejected the substantive merits of X2I's claims. [00:28:57] Speaker 00: And under the abuse of discretion standard, which as your honors know, entitled the district court's ruling to great deference, we submit the [00:29:08] Speaker 00: Her ruling should be affirmed. [00:29:10] Speaker 03: Thank you. [00:29:10] Speaker 03: Before you sit down, counsel, I'm going to add something. [00:29:13] Speaker 03: I disagree with you. [00:29:15] Speaker 03: I'm an old man. [00:29:19] Speaker 03: I litigated for 19 years and then was a trial judge for 16 years. [00:29:23] Speaker 03: And I think the most valuable thing you have, that any lawyer has, is their honor. [00:29:29] Speaker 03: And the value of their word [00:29:32] Speaker 03: and their reputation in the legal community. [00:29:35] Speaker 03: And I know you said, well, we've got to move on. [00:29:37] Speaker 03: We look at it, and we've got to move on. [00:29:39] Speaker 03: But it is very clear to me from what I've seen in the record, you were wrong. [00:29:46] Speaker 03: And I want to say that so that if anybody ever asks you, you can say that that was recognized. [00:29:55] Speaker 00: Thank you, Your Honor. [00:30:03] Speaker 01: The district court had an independent duty to consider lesser sanctions. [00:30:08] Speaker 01: The court didn't do that here. [00:30:10] Speaker 02: Did you give it some alternatives? [00:30:12] Speaker 02: Did you say, well, you can do this with the evidence or exclude this evidence and then also proceed this way? [00:30:17] Speaker 01: We argued, Your Honor, that the sanction of dismissal was too harsh. [00:30:21] Speaker 01: We also argued that some record should first be developed to see if they actually have established prejudice and then a sanction can be tailored to that. [00:30:29] Speaker 01: And we gave a specific example of what that might look like. [00:30:32] Speaker 03: Where in the record exactly did you say that? [00:30:34] Speaker 03: Because your opposing counsel says you argued against dismissal with prejudice. [00:30:40] Speaker 01: We did argue against dismissal with prejudice and without prejudice. [00:30:43] Speaker 01: And in our brief, in our reply brief in the district court, we also argued that if they were actually able to establish prejudice, such as a reliance by them on the non-infringement finding that led them to develop a new product that read right on our patents, then the sanction in that case that would be tailored to that [00:31:02] Speaker 01: would be to exclude us from arguing that that product infringes. [00:31:06] Speaker 01: And that is in our reply brief. [00:31:07] Speaker 01: They don't deny that. [00:31:08] Speaker 01: They recognize it in their red brief as well. [00:31:11] Speaker 02: Your Honor, even under polis, if you look at the polis decision and the very first... So can we just go back to the first fine point, which is you did not propose or identify any alternative sanctions to the district court, right? [00:31:24] Speaker 01: No, that's correct. [00:31:25] Speaker 01: We pointed out... [00:31:27] Speaker 01: We pointed out a hypothetical sanction that could be granted if they showed prejudice, but primarily at the district court, we did what we were allowed to do. [00:31:34] Speaker 01: It's their burden to identify [00:31:37] Speaker 01: lesser sanctions and show why they're not effective. [00:31:40] Speaker 01: It is the district court's independent duty to consider lesser sanctions and determine why they're less effective. [00:31:45] Speaker 01: And the reason we know that is because polis is something that applies even when there's a sua sponte dismissal. [00:31:53] Speaker 01: And if you look at the very first polis case, the one we cite is the second one. [00:31:57] Speaker 01: It also describes the first polis case where the district court dismissed with prejudice, sua sponte, and they sent it back. [00:32:05] Speaker 01: They said, you do not consider lesser sanctions. [00:32:08] Speaker 01: And it wasn't about whether the parties identified it or not. [00:32:11] Speaker 01: That was the duty of the district court. [00:32:13] Speaker 01: And here... In a sui sponte dismissal. [00:32:16] Speaker 01: In a sui sponte dismissal and in a dismissal that's brought on by one of the parties, Your Honor. [00:32:20] Speaker 01: They are the moving party. [00:32:22] Speaker 01: And the only concrete piece of prejudice that they identified is their inability to take yet another deposition, a fourth day of deposition from Mr. Anthony because he's no longer alive. [00:32:34] Speaker 01: The question then becomes, is the proper sanction for that to throw the entire case out to completely obliterate and extinguish these patents? [00:32:44] Speaker 01: That is an extreme sanction that is not justified by that showing of prejudice. [00:32:48] Speaker 01: And again, Your Honor, you can drop your jaw again, but I submit that the Third Circuit law says it's not enough to sit back and presume prejudice as a result of the mere passage of time. [00:32:58] Speaker 01: That was rejected in Adams. [00:33:00] Speaker 01: that was also rejected when this court addressed polis in the Drome v. Parra case three years ago and said the assertions of prejudice were unsubstantiated. [00:33:09] Speaker 01: And if I can find a... Your Honor, Appendix 276 is where they admitted below that their assertions of prejudice were speculative. [00:33:20] Speaker 01: And, Your Honor, Judge Wallach, Appendix 758 is the prior slide in that X to Y presentation which explains [00:33:30] Speaker 01: that they weren't talking in 2002 about suing them for patent infringement, much less on patents that hadn't yet issued. [00:33:38] Speaker 01: They were talking about having discovered that the same three Intel engineers that came and met with the company in 1999 had copied X2Y technology, put it in their own patent filings, and the decision was whether to sue them over that under the NDA or not. [00:33:54] Speaker 01: And if you look at the ALJ's initial determination, it's inconsistent on this point. [00:33:59] Speaker 01: On the one hand, it points to this presentation and says, maybe X2Y should have been more upfront with Intel in their discussions. [00:34:05] Speaker 01: But it also expressly, in denying their latches defense, says that X2Y did not discover infringement until 2009. [00:34:12] Speaker 01: Not 2002, 2009. [00:34:14] Speaker 01: Thank you. [00:34:14] Speaker 02: We thank both sides, and the case is admitted.