[00:00:00] Speaker 05:
The last case for argument is 2222-1227, Philip Morris versus ITC.

[00:00:11] Speaker 05:
Mr. Gar, whenever you're ready.

[00:00:15] Speaker 03:
Thank you, Judge Prost, and may it please the court.

[00:00:18] Speaker 03:
The exclusion order at issue in this case bans the importation of a revolutionary class of heat-not-burn tobacco products

[00:00:27] Speaker 03:
that the expert agency charged with regulating tobacco products concluded is appropriate to promote the public health and expected to benefit the health of the United States population.

[00:00:37] Speaker 02:
How does that benefit the health?

[00:00:39] Speaker 02:
Is it because it prevents people from smoking other cigarettes?

[00:00:43] Speaker 03:
That's one aspect of it, Your Honor.

[00:00:45] Speaker 03:
The other is that

[00:00:46] Speaker 03:
The EICOS system the FDA found significantly reduced exposure to toxic chemicals and carcinogens.

[00:00:55] Speaker 02:
And that led to you finding that there's benefits to the health of society as a whole?

[00:01:01] Speaker 03:
That's correct.

[00:01:02] Speaker 03:
And this was an extraordinary action by the FDA.

[00:01:05] Speaker 03:
there's only been, I think, three products that has obtained this MRTP, a modified wrist, and specifically modified reduced exposure designation.

[00:01:15] Speaker 02:
Were the other two instances tobacco?

[00:01:17] Speaker 02:
Excuse me, Your Honor?

[00:01:17] Speaker 02:
Were the other two instances tobacco?

[00:01:19] Speaker 02:
You said there were three.

[00:01:21] Speaker 03:
Yes, yes.

[00:01:22] Speaker 03:
That's right, Your Honor.

[00:01:23] Speaker 03:
These determinations are specifically like this.

[00:01:25] Speaker 03:
And we do think that this case raises broader questions, important questions about the FDA's

[00:01:31] Speaker 03:
authority to second guess the determinations of other expert agencies on public health and public interest issues.

[00:01:37] Speaker 03:
But ultimately, we think this case can be decided on more conventional grounds because of the plain legal defects in the underlying patents.

[00:01:46] Speaker 03:
And I'd like to identify two up front.

[00:01:49] Speaker 03:
The 123 patent

[00:01:51] Speaker 03:
is invalid for obviousness.

[00:01:54] Speaker 05:
Can I ask you just, and I don't want to take too much time on that, but could you provide an update on the status with regard to the claims of these two patents?

[00:02:01] Speaker 05:
There's so many other proceedings ongoing.

[00:02:03] Speaker 05:
Can you just tell me what's going on with respect to, again, were the claims of the same in the 123 and the 915?

[00:02:09] Speaker 03:
So there were PTAB proceedings as to both.

[00:02:12] Speaker 03:
There's an appeal of the 915 determination by the Invalidity... Where you prevail below, right.

[00:02:18] Speaker 03:
Right.

[00:02:18] Speaker 03:
That we prevail below.

[00:02:20] Speaker 03:
And that is...

[00:02:21] Speaker 03:
the opening brief i believe is do at the end of october and it's all the claims so it's the same claims that they're they're overlapping claims your honor that's right and what about the ones that the other one is on appeal but further behind i believe and what was that what did the board do that in that case one two three pat and they upheld the uh... validity of it but not with respect to the particular arguments we're making here there were no but the same claim but oh yes that's okay so so as to the

[00:02:50] Speaker 03:
123 patent, and the argument that we're making here, we believe it's invalid for obviousness for the same reason, essentially, that this court found it invalidity on that ground in the Uber Technologies case.

[00:03:04] Speaker 03:
This is a situation in which the only element at issue, the centered heater, was the subject of finite number of design options, three.

[00:03:13] Speaker 05:
that were known in the public life.

[00:03:34] Speaker 05:
There needs to be some prejudice, even if there is an obligation to consult and the failure to fulfill that obligation, that you would have to demonstrate prejudice.

[00:03:43] Speaker 03:
Yes, we do.

[00:03:43] Speaker 05:
So that even if they consulted with the FDA here, you wouldn't be able to come behind them and say, well, what about the FTC?

[00:03:49] Speaker 05:
Right.

[00:03:50] Speaker 03:
Yes, that's correct.

[00:03:52] Speaker 05:
And so what is it that, I mean, this is different than the cases you cite because this comes up in the context of an adjudication and not just a rulemaking.

[00:04:02] Speaker 05:
Uh, there's lots of pages like 10, there's many, just much discussion about FDA statements, you know, experts talking about that.

[00:04:12] Speaker 05:
It's not like they ignored what the FDA's position on any of this was.

[00:04:16] Speaker 05:
So what, what's the prejudice?

[00:04:19] Speaker 05:
What, what could they have gleaned or would they likely have gleaned from a consultation with the FDA that they didn't already have?

[00:04:25] Speaker 03:
Your honor, the prejudice is the failure to engage in an interactive

[00:04:29] Speaker 03:
deliberative process on the most fundamental issue in this case, whether the exclusion of these products.

[00:04:35] Speaker 05:
But if the FDA put out thousands of press releases, there's plenty of documentation as to what their view is, that was all before the commission.

[00:04:42] Speaker 05:
I mean, this is after all an adjudication with both sides robustly putting in what the FDA's position is.

[00:04:51] Speaker 05:
What question was left unanswered?

[00:04:54] Speaker 03:
So first of all, I think the Ninth Circuit answered this in the California Wilderness case at pages 1093 to 95.

[00:05:00] Speaker 04:
I think her question is more specific.

[00:05:03] Speaker 04:
And we've read those cases.

[00:05:06] Speaker 04:
What specifically in this adjudicatory process do you think that the FDA would have provided?

[00:05:11] Speaker 04:
Should the briefing have been invited?

[00:05:14] Speaker 04:
What would that briefing have asked for?

[00:05:16] Speaker 04:
None of that is clear to us.

[00:05:18] Speaker 03:
Sure.

[00:05:18] Speaker 03:
I can give you a sense, Your Honor.

[00:05:20] Speaker 03:
I mean, the fundamental question is we don't know, and that's where the prejudice is on this kind of discretionary determination.

[00:05:25] Speaker 03:
But the difficult part about the public health determination here is the balancing of the benefits of this revolutionary product and the known harms of tobacco use.

[00:05:34] Speaker 03:
And that's ultimately where I think the commission got hung up.

[00:05:37] Speaker 03:
It overweighed the decision.

[00:05:40] Speaker 04:
There were 32 documents from the FDA that they considered.

[00:05:44] Speaker 04:
32.

[00:05:45] Speaker 04:
32 exhibits.

[00:05:46] Speaker 04:
But I understand.

[00:05:48] Speaker 04:
But it sounds like you're arguing now that maybe their balance was wrong, and they abused their discretion, and thinking that the public health did not weigh the injunction.

[00:05:58] Speaker 04:
So I want to make sure I understand, because I'm trying to understand what it is that you think that the ITC should have done here.

[00:06:05] Speaker 03:
Engage in a deliberative process.

[00:06:06] Speaker 03:
That's why we're here.

[00:06:07] Speaker 04:
What does that deliberative process look like?

[00:06:09] Speaker 04:
Again, we're in an adjudicatory process, right?

[00:06:12] Speaker 04:
It's not like, I mean, are you saying that they should call the FDA behind closed doors and say, tell us what to do?

[00:06:18] Speaker 04:
I mean, what exactly do you expect the process to look like?

[00:06:22] Speaker 03:
The answer is yes.

[00:06:23] Speaker 03:
And again, we're talking about a statutory requirement.

[00:06:26] Speaker 03:
Congress said, you shall consult.

[00:06:28] Speaker 05:
Well, what about if they write the FDA and they say, do you have any comments on this?

[00:06:32] Speaker 05:
Do you have any views that you want to express on this?

[00:06:34] Speaker 05:
And the FDA says, nope, you've covered it all.

[00:06:38] Speaker 05:
Is that sufficient?

[00:06:39] Speaker 05:
Does that satisfy the consultation requirement?

[00:06:41] Speaker 03:
It probably would, Your Honor.

[00:06:43] Speaker 05:
That didn't happen here.

[00:06:45] Speaker 05:
OK.

[00:06:46] Speaker 05:
Well, what didn't happen here is that they called the FDA and said, do you have anything to say?

[00:06:51] Speaker 05:
What they did was give them notice.

[00:06:53] Speaker 04:
Right.

[00:06:53] Speaker 03:
And that's not sufficient.

[00:06:55] Speaker 03:
Notice is not collected.

[00:06:56] Speaker 04:
They told them in a letter

[00:06:58] Speaker 04:
specifically to a person at HHS and said here's an investigation we're doing, right?

[00:07:03] Speaker 03:
They posted it on the website and they put it in the Federal Register and as the Ninth Circuit said in the California Wilderness case, notice is not consultation.

[00:07:12] Speaker 04:
But they did more than that.

[00:07:13] Speaker 04:
My reading of the record is that initially they sent a letter to somebody tasked with looking at these types of reviews at the agency.

[00:07:24] Speaker 04:
Then

[00:07:24] Speaker 04:
After the ITC, after the initial decision from the ALJ was issued, then there was the notice to federal agencies generally.

[00:07:35] Speaker 03:
There's nothing that I'm aware of in the record, Your Honor, that shows that HHS, FDA looked at this and said,

[00:07:40] Speaker 03:
we have nothing further to offer.

[00:07:42] Speaker 03:
And again, this is a statutory requirement that requires a deliberative process.

[00:07:47] Speaker 04:
That wasn't my question.

[00:07:49] Speaker 04:
I was saying that the ITC wrote to it.

[00:07:51] Speaker 03:
Right.

[00:07:52] Speaker 03:
And my answer is, that's not consultation.

[00:07:54] Speaker 03:
That's a one-way communication.

[00:07:56] Speaker 03:
Consultation, defined in the dictionary, as understood in other cases.

[00:07:59] Speaker 05:
Well, how do we force the FDA to respond?

[00:08:01] Speaker 05:
What if they said,

[00:08:03] Speaker 05:
Somebody called them up and said, hey, you haven't responded.

[00:08:05] Speaker 05:
They said, no, we're too busy.

[00:08:06] Speaker 05:
We don't care.

[00:08:07] Speaker 03:
Again, I think that's a different case.

[00:08:09] Speaker 03:
We don't have that evidence in this case.

[00:08:10] Speaker 03:
But I would be surprised if FDA would do that.

[00:08:13] Speaker 03:
This is an issue of great public import.

[00:08:16] Speaker 03:
They had spent years studying this issue.

[00:08:18] Speaker 03:
And to say that there was no- Can I ask you just a follow-up?

[00:08:20] Speaker 05:
Because we talked about the adjudicatory process.

[00:08:23] Speaker 05:
Sure.

[00:08:23] Speaker 05:
What happens then, under your view of the statute?

[00:08:28] Speaker 05:
You've got two parties here.

[00:08:29] Speaker 05:
So they have a meeting with the FDA.

[00:08:31] Speaker 05:
Do you get to go?

[00:08:33] Speaker 05:
Do you get to hear, have a transcript of what was said in those consultations so that the parties can respond to what the FDA said?

[00:08:44] Speaker 05:
Right?

[00:08:44] Speaker 03:
I believe that would be an internet agency process.

[00:08:48] Speaker 03:
The particulars of it could depend on the context.

[00:08:50] Speaker 03:
Here, none of that happened.

[00:08:52] Speaker 03:
I mean, we're talking about what consultation would entail.

[00:08:55] Speaker 03:
The problem here is there is no consultation whatsoever.

[00:08:58] Speaker 03:
And the commission has never argued otherwise.

[00:08:59] Speaker 03:
It simply argues that its notice equals consultation.

[00:09:03] Speaker 04:
Well, there is, in one of those Ninth Circuit cases, there's a suggestion.

[00:09:07] Speaker 04:
I think it's actually one where the Ninth Circuit found there was sufficient consultation.

[00:09:12] Speaker 04:
I think it's environmental defense.

[00:09:14] Speaker 04:
Anyway, in that case, one of the things they said was having an opportunity to have the initial memo, the agency having an opportunity to see that memo and comment on it if they wanted to was consultation.

[00:09:29] Speaker 04:
Do you think that was satisfied here?

[00:09:30] Speaker 04:
I mean, the agency was informed that there was an initial decision from an ALJ.

[00:09:36] Speaker 03:
No, I don't think notice is consultation.

[00:09:38] Speaker 03:
I think if you looked at the dictionary definition, I think if you looked at what the cases talk about, California wilderness case from the Ninth Circuit, notice is not consultation.

[00:09:46] Speaker 04:
What about the fact that this has been the ITC's practice for years and years and years, and presumably your client was aware of their practice.

[00:09:55] Speaker 04:
So what about the fact that there was no suggestion

[00:09:58] Speaker 04:
made to the LJ or the Commission until very much later about what specifically should have been done by the Commission in order to satisfy its statutory duty?

[00:10:10] Speaker 03:
Sure.

[00:10:10] Speaker 03:
So I don't think this issue was ripe until the Commission issued its final determination.

[00:10:14] Speaker 03:
Before the agency, the staff itself argued that the ALJ didn't have this authority.

[00:10:19] Speaker 03:
And as soon as the Commission made its determination, it was clear that they had not engaged in the requisite consultation.

[00:10:25] Speaker 03:
We raised that issue in our stay request.

[00:10:27] Speaker 03:
So I think the waiver argument is misplaced.

[00:10:29] Speaker 03:
This is a statutory requirement.

[00:10:31] Speaker 05:
And you didn't have to, even though you, I think, would assume you're charged with knowing that this is a longstanding practice of how the agency implements this statutory requirement.

[00:10:43] Speaker 05:
And in light of that, you don't think there was any need for you to specifically ask the commission to do that?

[00:10:52] Speaker 03:
Your Honor, I don't think there was a legal waiver in that sense.

[00:10:56] Speaker 03:
discussion throughout as to whether or not, and we made clear we wanted a public interest hearing.

[00:11:01] Speaker 03:
We wanted FDA involved.

[00:11:03] Speaker 03:
So it's not as though this wasn't part of the conversation.

[00:11:06] Speaker 03:
But I think even if you thought that there was some technical waiver, we don't think there is.

[00:11:11] Speaker 03:
This court has the authority to decide issues that are legal issues, that have been fully briefed, and that go to public importance.

[00:11:17] Speaker 05:
What about a question?

[00:11:19] Speaker 02:
I've been here in Washington practicing law and sitting on the bench for quite a while now.

[00:11:27] Speaker 02:
And it seems to me that publication in the Federal Register, and I understand you have a Ninth Circuit opinion, but publication in the Federal Register is sufficient to put interested parties on notice.

[00:11:42] Speaker 02:
It puts them on notice.

[00:11:43] Speaker 02:
And that notice is that if you want to be heard in this particular case, come forth.

[00:11:50] Speaker 02:
And that's what the notice of initiation in this particular case seems to me to do as well.

[00:11:57] Speaker 03:
Your honor, I simply don't think that consultation can be satisfied by mere notice.

[00:12:02] Speaker 02:
But again, it says, shall consult with.

[00:12:05] Speaker 02:
That's what the statute says.

[00:12:06] Speaker 02:
Exactly.

[00:12:07] Speaker 02:
What does that mean here in this town?

[00:12:09] Speaker 02:
I mean, if I send a notice to Judge Prost and I say, let's talk about this, and she doesn't respond,

[00:12:19] Speaker 02:
I can't force her to talk about this, and she may not want to.

[00:12:24] Speaker 02:
But the fact that I did give her the opportunity to, why is that not consultation itself?

[00:12:31] Speaker 02:
That one-way communication that you're talking about.

[00:12:33] Speaker 02:
Right.

[00:12:34] Speaker 03:
I mean, I think, and the Ninth Circuit explained this in the California Williams case, consultation, if you look in the dictionary, understanding is a deliberative process, an inter-change

[00:12:43] Speaker 03:
and simply one-way notice that's not sufficient.

[00:12:45] Speaker 02:
That's the new circuit, and not us.

[00:12:47] Speaker 03:
Right.

[00:12:48] Speaker 03:
I would like to shift to the patent issues, because I'd hate for my time to expire unless your owners have further questions.

[00:12:52] Speaker 04:
We understand that you were using a lot of your time.

[00:12:55] Speaker 04:
We understand that.

[00:12:56] Speaker 04:
So don't worry about time right now.

[00:12:57] Speaker 04:
OK, thank you, Your Honor.

[00:13:00] Speaker 04:
I wanted to ask about this.

[00:13:04] Speaker 04:
Sorry for that.

[00:13:05] Speaker 04:
I wanted to ask about your reply brief on page one.

[00:13:11] Speaker 04:
There's a statement here, you say, appellants did urge the commission, the relevant decision-maker to hold hearings on the public's interest and discuss these matters directly with dot, dot, dot, representatives of FDA.

[00:13:21] Speaker 03:
Right.

[00:13:21] Speaker 04:
Are you standing behind that crop quote?

[00:13:23] Speaker 03:
This is what we said, Your Honor, and this is at page, I think, 14780, is that we certainly urge them to conduct a public interest hearing.

[00:13:32] Speaker 03:
And we indicated that it may be enlightening to meet with representatives of the FDA.

[00:13:37] Speaker 03:
I agree with you.

[00:13:37] Speaker 03:
We didn't make the argument as categorically

[00:13:40] Speaker 03:
as we are in our briefs today.

[00:13:42] Speaker 03:
I think that's fair, Your Honor.

[00:13:46] Speaker 03:
And I do think, thank you, Your Honor, and I do think, though, that those statements were made before the ALJ and the commission itself took the position that, and this was at appendix 21384, that it was not delegated to the agency to engage in that.

[00:14:00] Speaker 03:
Consultation is imposed on the commission itself.

[00:14:03] Speaker 03:
That's in the statute.

[00:14:04] Speaker 03:
And so we think the commission had that duty at the final determination stage.

[00:14:09] Speaker 03:
actually engage in this interactive process.

[00:14:11] Speaker 03:
And there's no dispute that no interactive process took place.

[00:14:15] Speaker 02:
Why would not a proceeding to review the remedial order and to amend it, why would that not suffice to an opportunity to consult?

[00:14:25] Speaker 03:
I think, Your Honor, FDA was not part of that.

[00:14:27] Speaker 03:
And maybe the analogy I would make is you all read the briefs here today.

[00:14:31] Speaker 03:
That's obvious.

[00:14:32] Speaker 03:
But you're not deciding this case based on the briefs.

[00:14:34] Speaker 03:
We're here having this discussion, interaction.

[00:14:36] Speaker 03:
And that shows the value of interaction, deliberative process.

[00:14:40] Speaker 03:
And that's what Congress wanted.

[00:14:41] Speaker 03:
on particular matters with respect to specific agencies.

[00:14:44] Speaker 03:
In this case, I think everyone agrees that at the heart of the public interest determination is a public health determination.

[00:14:51] Speaker 03:
FDA, after years of scientific study, had concluded that these products were appropriate to promote the public health.

[00:14:56] Speaker 05:
Well, except you had an opportunity.

[00:14:58] Speaker 05:
I mean, there's plenty of documentation as to the FDA's position, and that's what the parties adjudicated.

[00:15:04] Speaker 05:
And they put forth experts, and they put forth press releases by the FDA and all this information.

[00:15:09] Speaker 05:
Yes.

[00:15:10] Speaker 05:
Let me ask you one more hypothetical, which I'm not sure was asked before.

[00:15:13] Speaker 05:
What if the ITC calls the FDA and the FDA never returned this call?

[00:15:21] Speaker 03:
I mean, I think there's a reasonableness element to your honor.

[00:15:24] Speaker 03:
If they never even tried to get an answer, I don't think that would be consultation.

[00:15:29] Speaker 03:
If they genuinely tried,

[00:15:31] Speaker 05:
then I think at some point... Putting a notice and serving it on them versus placing a phone call is the decision that you would say is okay.

[00:15:39] Speaker 03:
I will let you move on to your... Thank you, Your Honor.

[00:15:42] Speaker 03:
Just to make one closing point.

[00:15:43] Speaker 03:
In a prior world, I spent many years in government, and I can tell you from first-hand experience that there's no substitute for the interactive exchange among different agencies and different government officials in making decisions

[00:15:56] Speaker 03:
And that simply and undeniably did not take place.

[00:15:59] Speaker 02:
My experience has been that here in Washington, if you're not reading the Federal Register on a daily basis, you're going to miss out on a lot.

[00:16:07] Speaker 03:
Well, I think that may be true.

[00:16:09] Speaker 03:
But I think that just underscores that no one can truly have knowledge of everything in the Federal Register.

[00:16:13] Speaker 03:
And notice is simply not enough, Your Honor.

[00:16:16] Speaker 03:
Congress said consult.

[00:16:17] Speaker 03:
It said consult with.

[00:16:19] Speaker 02:
That's the purpose of the notices.

[00:16:21] Speaker 02:
I mean, it's one government agency talking to another one in this case.

[00:16:26] Speaker 03:
I'll stop, because I don't even understand the arguments, Your Honor.

[00:16:30] Speaker 05:
Just because we've never let you get... I know you wanted to discuss 123 and obviousness, but what was yours?

[00:16:36] Speaker 05:
You said you had two patent-specific issues.

[00:16:38] Speaker 03:
Right.

[00:16:39] Speaker 03:
The two patent-specific issues are 123 and the implementation of known design choices in the public car, which we think is controlled by Uber Technologies.

[00:16:48] Speaker 03:
And the second one I'd like to mention is on the 915 patent, all of the elements

[00:16:54] Speaker 03:
were in public use, the only way that the commission avoided that conclusion was by imposing a legally erroneous and impossible to meet corroboration requirement.

[00:17:03] Speaker 03:
And that's in conflict with this court's decision in trans web and noble bio care.

[00:17:07] Speaker 03:
And so just briefly, Your Honor, on the 123 patent, there were three locations for the centered heater, the only element at issue in this case.

[00:17:19] Speaker 03:
The Reynolds expert acknowledged that at page 21377.

[00:17:24] Speaker 03:
All of those locations were known in the prior art.

[00:17:28] Speaker 03:
Reynolds expert acknowledged that again, 21376.

[00:17:31] Speaker 03:
There were disadvantages to non-centered heaters.

[00:17:37] Speaker 03:
Reynolds expert acknowledged that at 2137781.

[00:17:41] Speaker 03:
And there were known benefits of centered heaters

[00:17:45] Speaker 05:
It seems that what drove certainly the commission, if not the ALJ, and they even called it, the commission used the words legally flawed, they seem to have some reading of our cases that suggested that you couldn't provide a missing limitation without a piece of prior art, as opposed to with expert, uncompromised testimony.

[00:18:04] Speaker 05:
Is that a problem, do you think?

[00:18:06] Speaker 03:
it absolutely is.

[00:18:07] Speaker 03:
Your honor's own decision in that, and I wish I could pronounce it, conan clinton.

[00:18:12] Speaker 05:
We call it Phillips because we call it Phillips.

[00:18:14] Speaker 03:
No, it's okay.

[00:18:14] Speaker 03:
I mean, it says that the general knowledge of a person's skill in the art is sufficient to supply the missing limitations, so that was clear

[00:18:21] Speaker 05:
Legal error and in the Commission and this is defended by Reynolds here, you know also try to make this teaching away argument, which is what they're You don't want to go to the teaching away because I think once again in your briefs you were you I think the board didn't you the Commission didn't say anything about teaching away and the ITC and the ALJ didn't say anything about teaching away what they did rely on is That you know what more been said about how it or that how difficult would be they didn't find teaching away They didn't base their decision

[00:18:51] Speaker 03:
teaching away, right?

[00:18:53] Speaker 03:
I think that's a fair reading of it.

[00:18:54] Speaker 03:
I would say that they, the commission of Reynolds here, have defended it on teaching away because the one thing that they cite is their expert's testimony at 21.367 and that's where he makes the teaching away argument.

[00:19:05] Speaker 03:
There was no teaching away here.

[00:19:07] Speaker 05:
Okay, but let's agree with you there's no teaching away.

[00:19:10] Speaker 03:
So in that situation we have a person of skill in the art who knows that you have a finite set of

[00:19:17] Speaker 03:
options for the location.

[00:19:18] Speaker 04:
What about the ALJ's fact-finding that there isn't just three places to put the heater elements?

[00:19:24] Speaker 04:
He says there's actually a lot of different places where you can put the heater elements.

[00:19:27] Speaker 04:
I'm sorry, I just want to make sure.

[00:19:29] Speaker 04:
I understand because I'm not sure that there is an uncontested fact that there's only three places to place the heater.

[00:19:37] Speaker 03:
So I think, Your Honor, here's what's indisputable, I think.

[00:19:41] Speaker 03:
It's that you can place it outside

[00:19:45] Speaker 03:
of the area.

[00:19:46] Speaker 03:
You can place it inside, but not centered, and inside and centered.

[00:19:50] Speaker 03:
Now, there were a number of different places that are inside and not centered that are shown in the prior art, but the fundamental question of is the heater outside of the element, inside the element, and if it's inside the element, is it in the center of the element, or is it somewhere else around the heating cylinder?

[00:20:06] Speaker 03:
So yes, there were different ways inside of it you could put it, but the question of whether you would put it in the center, that was something that was indisputably known in the art.

[00:20:14] Speaker 03:
There were known advantages of putting it in the center, and there were known disadvantages of not putting it in the center.

[00:20:21] Speaker 03:
And so a person of skill in the art, and this is true, follows from KSR, it follows from Uber Technologies, and from the Phillips decision.

[00:20:30] Speaker 05:
I guess I'm understanding by appreciating everything you're saying.

[00:20:35] Speaker 05:
My problem, I guess, comes down to the standard of review.

[00:20:40] Speaker 05:
And so Morgan says there are problems and this is better.

[00:20:44] Speaker 05:
And you've got at least testimony that suggests that the prior art would have viewed the central location as being desirable.

[00:20:53] Speaker 05:
Why don't we have to defer to a finding that that was not enough to motivate the inventors

[00:21:00] Speaker 03:
So I think, first of all, generally the obviousness is a legal question.

[00:21:03] Speaker 03:
But on that underlying question, Your Honor, I think if you look at their expert's testimony at 21377 to 779, and actually to 81, where he discusses the known benefits and known disadvantages, I think as a matter of law, whether you want to look at that under substantial evidence, clear error, I mean, it's clear that he's acknowledging that a person of skill in the art would have recognized that there were benefits to the center heater.

[00:21:30] Speaker 03:
and disadvantages, and then you're left with the legal question of whether or not that element can be supplied.

[00:21:36] Speaker 03:
And I think the uber technologies case is almost exactly on point on that, Your Honor, and I think that there was clear

[00:21:43] Speaker 03:
I mean, at the bare minimum, this court should hold that the ALJ and the commission were wrong in their thinking about what the legal requirements for this analysis were in terms of what a person of skill and the art, his general knowledge could bring to the equation.

[00:21:56] Speaker 05:
Well, is there a basis for remand solely because the commission relied on a legally flawed argument if they don't think that that was a legally flawed argument?

[00:22:05] Speaker 03:
Absolutely, Your Honor.

[00:22:07] Speaker 03:
Absolutely.

[00:22:08] Speaker 03:
Even if you thought that the record was sufficient debatable, we don't think it is.

[00:22:11] Speaker 03:
But absolutely, at a minimum, we would be entitled to a remand on that.

[00:22:15] Speaker 03:
Go ahead.

[00:22:17] Speaker 05:
I'll give you a couple more minutes to discuss your final issue.

[00:22:19] Speaker 03:
Thank you, Your Honor.

[00:22:20] Speaker 03:
On corroboration and the 915 patent, the only issue is whether or not the device, the Accord K device, was in use before the priority date.

[00:22:31] Speaker 03:
And Mr. Doug Burton was a Philip Morse engineer who testified at length

[00:22:36] Speaker 03:
Credibly, that's not disputed, that this Accord K device practiced all the elements.

[00:22:41] Speaker 03:
There was only one Accord K device.

[00:22:43] Speaker 03:
And it was used publicly in a series of events in Miami in 2005, 2006.

[00:22:49] Speaker 03:
That testimony on its own clearly satisfies the element.

[00:22:52] Speaker 03:
But we had to corroborate that.

[00:22:53] Speaker 03:
We acknowledged that.

[00:22:55] Speaker 03:
But here, the corroboration evidence was overwhelming, I would submit.

[00:22:58] Speaker 03:
And I would point you to just four things.

[00:23:02] Speaker 03:
First is the technical file, which is dated June 2004, which has an ID number.

[00:23:07] Speaker 04:
I would like to ask you a question about this.

[00:23:08] Speaker 04:
I have to tell you, I did look at every single one of the documents that was cited as corroboration.

[00:23:13] Speaker 04:
What I didn't see corroborated was that the device that was provided to 600-some people in Miami is, in fact, the Accord K device.

[00:23:24] Speaker 04:
And I didn't see that anywhere.

[00:23:26] Speaker 04:
It seems like an important point.

[00:23:28] Speaker 04:
There was nothing linking the two.

[00:23:30] Speaker 04:
Instead, there were multiple different names for the device.

[00:23:35] Speaker 04:
And the only testimony saying that the Accord K is all those different names is, again, testimony.

[00:23:43] Speaker 04:
I mean, there's no evidence or documents.

[00:23:46] Speaker 04:
So why, under a rule of reason, which I think we view as a fact finding, isn't the ALJ's finding supported by support?

[00:23:57] Speaker 04:
substantial evidence.

[00:23:58] Speaker 04:
Sure.

[00:23:59] Speaker 03:
So I think we're talking about corroboration, and no one is going to, and I think as this court said in the trams web, you look at that question as a whole, not on an element or specific basis, but I think that the record actually does satisfy it.

[00:24:12] Speaker 03:
For example, I would say that the technical file actually uses an ID number for the Accord K device, and that's the same ID number that is found on the picture of the Accord K device in the record at Page

[00:24:24] Speaker 03:
473.

[00:24:25] Speaker 03:
It's NHAPL7.

[00:24:28] Speaker 03:
So that's an explicit document linking this Accord K device to the photograph of the device.

[00:24:39] Speaker 03:
And so I think that that in itself would be sufficient.

[00:24:41] Speaker 03:
The March 2006 research report refers to it as the next smoking device.

[00:24:47] Speaker 03:
And that was something that Mr. Barton testified was one of the ways

[00:24:50] Speaker 03:
to refer to it.

[00:24:52] Speaker 03:
In the 2006 slide deck at 41-477, refer to it not only as Next Smoking, but the EHC SS Series K. And then you look at that document and it has a picture of the ICOAS device that says a quote on it, Appendix 41-477.

[00:25:09] Speaker 03:
And there are many other documents that we've discussed at pages 56 to 62 of the brief.

[00:25:13] Speaker 03:
I mean, the real question is at what point is cooperation enough?

[00:25:17] Speaker 03:
I mean, we're not going to have a videotape of the Miami events in 2005, 2006.

[00:25:22] Speaker 03:
But we have the testimony that's not disputed to be, that is credible and no one argues otherwise, that's detailed by Mr. Burton explaining that he was an expert involved in the design and use of this device.

[00:25:35] Speaker 03:
He brought it down to Miami to show these people.

[00:25:37] Speaker 03:
And then we have all these documents using the same shorthand, the same way we refer to the device, the same identification number of the device, linking it to that time frame.

[00:25:47] Speaker 03:
And under a rule of reason analysis that looks to the documentary evidence

[00:25:51] Speaker 03:
as a whole and determines whether there is corroboration.

[00:25:55] Speaker 03:
I mean, I would submit in any other context, this would corroborate that the court date device was actually shown in Miami in 2005, 2006.

[00:26:03] Speaker 03:
Any other legal conclusion in this case would be error and would impose an impossible to meet corroboration standard that couldn't stand with this court's decision in TransWeb.

[00:26:13] Speaker 03:
or its decision, novel bio-care.

[00:26:15] Speaker 03:
Thank you.

[00:26:16] Speaker 03:
We've done fine.

[00:26:16] Speaker 05:
We will stir a little rebuttal.

[00:26:18] Speaker 05:
Let's hear from the other side, which has a split argument.

[00:26:21] Speaker 05:
So we will hear from the commission first.

[00:26:25] Speaker 05:
Is that correct?

[00:26:27] Speaker 01:
Yes, ma'am.

[00:26:28] Speaker 05:
Please proceed.

[00:26:30] Speaker 01:
Thank you.

[00:26:30] Speaker 01:
May it please the Court?

[00:26:32] Speaker 01:
I'd like to start with Philip Morris' statutory argument regarding the consult with language of Section 337.

[00:26:38] Speaker 01:
As the Court observed, there's many of these details, such as what the further consultation would even entail.

[00:26:42] Speaker 01:
They're just not in the record because the argument was never raised below.

[00:26:46] Speaker 01:
Philip Morris is incorrect that the issue was not right until the Commission's final determination.

[00:26:52] Speaker 01:
Philip Morris was required to specifically assert its statutory argument during the investigation, and there are cases in the commission's brief on that point, on pages 34 to 35.

[00:27:02] Speaker 05:
Not before the A.L.J., but before the commission.

[00:27:05] Speaker 01:
I think during the investigation, because it relates to the public interest factors.

[00:27:10] Speaker 05:
Well, there was this dust-up before the ALJ where the ALJ sort of on its own sort of asked about this requirement.

[00:27:17] Speaker 05:
And my read was that the government took the position that no, the ALJ has nothing to do with this and nothing to say about it because the commission has not delegated that authority to him in terms of the consultation.

[00:27:30] Speaker 05:
Am I misreading the record?

[00:27:32] Speaker 01:
So I think I'd like to clarify two points on that.

[00:27:35] Speaker 01:
First, I think the consultation relates to both the domestic industry products, Reynolds product status,

[00:27:40] Speaker 01:
and also the public interest.

[00:27:42] Speaker 01:
So for the ALJ's statement on the record was related to the status of the domestic industry products of Reynolds and their FDA authorization.

[00:27:50] Speaker 01:
Here, for the public interest factors, the commission did order that the ALJ make findings of fact as to the public interest, and that was in the notice of investigation.

[00:28:00] Speaker 01:
So we do have the ALJ as a finder of fact on both issues that relate to the consult with statutory argument.

[00:28:08] Speaker 01:
So Philip Morris should have raised it before the ALJ.

[00:28:11] Speaker 01:
Now, in a commission proceeding, once the ALJ issues his final initial determination, the commission issues additional federal register notices seeking public interest and remedy briefing from the parties, from the public, from interested government agencies.

[00:28:27] Speaker 01:
and that gives the parties and the interested government agencies another opportunity to come forward.

[00:28:32] Speaker 05:
Okay, but given the statutory language of consult, I mean, you're talking about notice.

[00:28:39] Speaker 05:
I mean, is there anything more than notice that was provided to these government agencies?

[00:28:44] Speaker 05:
So, Your Honor was correct.

[00:28:46] Speaker 05:
Can you just answer my question?

[00:28:48] Speaker 01:
Yes.

[00:28:48] Speaker 01:
So, well, I believe that the notice was in both the Federal Register of Notice and the service of the Notice of Investigation.

[00:28:54] Speaker 05:
So there was notice given.

[00:28:55] Speaker 01:
Absolutely.

[00:28:56] Speaker 05:
That's not where the statute begins or ends.

[00:29:00] Speaker 05:
The statute talks about consultation.

[00:29:02] Speaker 05:
You would agree, would you not, that consultation and notice are two very different things, right?

[00:29:08] Speaker 01:
I think the statute states consultation, comma, and seek information from.

[00:29:12] Speaker 01:
And that's what the commission has to say.

[00:29:14] Speaker 05:
So it requires more than notice, right, by its terms.

[00:29:18] Speaker 01:
It requires to seek information from yes.

[00:29:21] Speaker 01:
So in that way, by service of the notice of investigation.

[00:29:24] Speaker 05:
So it requires more than notice, right?

[00:29:27] Speaker 01:
I think it requires that the commission keeps the interest of government agencies apprised of what the subject matter is of the investigation and gives them a chance to respond.

[00:29:38] Speaker 01:
But that covers a number of different things under the board.

[00:29:40] Speaker 02:
Did the notice in this case, a Federal Register notice, provide an invitation to receive comments from interested parties?

[00:29:47] Speaker 01:
That's correct.

[00:29:48] Speaker 01:
There are multiple times during the investigation.

[00:29:51] Speaker 01:
I think that's why I'm struggling to answer your question directly.

[00:29:53] Speaker 04:
Could you tell us with the different times in which the Commission or ALJ reached out to provide notice?

[00:30:02] Speaker 01:
So in the Federal Register notices, there's an invitation to submit briefing.

[00:30:06] Speaker 01:
And that's before the investigation is even instituted.

[00:30:11] Speaker 01:
When we receive a complaint... That's to everyone.

[00:30:13] Speaker 01:
To everyone.

[00:30:13] Speaker 04:
What about to the HHS?

[00:30:16] Speaker 01:
To the HHS, the notice of investigation is served on the designated attorney for HHS.

[00:30:22] Speaker 04:
And then what happened later?

[00:30:24] Speaker 04:
What was the continual communication with the agencies?

[00:30:27] Speaker 01:
So then we rely on the Federal Register notices.

[00:30:31] Speaker 04:
And that... And those register notices said what?

[00:30:35] Speaker 01:
The federal register notices state that they're the subject matter of the investigation, the status, because they're at different times.

[00:30:43] Speaker 01:
And they invite the public and any interested government agencies, possibly even beyond those.

[00:30:48] Speaker 04:
At what times were those sent?

[00:30:49] Speaker 04:
I think I read in the record, there was one that was sent after the ALJ's decision.

[00:30:55] Speaker 01:
Yes, after the ALJ's decision, there is an initial notice that requests a briefing from everyone.

[00:31:02] Speaker 01:
There's also another request at the weather to review notice, is I think how it's referred to, that also asks for more public interest briefing.

[00:31:11] Speaker 01:
The commission takes it very seriously, and we've followed our rules here.

[00:31:15] Speaker 01:
And we know that these rules work.

[00:31:16] Speaker 05:
So I mean, I guess, let me hypothetically, it seems to me like what you're saying is that the statute more or less

[00:31:23] Speaker 05:
says the consultation shall be with anyone in the universe.

[00:31:27] Speaker 05:
Did they do anything more with respect to the FDA or the HHS than they did to the public beyond notifying them that if you have anything to say, you can come?

[00:31:40] Speaker 05:
Would you agree that they treated them all the same?

[00:31:44] Speaker 01:
So the one difference would be the notice of investigation.

[00:31:46] Speaker 01:
And that is that actually served on the attorney's part.

[00:31:49] Speaker 01:
OK, so there's service.

[00:31:50] Speaker 05:
But you wouldn't say that there's an obligation for them to consult with the public, right?

[00:31:56] Speaker 05:
That's all treated as notice.

[00:31:58] Speaker 05:
It's under the rubric of the heading notice.

[00:32:00] Speaker 05:
It's not under the rubric consultation.

[00:32:03] Speaker 05:
So where is the extra step?

[00:32:05] Speaker 05:
Are you saying they don't need an extra step?

[00:32:07] Speaker 05:
The only extra step you've told us about is service.

[00:32:11] Speaker 05:
So in terms of satisfying a consultation requirement that is different than a notice requirement, you're saying actual service is sufficient.

[00:32:21] Speaker 01:
Actual service has been sufficient.

[00:32:23] Speaker 01:
And I can point to two examples where this has worked, where we have had commentary from other government agencies recently that the Federal Trade Commission supplied a letter regarding a different investigation.

[00:32:36] Speaker 01:
We also know in the Ameren appeal, actually, before this court,

[00:32:40] Speaker 01:
It was never instituted because the FDA weighed in prior to the institutional investigation because the underlying issue related to the FDCA.

[00:32:50] Speaker 04:
Are you aware of any circumstances in which either at the parties urging or at the commission's own action or the LJ's own action, the FDA or HHS or the other agencies identified in the statute were actually contacted more than this process that you've just told us about?

[00:33:09] Speaker 01:
I'm not aware of any other examples, just the Ameren case.

[00:33:14] Speaker 01:
And in that case, we know that the FDA provided comments prior to the institution.

[00:33:21] Speaker 05:
Can I just move on to this unlawful articles issue, which I know Mr. Gardin didn't spend any time on.

[00:33:26] Speaker 05:
But I just have a sort of hypothetical question.

[00:33:31] Speaker 05:
There have been regulatory developments since this case.

[00:33:39] Speaker 05:
Philip Morris argues that a remand is necessary to take stock of regulatory developments.

[00:33:45] Speaker 05:
Let's assume, hypothetically, that even though the timing didn't work out, five days later, the FDA rejected all of this stuff.

[00:33:55] Speaker 05:
Would there be a basis for coming in and said they couldn't use them lawfully?

[00:34:01] Speaker 05:
Would there be a basis to come in and revisit and reopen this matter?

[00:34:07] Speaker 01:
The commission, if there is a material change in fact, a party can petition the commission to modify the enforcement orders.

[00:34:15] Speaker 01:
So in your hypothetical, let's say a company went bankrupt and stopped selling a product, the parties would come back to the commission.

[00:34:22] Speaker 05:
Well, let's assume that they had been rejected.

[00:34:26] Speaker 01:
Let's say there was an enforcement order from the FDA banning their sale.

[00:34:29] Speaker 01:
If that was after the enforcement orders had issued, the parties would petition the commission because it's a material change of fact.

[00:34:36] Speaker 01:
to modify the enforcement order in a proceeding.

[00:34:41] Speaker 05:
Now, I know your time's up, but I'd like, before we go to your colleague, go to the patent-specific issues that Mr. Carr raised, mainly to the 123 argument.

[00:34:54] Speaker 05:
The commission, I mean, the ALJ was brief.

[00:34:57] Speaker 05:
He made a few points, and maybe that's sufficient, and maybe it's not.

[00:35:00] Speaker 05:
But the commission seemed to add on.

[00:35:03] Speaker 05:
And it added on as my read two things.

[00:35:05] Speaker 05:
The first thing, that there's this legally flawed analysis that I guess PM was raising that says that you can provide a missing limitation by expert testimony on what the prior art is.

[00:35:22] Speaker 05:
Isn't that wrong as a legal matter under our case law?

[00:35:26] Speaker 01:
I think that it depends on the facts of the case.

[00:35:29] Speaker 01:
I agree that it can be inconsistent with the Phillips case that Council mentioned.

[00:35:33] Speaker 01:
And we don't focus on that point in our brief.

[00:35:35] Speaker 05:
Well, I'm leaving your brief aside.

[00:35:37] Speaker 05:
We're reviewing the commission's findings.

[00:35:40] Speaker 05:
And is it fair to conclude that that was one of the legs in the stool?

[00:35:45] Speaker 05:
That's one of the bases that the commission relied on

[00:35:50] Speaker 05:
to affirm the ALJ on this obviousness finding?

[00:35:55] Speaker 05:
And if that's true, and if you seem to kind of agree with me that that was legal error, isn't that a basis for remanding that analysis?

[00:36:05] Speaker 01:
I think there were at least two different reasons for finding that they didn't prove invalidity here.

[00:36:09] Speaker 01:
One is that they didn't show the motivation to combine.

[00:36:12] Speaker 01:
And then the analysis under Arendi, I think, was a separate analysis.

[00:36:16] Speaker 01:
So it doesn't require a remand because we still have the issue that Philip Morrison never proved, a motivation to combine the primary reference Morgan

[00:36:25] Speaker 01:
which teaches sequential heating using multiple heaters and replacing all those multiple heaters in the sequential heating with a single centered heater that's in the general knowledge of a person with ordinary skill.

[00:36:36] Speaker 01:
That finding alone is enough to find that the ability wasn't shown by clear and convincing evidence.

[00:36:45] Speaker 05:
Prior art, undisputed testimony by experts from both sides saying central heaters were in the prior art.

[00:36:52] Speaker 05:
There were numerous advantages to central heating.

[00:36:56] Speaker 05:
So that's on the one side.

[00:36:57] Speaker 05:
And then you've got the Morgan reference, which says there are problems.

[00:37:04] Speaker 01:
The Morgan reference, Reynolds expert testimony, and also the other references that are in the record.

[00:37:11] Speaker 01:
And those are included at least three.

[00:37:15] Speaker 05:
What about Reynolds expert testimony?

[00:37:17] Speaker 05:
Because they agreed it was in the prior art.

[00:37:20] Speaker 05:
Central heating was in the prior art, correct?

[00:37:22] Speaker 05:
That is correct.

[00:37:22] Speaker 05:
And they agreed that there were significant advantages to using central heating.

[00:37:27] Speaker 01:
So they agreed that there could be advantages to using a single centered heater.

[00:37:31] Speaker 01:
But the expert also testified there were numerous disadvantages.

[00:37:36] Speaker 05:
I know.

[00:37:36] Speaker 05:
But isn't our case law replete with examples that say, leaving aside the teaching away, if this is not a teaching away, and there was no finding that this is a teaching away, that just because it's not the best or just because there are certain advantages but also disadvantages, that's not enough to obviate the motivation

[00:37:57] Speaker 01:
No, that's right.

[00:37:58] Speaker 01:
But I think if we look at not whether the combination could have been made, but what a person with ordinary skill had been motivated based on the teachings of the prior art.

[00:38:06] Speaker 01:
So we know that Morgan highlights, you should not reheat this tobacco or it has unpleasant flavors.

[00:38:11] Speaker 01:
And that's why it has the multiple heaters and it uses them in sequence.

[00:38:15] Speaker 01:
If you use a centered heater, a single centered heater, there are no benefits unless you have a single centered heater.

[00:38:21] Speaker 01:
You don't reduce your manufacturing costs by adding a centered heater.

[00:38:26] Speaker 01:
And so we're talking about, is there?

[00:38:28] Speaker 05:
What if there was not testimony?

[00:38:30] Speaker 05:
What if there was a piece of prior art?

[00:38:32] Speaker 05:
I don't want to call Adams or something, but there was some prior art that said exactly what the expert said, which is there are plenty of advantages to central heating.

[00:38:41] Speaker 05:
Go for central heating.

[00:38:42] Speaker 05:
So you've got that piece of prior art, and you've got the Morgan, which says kind of something different.

[00:38:49] Speaker 05:
Isn't that enough to say there's a motivation?

[00:38:51] Speaker 05:
As long as there's no teaching away that you would combine the two?

[00:38:56] Speaker 01:
I think that we have to look at the references as a whole, and because their focus is on this sequential heating and not reheating the tobacco, unless there was something to that centered heater disclosure in the reference that would also address those issues, that wouldn't solve the problem.

[00:39:13] Speaker 05:
It's similar to the allied... I'm sorry.

[00:39:16] Speaker 05:
I didn't catch you talking quickly, as I do.

[00:39:19] Speaker 01:
I apologize.

[00:39:20] Speaker 01:
I realize I'm also out of time, but I want to make sure I answer your question.

[00:39:23] Speaker 05:
Yes, please.

[00:39:24] Speaker 01:
So when we're looking at Morgan's teaching of sequential heating with multiple heaters and then a single centered heater, you would need something in that reference that discloses the centered heater that also addresses this idea of a sequential heating so you're not reheating the tobacco.

[00:39:40] Speaker 01:
And there could be a reference like that, but Philip Morris made the decision not to.

[00:39:44] Speaker 01:
To deal with that, how?

[00:39:47] Speaker 05:
To say that's wrong?

[00:39:50] Speaker 05:
To say ours is better in any event?

[00:39:54] Speaker 05:
What would they have to say to overcome it?

[00:39:56] Speaker 01:
There would need to be a teaching as to how to avoid or address this reheating issue.

[00:40:02] Speaker 01:
So Morgan, for example, addresses the thermal inefficiency issue because it states you can remove the tobacco from the center.

[00:40:09] Speaker 01:
and place a non-tobacco filler.

[00:40:11] Speaker 01:
So something like that in a reference could possibly take care of that motivation issue.

[00:40:16] Speaker 01:
But again, we know there's a centered heater.

[00:40:18] Speaker 01:
It doesn't mean just because you could combine it, we have to look at the motivation.

[00:40:23] Speaker 01:
And coming back to the substantial evidence standard, we do have Reynolds expert testimony, and we have the references themselves, three of which are Philip Morse's own patents that do talk about drawbacks to a centered heater.

[00:40:36] Speaker 05:
Thank you.

[00:40:36] Speaker 05:
Why don't we hear from Melissa?

[00:40:38] Speaker 01:
If I could just make a quick comment on the 915 patent and validity regarding the corroboration.

[00:40:43] Speaker 01:
Standard.

[00:40:47] Speaker 01:
I think that just to hit it right on the head with this issue is the multiple devices that are in these documents versus one former employee's testimony

[00:41:00] Speaker 01:
that there's only one AccordK device, which is not corroborated.

[00:41:04] Speaker 01:
We don't have a list of all the versions or all the different names that were possibly used.

[00:41:08] Speaker 01:
And that uncorroborated testimony from the same witness is being used to corroborate testimony that the multiple devices shown in the documents were the same as the device in Miami.

[00:41:19] Speaker 01:
And that circular reasoning has previously been rejected by this court.

[00:41:24] Speaker 01:
So we would believe that the commission used the correct legal standard.

[00:41:28] Speaker 04:
Do you have a particular case you're referring to when you say that circular reason has been rejected?

[00:41:32] Speaker 01:
Absolutely.

[00:41:32] Speaker 01:
The in Ray NTP case is cited in the commission's brief.

[00:41:36] Speaker 01:
It was a slightly different issue regarding the date of a document.

[00:41:39] Speaker 01:
But it's the same issue where you have one witness is uncorroborated testimony being used to corroborate another point that's needed to fix those prior holes.

[00:41:49] Speaker 01:
And I think we can look at the Finnegan case.

[00:41:52] Speaker 01:
What was expected to be seen here from a very large company is more than one former employee and an actual document trail.

[00:41:59] Speaker 01:
There's no email stating this is what you're going to take.

[00:42:02] Speaker 01:
Their witness even said that the documents don't say anywhere that this is a device you'll take to Miami.

[00:42:08] Speaker 01:
And we expect to see those paper trails in this day and age, and it's just not present here.

[00:42:13] Speaker 00:
Thank you.

[00:42:13] Speaker 01:
Thank you, Your Honor.

[00:42:16] Speaker 00:
Good morning, Your Honor, and may it please the court.

[00:42:19] Speaker 00:
I stand here ready to address any of the issues the court wants to further discuss with me, but I propose to focus on the two patent issues.

[00:42:28] Speaker 00:
Judge Proce, let me start with your concern about the Phillips case and what the Commission did here.

[00:42:37] Speaker 00:
You've mentioned a couple of times in your colloquy with my friends here the Commission's use of the term legally flawed.

[00:42:43] Speaker 00:
That's at page 37 of the appendix.

[00:42:46] Speaker 00:
But look at what the Commission was saying there.

[00:42:48] Speaker 00:
The commission citing Arendt versus Apple was saying that there are three caveats.

[00:42:55] Speaker 00:
It's not saying you can never use common sense to supply missing claim limitation.

[00:43:03] Speaker 00:
The commission is saying quite accurately under Arendt that there are three caveats to doing that.

[00:43:08] Speaker 00:
And first, common sense is typically, not always, but typically invoked.

[00:43:14] Speaker 00:
to provide a known motivation to combine and not to supply a missing claim limitation.

[00:43:19] Speaker 00:
Well, at page appendix 37, there are quotes around that.

[00:43:22] Speaker 00:
That is a direct quote, or almost a direct quote, from the Arendi decision.

[00:43:27] Speaker 00:
Second, in cases where common sense was invoked to supply a limitation that was admittedly missing, and that's the commission recognizing, I think contrary to the premise of your question to my friend over here, that the commission thought that it could never

[00:43:44] Speaker 00:
use common sense to supply missing claim limitation.

[00:43:48] Speaker 00:
The Commission says here, again quoting Arendy, that the limitation has to be unusually simple and the technology particularly straightforward.

[00:43:58] Speaker 00:
Now this is a very important point in this case because that's where Philip Morris's case failed as a matter of fact.

[00:44:08] Speaker 00:
Now I have to be careful here because this is one of the few areas of the record where

[00:44:12] Speaker 00:
There is confidential information, so I'll only be general about it.

[00:44:19] Speaker 05:
They cite Arendy, but we've talked about Phillips, the case that we can't pronounce.

[00:44:27] Speaker 05:
And that really does explain, clarifies, what Arendy does and doesn't do.

[00:44:33] Speaker 05:
And their quote for Arendy that, common sense cannot be used as a wholesale substitute for reasoned analysis and evidentiary support.

[00:44:43] Speaker 05:
Well, that's a given.

[00:44:44] Speaker 05:
But as in Phillips, there was evidentiary support.

[00:44:48] Speaker 05:
In this case, there were witness experts from both sides.

[00:44:52] Speaker 05:
It wasn't disputed.

[00:44:53] Speaker 05:
This was in the prior art.

[00:44:55] Speaker 05:
So Arendt says what it says, and it's right.

[00:44:58] Speaker 05:
But there, there was no reasoned analysis.

[00:45:01] Speaker 05:
There were conclusory statements.

[00:45:03] Speaker 05:
So this is distinguishable for Arendt, and somehow they thought Arendt controlled.

[00:45:08] Speaker 00:
Well, I don't think there's any reason to view Phillips and Arendy as case law that's in contra distinction to one another.

[00:45:17] Speaker 00:
No.

[00:45:17] Speaker 00:
I think quite the contrary.

[00:45:19] Speaker 00:
I think even under Phillips, the court would not have allowed such a complicated and conflicting sort of addition like a central heater here to satisfy the

[00:45:34] Speaker 00:
uh... what a remedy calls the unusually simple and technology particularly straight forward is your view that central leaders weren't known in the prior art and that their advantages to use in central heathen was not known in the prior art because i thought all both witnesses from both sides agreed with that known perhaps but look at the finding again at page a thirty's appendix thirty-seven where the commission says that circumferential

[00:46:02] Speaker 00:
spaced heaters are the state of the art as of the critical date in this case.

[00:46:08] Speaker 00:
So the fact that it might have been known doesn't mean that it was enough to satisfy what the law requires, which is, if we were talking about a separate reference rather than simply common sense, the motivation to combine.

[00:46:22] Speaker 00:
What's the motivation to combine something that's known but not state of the art?

[00:46:26] Speaker 00:
with this particular Morgan 1993 reference.

[00:46:32] Speaker 00:
And here is where both the record and the findings of the commission and the standard of review are not Philip Morris's friends.

[00:46:40] Speaker 00:
Philip Morris, and here again, this is where I want to be careful, so I'm going to be general.

[00:46:45] Speaker 00:
Philip Morris started trying to design the Icos device in the mid first decade of the 2000s, roughly

[00:46:56] Speaker 00:
15 years after Morgan, which, by the way, is their own patent.

[00:47:02] Speaker 00:
It's their own inventor.

[00:47:03] Speaker 05:
Well, one of their answers to that is that you have to use the time of the invention.

[00:47:08] Speaker 00:
Well, and that's, well, you're absolutely, you're looking at the time of the invention, but look at what, we're talking about common sense, look at what the common sense tells us about the record here.

[00:47:22] Speaker 00:
Philip Morris, as Judge Stoll noted,

[00:47:24] Speaker 00:
used far more than three possibilities.

[00:47:28] Speaker 00:
They used a lot of people.

[00:47:29] Speaker 00:
It took them a lot of years.

[00:47:31] Speaker 00:
And they used at least a significant multiple of the three locations.

[00:47:40] Speaker 05:
So are you saying that goes to motivation?

[00:47:42] Speaker 05:
They wouldn't have been motivated to combine it because it took a long time and it was complicated?

[00:47:47] Speaker 00:
No, I'm saying that the proof is in the pudding here, Your Honor, that there was

[00:47:52] Speaker 00:
There was no motivation to combine because they had Morgan, it was their own patent.

[00:47:56] Speaker 00:
And instead, it took them a long, expensive period of time to come up with the central heater.

[00:48:03] Speaker 00:
And whether or not there was a teaching away in Morgan, let's remember one other thing about Morgan.

[00:48:09] Speaker 05:
And that is not only did- No, but I just want, I guess I, it's not like I'm disagreeing with you, I'm just not clear on what we're talking about here, is the fact that it's,

[00:48:19] Speaker 05:
complicated and it took a long take might take a long time to put together an answer to why there was no motivation to combine?

[00:48:27] Speaker 00:
I think in part the motive well if first of all the motivation to combine finding here is based not just on the Morgan reference and the Philip Morris design story but also on the testimony of experts.

[00:48:43] Speaker 00:
Beyond that

[00:48:45] Speaker 05:
testimony in what regard I mean there's lots of testimony in this case I mean I thought the the experts agreed that this was in the prior art and the experts agreed or there was no disagreement the experts I think the experts agreed that there were a lot of advantages to the central yes and that's where I was actually going with regard to Morgan because remember that Morgan in addition to teaching circumferential

[00:49:11] Speaker 00:
uh, spaced multiple heaters also teaches about removing the tobacco from the center and instead replacing it with a fiber plug.

[00:49:23] Speaker 00:
And that's because the whole notion of, again, remember finding a fact state of the art at the relevant time is circumferential spaced heaters, not a central heater, even though possibly no.

[00:49:37] Speaker 00:
I can grant you that it's known in the art at the time, and it still doesn't show a motivation to combine it here with Morgan.

[00:49:45] Speaker 00:
And it's because Morgan doesn't even have tobacco in one of its preferred embodiments.

[00:49:52] Speaker 00:
It doesn't even have tobacco in the center.

[00:49:55] Speaker 00:
So there's no motivation to combine a central heater

[00:49:59] Speaker 00:
to burn fiber, that's not going to do the job.

[00:50:04] Speaker 00:
You have to go far beyond what Morgan teaches in combining what a centered heater might do.

[00:50:13] Speaker 04:
I'm not sure I understand what your position is.

[00:50:15] Speaker 04:
It sounds like you're saying maybe it's harmless error.

[00:50:17] Speaker 04:
I'm not sure what you're saying about the Phillips case.

[00:50:20] Speaker 00:
I don't think it's error at all.

[00:50:22] Speaker 00:
Let's start there.

[00:50:23] Speaker 00:
Because I think that Phillips is completely consistent with Arendy's caveats.

[00:50:27] Speaker 00:
Remember, Arendy isn't a holding that says you can never use common sense to supply missing claim limitation.

[00:50:35] Speaker 00:
It just says be careful about it because anybody can make up anything after the fact.

[00:50:39] Speaker 00:
So, and Phillips is a case where it's relatively simple and it's fine to provide common sense and

[00:50:45] Speaker 04:
Do you think the Commission actually though credited that testimony anyway?

[00:50:49] Speaker 04:
Because I was looking at page A38 and it says, merely contending that a positive would have been aware of the, it says, possible internal heating arrangement.

[00:50:58] Speaker 04:
I assume that means the central heating arrangement doesn't establish that a positive would have been motivated to modify.

[00:51:05] Speaker 00:
I think that's completely consistent with what I'm saying.

[00:51:09] Speaker 00:
I hope I'm

[00:51:10] Speaker 00:
I hope I'm not confusing the matter by my answers to Judge Prost here.

[00:51:15] Speaker 00:
I think that this is the difference between what the state of the art is versus merely having something known in the art.

[00:51:22] Speaker 00:
And this is where the commission is saying, Philip Morris, you failed as a matter of proof.

[00:51:29] Speaker 00:
You're just contending that a person of ordinary skill would have been aware of a possible internal heating arrangement.

[00:51:37] Speaker 00:
But that doesn't go so far as to say that a person of ordinary skill would have been motivated to make the modification.

[00:51:43] Speaker 00:
And while there isn't a teaching away finding on this record, we're pretty darn close to one here with regard to Morgan.

[00:51:51] Speaker 00:
So at the very least, the fact that Morgan does not really easily allow

[00:51:57] Speaker 00:
for just the input of a centered heater because it would start burning fiber instead of tobacco in the middle, that's a pretty powerful indication that the commission was right with regard to its fact-finding and right to tax Philip Morris with a failure of proof in its case.

[00:52:11] Speaker 00:
And remember, it's not just their burden, but it's their burden by clear and convincing evidence.

[00:52:16] Speaker 00:
And so, unless you have more questions on 123, I'll just say with regard to the 915,

[00:52:24] Speaker 00:
that I think, Judge Stoll, this is a finding of fact.

[00:52:28] Speaker 00:
Again, the standard review is not their friend.

[00:52:32] Speaker 00:
It's more than a scintilla standard on an administrative review.

[00:52:38] Speaker 00:
And I think I'll adopt the argument made by my friends at the ITC here.

[00:52:42] Speaker 00:
I think they've made our point as well as we could.

[00:52:45] Speaker 00:
So unless you've got any further questions either on the patent issues or on any of the other issues, we would urge that the court defer.

[00:53:04] Speaker 05:
We've all kind of lost control of the time, but I would really store three minutes.

[00:53:07] Speaker 05:
I think that makes it somewhat easier.

[00:53:10] Speaker 04:
Before you start, can I ask you one quick question?

[00:53:12] Speaker 04:
In your brief, blue brief at page 19, the top of the sentence, it's in italics.

[00:53:17] Speaker 04:
And it says, it is undisputed that at no point during the investigation did the commission consult with the FDA or any other federal agency.

[00:53:26] Speaker 04:
Are you going to maintain that, that it is undisputed part?

[00:53:30] Speaker 03:
Well, I heard the commission this morning to say that they had general notice and that was it.

[00:53:34] Speaker 03:
And that's what I understood my colleague to say.

[00:53:37] Speaker 04:
So maybe we're... It's the word is consult with.

[00:53:41] Speaker 03:
Consult.

[00:53:42] Speaker 04:
That's a big issue in this case.

[00:53:44] Speaker 04:
What is the meaning of consult?

[00:53:45] Speaker 03:
Right.

[00:53:45] Speaker 03:
And I think we laid out in our brief what we think the meaning is in terms of deliberative... So this sentence means it's undisputed with your interpretation.

[00:53:52] Speaker 03:
Yes, it is.

[00:53:53] Speaker 03:
And I'm sorry if that was confusing, Your Honor.

[00:53:55] Speaker 04:
That was a little confusing.

[00:53:56] Speaker 03:
I'm sorry, Your Honor.

[00:53:58] Speaker 03:
But on the consultation issue, I do want to just make two points.

[00:54:02] Speaker 03:
One is that I did understand my friend from the commission to acknowledge today that the only thing that they had is general notice, notice that would have been to the public, and they happen to include the agencies.

[00:54:12] Speaker 03:
And then what I would do is read from the Ninth Circuit's decision in California Wilderness, which I understand is controlling this court, but we think is persuasive.

[00:54:18] Speaker 03:
And this is what the Ninth Circuit said, quote, DOE's interpretation of consult to mean no more than notice and comment would render part of the statute superfluous.

[00:54:27] Speaker 03:
If consultation means no more than an opportunity for comment, there is no reason for Congress to use distinct language in these other provisions.

[00:54:33] Speaker 03:
And I think that's true generally as to notice and comment schemes.

[00:54:37] Speaker 02:
Am I correct that Philip Morris met with the FDA or USTR?

[00:54:42] Speaker 03:
We attempted to, Your Honor.

[00:54:43] Speaker 03:
We had discussions.

[00:54:45] Speaker 03:
But that's obviously not the agency.

[00:54:46] Speaker 03:
I mean, the interactive process between agencies where they could say, well, you said you made this

[00:54:53] Speaker 03:
uh... reduced exposure finding that there'd be reduced exposure to carcinogens and they would help people stop smoking but then there are these countervailing benefits.

[00:55:00] Speaker 03:
How do we weigh those?

[00:55:01] Speaker 03:
What's the impact on this?

[00:55:03] Speaker 03:
What does it mean if we exclude this device that has helped millions of smokers around the world transition to a less harmful product from combustible cigarettes?

[00:55:11] Speaker 03:
That discussion never took place.

[00:55:13] Speaker 05:
I hate to belabor this, but why isn't specific service enough?

[00:55:17] Speaker 05:
Why is that any different than a phone call to an agency, which I think we all agreed

[00:55:22] Speaker 05:
you call the agency if they don't turn the call, could not.

[00:55:26] Speaker 03:
We don't know that they never said, and we're not going to talk to you, we don't care.

[00:55:30] Speaker 03:
We don't know if they didn't see the notice.

[00:55:31] Speaker 03:
I mean, and Congress wanted consultation.

[00:55:33] Speaker 03:
It wanted consultation, an interactive process that never took place.

[00:55:38] Speaker 03:
On the 123 patent, I would say we agree with you, Judge Post, in terms of your comments.

[00:55:44] Speaker 03:
There's no question the locations were known in the art and that their expert acknowledged that there were benefits

[00:55:51] Speaker 03:
to the centered location.

[00:55:52] Speaker 03:
There was a clear motivation to use the centered location.

[00:55:54] Speaker 03:
The fact that we spent time developing this underscores the motivation.

[00:55:58] Speaker 03:
And that time was spent not to determine what the location of the heating element would be, but to design the heating element, the design blade.

[00:56:05] Speaker 03:
And that's at appendix 4168182.

[00:56:07] Speaker 03:
And then on corroboration, I think the photograph that I mentioned to you, Your Honor, answers

[00:56:17] Speaker 03:
Your question about specific corroboration of use of the same identification number on the Accord K device.

[00:56:23] Speaker 04:
Do you have a site specifically for that?

[00:56:25] Speaker 03:
Yes.

[00:56:26] Speaker 03:
The photograph is 40073.

[00:56:30] Speaker 03:
And the technical file using the same identification number on the photograph is 40791.

[00:56:35] Speaker 03:
I would end, though, by saying that we think that this is a clear error of law.

[00:56:42] Speaker 03:
I mean, this is what this court said in the trans-web case.

[00:56:46] Speaker 03:
at page 1301.

[00:56:48] Speaker 03:
Importantly, the Rule of Reason analysis does not require that every detail of the testimony be independently and conclusively supported by the corroborating evidence.

[00:56:57] Speaker 03:
Yes, whether they use the AccordK device in Miami is important, but there was overwhelming evidence corroborating that the device was used in Miami, that it used the same shorthand, the identification number, the EHCCS

[00:57:13] Speaker 03:
identification, the next smoking identification.

[00:57:15] Speaker 03:
These are all over the documents.

[00:57:16] Speaker 03:
Mr. Burton, who was an engineer at Philip Morris for years and knew directly about this, testified about it, you don't exclude the testimony itself.

[00:57:24] Speaker 03:
You look at it in light of the documentary evidence.

[00:57:26] Speaker 03:
Contemporary.

[00:57:27] Speaker 03:
One final question I really have to ask.

[00:57:30] Speaker 05:
Yes.

[00:57:30] Speaker 05:
Because you need to win on both the 915 and the 123 here.

[00:57:35] Speaker 05:
So I think that's.

[00:57:36] Speaker 05:
To get rid of the exclusion order, right?

[00:57:37] Speaker 05:
I mean, there's other stuff going on that you mentioned.

[00:57:40] Speaker 05:
But in terms of reversal here, you would have to win on both patent-specific issues, right?

[00:57:46] Speaker 03:
I think that's right with this caveat, Your Honor.

[00:57:48] Speaker 03:
First, it's very important for this court to address both patents because they're interrelated appeals.

[00:57:54] Speaker 03:
For example, if the PTAP appeal were to affirm the Invalidia 915, this court addressed the 123, then that would be very important.

[00:58:02] Speaker 05:
I also think that... That's not my question.

[00:58:04] Speaker 05:
Yes.

[00:58:04] Speaker 05:
I'm talking about this case and the result in this case.

[00:58:09] Speaker 03:
Yes, Your Honor.

[00:58:10] Speaker 03:
I mean, I think there are separate questions about the scope of the domestic industry and how it affects the patents.

[00:58:15] Speaker 03:
But I think that the basic answer is yes, Your Honor.

[00:58:19] Speaker 05:
Thank you.