[00:00:00] Speaker 00: 19-1745 DM versus Big Commerce. [00:00:27] Speaker 03: Hello. [00:01:08] Speaker 04: Please the court commit the other wall for the commerce reserved three minutes for a bottle Big commerce ended this case By obtaining a dismissal with prejudice without paying we're in the record is any settlement discussion regarding fees and [00:01:39] Speaker 04: This is Appendix 59, Section 3. [00:01:44] Speaker 04: And this section relates to the event if payment occurs, where payment is previously defined as the $30,000 payment that Big Commerce would pay DM if Big Commerce came out on the losing side. [00:02:01] Speaker 04: And Big Commerce and DM agreed that each party would pay their own legal fees and costs incurred in this section if payment occurred. [00:02:10] Speaker 02: Where is Section 8.11 in your brief? [00:02:13] Speaker 02: That's Appendix 63. [00:02:21] Speaker 04: Did you repeat the question, Your Honor? [00:02:22] Speaker 02: Yes, the District Court at Appendix 17, block, quote, Section 8.11 of the Settlement Agreement, which says, [00:02:34] Speaker 02: The parties agree that the settlement reflected in this agreement is intended solely as a compromise of disputed claims. [00:02:42] Speaker 02: Each party expressly denies any liability or wrongdoing, and so on. [00:02:48] Speaker 02: Where did you cite that in your blue group? [00:02:50] Speaker 04: I don't believe we did. [00:02:51] Speaker 02: Why not? [00:02:52] Speaker 02: How can you write an appellate brief and not mention that you agreed to this settlement provision in 8.11? [00:03:02] Speaker 04: I don't understand the relevance of this provision, Your Honor. [00:03:05] Speaker 04: Maybe I'm missing Your Honor's point. [00:03:09] Speaker 02: The parties are agreeing that there's no admission of liability? [00:03:13] Speaker 04: Yes, Your Honor. [00:03:14] Speaker 04: Diem and Big Commerce agreed that neither Diem nor Big Commerce had any admission of liability wrongdoing in this case. [00:03:24] Speaker 04: And how are you with the prevailing party? [00:03:29] Speaker 04: Prevailing party, [00:03:30] Speaker 04: We don't prevail in the colloquial sense of the word prevail, but in a legal sense of the phrase prevailing party, that has nothing to do with the merits of the case, as the Supreme Court clarified in CSRT. [00:03:43] Speaker 04: So they could have brought the world's best patent lawsuit and could have even won, potentially, on summary judgment and infringement. [00:03:52] Speaker 04: And the merits of the case could be extremely in favor of a patentee. [00:03:56] Speaker 04: But if, for whatever reason, the [00:03:59] Speaker 04: Say, for example, there was a defect in the patent ownership, or there was an issue with latches, or some non-marriage reason, or even in the non-patent context, the statute of limitations. [00:04:11] Speaker 04: It doesn't matter if the party that's seeking prevailing party status got to the end goal of [00:04:23] Speaker 04: achieving its primary objective, which in this case was a dismissal with prejudice and without paying any consideration. [00:04:30] Speaker 04: Of course, if there was merit in the case, we would be hurting ourselves on the exceptionalist prong of 285. [00:04:37] Speaker 04: But we're not there. [00:04:39] Speaker 04: And this is a threshold inquiry as to whether even we have a seat at the table to raise our exceptionalist argument. [00:04:47] Speaker 04: Certainly in cases where we cannot prove liability or fail to prove liability, or even say that we agree that there is no liability here, that is not an express waiver of Section 285. [00:05:05] Speaker 04: It's not something we agreed to do. [00:05:10] Speaker 04: If the court finds that that language implicitly waves a claim to 285, then that would be the only route I could see the court going under that provision that your honor cited. [00:05:22] Speaker 03: But let me ask you, in CRST, the Supreme Court said, I think the touchstone of the prevailing party inquiry must be the material [00:05:31] Speaker 03: alteration of the legal relationship of the parties, and then continued and said, and this change must be marked by judicial imprimatur. [00:05:42] Speaker 03: Where do you have that requirement met here in terms of the relationship of the parties changing under the gloss of the judicial imprimatur? [00:05:53] Speaker 03: I saw you had the settlement agreement, and then you come back into court [00:05:58] Speaker 03: And the court makes a determination on the $30,000 point about joint infringement. [00:06:05] Speaker 03: But where do you have that requirement that I just referred to met here? [00:06:10] Speaker 04: Your honor, that would be the court's decision making and the parties contested briefs on the motion to enforce the settlement agreement. [00:06:21] Speaker 04: Before that motion was adjudicated, the legal relationship between the parties was up in the air as far as the [00:06:30] Speaker 04: contract, which side won the contract. [00:06:34] Speaker 04: At the time they signed the dotted line on the contract, the party's legal relationship changed with respect to the underlying patent dispute, and then the court [00:06:45] Speaker 04: finalized that by analyzing the contract and deciding which side won and which side lost under the contract. [00:06:51] Speaker 04: The court could have, in its own discretion, said, no, this is a weird thing you guys have done with this patent lawsuit. [00:06:58] Speaker 04: You fabricated your own dispute, and I'm not going to exercise your assumption on it. [00:07:02] Speaker 03: You're saying the fact that the court ruled on the contract dispute name and the contract being your little settlement agreement, that that's enough of a judicial informata. [00:07:13] Speaker 04: Yes, Your Honor, because of the breadth of the discretion the Court enjoyed in doing so, the Court could have very well not exercised supplemental jurisdiction over the parties. [00:07:26] Speaker 03: So you're saying it's only the discretionary action of the Court in ruling on this dispute under the settlement agreement that brings it into the realm of CRST? [00:07:39] Speaker 04: Yes, I would cite highway equipment where this court cited the district court's [00:08:09] Speaker 04: discretion under FRCP 41A2. [00:08:13] Speaker 04: And when deciding whether it was judicial and promoter, the citation, the support that finding of judicial and promoter was the district court's discretion. [00:08:24] Speaker 04: And this district court likewise exercised its discretion in resolving the court's settlement agreement. [00:08:33] Speaker 04: It could have said, [00:08:35] Speaker 04: no to that question posed by the parties, in which event the patent lawsuit would have continued and the legal relationship between the parties would still have been one of. [00:08:45] Speaker 02: Well, the court's reading was, and I'm reading from the court, while the court granted defendants motion resulting in big commerce not having to pay anything, this precise scenario was contemplated by the parties and accounted for in the settlement agreement. [00:09:01] Speaker 02: And then the court [00:09:03] Speaker 02: unlike your blue brief, cites section 8.11. [00:09:07] Speaker 02: And then the court goes on. [00:09:08] Speaker 02: Had the parties wanted to negotiate attorney's fees and the settlement agreement, they could have. [00:09:14] Speaker 02: They did not. [00:09:19] Speaker 04: Yes, sir. [00:09:19] Speaker 04: I have two points in response. [00:09:21] Speaker 04: One, section 8.11 relates to a liability. [00:09:24] Speaker 04: And the court's order itself cited exigent, which [00:09:31] Speaker 04: itself cites two cases, Akers and Inland Steel, both of which, and Akers says, only when a party is prevailing the merits of at least some of the claims can they be prevailing party. [00:09:42] Speaker 04: Inland Steel quotes, only if a party receives at least some relief on the merits. [00:09:47] Speaker 04: And here's the problem with merits. [00:09:50] Speaker 04: It's very expensive to get anything on the merits through the court system. [00:09:55] Speaker 04: And in this case, it would have been [00:09:59] Speaker 04: Irrational economically for the commerce to. [00:10:04] Speaker 02: Well, it could have been irrational economically for your friend on the other side to agree to the settlement agreement if your position was, well, we're still going to pursue attorney's fees. [00:10:18] Speaker 02: Where is that articulated in the agreement? [00:10:23] Speaker 04: It's not. [00:10:25] Speaker 04: The settlement agreement is silent on attorney's fees. [00:10:28] Speaker 04: except for when Big Commerce wanted to ensure that it would not be on the hook for attorney's fees had it lost. [00:10:37] Speaker 04: DM could have, in the mediation room, pressed its foot and said, we want to eliminate the risk of 285, and we would like a provision here which says, each side pays its own attorney's fees, regardless of what happens in this contract. [00:10:51] Speaker 04: But the algorithm of the contract has only one instance where the parties mentioned attorney's fees, and that instance corresponds to when big commerce wins. [00:11:00] Speaker 00: We did not advise them to... Yeah, well, the problem for you is that even if we buy what you're saying here, which is the parties didn't negotiate their way away the rights to attorney's fees, that doesn't come nearly close to getting you the right to attorney's fees as the prevailing party. [00:11:18] Speaker 00: And as Judge Shaw pointed out, you've got settlement agreements you would agree under Buchanan are typically not included. [00:11:26] Speaker 00: in terms of the prevailing party case law that was changed, arguably, by Buchanan. [00:11:32] Speaker 00: And the only thing they had to distinguish in terms of the precedents was the Maher case, right, that didn't go to final judgment. [00:11:39] Speaker 00: And they said there, well, they kind of cabined it as a narrow exception for consent decrees. [00:11:45] Speaker 00: So your argument depends on our extending [00:11:52] Speaker 00: the Marher case, which is one of the few exceptions to Buchanan, to include not just consent decrees, but what? [00:12:01] Speaker 00: How would you characterize it? [00:12:02] Speaker 00: Settlements that are partly adjudicated where the judge gets involved? [00:12:07] Speaker 00: What's your rule here? [00:12:09] Speaker 00: Because I think you're asking us to modify what the Supreme Court has told us. [00:12:13] Speaker 04: Your Honor, I would, instead of extending, instead of adding this unique and odd situation atop [00:12:20] Speaker 04: consent decrees, I would simply cite the... Well, it's only unique and odd because the other side got snuckered. [00:12:29] Speaker 02: That's what you're saying. [00:12:30] Speaker 02: You said to us, I'll quote you, you said, well, we didn't advise them. [00:12:37] Speaker 04: They did get snuckered because we wanted to snuckered them. [00:12:41] Speaker 04: They negotiated a poor contract, and that may disturb the court, and that [00:12:47] Speaker 04: But it doesn't change the fact that the logic that the Supreme Court used in CRST to identify the prevailing party and designate the prevailing party, that logic said, look to congressional intent. [00:13:00] Speaker 04: We're not going to block. [00:13:03] Speaker 02: Good thing you're not here in equity. [00:13:06] Speaker 03: Let me ask you one of the, I think Judge Ilston made it clear both in this decision and her denial of reconsideration. [00:13:15] Speaker 03: that she thinks this is not an exceptional case, leaving aside the prevailing party issue that we've been talking about. [00:13:22] Speaker 03: What is your comment on that? [00:13:25] Speaker 03: She's made it pretty clear that even if this went back, she, being the judge familiar with this, would say this isn't an exceptional case. [00:13:35] Speaker 03: End of story. [00:13:38] Speaker 04: I'm only here to get an opinion from the California court on why it's not an exceptional case. [00:13:45] Speaker 04: We didn't get that opinion because the judge said that I don't need to go there because this threshold issue, whether you even have... Yeah, but she in essence in her footnote says, Ben, even if I were to go there, there's no way this comes close to being an exceptional case. [00:13:57] Speaker 00: You started off by telling us you're only here to get a seat at the table. [00:14:01] Speaker 00: You recall that? [00:14:02] Speaker 04: Yes, Your Honor. [00:14:04] Speaker 00: So you want us to use the judicial system, and your colleague, she's already decided that even if it weren't a prevailing party, if you were a prevailing party, this is not an exceptional case. [00:14:15] Speaker 00: But you're saying, since that wasn't technically before her then, we just want to go back so she can say that to us. [00:14:24] Speaker 04: Yes, Your Honor, because I can't cite the fact finding she did. [00:14:28] Speaker 04: Why? [00:14:29] Speaker 02: Why do you want? [00:14:36] Speaker 04: I think it's important to go back and get that determination that's not acceptable. [00:15:00] Speaker 04: issued a footnote, I decided that that was not, that was dicta. [00:15:04] Speaker 04: And the judge said that I don't need to reach dot dot dot. [00:15:07] Speaker 04: So I decided that I can't appeal it to the federal circuit because the district court had said they're not reaching something, so how can I appeal that? [00:15:13] Speaker 04: And if I've made that mistake, then I've made that mistake. [00:15:17] Speaker 03: But the judge has given us a pretty good idea of her view on the question of exceptional case. [00:15:26] Speaker 04: There is a good probability that this is a waste of time, sure. [00:15:29] Speaker 04: But it's something that my client would like to read. [00:15:33] Speaker 04: My client would like to know why a two, three-year litigation was not exceptional. [00:15:39] Speaker 04: We believe it was exceptional. [00:15:40] Speaker 00: Well, I mean, there are footnotes, and there are footnotes. [00:15:43] Speaker 00: This footnote is quite detailed and intense. [00:15:50] Speaker 00: It not only goes on and on. [00:15:51] Speaker 00: It cites cases. [00:15:53] Speaker 00: It cites docket numbers. [00:15:55] Speaker 00: It's as detailed as a lot of cases I've seen where if this footnote were in the body of the opinion, no one would say this is not a detailed, clear walkthrough of the record as to why this case is not exceptional, right? [00:16:10] Speaker 00: So what is it? [00:16:12] Speaker 00: Is the difference between this being in a footnote and this being in the body of the opinion? [00:16:16] Speaker 04: Your honor, I exercised my best judgment of the time I decided which issues to appeal and when I read the footnote and read the phrase We do not need to reach dot dot dot. [00:16:26] Speaker 04: I made a decision on my client's behalf. [00:16:28] Speaker 00: Well, what would you have hypothetically, what would one argue in this case? [00:16:32] Speaker 00: Is it a differential standard of review on exceptional cases? [00:16:36] Speaker 00: She goes through pretty much what the standards are and what the case law is in terms of exceptional cases. [00:16:43] Speaker ?: It's [00:16:44] Speaker 00: It's hard for me to see a big gap in terms of what she's done here in terms of an appealable issue. [00:16:53] Speaker 04: If we have waived a challenge to the court's exceptionalist determination, then we've waived it. [00:17:01] Speaker 02: That's not the issue here because it's a footnote. [00:17:09] Speaker 02: But what strikes me [00:17:12] Speaker 02: This has gone on for three years, you're saying? [00:17:14] Speaker 02: Yes, Your Honor. [00:17:15] Speaker 02: Were you counsel for three years? [00:17:16] Speaker 02: Yes, Your Honor. [00:17:16] Speaker 02: Were you pro bono the entire time? [00:17:18] Speaker 02: Yes, Your Honor. [00:17:19] Speaker 02: Well, that answers the question of why you're pushing to get attorney's fees, doesn't it? [00:17:24] Speaker 04: We had local counsel fees, and we had independent contractors doing work for invalidity contentions, and I see I'm into my rebuttal time. [00:17:35] Speaker 04: May I reserve the remainder? [00:17:36] Speaker 04: Thank you, Your Honor. [00:17:51] Speaker 01: May it please the court, before I launch into my tirade about how frivolous this appeal is, I imagine you guys have some questions for me. [00:17:59] Speaker 01: Basically, he said, I'm gladly frivolous before I launch into my rehearsed tirade. [00:18:04] Speaker 00: Well, we don't really want to hear something that you've labeled the rehearsed tirade. [00:18:08] Speaker 00: So try to calm it down and tell us what you think we need to know in order to resolve this appeal. [00:18:14] Speaker 02: And if there isn't anything we need to know, sit down. [00:18:17] Speaker 01: Well, naturally, we rely on our brief, and we have yet to find absolutely any argument put forth by Big Commerce that really distinguishes the precedent cited in our brief. [00:18:31] Speaker 00: Do you agree with his comment about the Section C, at least, Section 3, that where it says each party shall pay their own legal fees and costs, incur connection with the lawsuit, that that is cabined only to [00:18:48] Speaker 00: plaintiff had if there's a payment that occurs? [00:18:53] Speaker 01: Yes, to an extent. [00:18:54] Speaker 01: And that when during mediation, when the major terms of this settlement agreement were negotiated, the idea, and I was the party who negotiated on behalf of DM during the mediation. [00:19:07] Speaker 01: Are you pro bono too? [00:19:09] Speaker 01: I am not. [00:19:09] Speaker 01: I'm not pro bono. [00:19:12] Speaker 01: Well, I won't get into that. [00:19:14] Speaker 01: Sorry I asked. [00:19:18] Speaker 01: A big issue in this case was that at the time of drafting the major terms of this contract, or the settlement agreement, the idea was that the determination of the then pending summary judgment motion would be the determining factor on which party, quote unquote, if you will, prevails. [00:19:37] Speaker 01: And I use that in tongue and cheek [00:19:40] Speaker 01: We all agreed that when that decision came down from the district court of whether or not to grant the motion for summary judgment, that the litigation would end. [00:19:51] Speaker 01: It could be that there was no money exchanging hands and the litigation was then shuttered, or it could be the fact that the Congress had to pay $30,000 for a lump [00:20:02] Speaker 01: license agreement. [00:20:04] Speaker 01: And I believe, I'm not sure which of the justices use the term snookered. [00:20:10] Speaker 01: That's apropos, because that's what ended up happening. [00:20:15] Speaker 01: Because the reason that the big commerce would have, and I use the term here literally, prevailed on the contract dispute is because the issue was not whether or not DM [00:20:28] Speaker 01: prevailed on the motion for summary judgment. [00:20:30] Speaker 01: Instead, it was whether or not a judge would have ruled that a theory of joint infringement was disclosed in the initial patent infringement contentions. [00:20:40] Speaker 01: And that issue, as my colleague here introduced, was decided upon on an [00:20:52] Speaker 01: The idea to me that that is grounds for now pursuing section 283 fees for a patent case that was Determined completely outside of water to draw 25. [00:21:03] Speaker 01: I'm sorry 25. [00:21:03] Speaker 01: Yes outside of whether or not there was a Actual dispute regarding the contract versus the merits of a patent litigation. [00:21:13] Speaker 01: That's the big differentiating factor here and what I take [00:21:19] Speaker 01: strongly or I think most issue with is the fact that in their briefing and in their argument, the Congress has yet to tell the court or DM exactly why exigent, decided in 2006 by this very court, does not apply. [00:21:35] Speaker 01: The entirety of their substantive briefing in terms of detressing the opinion exigent is a two by two table on page two of their brief. [00:21:49] Speaker 01: in which they just juxtapose quotations from the opinions without offering any substantive analysis of what those quotes mean. [00:21:58] Speaker 01: And it's not for lack of knowing that exigent exists. [00:22:03] Speaker 01: The district court cited exigent in its decision denying the underlying motion for fees here in their opening brief to this court [00:22:14] Speaker 01: Big Congress did not cite exigent, did not analyze exigent, did not tell us why that CRST could have been interpreted to overturn exigent. [00:22:23] Speaker 01: Instead, it's just absent. [00:22:25] Speaker 01: Naturally, in our opposition brief, we brought up exigent. [00:22:29] Speaker 01: And yet again, the only lip service that Big Congress provided to this opinion was what I would consider exactly that, lip service, which is a table that takes up about a third of a page. [00:22:44] Speaker 01: What I don't quite understand is how this is essentially a frivolous appeal, because there is no basis, or at least there's no precedent in which this Congress can point to as giving it the right to seek to it. [00:23:07] Speaker 01: My point is I shouldn't be here. [00:23:09] Speaker 02: Yeah. [00:23:10] Speaker 02: What are you asking us to do other than [00:23:13] Speaker 02: to a firm judge below. [00:23:15] Speaker 01: I'm asking you guys to eventually. [00:23:17] Speaker 01: We're not guys. [00:23:18] Speaker 01: I'm sorry. [00:23:18] Speaker 01: I'm asking you all to approve a subsequent motion for frivolous appeal because at this point, the pro bono attorney to my right here is. [00:23:29] Speaker 00: So you're here to argue a motion that hasn't been filed yet, but you're here to preempt that by arguing it while you're here. [00:23:35] Speaker 01: Well, I guess I could have waived my right to appear and speak for you all, but I also want to make sure that I was [00:23:42] Speaker 01: addressing any of my opposing accounts. [00:23:47] Speaker 02: So you really don't have anything? [00:23:49] Speaker 01: No. [00:23:50] Speaker 01: We rely on our briefs. [00:23:51] Speaker 01: And at that point, I will reserve my nine minutes. [00:23:54] Speaker 00: You don't get to reserve it. [00:23:56] Speaker 00: You're not coming back here again. [00:23:58] Speaker 00: There's no cross-appeal. [00:24:00] Speaker 01: I understand. [00:24:01] Speaker 01: You forfeit. [00:24:01] Speaker 01: You cede your nine minutes. [00:24:03] Speaker 01: Cede, I apologize. [00:24:05] Speaker 01: Thank you. [00:24:21] Speaker 02: suggest to you that it's pedophagery. [00:24:24] Speaker 02: How is your appeal not pedophagery? [00:24:28] Speaker 02: I'm sorry. [00:24:28] Speaker 02: I could define that word, Your Honor. [00:24:32] Speaker 02: Yeah. [00:24:33] Speaker 02: It's an English common law term meaning an argument which has no merit and is based surely on attorney willful misinterpretation of the law. [00:24:47] Speaker 04: I respectfully disagree, Your Honor. [00:24:48] Speaker 04: Exigent has section 3. [00:24:51] Speaker 04: which is the only section of the argument which discusses the Quote that appears in the appellee group and that opinion cites a prison in one steel both of which Talk about a merits based prevailing on the merits as a requirement before you can get prevailing party status the section which I did not cite in my account brief the the contract and [00:25:18] Speaker 04: which the court cited, talks about liability. [00:25:24] Speaker 04: Again, liability relates to the merits of a case. [00:25:28] Speaker 04: And in CSRT, the court essentially has decoupled merits from this threshold inquiry of prevailing party. [00:25:36] Speaker 04: Big commerce won a dismissal with prejudice, paid $0.00 to the patentee. [00:25:43] Speaker 04: The route it took to get from start to finish was a lot cheaper than [00:25:49] Speaker 04: fighting the case on the merits. [00:25:53] Speaker 02: Instead of spending... You've already conceded that you took unfair advantage of the other side in negotiations. [00:26:03] Speaker 04: I respectfully disagree with that characterization. [00:26:06] Speaker 04: We snickered them. [00:26:09] Speaker 04: We did not... If I may clarify, Your Honor, during mediation, we did not alert them that they were not [00:26:18] Speaker 04: negotiating for any protection from Section 285 and that they were not closing the door on us filing a motion for exemption. [00:26:31] Speaker 02: You know, Council, when I practiced law and I got a request for discovery that was objectionable, I would respond saying, this is objectionable. [00:26:41] Speaker 02: But I think what you want is this document or this information. [00:26:45] Speaker 02: If it's not, you let me know. [00:26:51] Speaker 02: with rule 1, rule 11, and the general obligations of counsel to treat each other in a decent and honorable way. [00:27:02] Speaker 04: I think I misunderstand the word snooker as well as the other word Your Honor used. [00:27:08] Speaker 04: We didn't [00:27:09] Speaker 04: We didn't. [00:27:11] Speaker 04: I would consider it a violation of my duty to advocate for my client if I went to mediation and alerted them that this contract does not give you any benefit of protection from an examination of the merits of your case. [00:27:24] Speaker 03: You're saying, Mr. Agarwal, that everybody was aware of the existence of 285 and could conduct themselves accordingly? [00:27:32] Speaker 04: Yes, Your Honor. [00:27:32] Speaker 04: And in essence, when we go to mediation, I don't think of, [00:27:39] Speaker 04: Writing insurance policies for the other side and again. [00:27:42] Speaker 04: We have not established this case is exceptional and we just want Essentially seat of the table for whether or not [00:27:50] Speaker 00: To the extent you're making a policy argument about how settlements, court should encourage or whatever, you might go back to Buchanan, because that was the argument, as I recall, made by the dissent in that case. [00:28:01] Speaker 00: And that was a very controversial case when it issued, because that was the argument. [00:28:05] Speaker 00: Well, you're just discouraging people from settlements. [00:28:08] Speaker 00: The Supreme Court rejected that argument in Buchanan. [00:28:11] Speaker 04: Thank you. [00:28:13] Speaker 00: Thank you. [00:28:13] Speaker 00: We thank both sides. [00:28:14] Speaker 00: The case is submitted.