[00:00:00] Speaker 06: Our first case is DR Optics versus Peloton Interactive 2021-1900. [00:00:07] Speaker 06: And we should say in advance, the panel is a bit doubtful whether the asserted cross-appeal by Peloton is genuinely a cross-appeal [00:00:25] Speaker 06: But we, in the interest of being totally fair and not having anyone feel they were deprived of argument time, will let you have your two minutes for rebuttal on the cross-appeal, if that's what you wish. [00:00:43] Speaker 06: Mr. Gannon. [00:00:46] Speaker 03: May I please the court? [00:00:49] Speaker 03: The Markman. [00:00:50] Speaker 03: in this case was hotly contested. [00:00:52] Speaker 03: The plaintiff, VRO, got the construction it asked for verbatim. [00:00:58] Speaker 03: Everybody at the Markman hearing understood that the plaintiff's construction required more than just the display of individual performance parameters. [00:01:08] Speaker 03: That was the issue at the Markman. [00:01:10] Speaker 03: Does the claim, is it broad enough to read on just showing performance parameters, or do you have to do something more? [00:01:16] Speaker 03: Do you have to have a comparison? [00:01:18] Speaker 03: Do you have to compare the performance parameters, calculate a difference, and then display that difference on the screen? [00:01:25] Speaker 03: In other words, provide a ranking. [00:01:28] Speaker 03: That's what was argued at Markman, and the district court judge adopted the plaintiff's construction verbatim. [00:01:35] Speaker 01: Is this the construction that says display a difference in performance between the fitness equipment and at least one remote fitness equipment? [00:01:44] Speaker 01: That's what you're referring to, right? [00:01:46] Speaker 03: Correct. [00:01:46] Speaker 03: It's to display a difference in performance [00:01:51] Speaker 03: between the fitness equipment and at least one remote fitness equipment based on the difference between the first and second parameters. [00:01:59] Speaker 03: That was the stated construction. [00:02:02] Speaker 03: And it was all discussed very clearly at the Markman, I believe. [00:02:06] Speaker 01: But your view is that that language requires that there be no mental effort on the part of the user when looking at the display of the difference. [00:02:16] Speaker 01: And if it's, for example, just numbers, that would not satisfy that claim construction. [00:02:22] Speaker 03: Yes. [00:02:22] Speaker 03: If the user has to, in their own mind, figure out the ranking, then the system hasn't done a comparison. [00:02:31] Speaker 01: So if I see 61 bikers at 60, that would be very fast. [00:02:36] Speaker 01: But let's just say they are. [00:02:37] Speaker 01: 60 miles per hour, and the other one's at 40. [00:02:41] Speaker 01: Because that takes mental effort on my part to do [00:02:43] Speaker 01: 40 is less than 60. [00:02:45] Speaker 01: It's not actually satisfying the visual display of a difference. [00:02:49] Speaker 03: That's right because there's no comparison of those performance parameters. [00:02:53] Speaker 03: to determine a difference and then visually displaying that difference. [00:02:57] Speaker 03: So in other words, if you only understand that somebody's riding at 8.5 miles an hour and someone else is riding at 3 miles an hour, you don't know who's winning that race. [00:03:07] Speaker 03: That's just a instantaneous performance parameter. [00:03:11] Speaker 01: Did your specification make that clear? [00:03:14] Speaker 03: The specification does make it clear. [00:03:15] Speaker 03: And actually, Your Honor, let me start with the claim, because I think the claim itself is clear. [00:03:21] Speaker 03: The claim says logic configures the drive to display, this is claim one, in response to both the first and second performance parameters such that a performance comparison is displayed. [00:03:33] Speaker 03: So the claim itself is contemplating there's a difference between the performance comparison [00:03:39] Speaker 03: the first and second performance parameters in other words you're displaying the performance comparison in response to those first and second parameters so to answer your question yes column 11 this is appendix 124 the specification is very clear it talks about this racing track in figure two and [00:04:00] Speaker 03: And that specification talks about Figure 2 with a racing track with dots. [00:04:05] Speaker 03: First of all. [00:04:06] Speaker 01: And so those dots, the dots in your view do show [00:04:13] Speaker 01: the relative comparison because because they're dots there's no mental there looks like there's mental effort on my part to figure out which of those dots is winning so all all those dots are showing each of those dots are reflecting the individual performance parameter of each rider so are the numbers 60 and 40 [00:04:35] Speaker 01: Excuse me the 60 and 40 well I just was making up from the hypothetical I gave you earlier where I said one bike riders going 60 and one bike riders going 40 right and And but here there's also some mental effort for me to see which dot is in advance of the other dot That's right your honor so with respect to with respect to this track [00:04:57] Speaker 03: Each one of the dots is only reflecting the individual parameters of each bike. [00:05:03] Speaker 03: And it's putting it on the screen. [00:05:05] Speaker 03: So in this particular display, where you only have dots on a circle, you're not comparing. [00:05:10] Speaker 03: You're not calculating a difference or comparing that parameter, determining a performance comparison, and then displaying that. [00:05:20] Speaker 03: So if you look at the specification at column 11, [00:05:23] Speaker 03: It's very clear. [00:05:24] Speaker 03: It says, references now made to Figure 2, which shows the electrical running track with the dots. [00:05:31] Speaker 03: And it may be provided to illustrate respective competitors. [00:05:35] Speaker 03: Now, those dots are reflecting individual performance parameters. [00:05:39] Speaker 03: Then the specification says, additional textual information, 208 and 210, may be provided to give more detailed data on the individual competitors. [00:05:48] Speaker 03: So if you look at figure two, the information about the individual competitors, you can see in figure two, for example, on the top right, there's the instantaneous speed, 8.2. [00:05:58] Speaker 03: It's lap two, and that competitor's gone 0.31 miles. [00:06:02] Speaker 01: What is the information here in figure two that doesn't require any mental effort on my part to figure out [00:06:09] Speaker 03: Difference between the two well this so the the difference between the two when the patent says and their comparative performance information the only information on figure two that shows the comparative performance information is the lead by 0.01 and the lead by 0.6 there you don't have to do any there's no offloading to the user the computer has determined the difference between the performance parameters and [00:06:37] Speaker 03: It's determined that difference, and it's actually displayed in Figure 2 when it tells you, OK, Rider 2 is leading by 0.01 miles. [00:06:46] Speaker 03: That is a ranking, and that's what the claim was limited to with the term. [00:06:52] Speaker 03: The term in the claim is performance comparison. [00:06:58] Speaker 03: Let me just get to the claim. [00:07:01] Speaker 03: Performance comparison and in the specification at column 11. [00:07:06] Speaker 03: It's telling you that the performance The comparative performance information is different than the raw parameters the raw data So with respect to figure 2 the only information that you that's where you're displaying a difference in performance is when it's telling you hey I'm leading by 0.01 miles or I'm leading by 0.6 seconds [00:07:30] Speaker 03: So what happened here? [00:07:31] Speaker 03: The district court, even though it gave the plaintiff, VRO, its construction, when we got to summary judgment, the district court failed to apply the construction that it gave us that was argued and that was given to us at the markment. [00:07:47] Speaker 03: The Watterson reference at best only shows individual performance parameters, not the other requirements of the claim. [00:07:54] Speaker 03: And so the district court made a couple errors. [00:07:57] Speaker 03: One is the district court didn't apply the construction that was given. [00:08:00] Speaker 03: And number two, the district court improperly resolved issues of fact on summary judgment. [00:08:06] Speaker 03: So what were the issues of fact on summary judgment? [00:08:09] Speaker 03: And let me just make sure this is very clear. [00:08:12] Speaker 03: VRO's expert, Mr. Lenz, testified, and he put in evidence on summary judgment, that an elliptical track that only shows individual competitor data performance parameters does not meet the claim language. [00:08:26] Speaker 03: So that was VRO's expert put in evidence saying, hey, if you're putting in just the raw speed, that's not a performance comparison. [00:08:34] Speaker 03: And he said, there's no disclosure of a comparison of the parameters to determine a difference in performance, nor is there a display [00:08:41] Speaker 03: of that difference in performance. [00:08:43] Speaker 03: And that's at appendix 9196 to 97. [00:08:47] Speaker 01: This is the part where the district court said that that was a cramped reading of his claim of destruction, right? [00:08:55] Speaker 03: That's right. [00:08:56] Speaker 03: That's right. [00:08:56] Speaker 03: This is where the district court veered off course we believe and didn't follow the construction that was given. [00:09:02] Speaker 01: What if I think that that's a reasonable reading of the claim of destruction language, even though it was your proposed language and you meant it in a different way? [00:09:11] Speaker 03: Well, I think at the very least, Your Honor, there would still be an issue of fact. [00:09:16] Speaker 03: Because the claim says you're displaying a performance comparison in response to parameters. [00:09:24] Speaker 03: And that there's testimony in the record that that's not met by Watterson. [00:09:31] Speaker 03: And that testimony was given by VRO's expert, Mr. Lenz. [00:09:36] Speaker 03: Peloton's expert interestingly agreed with Mr. Lenz. [00:09:40] Speaker 03: But in any event, it's an issue of fact for the jury. [00:09:45] Speaker 03: But let me go on to pointing out what Peloton's own expert said in this case. [00:09:53] Speaker 03: Peloton's expert agreed that merely displaying performance parameters, like in Watterson, [00:09:59] Speaker 03: does not meet the claim element. [00:10:00] Speaker 03: So this is what Peloton's own expert said. [00:10:03] Speaker 03: Now, this was in his infringement report. [00:10:05] Speaker 03: But nonetheless, he was talking about the construction that was given to VRO, the plaintiff at Markman. [00:10:13] Speaker 03: And I think this is really the crux here. [00:10:17] Speaker 03: He said, presenting the raw output data, performance parameters, [00:10:22] Speaker 03: in the absence of any display based on the difference between the first and second performance parameters does not satisfy this claim element. [00:10:31] Speaker 03: That's at Appendix 9309. [00:10:34] Speaker 03: He also said, offloading the comparison of performance parameters to a human does not satisfy the plain and ordinary meaning of the claim language. [00:10:43] Speaker 03: That's at Appendix 9309. [00:10:49] Speaker 05: When I look at figure two, and I listen to your argument regarding difference in performance parameters, [00:11:02] Speaker 05: you claim compels you to make a mental comparison. [00:11:09] Speaker 05: And I'm not persuaded that even if it does that, that you don't have a difference in performance parameters, that that's not displayed. [00:11:21] Speaker 05: It just seems to me that you're bringing into the claim a function that's not in the claim. [00:11:29] Speaker 05: And that's an algorithm of some sort that takes you beyond just simply displaying the differences in performance parameters. [00:11:40] Speaker 03: So your honor, the construction? [00:11:45] Speaker 05: Back to your race analogy, you not only want there to be a display as to the [00:11:50] Speaker 05: the time that each runner ran the race, and maybe even a display that shows one runner ahead of another. [00:11:59] Speaker 05: You want to see them up on the podium. [00:12:03] Speaker 03: Right. [00:12:03] Speaker 03: You want to see the ranking. [00:12:05] Speaker 05: And that's because the- But where does the claim take us, sir? [00:12:09] Speaker 03: So the claim, OK, so here's where the claim takes us there. [00:12:13] Speaker 03: The claim says a performance comparison. [00:12:15] Speaker 03: First of all, the court's construction says that the visual display of the performance has to be based on a difference between the performance parameters. [00:12:25] Speaker 03: There has to be a difference between the parameters, and then you display it. [00:12:28] Speaker 01: Doesn't it say you have to display the difference? [00:12:30] Speaker 03: You have to display the difference based on the difference between the first and second parameters. [00:12:36] Speaker 01: In your view, is that that's [00:12:38] Speaker 01: I get well, you can answer, Judge Raina. [00:12:41] Speaker 01: But I understand, I have the same trouble that Judge Raina does, that I have a hard time understanding that when you display 60 and 40, that's not displaying the difference in and of itself. [00:12:51] Speaker 03: And it comes from, again, from the specification, column 11, where it talks about. [00:12:57] Speaker 05: What line are you looking at? [00:12:58] Speaker 05: Pardon me? [00:12:58] Speaker 05: Column 11. [00:12:59] Speaker 03: Sure. [00:13:00] Speaker 03: Column 11, line 34. [00:13:02] Speaker 03: That's the key, Your Honor. [00:13:06] Speaker 03: It talks about. [00:13:08] Speaker 03: Individual competitor data, which is the performance parameters, and then it says at line 34, and their comparative performance information. [00:13:21] Speaker 03: The only information in figure two that's comparative performance information is showing the difference. [00:13:27] Speaker 03: Who's winning the race? [00:13:28] Speaker 01: If you display more than one person's data, why would that not inherently include displaying their comparative performance information? [00:13:39] Speaker 03: I'm sorry, could you say that again, Judge? [00:13:41] Speaker 01: If you're displaying more than one person's data, why would you not be also inherently displaying their competitive performance information? [00:13:50] Speaker 03: Because the claim and the specification are clear, that you're taking the performance parameters and you're calculating a difference between the two. [00:14:00] Speaker 03: Just putting up raw information from each competitor doesn't meet the claim. [00:14:06] Speaker 01: Where does it say that? [00:14:08] Speaker 03: It says it right in column 11. [00:14:10] Speaker 03: Column 11. [00:14:11] Speaker 01: Well, it does say, it says, you give data on the individual competitors and their comparative performance information. [00:14:19] Speaker 01: You might be reading a little bit into that and saying, well, what that means is the comparative performance information has to be something. [00:14:26] Speaker 01: It can't be just the data. [00:14:28] Speaker 01: And I look at it and I see a difference. [00:14:29] Speaker 01: But I'm afraid, is there something else besides that one sentence that you're relying on? [00:14:34] Speaker 03: Sure. [00:14:34] Speaker 03: Look at figure 10 of the patent. [00:14:37] Speaker 03: Sorry, sorry figure six figure six of the patent a box three three zero Says logic to compare local and remote performance parameters It's right in figure six. [00:14:52] Speaker 03: It's box three three. [00:14:53] Speaker 03: Oh that's what the [00:14:56] Speaker 03: what the patent is talking about. [00:14:59] Speaker 03: And it's clear from the claim. [00:15:00] Speaker 03: You're displaying a performance comparison in response to the raw data. [00:15:05] Speaker 03: It's in response to the raw data. [00:15:07] Speaker 03: So this box 330 is the logic to compare the local and remote parameters. [00:15:13] Speaker 03: So you're comparing those parameters, and then you're calculating a difference in performance and then displaying that. [00:15:19] Speaker 03: And again, I think even under which regardless of what the district court judge, again, the point here is [00:15:26] Speaker 03: Our expert put in evidence that Waterson doesn't meet the claim. [00:15:30] Speaker 03: Peloton's own expert said, if you have to offload, if you have to calculate in your own head, it doesn't meet the claim. [00:15:37] Speaker 03: That's the record. [00:15:38] Speaker 06: Let's hear from Mr. Berman, and we'll give you two minutes for a bottle. [00:15:44] Speaker 04: Thank you, Your Honor. [00:15:45] Speaker 06: Mr. Berman, you've just allocated a short amount of time for yourself. [00:15:50] Speaker 06: So let me get right to the issue, the duty to defend. [00:15:56] Speaker 06: You contracted to build a frame for Peloton, and you delivered. [00:16:05] Speaker 06: And the contract's over. [00:16:07] Speaker 06: And then you bought a patent and sued them under it. [00:16:11] Speaker 06: And you said, you argued that the duty to defend doesn't apply because the contract is open. [00:16:20] Speaker 06: This sounds like the boy who shot his parents and asked for mercy from the court on the grounds that he's an orphan. [00:16:28] Speaker 04: So Your Honor, and I understand where Your Honor's question is coming from. [00:16:34] Speaker 04: So that's one of the arguments we make. [00:16:36] Speaker 04: But even before then, our argument is that the district court's application and interpretation of the party's contracts to impose on [00:16:47] Speaker 04: Valencia Design Group a broader duty to defend than its own design work is divorced from the actual language of the contracts as a whole. [00:16:58] Speaker 01: I want to ask you about a statement you have in your brief on page 25. [00:17:02] Speaker 01: You state without any case law or any legal support that the duty to defend is not a representation or warranty under section 8.3b. [00:17:17] Speaker 01: What is your basis for saying that? [00:17:20] Speaker 01: Because it doesn't seem correct to me. [00:17:24] Speaker 04: So the duty to defend is in... Hey, why isn't that a representation? [00:17:32] Speaker 00: What is your view of what a representation or warranty is that you could say that? [00:17:36] Speaker 04: So the representations of warranties are listed in the contract itself. [00:17:40] Speaker 04: The duty to defend, the duty to identify. [00:17:42] Speaker 01: It is in the contract itself. [00:17:47] Speaker 04: There is a provision of the contract that's an indemnification provision, which also references a duty to defend. [00:17:53] Speaker 04: There's separate sections of the contract of representations and warranties. [00:17:56] Speaker 04: So I don't believe it was a legal statement we were making that required [00:18:04] Speaker 04: a citation to case law, it's simply accurate to state that the way the contract is structured, there are representations and warranties, and then there's some indemnification obligation and duty to defend. [00:18:15] Speaker 01: So you think you define those words, representation and warranties, to have a special meaning? [00:18:22] Speaker 04: I think that's accurate, that they do have, well, there's special [00:18:27] Speaker 04: I mean, they are what they are. [00:18:27] Speaker 04: They're representations and warranties. [00:18:29] Speaker 04: It's not a duty to defend. [00:18:31] Speaker 04: It's not a representation and warranty. [00:18:34] Speaker 04: It's an obligation imposed. [00:18:36] Speaker 04: Well, first of all, it's not. [00:18:37] Speaker 01: I mean, representation and warranty is pretty broad. [00:18:39] Speaker 01: I represent. [00:18:40] Speaker 01: I will defend you if you're sued for infringement. [00:18:43] Speaker 04: But in the section of the contract. [00:18:46] Speaker 01: Just because it doesn't say I represent doesn't mean it's not a representation or a warranty. [00:18:50] Speaker 04: Well, here's what I would say about that. [00:18:58] Speaker 04: There's a section of the contract referred to as representations and warranties. [00:19:02] Speaker 04: Each party makes specific representations and warranties. [00:19:05] Speaker 04: These contracts aren't unique in that respect. [00:19:08] Speaker 04: And I think just as a matter of contract interpretation, to encompass every obligation in a contract as a representation and warranty, I don't believe that's the way contracts are interpreted. [00:19:24] Speaker 04: Not everything is a representation and warranties. [00:19:26] Speaker 04: I'm not saying it's not a legal obligation. [00:19:29] Speaker 04: It is a legal obligation and the district court interpreted the scope of that obligation to the duty to defend, but that doesn't... Is this the section that says representation and warranties? [00:19:39] Speaker 04: And so I want to make sure I'm looking at the same contract as you are looking at. [00:19:44] Speaker 04: So they're the two contracts. [00:19:46] Speaker 04: Both have sections. [00:19:47] Speaker 04: So I'll refer to both. [00:19:50] Speaker 04: So in the 2012 contract. [00:19:52] Speaker 01: I was just more interested in 2014, right? [00:19:55] Speaker 04: OK. [00:19:56] Speaker 04: So in the 2014 contract. [00:19:59] Speaker 04: I didn't type, but I did. [00:20:21] Speaker 06: division here that extends beyond the termination of the contract. [00:20:35] Speaker 06: performance after termination of the contract. [00:20:39] Speaker 06: And an infringement claim can be made after the termination of the contract, and so necessarily the duty to defend survives the termination of the contract. [00:20:54] Speaker 04: So, Your Honor, it's section 8.2, Your Honor. [00:20:57] Speaker 04: I apologize. [00:20:58] Speaker 04: And I hear, Your Honor, you're going back to the original question, which is, does the duty to defend extend beyond the term of the contract? [00:21:08] Speaker 04: And we've presented arguments that if reading the contract as a whole, there are provisions which reference obligations that survive and don't survive. [00:21:18] Speaker 04: And I can hear the skepticism in Your Honor's question [00:21:21] Speaker 04: I'm inferring that Your Honor believes that that obligation necessarily survives. [00:21:30] Speaker 04: And even if that were the case, one still has to interpret the contract to encompass a duty to defend that goes beyond Valencia Design Group's own design work. [00:21:45] Speaker 04: The primary argument making is that that is not a fair interpretation or application of the contract as a whole if one considers the relationship of the parties. [00:21:55] Speaker 04: And the clearest evidence of that is Peloton's own behavior. [00:22:00] Speaker 04: There is other intellectual property litigation surrounding the Peloton spike system. [00:22:07] Speaker 04: And they did not submit any of those litigations to the Valencia Design Group to defend. [00:22:12] Speaker 04: And that's because even they understood that this contract didn't encompass the duty to defend anything other than Valencia Design Group's own work. [00:22:20] Speaker 06: Counsel, you allocated the majority of your time to your partner here. [00:22:23] Speaker 06: Thank you, Your Honor. [00:22:24] Speaker 06: We'll give you a minute for rebuttal later. [00:22:26] Speaker 06: Thank you. [00:22:28] Speaker 06: Mr. Shorten, can you remain accurately? [00:22:33] Speaker 02: Yes, Your Honor, you did. [00:22:34] Speaker 02: Thank you. [00:22:34] Speaker 02: It's tall, short, gin-like alcohol. [00:22:37] Speaker 02: Thank you, Your Honor. [00:22:40] Speaker 06: These days, genealogy is very popular. [00:22:44] Speaker 02: Thank you, Your Honor, for that. [00:22:45] Speaker 02: I appreciate that. [00:22:47] Speaker 02: Good morning, Your Honors, and may it please the court, Steve Shorchin from the firm Shepherd and Mullen, on behalf of the Appellee and Cross Appellant Peloton Interactive. [00:22:58] Speaker 02: Your Honors, I'd like to dive right into some of the questions Judge Stoll and Judge Reyna asked counsel for VR optics, if that's appropriate from the court's perspective. [00:23:06] Speaker 02: Because I think those questions laser-focused on the issue before the panel and result in affirming the district court's decision. [00:23:14] Speaker 02: One matter that hasn't been addressed so far, Your Honor, is the question of waiver. [00:23:19] Speaker 02: As counsel for VR Optics stated during their prepared statements, in this case, Judge Etkin in the district court adopted verbatim the claim construction proposed by VR Optic for the single limitation at issue in this appeal. [00:23:34] Speaker 02: Now on appeal, having lost on summary judgment, [00:23:38] Speaker 02: and had their expert excluded, they seek this court, or they request this court, to adopt a new construction that adds a significant limitation to the claim construction, which Judge Stoll questioned about. [00:23:53] Speaker 05: Part of the argument for the new claim construction is that your expert changed the opinion. [00:24:00] Speaker 02: Your Honor, with all due respect to opposing counsel, that is not a fair characterization of what Mr. Rawls did on behalf of Peloton. [00:24:08] Speaker 02: What Mr. Rawls did, and the court will find that Appendix 9309 and the associated two pages cited after that by VR Optics, he was discussing what was called a scorecard. [00:24:21] Speaker 02: And in some of the Peloton devices, for example, the Accused Peloton Treadmill, there can be a scorecard that demonstrates just your specific performance metrics. [00:24:31] Speaker 05: I want to hear what you're saying, but can you answer the question whether your expert [00:24:36] Speaker 05: agreed with the claim construction that VR was seeking clarification on? [00:24:42] Speaker 02: Our expert followed the court's construction. [00:24:45] Speaker 02: Our expert absolutely disagreed. [00:24:48] Speaker 02: And our brief points out where, as does appendix 10277 through 78, that our expert [00:24:57] Speaker 02: did not believe that the claims required, as they now seek, no mental comparison by the user is required, Judge Raina. [00:25:06] Speaker 02: And so the section that is cited by VRO in their brief, in that section of our expert's report, he is discussing a limited application of the Peloton treadmill in which, for example, hypothetically, Judge Raina, your individual performance parameter is displayed and just that information. [00:25:23] Speaker 02: And what our expert actually said in his report, and the court may find this at Appendix 9309, presenting the raw output data, this is the important part, in the absence of any display on the difference between the second and first performance parameters does not satisfy the claim limitation or the claim element, he said. [00:25:45] Speaker 02: He then said, alternatively, a graphical representation could be presented to each user. [00:25:49] Speaker 02: And those are the elliptical dots around a track. [00:25:52] Speaker 06: Counsel, you might tone down your voice a little. [00:25:55] Speaker 02: I'm sorry, Your Honor. [00:25:55] Speaker 02: I actually have a hearing issue, and I sometimes speak loudly because I don't hear well. [00:26:00] Speaker 02: I apologize, Your Honor. [00:26:01] Speaker 02: Thank you for noticing that. [00:26:03] Speaker 02: Appendix 10-277 through 278, which is the remainder of our expert's report that was submitted on summary judgment, [00:26:14] Speaker 02: In discussing figure two, which is the figure that counsel discussed with Judge Stoll and the specification Judge Reina in line 34 that he discussed with you, Mr. Rall said, the textual information provides the exact gap, 0.1 miles or 0.6 seconds, while the graphic representation of the elliptical track provides the visual representation of the same gap. [00:26:40] Speaker 02: He then continues at appendix page 10279 to discuss the specifications figures 3 and 4 and figures 5a and 5b, which the panel saw we briefed in our discussion about why the new clamp construction is not appropriate. [00:26:56] Speaker 02: And with respect to those particular embodiments of claims one and claim six, he stated, with respect to figures three and four, it should be noted that all that's displayed in this case is the graphic representation of the gap between competitors. [00:27:10] Speaker 02: The textual information is not present or required to satisfy the claim limitation. [00:27:15] Speaker 02: And the court may recall from the specification figures 5A and 5B, which are intended to show a particular embodiment of dependent claim three. [00:27:24] Speaker 02: Dependent claim 3, which depends from asserted claim 1, specifies that the display could be a virtual reality headset in one embodiment. [00:27:33] Speaker 02: Figures 5A and 5B are intended to show, according to the spec, what should be or could be displayed to one using a VR headset, were they to look forward, to the side, or behind themselves. [00:27:45] Speaker 02: And that's what figures 5A and 5B show. [00:27:47] Speaker 02: So Judge Raina, in response to your direct question, our expert expressly [00:27:51] Speaker 02: disagreed with the construction now being offered. [00:27:54] Speaker 01: So just to make sure I understand, the point is that if there is an embodiment in which the user has to look behind them to see who's behind them and look in front of them to see who's in front of them for this comparative information, that that also takes mental effort. [00:28:07] Speaker 01: So that claim construction can't be correct. [00:28:09] Speaker 02: Your Honor, that is exactly correct. [00:28:11] Speaker 02: And that is precisely why, focusing back, Judge Raina, to your question, we start with the claim language that was issued by the office. [00:28:19] Speaker 02: The claim language that issued here, and it's regardless of whether it's independent claim one and six, there's a minor difference in the language. [00:28:25] Speaker 02: And the difference is whether the display is driven or controlled because of the way the claims begin in their preambles. [00:28:32] Speaker 02: But the claim language for both is the same and relevant portion. [00:28:36] Speaker 02: They require that a performance comparison between the fitness equipment and at least one remote fitness equipment is visually displayed. [00:28:46] Speaker 02: That's the claim language that issued. [00:28:47] Speaker 02: A performance comparison. [00:28:49] Speaker 02: is visually displayed. [00:28:51] Speaker 02: As we set out in our brief, the principal problem, well, there's two primary problems with appellant VR optics appeal today. [00:29:01] Speaker 02: First is in seeking a new construction. [00:29:04] Speaker 02: They're not simply seeking to adopt the court's construction. [00:29:07] Speaker 02: They say that initially. [00:29:09] Speaker 05: But then if you look at their argument, they're just clarifying the construction. [00:29:13] Speaker 05: They're not seeking a new construction. [00:29:15] Speaker 02: Your Honor, respectfully, the court's decision in the Solvay case answered the question of when is a construction a new construction? [00:29:26] Speaker 02: And the court held in Solvay that when the construction seeks a material change, it's new. [00:29:33] Speaker 02: Adding a limitation here such that no mental comparison by the user is required is inappropriate for two reasons. [00:29:39] Speaker 02: One, it's plainly not contemplated by the claim language or by the specification or by the alternative embodiments, as we point out in our brief, including figures 3, 4, 5A, 5B, and dependent claims. [00:29:51] Speaker 02: But more importantly, it adds materially to the claim construction. [00:29:54] Speaker 02: And the proof of that is in the pudding, in that without getting a new construction from this court, [00:30:01] Speaker 02: they can't deny that the district court properly entered summary judgment. [00:30:05] Speaker 02: And so the very fact that they require a new construction from this court, adding such that no mental comparison by the user is required, is necessary to overturn the district court's judgment, is an indication under Solvay that that is a new construction. [00:30:23] Speaker 02: Respectfully, the decision in Lizard Tech is also, I think, helpful here. [00:30:29] Speaker 02: In that case, the court said, where the party came forward having proposed the construction of the district court and lost on summary judgment, as VR Optics has here, they then argued that, well, the district court changed its interpretation of the claim in granting summary judgment. [00:30:46] Speaker 02: The court here said they could discern no change in the way the district court applied its construction, including its summary judgment. [00:30:54] Speaker 02: That same result is here in Judge Edkin's district court opinion. [00:30:58] Speaker 02: In that opinion, he expressly states, this is the construction I pointed out. [00:31:03] Speaker 02: I discussed figure two in my Markman construction. [00:31:06] Speaker 02: I talked about the elliptical dots. [00:31:09] Speaker 02: I'm applying the same construction. [00:31:11] Speaker 02: And as in the Lizerteck case, there's no discerned change by the district court in how he adopted or interpreted his construction. [00:31:19] Speaker 02: So as a first point, VR Optics's [00:31:22] Speaker 02: frankly, only argument to reverse the district court's grant of summary judgment is waived because it is a new construction. [00:31:30] Speaker 02: But as we've discussed, even if it is not waived, the new construction is improper because the figures that we've just talked about, 3, 4, 5A, 5B, dependent claim 3, and the VR headset all contemplate at some level a user having to make some type of mental comparison. [00:31:51] Speaker 02: In rejecting and excluding VRO's expert, Mr. Lenz, and the court may find this in the district court summary judgment order at appendix 66, the court actually addressed this argument. [00:32:09] Speaker 02: In other words, that in order to properly construe claim one and six, there must be no mental activity by a user required. [00:32:19] Speaker 02: And the court expressly considered this, Appendix 66, in the second full paragraph, when he excluded Mr. Lanz and said, the display of a relative position of each competitor on a simulated track is a spatial representation of the competitor's relative performance. [00:32:39] Speaker 02: In short, it's a performance comparison, just as ordinal ranking is a numerical representation of the competitor's relative performance. [00:32:46] Speaker 02: And the next sentence is the key. [00:32:48] Speaker 02: The embodiment described in the Watterson patent no more requires a user to manually execute the comparison than any other conceivable display of relative performance. [00:33:01] Speaker 02: Judge Stoll, this directly answers your question, where you said, if I have to turn around in a virtual headset and you behind me, the pack of riders as displayed in figure 5B or the pack of riders in front of me as displayed in figure 5N, the specification, doesn't that inherently require me to have some mental activity? [00:33:19] Speaker 02: It exactly does, which is why the construction is improper and why the construction is ignoring other embodiments and why Judge Etkin in the district court of the Southern District of New York properly considered this very argument and rejected it in the sentence I've just read from Appendix Page 66. [00:33:35] Speaker 02: The only authority that VR Optics presents to this court for its narrowing construction [00:33:41] Speaker 02: is what was line 34, Judge Raina, just discussed with you in connection to figure 2. [00:33:47] Speaker 02: That argument, Your Honor, respectfully is inappropriate as well. [00:33:51] Speaker 02: And the reason it's inappropriate is it relies on too narrow a reading of the specification. [00:33:55] Speaker 02: The very line that Mr. Gannon pointed out to the court in response to your question, Judge Raina, actually says this. [00:34:01] Speaker 02: In discussing the display 200, so figure 2 is of the display of claim 1 and 6, [00:34:09] Speaker 02: In discussing display 200, in this embodiment, a display may include a graphic image of a track, 202, such as an elliptical running track that is 0.025, quarter miles in circumference. [00:34:23] Speaker 02: Relatively simplistic circles or dots 204 and 206 may be provided to illustrate the respective competitors. [00:34:31] Speaker 02: This is the language they next hinge on. [00:34:34] Speaker 02: Additional textual information, 208 and 210, may be provided to give more detailed data on the individual competitors and their comparative performance information. [00:34:46] Speaker 02: That line from the specification, Judge Raina, that was discussed with you specifically [00:34:50] Speaker 02: doesn't say that is the only embodiment. [00:34:53] Speaker 02: It is not a disclaimer. [00:34:55] Speaker 02: It is not a disavowal. [00:34:56] Speaker 02: It is not lexography. [00:34:58] Speaker 02: It is none of the things that can be used to definitively say that the claim language as issued by the Patent Office, which is much broader, that a performance comparison is visually displayed, in fact, was intended to exclude the other embodiments in figures 3, 4, 5A, and 5B. [00:35:15] Speaker 01: Would you say that the following sentence is also helpful where it talks about by way of example the information relating to the forms of the person may be displayed and then they have a lot of different ways of doing that. [00:35:27] Speaker 01: Would that also support your point? [00:35:29] Speaker 01: It seems to me it would. [00:35:30] Speaker 02: Your Honor, I apologize. [00:35:32] Speaker 02: I'm leaning in again. [00:35:33] Speaker 02: I don't hear very well. [00:35:34] Speaker 02: I heard, Your Honor, I believe. [00:35:35] Speaker 02: Just apologies for the body language. [00:35:36] Speaker 02: Yes, Your Honor, it does. [00:35:38] Speaker 02: And as the court knows, one cannot selectively pick a single embodiment from the specification imported into the limitation and then require that as construction. [00:35:47] Speaker 02: That's black letter law. [00:35:48] Speaker 02: I don't need to cite the court, certainly, to that law, which is exactly what's happening today. [00:35:54] Speaker 02: Your Honors, with two minutes remaining, [00:35:58] Speaker 02: If I may, if the court deems it appropriate, may I address the duty to defend questions, Judge Laurie, that you were asking potentially? [00:36:07] Speaker 02: The court is correct in our view that the 2014 agreement broadly granted to Peloton a duty to defend and hold harmless. [00:36:18] Speaker 02: That duty may be found in section 7.1 of the 2014 agreement. [00:36:24] Speaker 02: One of the things that I noticed as I prepared for oral argument is that the two, the appellants and appellee, Peloton, used the same document but different versions of the summary judgment evidence because both parties submitted it. [00:36:36] Speaker 02: So I'm going to provide the court with two appendix citations so that the court may both track VR Optics's brief and Peloton's brief in response. [00:36:44] Speaker 02: So section 7.1, we cited it at appendix 3770. [00:36:50] Speaker 02: Appellant VR Optics cited it at appendix 4369. [00:36:54] Speaker 02: That claim, Judge Stoll, as you noted, is broad. [00:36:58] Speaker 02: That indemnity is to indemnify, defend, and hold harmless. [00:37:02] Speaker 02: It has no other limitations. [00:37:04] Speaker 02: And importantly, in paragraph B on the next page of the record appendix, it applies to any claim [00:37:10] Speaker 02: arising out of or relating to any violation or alleged violation, any violation or alleged violation, of any intellectual property rights regarding any of the bike intellectual property. [00:37:25] Speaker 02: Judge Dolby, it was you that asked, doesn't the claim language, I'm sorry, doesn't the contract language rather expressly survive? [00:37:32] Speaker 02: It does, Your Honor. [00:37:33] Speaker 02: In paragraph 5.6 of the agreement, which the court may find in appendix 4368, [00:37:39] Speaker 02: or at appendix 3769. [00:37:41] Speaker 02: And the survival of rights in the agreement expressly states that the termination of the agreement shall be without prejudice to, and this is subparagraph C, rights under any other provision of this agreement, which expressly and necessarily calls for performance after contract termination. [00:38:01] Speaker 06: What about expressly and necessarily? [00:38:04] Speaker 06: Expressly. [00:38:06] Speaker 02: Yes, sir. [00:38:07] Speaker 06: Is that clear here? [00:38:08] Speaker 02: Yes, sir, I believe that it is. [00:38:10] Speaker 02: And the reason it is is that in the representation and warranty that was given by Valencia Design Group to Peloton, and your honors may find this in section 8.2a of the 2014 agreement at appendix page 4370 or appendix page 3771, the representation and warranty, Judge Laurie, that was provided by Valencia was that the bike intellectual property does not [00:38:37] Speaker 02: And this is the important language, Your Honor, and will not in French. [00:38:41] Speaker 02: And so that representation that the intellectual property and the design provided by Valencia Design Group was that it would not in the future. [00:38:50] Speaker 02: It did not and would not infringe. [00:38:52] Speaker 02: And as a result, that clause under the survival language, Your Honor, expressly and necessarily survives. [00:38:59] Speaker 02: I'd like to address briefly. [00:39:00] Speaker 01: How does that then bring us back to the other language in the contract about the duty to defend? [00:39:08] Speaker 01: I mean, in other words, you're relying on the representation and warranty in section 8.283 to tie back to the duty to defend. [00:39:18] Speaker 01: Do I understand that correctly? [00:39:20] Speaker 01: Or are you saying the duty to defend is itself a representation or warranty? [00:39:24] Speaker 02: Both. [00:39:25] Speaker 02: Frankly, Your Honor, both. [00:39:26] Speaker 02: Both are correct. [00:39:26] Speaker 01: How do you respond to opposing counsel's argument that, in fact, [00:39:30] Speaker 01: The duty to defend is not a representation of warranty, because it's not listed expressly under Section 8.2, which is now caps, representations, and warranties. [00:39:40] Speaker 02: Because the Defense and Indemnity Clause, which is in paragraph 7.1 of the agreement, 7.1a, appendix 3770, states that Valencia agreed to indemnify and hold harmless peloton against any claim [00:39:55] Speaker 02: And then Section B, arising out of a relating to any violation or alleged violation of the intellectual property rights. [00:40:02] Speaker 02: So there's a symmetry Judge Stoll between the representation and warranty language and the duty to defend, and that they both contemplate an alleged violation in the first section, and in the second, that the Peloton bike did not and will not in the future infringe on any intellectual property rights. [00:40:19] Speaker 01: Importantly, and then- Do you think that the clause, the duty to defend clause itself, is a representation or warranty? [00:40:27] Speaker 02: I do, Your Honor. [00:40:28] Speaker 02: And I think it is. [00:40:29] Speaker 02: But I don't know that it's necessary to address that question or to find that affirmatively in order to affirm the district court's decision. [00:40:37] Speaker 01: You're saying there could be an alternative logic. [00:40:39] Speaker 01: But what different logic would be, even though 8.3b says representations and warranties, [00:40:45] Speaker 01: It's not capitalized. [00:40:46] Speaker 01: It's not. [00:40:47] Speaker 01: I'm sorry, I speak louder. [00:40:48] Speaker 01: 8.3B, when it refers to the language representations and warranties, that's not capitalized as you might if you were trying to use a specialized meaning of that word. [00:41:01] Speaker 01: And it also says, in this agreement, representation and warranties in this agreement, not in this section. [00:41:10] Speaker 01: What do you think of that, those points? [00:41:13] Speaker 02: Your Honor. [00:41:17] Speaker 02: I'm referring to the text of the representation and warranty clause in the agreement, which is on appendix page 3771, or alternatively, appendix 4370. [00:41:27] Speaker 02: 4370, Your Honor. [00:41:29] Speaker 02: Appendix 4370. [00:41:30] Speaker 01: I'm looking at A4371. [00:41:34] Speaker 01: And I'm just asking you if the language in 8.3b that refers to representations and warranties in lower case includes the duty to defend. [00:41:47] Speaker 01: I believe it. [00:41:48] Speaker 01: I note that it's in lower case, so it doesn't seem to be a defined term. [00:41:51] Speaker 01: And in addition, I note that it says, [00:41:54] Speaker 01: representations and warranties contained in this agreement. [00:41:58] Speaker 01: It doesn't say contained in this section. [00:42:00] Speaker 01: So I'm asking you what you think of this point I'm making. [00:42:03] Speaker 02: Your Honor, I believe you're correct. [00:42:05] Speaker 02: Because it doesn't invoke the defined terms of the representation and warranty provision, and it broadly invokes the agreement. [00:42:11] Speaker 02: The duty to defend expressly survives under section 8.3b. [00:42:18] Speaker 06: Counsel, we've given you extra time because the opponents ran over, but I think we have your case. [00:42:25] Speaker 02: Thank you, Your Honor. [00:42:27] Speaker 06: Mr. Gannon, you have two minutes, and then Mr. Berman, one minute. [00:42:32] Speaker 03: Thank you, Your Honor. [00:42:33] Speaker 03: Let's go back to what Peloton's expert admitted about the claim construction, Appendix 9308. [00:42:40] Speaker 03: Starting on paragraph 22, he talks about the construction given by the court [00:42:46] Speaker 03: logic configure to drive the display to visually display a difference in performance between the equipment based on the difference between the first and second parameters. [00:42:56] Speaker 03: Then, farther down on paragraph 22, he says, this means that both parts determining a difference between the first and second parameters and driving the display to visually display a difference in performance based on that difference are structure function of the exercise device itself. [00:43:16] Speaker 03: Okay, so now moving on to the next page of his report. [00:43:20] Speaker 03: This is Appendix 9309 at the top. [00:43:23] Speaker 03: You can see he's discussing raw performance parameters. [00:43:27] Speaker 03: He's talking about one traveler going at five miles per hour and another traveler going at 7.5 miles per hour. [00:43:34] Speaker 03: And what he says in the middle of page 9309 [00:43:38] Speaker 03: is that presenting the raw output data, like how fast you're going, presenting the raw output data in the absence of any display based on the difference between the first and second performance parameters does not satisfy that claim element. [00:43:55] Speaker 03: How could the court possibly have ruled against us on summary judgment when their experts said displaying raw performance parameters only doesn't meet the claim? [00:44:06] Speaker 03: That's one admission by their expert. [00:44:09] Speaker 03: What else does he say? [00:44:10] Speaker 03: He says, again, on page 9309, the claim itself requires the function of calculating the difference. [00:44:16] Speaker 03: He talks, and then he says. [00:44:18] Speaker 01: Could one possibility be that the district court didn't think this was correct as a matter of claim construction? [00:44:24] Speaker 03: The court made no indication at all that it was changing its construction or that its construction was incorrect. [00:44:30] Speaker 01: I wasn't suggesting that it thought its construction was incorrect. [00:44:33] Speaker 01: I was suggesting that maybe it thought that its construction didn't support this idea that is in the expert report on page 9309. [00:44:42] Speaker 03: Well, again, Your Honor, when you have our expert saying one thing about the construction and their expert saying, if you're offloading the comparison to the user that doesn't meet the claim, it seems to me there's an issue of fact. [00:44:56] Speaker 03: And one last point. [00:44:57] Speaker 00: Is the claim construction a question of law? [00:44:59] Speaker 03: Planned construction is a question of law, Your Honor, yes. [00:45:03] Speaker 03: One last point I'd like to make that I didn't get out, again on this same page, 9309, the court said, [00:45:10] Speaker 03: If the difference is not calculated, determined by the exercise device itself, and is used as a basis of a comparative display, then the claim element is not satisfied. [00:45:22] Speaker 03: So their experts gave three different reasons why the court stated construction isn't satisfied by Waterson. [00:45:31] Speaker 06: Thank you, counsel. [00:45:33] Speaker 06: Thank you. [00:45:34] Speaker 06: Mr. Berman has a minute if he wishes to use it. [00:45:39] Speaker 04: Thank you, Your Honor, just very quickly. [00:45:43] Speaker 04: It's a black letter rule of law that contracts have to be interpreted as a whole. [00:45:47] Speaker 04: When a contract contains representations and warranties, a section called representations and warranties, then interpreting that contract as a whole, later references to representations and warranties, I think it's only fair to understand that, to refer to the section of the contract that specifically includes the representations and warranties. [00:46:06] Speaker 04: A duty to defend is not, I've seen lots of contracts in my career, it's an obligation. [00:46:11] Speaker 04: But it's not a representation or a warranty. [00:46:13] Speaker 04: It's not a representation of fact. [00:46:15] Speaker 04: It's not a warranty that something exists. [00:46:17] Speaker 04: It's just legally a different concept. [00:46:21] Speaker 06: But the duty to defend is encompassed within the survival provision. [00:46:26] Speaker 04: Well, it is, and I was pairing those questions at the beginning, but Mr. Shortkin addressed it. [00:46:32] Speaker 04: And so let me go directly to where Your Honor started, which is if we're going to interpret this contract [00:46:37] Speaker 04: Strictly, what's good for the goose is exhaust for the gander. [00:46:43] Speaker 04: The word is expressly. [00:46:45] Speaker 04: There is not an express provision that the duty to defend survives the contract. [00:46:50] Speaker 04: So if Mr. Shortkin wants a very, very strict interpretation of this contract, then he needs to be able to point to a place in this contract where it expressly survives. [00:46:59] Speaker 04: There isn't one. [00:47:00] Speaker 04: I believe the court needs to interpret this contract as a whole, which includes this issue that the district court avoided. [00:47:08] Speaker 04: The district court didn't decide on an interpretation of the phrase bike intellectual property. [00:47:14] Speaker 04: The only way that phrase can be understood is in the context of the entire contract, which was that Valencia Design Group was providing specific services and that it was warranting its own design services. [00:47:25] Speaker 04: fundamentally unfair and inaccurate to make a small design firm responsible for the entire multi-billion dollar Peloton system. [00:47:33] Speaker 04: There's no consideration for it. [00:47:35] Speaker 04: There is no expectation of the parties as reflected in Peloton's own conduct. [00:47:40] Speaker 04: And it simply is an incorrect interpretation and application of this contract and the duty to defend. [00:47:45] Speaker 06: Thank you, counsel. [00:47:46] Speaker 06: I don't think there's anything to respond to, so the case is submitted.