[00:00:00] Speaker 03:
The first case is applied in biokinetics versus CVS and Mueller Sports Medicine, 2022, 2038, 39, and 40.

[00:00:11] Speaker 03:
Mr. Katz.

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

[00:00:18] Speaker 00:
Robert Katz on behalf of Applied Biokinetics, LLC, or ABK.

[00:00:23] Speaker 00:
ABK had constitutional standing here.

[00:00:25] Speaker 00:
ABK adequately pleaded that it owned the Pattinson suit.

[00:00:30] Speaker 00:
ABK adequately alleged that it had the sorts of rights that confer Article III standing.

[00:00:38] Speaker 00:
ABK pleaded that CVS infringed its patent rights.

[00:00:43] Speaker 00:
ABK also adequately pleaded that it suffered an injury in fact.

[00:00:47] Speaker 00:
The district court was in a position to redress that injury.

[00:00:52] Speaker 00:
That is sufficient to confer constitutional... But doesn't it belong in Wisconsin?

[00:00:57] Speaker 00:
No, it certainly does not.

[00:01:00] Speaker 03:
If you had standing and the right to sue, according to the agreement, doesn't it belong in Wisconsin?

[00:01:08] Speaker 00:
No, I'd be happy to talk about the form selection clauses.

[00:01:11] Speaker 00:
There were two form selection clauses, and each clause actually consists of three sentences.

[00:01:17] Speaker 00:
The first one is a governing law sentence.

[00:01:21] Speaker 00:
At the beginning of Sentence 2 and 3, it actually refers to litigation under the agreement.

[00:01:31] Speaker 00:
sentenced to for venue and jurisdiction, it refers to under the agreement.

[00:01:37] Speaker 00:
There was no litigation under the license agreement.

[00:01:40] Speaker 00:
The litigation in this case was between ABK and CVS.

[00:01:45] Speaker 00:
There were no claims of breach between ABK and Mueller Sports Medicine or MSM.

[00:01:52] Speaker 00:
There were absolutely no claims being exchanged between the two.

[00:01:57] Speaker 00:
So for that reason alone, just under

[00:02:01] Speaker 00:
pure contract interpretation, neither one of the forum selection clauses would apply.

[00:02:06] Speaker 00:
Of course, ABK also alleged and is pleading that the license had been terminated and the forum selection clause would not survive termination.

[00:02:18] Speaker 04:
So that would be... Isn't that an issue for the Wisconsin court to address?

[00:02:24] Speaker 04:
Termination?

[00:02:25] Speaker 00:
No, the Wisconsin court would not be the court that would need to decide whether termination occurred just to figure out whether the form selection clauses applied.

[00:02:38] Speaker 00:
Courts regularly

[00:02:41] Speaker 00:
When they see a foreign selection clause, the first question that they need to address is, does it apply to my case?

[00:02:47] Speaker 00:
And is it in effect?

[00:02:50] Speaker 00:
And that's before they get into the merits of any underlying dispute.

[00:02:54] Speaker 01:
I'm a little unclear on what you're saying.

[00:02:56] Speaker 01:
You started off by saying, did you allege that the contract had been terminated, that the agreement had been terminated?

[00:03:03] Speaker 00:
We did.

[00:03:03] Speaker 01:
So is it your view that everyone should take that at face value, and therefore, there doesn't have to be a determination about whether or not the license has actually been terminated or not?

[00:03:17] Speaker 01:
I don't understand.

[00:03:18] Speaker 00:
No.

[00:03:20] Speaker 00:
I'm not saying that the district court would not make the inquiry.

[00:03:24] Speaker 00:
And the district court could make the inquiry, but as a matter of

[00:03:28] Speaker 01:
OK, so let's start there.

[00:03:31] Speaker 01:
So you allege it's been terminated.

[00:03:35] Speaker 01:
The district court here makes that inquiry.

[00:03:37] Speaker 01:
Why would it not be under the forum selection clause, the Wisconsin court, to make that determination?

[00:03:46] Speaker 00:
Before determining whether a district court should transfer or terminate a case based on a form selection clause, they need to determine whether the form selection clause applies to their case.

[00:03:58] Speaker 00:
So they read the content of the clause.

[00:04:03] Speaker 00:
And sometimes the form selection clauses can be very narrow.

[00:04:07] Speaker 00:
They can't just apply to specific issues.

[00:04:10] Speaker 00:
So the district court needs to make the determination, does it apply to my case?

[00:04:13] Speaker 00:
In this instance, it should not, first of all, because what Judge Lurie asked, as a matter of contract interpretation, it doesn't apply to the issue that was being litigated.

[00:04:28] Speaker 00:
And then after that, you get into, does it survive termination?

[00:04:31] Speaker 00:
And that determination should have been made first by the Texas court before.

[00:04:39] Speaker 04:
When the trial court determined to dismiss the case without prejudice to it being refiled after the case has been resolved by the Wisconsin court, what was the court referring to there?

[00:04:52] Speaker 00:
It's a little difficult to determine because there were no factual findings recited in the order.

[00:05:03] Speaker 00:
When you read the order, the order also talks about a stay, the fact that they provided a stay so that ABK and MSM could negotiate this issue.

[00:05:17] Speaker 00:
So as a preliminary matter, the fact that if you accept the premise that constitutional standing cannot be cured, then

[00:05:26] Speaker 00:
Presumably, the district court was only looking at this from a statutory standing perspective, which should not lead to a dismissal on that basis, because under Lexmark and under Lone Star, it's not correct to dismiss a case based on an issue of statutory standing.

[00:05:54] Speaker 00:
But with respect to what the court was referring to, it's a little difficult to tell because the same court in other instances where it was interpreting a license agreement, it actually did go in and examine, does the form selection clause apply to this case?

[00:06:11] Speaker 00:
What is the scope of the form selection clause?

[00:06:15] Speaker 00:
And does it survive termination, for example?

[00:06:18] Speaker 00:
Is it in effect?

[00:06:23] Speaker 01:
So you said a few minutes ago that we're supposed to assume that Judge Albright concluded there was no statutory standing and not unconstitutional standing because he gave the parties a chance to try to resolve this.

[00:06:40] Speaker 00:
Is that?

[00:06:42] Speaker 00:
I was simply referring to the content of the

[00:06:46] Speaker 00:
of the order.

[00:06:47] Speaker 00:
I'm not saying that the court needs to presume that.

[00:06:51] Speaker 00:
However, if you do accept the

[00:06:58] Speaker 00:
If you do accept the constitutional standing cannot be cured, it either exists or does not exist at the outset of the case, then the fact that the court did provide a stay would suggest that the court... Well, it could not be cured, but the parties could resolve to, yes, let's go in this together.

[00:07:16] Speaker 01:
We'll all sign off on it and go forward.

[00:07:18] Speaker 01:
That could, I don't know, would cure, but that could establish constitutional standing, right?

[00:07:26] Speaker 01:
I mean, I'm a little lost, too, because we don't know the basis upon which the court decided this.

[00:07:31] Speaker 01:
But I didn't conclude that constitutional standing was off the table because of the settlement.

[00:07:38] Speaker 01:
So I guess I was just wondering.

[00:07:39] Speaker 01:
Let me just go back to your very first point, where you started calling out the allegations in the complaint as if those by themselves were sufficient to establish standing.

[00:07:52] Speaker 01:
And I don't know that that's true.

[00:07:54] Speaker 01:
Are you familiar with our case in Cedar Sinai?

[00:08:00] Speaker 00:
Unfortunately, I'm not.

[00:08:01] Speaker 00:
I was mostly referring to the holding of Lone Star, where in Lone Star, the quote was, as long as the plaintiff alleges facts that support an arguable case or controversy under the Patent Act, the court has both the statutory and the Constitutional authority to adjudicate the matter.

[00:08:18] Speaker 01:
Well, Cedar Sinai says,

[00:08:21] Speaker 01:
And it's such a case where there's a factual basis, where there's a factual allegation.

[00:08:25] Speaker 01:
The allegations in the complaint are not controlling.

[00:08:27] Speaker 01:
And only uncontroverted factual allegations are accepted as true for purposes of this motion under 12b.

[00:08:34] Speaker 01:
And I think Cedar Sy and I proceed in the case that you're talking about.

[00:08:42] Speaker 00:
In this case, as I recall, there weren't factual challenges to many of the pleading allegations that actually get ABK into a position of having the sorts of patent rights that confer Article III standing.

[00:08:59] Speaker 00:
There was a license agreement.

[00:09:01] Speaker 00:
On the face of the license agreement, it's clear that it was a field of use license, did not confer all rights.

[00:09:10] Speaker 00:
There was a reservation of rights clause in the agreement, so ABK kept all the rights that it did not.

[00:09:16] Speaker 00:
Can they?

[00:09:17] Speaker 01:
You say it's clear.

[00:09:18] Speaker 01:
I don't know on what basis you say it's clear.

[00:09:20] Speaker 01:
No one adjudicated that.

[00:09:22] Speaker 01:
That has not been adjudicated.

[00:09:24] Speaker 01:
And the other side didn't agree to it, right?

[00:09:26] Speaker 01:
So what's clear about the fear of use limitation you're referring to?

[00:09:32] Speaker 01:
The field of use limitations.

[00:09:35] Speaker 00:
Well, that.

[00:09:37] Speaker 00:
I'm simply referring to the plain language of the license agreement.

[00:09:41] Speaker 00:
And there were not factual findings recited in the order to determine how far the district court got with that.

[00:09:51] Speaker 03:
Even aside from the field of use question, ABK was the owner of the patent and still is.

[00:10:04] Speaker 03:
It did not assign the patent.

[00:10:07] Speaker 03:
It licensed it.

[00:10:09] Speaker 03:
And under Supreme Court's Waterman v. McKenzie case, unless all substantial rights are conveyed, then it's only a license, not an assignment.

[00:10:23] Speaker 03:
And a number of rights were retained.

[00:10:26] Speaker 03:
So you should have standing, correct?

[00:10:32] Speaker 03:
Yes.

[00:10:38] Speaker 03:
Mueller only had a right to sublicense with your consent.

[00:10:45] Speaker 03:
And ABK reserved all rights not conveyed.

[00:10:52] Speaker 03:
And Mueller had a right to terminate without cause, which doesn't sound like an assignment.

[00:11:07] Speaker 03:
It sounds like a license.

[00:11:10] Speaker 03:
So ABK is still the owner, and in your view, has standing to sue.

[00:11:18] Speaker 03:
And that means under the revenue clause, it belongs in Wisconsin.

[00:11:23] Speaker 03:
So we should affirm the decision, but not for lack of standing, but because it belongs in Wisconsin.

[00:11:37] Speaker 00:
First of all, even if that was the outcome soon for the moment, a different set of parties where, for example, the infringer didn't have a location in Wisconsin under 1400 B, how would that even work?

[00:11:51] Speaker 00:
You would effectively have to have potentially two litigations, one to decide something under the license agreement, and then a different litigation to decide patent infringement.

[00:12:04] Speaker 00:
Our point is that you don't need to decide.

[00:12:06] Speaker 00:
You don't need to go and resolve anything under the license agreement to enable ABK to continue its lawsuit against CVS here.

[00:12:20] Speaker 01:
So do they not have the other side not have the exclusive right under the license to make use and sell?

[00:12:28] Speaker 01:
Do they not have the exclusive right to sue under the license agreement?

[00:12:33] Speaker 00:
MSM does not have the exclusive right to sue.

[00:12:38] Speaker 00:
After the parties give notice to one another, MSM has 120 days, and if MSM decides or declines to sue, then ABK's right to sue vests at that.

[00:12:51] Speaker 04:
That's not an exclusionary right to sue.

[00:12:54] Speaker 04:
That's not an exclusionary right to sue.

[00:12:56] Speaker 04:
The fact that ABK has to go and seek the consent

[00:13:01] Speaker 04:
of MMS means that ABK does not have exclusionary right.

[00:13:08] Speaker 00:
That's a covenant.

[00:13:10] Speaker 00:
The fact that the contract says that they need to obtain consent, it's not a condition.

[00:13:16] Speaker 04:
But wouldn't you agree that ABK, it's the owner of the patent, but it assigned all exclusionary rights in the patent to MSM

[00:13:29] Speaker 04:
And just by virtue of being the owner of the panel alone, under this scenario, does not confer standing.

[00:13:39] Speaker 00:
For all the reasons that Judge Laurie articulated, obviously I would disagree.

[00:13:48] Speaker 00:
In addition to that, ABK has the ability to sub-license.

[00:13:53] Speaker 00:
I would also add that MSM's ability to sub-license is actually limited to the rights conveyed.

[00:14:00] Speaker 00:
The license actually specifies that.

[00:14:04] Speaker 00:
And the rights conveyed are limited to a field of use.

[00:14:07] Speaker 00:
So even MSM's right to sublicense is limited.

[00:14:11] Speaker 04:
So if we determine that ABK lacks exclusionary rights in the asserted patent, then the fact that ABK is the owner of the patent is irrelevant.

[00:14:22] Speaker 04:
Is that correct?

[00:14:23] Speaker 00:
It's not irrelevant under Lexmark and under Lone Star.

[00:14:30] Speaker 00:
has sufficient rights to confer standing.

[00:14:32] Speaker 00:
I believe what Your Honor is referring to might be section 281 in terms of the right to carry on a patent infringement suit, but it certainly would not impact constitutional state.

[00:14:46] Speaker 04:
You say the right to commence a suit.

[00:14:49] Speaker 04:
ABK does not have the right to commence a lawsuit.

[00:14:53] Speaker 00:
ABK certainly does.

[00:14:55] Speaker 04:
It's got to go seek the consent of its licensee first.

[00:15:01] Speaker 03:
which may not unreasonably be withheld.

[00:15:04] Speaker 03:
And is that a fact question that wasn't decided?

[00:15:07] Speaker 00:
Well, that part of it is a fact question.

[00:15:08] Speaker 00:
But the question as to whether it's a covenant or a condition, I'm sorry, something that's, in other words, the right doesn't spring into life upon getting consent.

[00:15:25] Speaker 04:
ABK had the right, and whether it... We're getting into the weeds of contractual interpretation.

[00:15:33] Speaker 04:
Why is it that the Wisconsin court does not bear the authority to hear those issues?

[00:15:43] Speaker 00:
Two reasons.

[00:15:45] Speaker 00:
First, there is not litigation under the agreement.

[00:15:48] Speaker 00:
Again, the litigation is between ABK and CBS.

[00:15:53] Speaker 00:
And we also don't get there because the district court in Texas needs to decide whether the form selection clause survives termination.

[00:16:07] Speaker 00:
And that's something that this reports.

[00:16:09] Speaker 01:
This is all circular.

[00:16:11] Speaker 01:
You're saying it has to decide whether the Forum Selection Clause survives termination.

[00:16:14] Speaker 01:
That presumes that there has been a determination that there has been termination.

[00:16:20] Speaker 00:
The other way, though, to look at it doesn't necessarily make sense in terms of going into this Forum Selection Clause and

[00:16:27] Speaker 00:
having the court that specified there make the determination of whether the form selection clause even applies.

[00:16:35] Speaker 00:
Actually, in this case, there were two form selection clauses, right?

[00:16:38] Speaker 00:
So how do you adjudicate which particular court necessarily descended?

[00:16:45] Speaker 01:
So it's your view that only the Texas court had the authority to determine termination, and then if it decides it wasn't terminated, then the form selection clause applies to all of the other interpretive issues?

[00:16:58] Speaker 00:
The Texas court would determine sufficient facts to determine whether the forum selection clause applies to the case in front of it.

[00:17:08] Speaker 00:
So that would be interpreting the contract and determining.

[00:17:14] Speaker 04:
It did that.

[00:17:15] Speaker 04:
The Texas court did exactly that and said, the things that belong in Wisconsin should go to Wisconsin, and I'm going to stay until that occurs.

[00:17:30] Speaker 00:
There were no such factual findings, or the order did not recite anything about what it determined about the contract.

[00:17:41] Speaker 00:
So it's in it.

[00:17:44] Speaker 04:
Well, I agree with you that not only in the order, but in other aspects of its opinion, the district court did not do a good job at articulating the basis for its decisions.

[00:17:55] Speaker 04:
And this is one of those areas.

[00:17:56] Speaker 04:
And I realize that it puts you in a hard position to try to divine what the trial court was trying to do.

[00:18:06] Speaker 04:
But there is a foreign selection clause here.

[00:18:08] Speaker 04:
You're enumerating a number of disputes between the parties that are related to the contract, that are contractual in nature.

[00:18:17] Speaker 04:
It seems to me that, given the foreign selection clause,

[00:18:21] Speaker 04:
needs to go to Wisconsin in order to determine if they have a proper venue.

[00:18:27] Speaker 04:
And then, at that point in time, they decide the contractual issues.

[00:18:33] Speaker 00:
And I would disagree to the extent that it's regular practice for district courts to first analyze sufficient facts to determine whether the form selection clause applies to the case in front of it

[00:18:46] Speaker 00:
Second, whether the Forum Selection Clause is in force, so whether it survives termination in this case.

[00:18:54] Speaker 03:
Counsel, you're well over your time, of course.

[00:18:56] Speaker 03:
We've asked a lot of questions.

[00:18:58] Speaker 03:
This case is obviously a mess.

[00:19:00] Speaker 03:
The parties have contractually tied each other in knots, and the district court has given us a half a page.

[00:19:08] Speaker 03:
Kick the can down the road, and we'll just have to try to work it out with your help and opposing counsel.

[00:19:14] Speaker 03:
We'll give you three minutes for about all time, and let's hear from Ms.

[00:19:18] Speaker 03:
Gillis.

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

[00:19:20] Speaker 03:
Gillis.

[00:19:39] Speaker 03:
Counsel, doesn't ABK still own the patent?

[00:19:42] Speaker 03:
And did it retain substantial rights such that it granted only a license and not an assignment, and so it still owns the patent and had the right to sue?

[00:19:59] Speaker 02:
Your Honor, ABK is still the registered owner of the patents.

[00:20:04] Speaker 02:
But under the license agreement at issue here at appendix 3195, together with the first and second amendments, all substantial rights, all exclusionary rights in those asserted patents were conveyed to MSM.

[00:20:21] Speaker 02:
The language of the agreement themselves say that exclusive right to make, use, have, and sell, including without limitation,

[00:20:32] Speaker 02:
Opposing counsel, Mr. Katz, attempted to narrow the license on its face.

[00:20:36] Speaker 02:
It's not narrow.

[00:20:37] Speaker 02:
It's very broad.

[00:20:39] Speaker 03:
MSM cannot sue without ABK's consent, right?

[00:20:43] Speaker 02:
That is not correct.

[00:20:44] Speaker 02:
The Second Amendment at Appendix 3282 gives MSM the exclusive right to sue.

[00:20:52] Speaker 02:
Only if MSM declines to bring a suit under the assertive patents can ABK seek consent to bring suit.

[00:21:02] Speaker 02:
In this case, no consent by MSM was given.

[00:21:07] Speaker 02:
That's that Appendix 3292.

[00:21:08] Speaker 03:
I'm sorry.

[00:21:11] Speaker 03:
Consent cannot unreasonably be withheld.

[00:21:14] Speaker 03:
There is that language.

[00:21:15] Speaker 03:
And that has to be adjudicated.

[00:21:18] Speaker 02:
Correct.

[00:21:18] Speaker 02:
And just to go to sort of where you started with Mr. Katz at the outset of the day, and also to address the concise nature of the judge's order in Texas at Appendix 1.

[00:21:31] Speaker 02:
Even though that order is about a page, the court heard extensive argument on multiple motions.

[00:21:37] Speaker 01:
Do we know what basis upon which the court decided to dismiss without prejudice?

[00:21:43] Speaker 01:
Was it constitutional standing?

[00:21:45] Speaker 01:
Was it statutory standing?

[00:21:47] Speaker 01:
What was the basis for the venue adjudication?

[00:21:51] Speaker 02:
We would concede that the court's order is supported by lack of constitutional standing, lack of statutory standing, and improper venue.

[00:21:59] Speaker 01:
But we don't know whether the district court decided it unconstitutional.

[00:22:06] Speaker 02:
He didn't specifically say, but the guidance we have is CBS's motion was a 12b1 motion seeking dismissal for lack of constitutional standing.

[00:22:17] Speaker 02:
and lack of subject matter jurisdiction.

[00:22:19] Speaker 01:
OK, what do you say to your friend where your friend started in this case?

[00:22:22] Speaker 01:
On that point, was that the factual allegations asserted in the complaint were sufficient under 12b1, and no further adjudication was necessary at this date?

[00:22:35] Speaker 02:
Your Honor, they actually were not.

[00:22:36] Speaker 02:
In the original complaint that was filed in this case at appendix 2, an exemplar case number 555,

[00:22:45] Speaker 02:
ABK made reference in paragraph 37 to MSM as a licensee and showed photographs of MSM's products marked with the asserted patents in the case.

[00:22:58] Speaker 02:
So as to say, CBS was on notice of these patents by virtue of this licensee's marking.

[00:23:06] Speaker 02:
The license agreement was also recorded at the Patent Office.

[00:23:09] Speaker 02:
So if we were to look as an accused defendant, which we did, and go to where you record information about who has rights, this license agreement was also recorded.

[00:23:20] Speaker 02:
So that original complaint filed against CBS held MSM audits as licensee, put up photos of MSM products marked with the patents, and made allegations to support willfulness

[00:23:34] Speaker 02:
based on those patent markings.

[00:23:37] Speaker 02:
It was only when they admitted, I'm sorry.

[00:23:39] Speaker 01:
Let me add, just moving on, I take your point.

[00:23:41] Speaker 01:
So what, in your view, since the district court was not clear or direct or detailed in terms of what actually has to happen, what is your view?

[00:23:52] Speaker 01:
What has to go, what belongs under the former selection clause in the Wisconsin court?

[00:23:57] Speaker 01:
We've got termination, we've got field of use, and we've got whether consent was unreasonably withheld.

[00:24:06] Speaker 01:
I think those are the three big issues.

[00:24:08] Speaker 02:
Actually, there's an opening question.

[00:24:12] Speaker 02:
MSM contends only it has the right to assert these patents, that the license agreement is still in force

[00:24:20] Speaker 02:
and that the only party that could sue under the assertive patents is MSM.

[00:24:24] Speaker 01:
OK, but that assumes that the license agreement is enforced.

[00:24:27] Speaker 02:
Right.

[00:24:27] Speaker 01:
So I think everybody knows and has to adjudicate whether or not it's been terminated.

[00:24:32] Speaker 02:
And the adjudication of that should be in Wisconsin.

[00:24:36] Speaker 02:
That is something that should have occurred, because these parties, prior to CVS being sued, there is correspondence that's been made of record

[00:24:45] Speaker 02:
that the court had in front of it as part of not only CBS's pleadings, our motion to dismiss under 12B1, B3, and B7, and all of the evidence that we put in, and the cases that we cited in our brief, Patterson being one, Beverly being another, says the court can consider those evidentiary materials when jurisdiction is in play.

[00:25:09] Speaker 01:
Wait, so you're saying that it should have gone to the determination on termination?

[00:25:14] Speaker 02:
No.

[00:25:14] Speaker 02:
No.

[00:25:15] Speaker 02:
The court saw in our evidentiary materials that there was a live dispute between MSM and ABK as to who could assert the patents.

[00:25:26] Speaker 02:
And the court found in its order, it says, there's a dispute.

[00:25:30] Speaker 02:
between these two parties and under their agreement and the forum selection clause in their agreement, their dispute as to who gets to sue must be determined by a Wisconsin court.

[00:25:44] Speaker 02:
ABK also brought MSM into the case

[00:25:49] Speaker 02:
when they filed their First Amendment complaint.

[00:25:51] Speaker 01:
What about the other issue?

[00:25:55] Speaker 01:
Assuming the agreement was not terminated, does the question about whether or not consent to sue was unreasonably withheld?

[00:26:01] Speaker 01:
Does that issue belong in Wisconsin?

[00:26:03] Speaker 02:
All of it belongs in Wisconsin, because it's all based on language in the agreement.

[00:26:10] Speaker 04:
If the parties, sorry, sorry, sorry.

[00:26:20] Speaker 02:
He dismissed without prejudice.

[00:26:21] Speaker 02:
And if you read the transcript, he says, if you're able to cure standing,

[00:26:26] Speaker 02:
then you can refile after standing is cured.

[00:26:30] Speaker 02:
That is in the transcript, I think, at page 3957 and 3958.

[00:26:34] Speaker 02:
It's also in the order itself at appendix one.

[00:26:38] Speaker 04:
Should we take that to mean that the trial court understood that only the Wisconsin court could resolve the issue of standing?

[00:26:49] Speaker 04:
And that's the only issue before the Wisconsin court.

[00:26:53] Speaker 02:
What I think you can take it to understand is that,

[00:26:56] Speaker 02:
Only the Wisconsin court can resolve whether or not, as between ABK and MSM, who has the right to assert

[00:27:06] Speaker 02:
the patents, and if that may determine whether or not consent was reasonably withheld by MSM.

[00:27:13] Speaker 02:
And if you look at the two declarations that the CEO of MSM submitted to the court, both at appendix 3464 and at appendix 3853, MSM details why consent was withheld in this case.

[00:27:30] Speaker 02:
Again, those are issues for a Wisconsin court to decide.

[00:27:35] Speaker 02:
Is the agreement still enforced?

[00:27:36] Speaker 02:
Yes or no.

[00:27:37] Speaker 02:
If it is still enforced, can only MSM bring a lawsuit against anyone, or is ABK allowed to?

[00:27:45] Speaker 02:
it did MSM unreasonably withhold consent given the reasons that MSM put in testimonial declarations that we cited to the court.

[00:27:57] Speaker 01:
All of those issues.

[00:27:57] Speaker 01:
So all I'm suggesting is that in response to Judge Raina's point is that you don't think that Wisconsin is going to give them the ability to ever come back to the Texas court.

[00:28:06] Speaker 01:
I don't think so.

[00:28:07] Speaker 01:
I think.

[00:28:07] Speaker 01:
What about the field of use issue?

[00:28:10] Speaker 01:
Should we decide back here, or is that something for Wisconsin as well?

[00:28:13] Speaker 02:
It's also for Wisconsin.

[00:28:15] Speaker 02:
I also think the argument is without merit on the face of the agreement itself.

[00:28:19] Speaker 02:
But a Wisconsin court certainly can determine based on the language whether it's the field of use or is limited.

[00:28:25] Speaker 02:
And certainly nothing about.

[00:28:27] Speaker 01:
If Wisconsin goes the other way, or whichever way the Wisconsin court goes, what's the appellate review for the Wisconsin determinations on the contract?

[00:28:38] Speaker 02:
Well, I think whichever party wins or loses has to go through the appellate system in Wisconsin.

[00:28:44] Speaker 02:
to get final resolution of the issue.

[00:28:45] Speaker 01:
When you say Wisconsin, I guess the agreement, as I understood, it didn't specify whether we're dealing with federal or state courts here, right?

[00:28:53] Speaker 02:
It just said, yeah, courts sitting in Dade County, Wisconsin.

[00:28:55] Speaker 01:
So whatever is relevant.

[00:28:56] Speaker 02:
So it doesn't come back here.

[00:28:59] Speaker 02:
I wouldn't think so.

[00:29:00] Speaker 02:
I would think it would stay within the appellate system within Wisconsin.

[00:29:03] Speaker 04:
Which court is hearing the CVS litigation now?

[00:29:08] Speaker 04:
That's in Wisconsin, correct?

[00:29:10] Speaker 02:
No.

[00:29:10] Speaker 02:
ABK sued CVS and the Western District of Texas District Court in front of Albright.

[00:29:15] Speaker 03:
Now how does this get to Wisconsin?

[00:29:18] Speaker 03:
The Western District of Texas didn't transfer it to Wisconsin.

[00:29:23] Speaker 03:
And so who can sue

[00:29:25] Speaker 03:
in Wisconsin.

[00:29:27] Speaker 03:
It's an unanswered question, isn't it?

[00:29:31] Speaker 02:
It actually isn't, Your Honor.

[00:29:33] Speaker 02:
The CBS lawsuit cannot even be brought in the first instance, because we don't know who the proper plaintiff or plaintiffs are.

[00:29:43] Speaker 02:
The plaintiff that sued CBS in the Western District of Texas was ABK.

[00:29:51] Speaker 02:
MSM said ABK didn't have the right to sue anyone, including CBS, one because the agreement gives only MSM the right to sue.

[00:30:01] Speaker 02:
ABK can only bring suit with consent from MSM, which MSM did not give.

[00:30:08] Speaker 02:
And that was a matter of record.

[00:30:10] Speaker 02:
So in the first instance,

[00:30:13] Speaker 02:
ABK and MSM have to sort out their agreement.

[00:30:19] Speaker 02:
And the sorting out of that agreement, according to the agreement itself, must happen in Wisconsin.

[00:30:25] Speaker 02:
They contractually agree to litigate disputes there.

[00:30:29] Speaker 03:
But how do you get to Wisconsin?

[00:30:31] Speaker 03:
Someone has to bring an action in Wisconsin.

[00:30:33] Speaker 02:
ABK, if it wants, ABK is the one that is claiming termination of this lawsuit.

[00:30:39] Speaker 02:
So you're just saying that.

[00:30:42] Speaker 02:
ABK needs to sue MSM in Wisconsin over interpretation of the agreement.

[00:30:48] Speaker 01:
Since Judge Albright dismissed without prejudice, the only way that AB can get back into the Texas court in order to sue CVS would be to prevail in the Wisconsin court on its allegations about the license agreement, correct?

[00:31:04] Speaker 02:
Yes, or through some type of resolution with MSM wherein it gets all of its rights back.

[00:31:12] Speaker 01:
But your client sits back, because nothing is happening, and the case against CVS is not going forward in the absence of Wisconsin ruling in favor of your friend.

[00:31:23] Speaker 02:
That is correct, because standing must be right at the outset of the lawsuit.

[00:31:28] Speaker 02:
And even if ABK were to come back, it's not going back to day one, because they would only fix or cure standing

[00:31:36] Speaker 02:
as of the day they get their rights back.

[00:31:38] Speaker 02:
They don't get the rights back as the day they first sued us.

[00:31:41] Speaker 02:
They get the rights back if and when there is a resolution with MSM or a Wisconsin court determines somehow that they

[00:31:51] Speaker 02:
have some level of constitutional right under the assertive patents to bring suit.

[00:31:56] Speaker 01:
They have a declaration of rights under the agreement coming out of the Wisconsin Act.

[00:31:59] Speaker 01:
Yes, they do.

[00:32:00] Speaker 01:
Yes, they do.

[00:32:01] Speaker 01:
There's other litigation.

[00:32:02] Speaker 01:
You may not know about it, so that's fine.

[00:32:04] Speaker 01:
But there's other litigation going on that involves some of the similar issues, right?

[00:32:08] Speaker 02:
Yes, I actually am aware of the other litigation as well.

[00:32:11] Speaker 01:
OK, so that's either going to get here or it's not going to get here.

[00:32:16] Speaker 02:
We also believe that the related litigation in Delaware should not be going forward because ABK lacks standing, constitutional standing, to sue under the assertive patents.

[00:32:26] Speaker 04:
Counsel, just to be clear, if there's full-blown litigation in Wisconsin, what is left for the district court in Texas to hear?

[00:32:37] Speaker 02:
There is nothing for the district court in Texas to do now because the CBS cases have been dismissed.

[00:32:43] Speaker 02:
The Texas court litigation only gets revived there if ABK can establish that it has the exclusionary rights to assert these patents.

[00:32:55] Speaker 02:
I don't know that ABK gets there.

[00:32:57] Speaker 02:
Or if, miraculously, MSM decides they want to sue someone, which if you read the declarations that are in the record, they say the lawsuits against CBS have no merit because the products at issue aren't covered by these asserted patents.

[00:33:12] Speaker 02:
I mean, that's the real problem here, is that these patents don't cover the products that have been accused.

[00:33:19] Speaker 02:
And that's where ABK and MSM had their dispute.

[00:33:24] Speaker 02:
Because MSM, if you read Mr. Mueller's two declarations, he said,

[00:33:29] Speaker 02:
We agree.

[00:33:30] Speaker 02:
We knew these patents only covered a very specific type of product, this PFT tape product that MSM sold.

[00:33:40] Speaker 02:
It's the only product that MSM sells and has ever sold that's marked with these patents.

[00:33:46] Speaker 02:
MSM has been selling kinesiology products since 2010.

[00:33:50] Speaker 02:
They've got another 41 products.

[00:33:54] Speaker 02:
kinesiology tape products, just like the ones that issue in the CBS cases in another litigation.

[00:34:00] Speaker 02:
Those products have never been accused of infringement.

[00:34:04] Speaker 02:
They've never been marked with these patents.

[00:34:06] Speaker 03:
So you think we should affirm the dismissal by the Texas court on which ground?

[00:34:13] Speaker 02:
You can affirm the dismissal for lack of standing.

[00:34:16] Speaker 02:
You could also separately affirm it for improper venue.

[00:34:19] Speaker 02:
But the lack of standing is clear.

[00:34:22] Speaker 01:
And you're talking about constitutional sense.

[00:34:24] Speaker 02:
lack of constitutional standing.

[00:34:25] Speaker 02:
That is certainly what we argued.

[00:34:27] Speaker 02:
We don't believe they have statutory standing.

[00:34:29] Speaker 02:
And we raised in a footnote that we would raise statutory standing later.

[00:34:33] Speaker 02:
But certainly, the case law, Vorpil, Wyov, other cases we cited in our brief, would support no constitutional standing, because MSM has all of the exclusionary rights.

[00:34:46] Speaker 02:
In fact, the retained rights that Mr. Katz spoke about.

[00:34:51] Speaker 03:
Well, they don't have all substantial rights.

[00:34:54] Speaker 03:
That's the test of Waterman versus McKenzie, all substantial rights.

[00:34:59] Speaker 03:
Now, they retained rights not especially granted.

[00:35:11] Speaker 03:
They conditioned the right to sublicense only with consent.

[00:35:18] Speaker 03:
There are a number of limitations to what was granted.

[00:35:23] Speaker 02:
So the Volvo Federal Circuit case from 1991 addresses some very similar retained rights by a patent owner.

[00:35:30] Speaker 02:
I remember that case.

[00:35:32] Speaker 02:
I would expect that you would, Your Honor, as the author of that case.

[00:35:37] Speaker 02:
So that case

[00:35:39] Speaker 02:
at page 875, retaining a veto right on sub-licensing, a reversionary interest in the patents, meaning if the agreement is terminated, the rights go back to the patent owner, or even the right to collect infringement damages if there is a lawsuit.

[00:35:55] Speaker 02:
Those type of retained rights, under Volvo, do not confer constitutional standing in the patent owner.

[00:36:05] Speaker 02:
Under that case,

[00:36:06] Speaker 02:
MSM still would have the exclusionary rights and would still be the only party with constitutional standing.

[00:36:15] Speaker 03:
Standing doesn't have to be conferred on the Patent Owner.

[00:36:21] Speaker 03:
It retains standing unless it has granted all substantial rights to the licensee, constituting an assignment.

[00:36:31] Speaker 02:
That is right.

[00:36:32] Speaker 02:
And here, again under Volvo, or if we look at Speed Play,

[00:36:36] Speaker 02:
Um, another federal circuit case from 2000, um, or YF.

[00:36:42] Speaker 02:
So YF was Judge Lynn's case.

[00:36:44] Speaker 02:
Speedplay, I think, was Judge Bryson.

[00:36:47] Speaker 03:
Um, the exclusionary rights there were- We decide cases as a panel.

[00:36:52] Speaker 03:
I know.

[00:36:53] Speaker 03:
Even though one person is the author.

[00:36:55] Speaker 02:
Understood.

[00:36:56] Speaker 02:
Understood.

[00:36:56] Speaker 02:
Absolutely, Your Honor.

[00:36:58] Speaker 02:
Um, I remember the author of the opinion, but yes, always a panel.

[00:37:02] Speaker 02:
So in the Speed Play decision from 2000, it was important that the right conveyed to the licensee was the right to bring a lawsuit, also the right to grant sublicenses.

[00:37:16] Speaker 02:
MSM had both of those rights.

[00:37:20] Speaker 02:
And in one of those cases, I think it was a Speed Play case, where again, you couldn't convey a license without

[00:37:29] Speaker 02:
permission from the patent owner, which permission could not be unreasonably withheld, Speedplay still considered that licensee having that exclusionary right.

[00:37:44] Speaker 02:
And the whole point is that if you have a patent owner like ABK here, that even if they brought suit, the fact that another party, MSM,

[00:37:56] Speaker 02:
could grant a sub license to the accused infringer, that is what makes MSM's rights here exclusionary.

[00:38:06] Speaker 03:
But isn't that only with consent?

[00:38:09] Speaker 02:
which shall not be unreasonably withheld, which again, speed, play, vaup, will why of the cases we cited in our briefs deal with some very similar contract language.

[00:38:21] Speaker 02:
And the licensee comes out as the one with exclusionary rights.

[00:38:24] Speaker 03:
Justice once said that the Constitution is not a suicide pact.

[00:38:29] Speaker 03:
That idea seems to come to mind concerning this contract.

[00:38:34] Speaker 02:
No, I don't think so.

[00:38:36] Speaker 02:
I mean, again, I think it's two contracting parties coming together.

[00:38:42] Speaker 02:
ABK gave MSM all the power to go out and enforce the patents because they were getting royalties under that contract.

[00:38:52] Speaker 02:
ABK contractually did that.

[00:38:55] Speaker 02:
And again, if you review the MSM declarations, they're very enlightening as to what went awry here and why we stand before you today.

[00:39:08] Speaker 02:
But I'm also standing before you today arguing on behalf of the appellees.

[00:39:13] Speaker 02:
So the fact that MSM, like CBS, is also seeking to affirm the dismissal of the CBS cases is very telling.

[00:39:24] Speaker 03:
Counsel, we've given you extra time, just like we gave Pellant.

[00:39:29] Speaker 03:
So thank you very much.

[00:39:30] Speaker 02:
Thank you very much, Your Honors.

[00:39:31] Speaker 02:
Appreciate it.

[00:39:32] Speaker 03:
Pellant has three minutes for rebuttal.

[00:39:41] Speaker 00:
Your Honors, one of the issues that CVS raised with respect to pleading was CVS wanted to know who owns the patents.

[00:39:51] Speaker 00:
Well, when CVS

[00:39:53] Speaker 00:
came to us and said, well, we're going to file this motion to dismiss because maybe you don't have all the rights.

[00:39:59] Speaker 00:
Well, we basically said, okay, well, fine, we'll join the other party.

[00:40:04] Speaker 00:
And if you look at rule 21, rule 21 just, I think says Ms.

[00:40:08] Speaker 00:
Joinder is not a reason to dismiss.

[00:40:11] Speaker 00:
Well, they filed their motion to dismiss anyway, but when you look at the parties in this lawsuit in Texas, everybody's there, right?

[00:40:18] Speaker 00:
We've got

[00:40:19] Speaker 00:
MSM, CBS, and ABK.

[00:40:21] Speaker 00:
All the parties are there.

[00:40:23] Speaker 00:
CBS is not at risk of being sued on the same patents from different parties.

[00:40:29] Speaker 00:
The only question then comes down to within this contract between ABK and MSM, who can sue?

[00:40:37] Speaker 00:
And it's

[00:40:37] Speaker 00:
very clear in the contract that the parties give notice to each other, then there's 120 days for MSM to sue.

[00:40:47] Speaker 00:
If they don't, if they decline, then at that point, ABK's rights to sue vest.

[00:40:54] Speaker 00:
They do not vest upon permission.

[00:40:57] Speaker 00:
They vest upon the 120 days.

[00:41:00] Speaker 00:
The permission is simply a covenant.

[00:41:03] Speaker 00:
And it's quite clear it's not a condition precedent.

[00:41:08] Speaker 00:
The right is vested upon 120 days after notice.

[00:41:13] Speaker 00:
And Judge Prost asked about, you know, what should we decide here?

[00:41:18] Speaker 00:
Well, in the interest of not having this case come back, things, for example, is this an exclusive license agreement?

[00:41:26] Speaker 00:
Is it limited to a field of use?

[00:41:29] Speaker 00:
Those are helpful findings under the contract.

[00:41:32] Speaker 00:
The other helpful finding would be, is this a condition precedent or a covenant?

[00:41:37] Speaker 00:
We wrote in our brief, it's a covenant.

[00:41:39] Speaker 00:
There was no meaningful rebuttal to that.

[00:41:42] Speaker 00:
And we maintain that it's simply a covenant.

[00:41:46] Speaker 00:
So ABK waited 120 days, and it had the right to sue.

[00:41:52] Speaker 00:
If NSN believes that ABK breached, it's welcome to sue ABK or counterclaim.

[00:42:00] Speaker 00:
But in any instance, within the meaning of the contract,

[00:42:05] Speaker 00:
ABK had all rights to sue.

[00:42:08] Speaker 00:
And with respect to going to Wisconsin for contract interpretation, I don't believe that that's actually contemplated by the form selection clause.

[00:42:18] Speaker 00:
The form selection clause for the venue and jurisdiction aspects, it says litigation under the agreement.

[00:42:26] Speaker 00:
And again, no parties to that agreement are accusing one another of breach.

[00:42:32] Speaker 00:
So for that additional reason, the form selection clause should not come into play.

[00:42:37] Speaker 00:
The district court in Texas could resolve this just based on the contract interpretation of the contract in front of them.

[00:42:47] Speaker 03:
Thank you, counsel.

[00:42:47] Speaker 03:
We know that cases are sometimes settled on the courthouse steps going in.

[00:42:52] Speaker 03:
Maybe they can be settled on the courthouse steps going out.

[00:42:56] Speaker 00:
Thank you, your honor.

[00:42:57] Speaker 03:
The case is submitted.