[00:00:00] Speaker 03: Our next case is Apple versus the ITC, 2024-12-85, Mr. Mueller. [00:00:09] Speaker 00: Yes, Your Honor. [00:00:10] Speaker 00: May it please the Court, and may I reserve three minutes for rebuttal? [00:00:13] Speaker 03: Yes. [00:00:15] Speaker 00: May it please the Court, my name is Joe Mueller, and along with my partner, Tom Sprankling, I represent Apple. [00:00:22] Speaker 00: Your Honor, this case involves an exclusion order that has deprived millions of Apple Watch users from Apple's blood oxygen feature. [00:00:31] Speaker 00: The exclusion order is predicated on an underlying decision that suffers from a series of interrelated errors, all of which center on the lack of a proper domestic industry and the lack of valid claims that would cover a pulse oximeter on the wrist of the type that the Apple Watch takes. [00:00:52] Speaker 02: the underlying history and facts. [00:00:55] Speaker 02: Maybe you can jump in real quickly on the technical prong of the domestic industry question. [00:01:00] Speaker 00: Absolutely, Your Honor. [00:01:01] Speaker 00: So with respect to the technical prong, the first thing to note is the definition of the technical prong in terms of what was being proffered as the basis for finding that there was sufficient evidence of patent practicing products as required by the statute. [00:01:17] Speaker 00: And the administrative law judge had joint appendix page 60 [00:01:22] Speaker 00: listed the particular prototypes that Massimo and CircaCorp proffered as the basis for satisfying the technical prong. [00:01:31] Speaker 00: Those were the REV-A sensor, the REV-D sensor, and three versions of the... At that time there was no question that these were prototypes, right? [00:01:38] Speaker 00: That's correct, Your Honor. [00:01:39] Speaker 00: There's no question that those are prototypes. [00:01:41] Speaker 00: As of the date of the complaint, which is the operative temporal timeline, there was no commercial product on the market. [00:01:48] Speaker 00: The first time Massimo tried to sell a commercial watch that had pulse oximetry in it. [00:01:54] Speaker 00: was the W-1 that long post-dated the complaint, and the administrative law judge set the W-1 aside as a result. [00:02:01] Speaker 00: The prototypes, though, to go back to your question on the technical prong, suffered from further problems. [00:02:07] Speaker 00: Each one, if looked at with precision and rigor, did not provide sufficient evidence of practicing the asserted patents as of the date of the complaint. [00:02:16] Speaker 00: And I'll give your honor an example. [00:02:18] Speaker 00: At page 89 of the joint appendix, this is where the administrative law judge was discussing whether or not these prototypes were available at the time of the complaint. [00:02:29] Speaker 00: There's only a few pages in the decision that gets at that critical issue of were the prototypes available at the time of the complaint. [00:02:37] Speaker 00: In footnote 22, the administrative law judge states, with respect to the blood oxygen functionality itself, which is critical to satisfying the asserted claims and to demonstrating that these prototypes were practicing products, and I quote, Apple's arguments focus on the physical devices produced in discovery, EPCPX58C, which were loaded with specific software. [00:03:01] Speaker 00: Just to pause there, those were the prototypes listed at page 60 of the decision. [00:03:06] Speaker 00: in first defining the subject of the technical inquiry. [00:03:09] Speaker 00: So this footnote says, as to those products, they were loaded with specific software, but the circumstantial evidence regarding testing shows [00:03:17] Speaker 00: by preponderance of the evidence that prototype devices with designs that are consistent with the asserted domestic industry products were operational before the filing of the complaint. [00:03:30] Speaker 00: Notably, in that footnote, the administrative law judge did not find that the particular prototypes produced in discovery were operational, but instead alludes to [00:03:40] Speaker 00: designs consistent with or other prototypes that were consistent with. [00:03:43] Speaker 02: Is there a requirement that the prototypes be operational at the time of filing the complaint? [00:03:48] Speaker 00: Absolutely, Your Honor. [00:03:49] Speaker 00: The statute requires that there be articles that practice the patents. [00:03:54] Speaker 00: This court's precedent requires that the complaint is the relevant touchstone for assessing whether those physical articles exist. [00:04:00] Speaker 00: Cases like the Broadcom decision that we cited in our papers [00:04:03] Speaker 00: as well as the Microsoft decision have made clear that there needs to be a physical, tangible patent practicing article as of the filing of the complaint. [00:04:12] Speaker 00: And that's particularly true where the firm of domestic industry on which the commission relies is an established industry. [00:04:19] Speaker 05: I don't know that we've ever said that you're limited to either the specific thing you say in the complaint [00:04:29] Speaker 05: or the specific item you've turned over in discovery, and it seems like you're trying to hold the petitioner here either to the drawings in the complaint or to the specific prototypes turned over in discovery. [00:04:43] Speaker 05: Is that your position, and where have we set that? [00:04:45] Speaker 00: So, Your Honor, our position is that we need to note the article that Section 337A3 and A2 require. [00:04:53] Speaker 00: The article needs to be the same for the technical prong under A2 and the economic prong under A3. [00:04:59] Speaker 00: The antecedent basis for A3 is A2. [00:05:01] Speaker 00: It's the article. [00:05:02] Speaker 00: And so there needs to be an article, and we need to know what it is. [00:05:05] Speaker 00: Now, our position is that it would certainly be best practice to identify that in the complaint. [00:05:10] Speaker 00: But our appeal does not rise or fall on the complaint. [00:05:13] Speaker 00: Our appeal on this particular issue turns on whether we knew, as of the conclusion of the record, a particular article, the article that the statute requires that's protected by the patents. [00:05:25] Speaker 05: I take it, then, you concede. [00:05:27] Speaker 05: It could be alleged with some degree of generality in the complaint. [00:05:32] Speaker 05: And over the course of the investigation, the petitioner can produce examples of it, but still not limit themselves to just those examples that the commission makes a finding at the end of the close of the record. [00:05:46] Speaker 05: based on the totality evidence, did something that practices the patent exists back at the time of the complaint. [00:05:53] Speaker 05: Is that a fair recitation of the position? [00:05:55] Speaker 00: I think the fair recitation, Your Honor, is the nature of the critical analysis on blood oxygen is that footnote on page 89 of the Joint Appendix, and similar language on pages 88 through 90. [00:06:08] Speaker 00: where administrative law judge was addressing this issue of were there articles as of the filing of the complaint. [00:06:15] Speaker 03: But the statute says the industry exists or is in the process of being established. [00:06:22] Speaker 00: Yes, Your Honor. [00:06:22] Speaker 00: So in the process of being established, the commission here expressly disclaimed any adoption of the administrative law judge's findings in the process of being established. [00:06:32] Speaker 00: Under the Beloit decision, this court is limited to the articulated rationale. [00:06:36] Speaker 05: It's not disclaimed. [00:06:37] Speaker 05: It said we're not reaching it. [00:06:38] Speaker 00: That's right. [00:06:39] Speaker 05: It said there would need to be a review. [00:06:40] Speaker 05: If we were persuaded by you on some of these issues, shouldn't we remand? [00:06:44] Speaker 05: for the commission to reach that issue? [00:06:45] Speaker 00: That's correct. [00:06:46] Speaker 00: That's absolutely correct, Your Honor. [00:06:47] Speaker 00: In the process of being an established issue, there would need to be a remand for consideration by that issue of the commission in the first instance. [00:06:54] Speaker 02: Wouldn't that be giving you two shots or two bites of the apple? [00:06:58] Speaker 02: No pun intended. [00:06:59] Speaker 00: No, Your Honor. [00:07:02] Speaker 00: Sure. [00:07:02] Speaker 00: It would not. [00:07:02] Speaker 00: It would not. [00:07:03] Speaker 00: And again, there's a couple of keys here. [00:07:05] Speaker 00: Number one, we don't know as of today the article that was deemed to be patent practicing as of the date of the complaint. [00:07:11] Speaker 00: There's this hedged language of the type that I recited from the footnote on page 89. [00:07:16] Speaker 00: But we don't yet know the article. [00:07:18] Speaker 00: And there needs to be a remand on that as well. [00:07:20] Speaker 00: There's a second dimension to the domestic industry problem, which also is another reason for at least a remand. [00:07:26] Speaker 00: And that's the economic prong. [00:07:28] Speaker 00: with respect to the economic problem. [00:07:30] Speaker 00: the judge, and then the commission in adopting the administrative law judge's analysis, define the touchstone differently. [00:07:37] Speaker 00: And if your honors were to go to page 306 of the joint appendix, here we have the definition of the economic prong domestic industry. [00:07:46] Speaker 00: And as I noted earlier, at page 60, the domestic industry touchstone was defined as rev A, rev D, rev E, those five prototypes, rev A, rev D, and three versions of rev E. [00:07:58] Speaker 00: At page 306, in the pages that continue, there the domestic industry for economic-pronged purposes is defined as the Massimo watch prototypes, not limited to the Rev A, Rev D, and Rev E prototypes. [00:08:13] Speaker 00: It's a more nebulous and more general characterization of the economic pronged touchstone. [00:08:19] Speaker 00: And that's important. [00:08:20] Speaker 00: It's important because it lacks the precision and rigor that this court has required, including the Zircon decision that Judge Lurie and Judge Starkey joined as panel members last year. [00:08:30] Speaker 00: In that decision, there were a number of products that were offered by Zircon as patent practicing products [00:08:36] Speaker 00: for both the technical prong and the economic prong. [00:08:39] Speaker 00: There's a set of patents as to which they apply to the proffer domestic industry articles in different ways. [00:08:45] Speaker 00: Some of the products practice certain patents, but not others. [00:08:49] Speaker 00: So too here. [00:08:50] Speaker 00: If you look at the analysis that begins at Joint Appendix, page 306, there was an amalgamation by the administrative law judge of products that purportedly practice [00:09:00] Speaker 00: The two patents on appeal, the 502 and the 648, those are PUSA patents, named after one of the named inventors. [00:09:07] Speaker 00: Those are amalgamated with another patent, the 745 patent, different family, different technology, and found not infringed. [00:09:14] Speaker 05: Have we ever said though that, have we ever analyzed an iterative process circumstance where it's conceded, I think, that some of the early versions [00:09:26] Speaker 05: in that process didn't practice the patent, but also established, at least on this record, that some eventually do. [00:09:36] Speaker 05: Have we ever addressed which investments count in that circumstance? [00:09:41] Speaker 00: No, Your Honor. [00:09:42] Speaker 00: And we're not aware of any case, to be clear, we're not aware of any case in which this court has adopted a so-called project-based theory of domestic industry, where some research and development work and these- What authority would you point to that should persuade us [00:09:55] Speaker 05: that we shouldn't allow an analysis like the Commission did. [00:09:58] Speaker 00: So Zircon for one. [00:09:59] Speaker 00: Zircon dealt with commercial products as opposed to prototypes, but there's no logical or policy reason for treating prototypes more charitably. [00:10:06] Speaker 00: If anything, the contrary. [00:10:08] Speaker 00: This case involves as a premise, as a premise for the decision now on appeal [00:10:12] Speaker 00: that there was an industry that had been established by virtue of these prototypes. [00:10:17] Speaker 00: And we would respectfully submit that the Zircon approach of rigor and precision in assessing the significance of the economic expenditures applies with even greater force when we're at the nascent research and development stage as opposed to the commercial product stage. [00:10:34] Speaker 05: at page 32, and they cite, it runs over to 33, and they talk a little bit about information I think is still confidential. [00:10:40] Speaker 05: But they say there's this undisputed finding of sort of an alternative way that the economic problem could be satisfied. [00:10:48] Speaker 05: It has to do generally with how much of mass mode investment was here in the US, address why that's not an adequate ground. [00:10:57] Speaker 00: So there too, Your Honor, we need to isolate to the particular patent practicing products that are relevant to the PUSA patents. [00:11:03] Speaker 00: before we can address that theory. [00:11:06] Speaker 00: And to give an example that's non-confidential, it's an extreme example, but for illustration purposes, if we reduced and isolated the economic expenditures to those that actually pertained to the PUSA patents, and the amount was $10, it wouldn't matter if the entirety of that amount was spent in the U.S. [00:11:22] Speaker 00: That would not meet the statutory requirement of significance. [00:11:25] Speaker 00: under subprong 1 and 2 of subsection A3, or the substantial expenditure prong of the research and development prong under subsection A3. [00:11:35] Speaker 00: I'll note, the research and development prong was not relied on by the Commission in this case, purely the labor and expenditure prong. [00:11:41] Speaker 00: But to assess whether the amount would be significant in the language of the statute, we first need to isolate to the patent side issue. [00:11:49] Speaker 00: Zircon requires that we do that. [00:11:51] Speaker 00: The decision didn't. [00:11:52] Speaker 00: I'll also note, the administrative law judge had a separate section of her domestic industry analysis for the 127 patent. [00:11:59] Speaker 00: That was found ultimately to be not infringed. [00:12:02] Speaker 00: But that's an example of how the analysis could and should have been done for the PUSA patents. [00:12:06] Speaker 00: to focus on a patent-by-patent basis exactly as Zircon requires. [00:12:11] Speaker 00: And the Zircon logic, again, applies with even greater force in the context of a nascent research and development stage. [00:12:17] Speaker 00: When it's most challenging to characterize that nascent stage as a, quote, industry, the rigor and precision is just as important if not more there. [00:12:24] Speaker 02: So would every prototype represent a different industry? [00:12:26] Speaker 02: Is that your argument? [00:12:27] Speaker 00: Each of the asserted patent families should be assessed separately with respect to the domestic industry requirement and the technical prong as well. [00:12:35] Speaker 00: But there needs to be first identification of the touchstone for the technical prong, the touchstone for the economic prong. [00:12:41] Speaker 00: Those should match. [00:12:42] Speaker 00: which they did not match here. [00:12:44] Speaker 00: If you compare page 60 of the joint appendix to page 306, there was no symmetry as between the economic prong and the technical prong. [00:12:51] Speaker 00: That was a threshold failing. [00:12:53] Speaker 00: And then even once those were applied, once applied, there was no isolation of the patent practicing products for the relevant patents here. [00:13:01] Speaker 00: What should have happened is we should have first taken the prototypes, the Rev A, Rev D, Rev E, made a finding as to whether those prototypes met the technical prong, step one. [00:13:10] Speaker 00: Step two, on the economic prong, there should have been an assessment of the significance of the economic expenditures for those particular products. [00:13:17] Speaker 00: What happened instead was that hedged finding on the technical prong, and then on the economic prong, a different touchstone was used. [00:13:25] Speaker 00: The Massimo watch project, which is a more generalized nebulous characterization, and that prevented the isolation and the rigor that Zircon requires. [00:13:36] Speaker 00: Now, even beyond the domestic industry, we see that same lack of precision and consistency and rigor on issues like enablement. [00:13:44] Speaker 00: I'll give you an example there. [00:13:45] Speaker 00: There, the key reference that we relied on was a patent that was originally assigned to a company called Lumadime. [00:13:55] Speaker 00: The priority date was years before the Puzo Patton family. [00:13:59] Speaker 00: The administrative law judge found that Luminine, in combination with some other references, invalidated the relevant claims of the 501 Patton, which was actually a third member of this Puzo Patton family that was originally part of the case. [00:14:12] Speaker 00: That finding of obviousness was adopted by the commission and was not appealed to your honors here. [00:14:19] Speaker 00: But having found that Lumadime in combination with other references invalidated, on the ground of obviousness, the 501 patent, the administrative law judge and then the commission in adopting this portion of the administrative law judge's decision found lacking the degree to which Lumadime enabled blood oxygen at the wrist. [00:14:39] Speaker 00: and found it particularly challenging to do blood oxygen at the risk, and required a more detailed disclosure of blood oxygen at the risk. [00:14:47] Speaker 03: Lumadime. [00:14:47] Speaker 03: You've just about used all of your rebuttal time. [00:14:51] Speaker 03: We'll give you three minutes for rebuttal, and we'll give extra time to Kelly. [00:14:57] Speaker 03: Mr. Trott, you are first. [00:14:59] Speaker 03: You're taking eight minutes. [00:15:11] Speaker 04: Good morning. [00:15:12] Speaker 04: May it please the court? [00:15:15] Speaker 04: I would like to start with technical prong, if that's OK with the court. [00:15:20] Speaker 02: Could you speak up a little bit? [00:15:23] Speaker 04: Yes, sorry. [00:15:25] Speaker 04: The first point I would like to make is that domestic industry products for the technical prong that the commission relied on were not just the admitted exhibits. [00:15:34] Speaker 04: It wasn't just exhibit 52, 58, so on and so forth. [00:15:41] Speaker 04: My friend from Apple points to page 60 of the ALJ's decision where the ALJ recognizes that complainants rely on the red A sensor. [00:15:57] Speaker 04: It gives a citation of an exhibit for each of them, but then it cites Massimo's post-hearing brief and the argument that was presented to the commission. [00:16:09] Speaker 04: And there, for each of the emitted exhibits, Massimo explained that these exhibits are introduced as representative or exemplary of the domestic industry products. [00:16:20] Speaker 04: And that is how Massimo presented its evidence throughout its case, and that is consistent with the Commission's findings as well. [00:16:29] Speaker 02: It seems to me that your friend on the other side was arguing that you're limited by the language that was used in the [00:16:38] Speaker 02: in the complaint or that you're limited by the physical samples that you provided. [00:16:44] Speaker 02: What's your response to that? [00:16:46] Speaker 04: We disagree on both points. [00:16:49] Speaker 04: The purpose of the complaint is to allege a violation of Section 337 so that an investigation could be instituted. [00:16:59] Speaker 04: And the Commission's findings for a determination are consistent with the APA. [00:17:04] Speaker 04: They would be on the record after a notice [00:17:08] Speaker 04: notice an opportunity to be heard. [00:17:10] Speaker 04: And the decision needs to be based on the whole record. [00:17:13] Speaker 04: It's not on the allegation of the complaint. [00:17:16] Speaker 04: Under my friend's view, it seems like there would be no need for a hearing at all. [00:17:20] Speaker 04: We would just assess violations based on the complaint as well. [00:17:25] Speaker 04: And also, we have a statutory duty to consider all of the evidence presented by the parties. [00:17:31] Speaker 04: We're not limited to just certain subsets. [00:17:35] Speaker 04: give the parties an opportunity to be heard. [00:17:38] Speaker 04: We evaluate the evidence and determine whether or not they met their burden. [00:17:42] Speaker 04: We're not narrowed to just specific exhibits that are admitted for representative purposes. [00:17:48] Speaker 04: And we are not limited to just the CAD drawings that were admitted for each of the exhibits as well. [00:17:55] Speaker 05: What about the argument that there needs to be symmetry between what the patent practicing articles are at the technical prong, and they need to be identical at the economic prong? [00:18:07] Speaker 05: Do you agree with that, and was that done here? [00:18:09] Speaker 04: That was done here. [00:18:11] Speaker 04: So I don't know if I agree with that exactly. [00:18:14] Speaker 04: So for the economic prong analysis, [00:18:18] Speaker 04: The inquiry is centered on the article that practices the patent, but it's not limited to just that. [00:18:27] Speaker 04: It includes investments that are with respect to or relating to the patent practicing patents. [00:18:34] Speaker 05: So what I'm hearing is you [00:18:35] Speaker 05: dispute that it has to be identical. [00:18:39] Speaker 05: That is, if the way we review what the Commission did is it only looked to the certain prototypes at the technical prong, but then it widened its analysis for the economic prong to include non-practicing iterations. [00:18:58] Speaker 05: If that's how we see what the Commission did, you say that's okay. [00:19:05] Speaker 04: It's an iterative design process where the rev, a, d, and e are just future versions of the circle and wings. [00:19:15] Speaker 04: It's one product. [00:19:17] Speaker 05: But it looks to me like the commission considered, for instance, the circle and the wings at the economic prong analysis, but did not consider them at the technical prong. [00:19:29] Speaker 05: And so there's this mismatch between [00:19:32] Speaker 05: what they found as adequate for the technical and what they found adequate for the economic. [00:19:38] Speaker 05: And so if Apple's right that our law requires a symmetry or an identicality, then I think you have a problem. [00:19:45] Speaker 05: So help me with your position on that. [00:19:47] Speaker 04: All of the investments that the commission considered were investments that were related to or with respect to the ADME. [00:19:55] Speaker 04: From the circle and wings, those were features from those devices were incorporated [00:20:01] Speaker 04: into the A, D, and E sensors. [00:20:04] Speaker 04: There's an iterative design where they've led to these later versions. [00:20:10] Speaker 04: They incorporated features from those previous versions. [00:20:13] Speaker 04: It's all one design project. [00:20:20] Speaker 04: And as you're getting at it. [00:20:22] Speaker 05: The circle and the wings, you don't argue that they practiced the patents, right? [00:20:29] Speaker 04: Right. [00:20:30] Speaker 05: So why is it fair to consider that, any investment relating to that? [00:20:35] Speaker 04: The consideration of the investments that you consider for the economic prong stage, it's broader than what you can consider. [00:20:45] Speaker 04: Take, for example, this court's decision in Motorola. [00:20:48] Speaker 04: There, the investments were alleged by the complainant were only investments in software. [00:20:57] Speaker 04: But the completed article for the technical prong was a mobile device that had that software on it. [00:21:03] Speaker 04: And this court considered and rejected a very similar argument in that case. [00:21:07] Speaker 04: The argument was that you can't consider the investments in the software because the software doesn't practice the patent. [00:21:16] Speaker 04: But the court did consider it. [00:21:18] Speaker 04: And the reason why it considered it is because that software was important to and related to the [00:21:25] Speaker 04: article that practices the patent. [00:21:26] Speaker 05: But what about in the gray brief at 15 and 16, I'm sure you recall this is kind of vivid, Apple talked about what about the Model T. Under your logic, an investment in, they say, 1909 in the Model T could still be cited now because something to do with that research is no doubt impacting automobiles today. [00:21:51] Speaker 05: Is that the reality of your logic? [00:21:54] Speaker 04: No, not at all. [00:21:55] Speaker 04: The commission decision, I think, shows that that's not true here. [00:22:00] Speaker 04: So we require a clear connection between the research, between the labor that's credited and the investments directed to the patent practicing articles. [00:22:12] Speaker 04: In this very investigation, Massimo alleged a lot of investments, even in very recent designs of wrist-worn pulse oximeters, [00:22:23] Speaker 04: And the commission rejected that because there wasn't a clear relationship to the articles protected by the patent. [00:22:31] Speaker 04: So I can't comment on any argument that Ford would make in the future. [00:22:35] Speaker 04: But I think it's highly unlikely that, given the commission's practice, that century-old automobile... So you have to show a nexus between... Exactly like the statute says. [00:22:46] Speaker 04: It says, with respect to or relating to. [00:22:48] Speaker 04: The court has viewed that. [00:22:51] Speaker 04: Search it that that inquiry as pertaining to directed to and it's that Nexus also alleged in the complaint The Nexus alleged in the complaint. [00:23:02] Speaker 04: Yes, I believe it is Should it be should it be they have to allege a violation so it not a violation the Nexus well that that would be alleging that domestic industry element of It would be they have to alleged domestic industry [00:23:19] Speaker 04: And that nexus would be within the required allegations for a domestic industry. [00:23:26] Speaker 05: There's a lot of argument about Chenery in the reply brief. [00:23:29] Speaker 05: They're accusing you and Massimo of bringing up a whole bunch of arguments in your briefing that the commission didn't reach and therefore we cannot reach them. [00:23:37] Speaker 05: Do you have a response to that? [00:23:39] Speaker 04: Oh yeah, there are a lot. [00:23:40] Speaker 04: Can you point me to a specific one? [00:23:42] Speaker 05: Do you not have a general response? [00:23:46] Speaker 05: Do you agree we can't affirm on the ground that the commission didn't reach this? [00:23:52] Speaker 05: Do you agree with that? [00:23:54] Speaker 04: Are you talking about? [00:23:55] Speaker 05: So for example, Chenery precludes the court from affirming on the ground of waiver where the commission did not want to suggest that an issue had been waived. [00:24:04] Speaker 04: Do you agree or disagree? [00:24:05] Speaker 04: I disagree with that. [00:24:07] Speaker 04: We don't need to make a waiver finding for arguments that are obviously waived. [00:24:11] Speaker 04: And you wouldn't be affirming us on waiver. [00:24:13] Speaker 04: That's not a ground supporting the commission. [00:24:15] Speaker 04: You'd be affirming us on the grounds on the commission's decision below. [00:24:22] Speaker 04: And those arguments would just be forfeited. [00:24:27] Speaker 03: Thank you, counsel. [00:24:29] Speaker 03: Mr. Reg. [00:24:34] Speaker 03: Mr. Ray will give you the extra time. [00:24:36] Speaker 03: Take three minutes if you need it. [00:24:39] Speaker 01: Thank you, Your Honor. [00:24:40] Speaker 01: Mr. Ray from Massimo and Circuit Court are the interveners in this case. [00:24:45] Speaker 01: Many of the questions that you've asked today are answered by the statute. [00:24:49] Speaker 01: And I thought we should start with the statute. [00:24:52] Speaker 01: For example, there's not symmetry between the technical prong and the economic prong. [00:24:57] Speaker 01: The economic prong is broader because of the language that counsel raised in the statute with respect to or relating to. [00:25:04] Speaker 01: Whereas the article must meet the limitations of the claim. [00:25:10] Speaker 01: There is no question in my mind in this case, and I will show you, that Apple is really trying to rewrite the law. [00:25:16] Speaker 01: They are trying to change the law. [00:25:18] Speaker 01: And the easiest way to show that is if you go to the great brief, page seven, they conclude with this following quote. [00:25:29] Speaker 01: Quote, and again, section 337 requires a finished [00:25:35] Speaker 01: Article in quotes not finished in quotes article not a nascent development project There is their argument in a nutshell. [00:25:43] Speaker 01: They are trying to read in an adjective to the word article That argument was rejected by the Commission before the trial even started they filed a motion for sanctions terminating sanctions that our complaint was inadequate and [00:26:00] Speaker 01: The commission noted our argument that the statute does not require a finished product. [00:26:06] Speaker 01: They alleged that we were defrauding the commission by putting forth prototypes. [00:26:11] Speaker 02: Are you familiar with our case in Suprema? [00:26:14] Speaker 01: I certainly am. [00:26:15] Speaker 02: What's this application to this particular argument you're making now? [00:26:19] Speaker 01: that you need a physical article. [00:26:23] Speaker 01: We have physical articles. [00:26:25] Speaker 01: In some of the other cases, you might be talking about things that aren't physical, like in ClearCorrect was another case where the court said digital data was not physical. [00:26:34] Speaker 01: But we have physical articles. [00:26:36] Speaker 01: They don't need to be a finished product. [00:26:39] Speaker 01: And this commission at 14136 [00:26:44] Speaker 01: in this order denying the motion for terminating sanctions, specifically cited cases telling Apple that recognizing that a commercial production of a domestic industry article is not required. [00:26:59] Speaker 01: This court in Phillips later said you don't need FDA clearance for an article. [00:27:04] Speaker 01: The commission's decision say the word article is capacious. [00:27:07] Speaker 01: There's no adjective, no limiting attribute to argument. [00:27:11] Speaker 05: At the time of those orders, though, I think you were arguing for both established domestic industry and domestic industry in the process of being established. [00:27:20] Speaker 05: And as the case comes to us, we can only reach, unless you disagree, help me, but we can only reach the established industry prong. [00:27:28] Speaker 05: We can't affirm on the grounds of an industry being established. [00:27:33] Speaker 01: Correct. [00:27:34] Speaker 05: So aren't those broad statements [00:27:36] Speaker 05: possibly going just to the prong that's not really before us? [00:27:39] Speaker 01: No. [00:27:41] Speaker 01: This is very, very clear that we were relying on an iterative design project. [00:27:47] Speaker 01: A single product which culminated in the W-1 which received FDA clearance after [00:27:52] Speaker 01: the final initial determination. [00:27:55] Speaker 01: So no, this discussion is clearly discussing our reliance on the technical prong and not in the process of being established, which the ALJ found, but the Commission didn't take a position. [00:28:08] Speaker 05: Do you have any iterative design process cases, or is this an issue of first impression for us? [00:28:13] Speaker 01: I cannot find an iterative design process case exactly like ours. [00:28:18] Speaker 01: But that's why I'm relying on the statute, because article is such a broad, broad term. [00:28:24] Speaker 01: It applies to any physical thing. [00:28:27] Speaker 01: And that's exactly what the commission has held. [00:28:30] Speaker 01: And if you look at footnote four on 14136, the commission cites some cases to that effect. [00:28:36] Speaker 01: And Philip Morris came out two weeks later, which said you don't even need FDA clearance for products that can't be sold. [00:28:44] Speaker 01: So I think it's clear from their brief, they're trying to read something into article that is just simply not there. [00:28:52] Speaker 01: They also say, this whole argument on the CAD drawing, the CAD drawing, they occupy a lot of their brief on that, and they say, we have no answer, according to their gray brief, we have no answer for the fact that if we had a photo, why didn't we include it? [00:29:07] Speaker 01: Well, we did include a photo, and it's in the same order I just referred to. [00:29:11] Speaker 01: And it's 14130. [00:29:16] Speaker 01: In that same order denying is a photograph, which we needed a photograph to show the straps. [00:29:23] Speaker 01: because the straps aren't shown by the CAD joints. [00:29:26] Speaker 01: And this was in the complaint, attached as an exhibit, relied on by the Commission, and Apple has not sought review of these findings made before the trial. [00:29:37] Speaker 01: So we have a very comprehensive pre-trial order. [00:29:40] Speaker 01: This was April 28th. [00:29:41] Speaker 01: The trial was until June, and Apple has not sought review on any of these findings, including the finding [00:29:48] Speaker 01: that it is undisputed. [00:29:51] Speaker 01: Undisputed. [00:29:52] Speaker 01: There is no dispute that multiple Massimo watch physical items existed at the time of the amended complaint. [00:29:59] Speaker 01: And that's at 14138. [00:30:03] Speaker 01: fine found by the commission, not sought review. [00:30:06] Speaker 01: So I can understand these CAD arguments about the drawings. [00:30:11] Speaker 05: Is Zircon a problem for you? [00:30:13] Speaker 05: No. [00:30:14] Speaker 05: Why not? [00:30:14] Speaker 01: No. [00:30:15] Speaker 01: Zircon deals with different product lines covered by different patents, and you can't aggregate. [00:30:20] Speaker 01: We agree with that. [00:30:22] Speaker 01: But there's no dispute in this case that... You can't aggregate the patents or the cost? [00:30:27] Speaker 01: You can aggregate the patents if they cover common subject matter, which is the case here. [00:30:32] Speaker 01: If you look at the claims, they all read on the devices. [00:30:36] Speaker 01: As Mr. Trout explained, Rev. [00:30:38] Speaker 01: A, D, and E satisfy all the claims of the 648. [00:30:43] Speaker 01: Rev. [00:30:44] Speaker 01: D and E satisfy claim 28 of the 502. [00:30:50] Speaker 01: We don't have a situation of the Model T and the Ford Bronco. [00:30:54] Speaker 01: We have one re-integrative design project leading to one product, and the judge was so careful. [00:31:01] Speaker 01: She excluded work we did prior to the W1 project, which led to the W1 project. [00:31:07] Speaker 01: So she did a very conservative approach. [00:31:10] Speaker 05: But Circle and Wings, they don't practice your patents, but yet investments related to them, I think, were counted by you. [00:31:17] Speaker 05: Correctly so. [00:31:18] Speaker 05: That is correct. [00:31:19] Speaker 05: Why is that correct if they are patented articles? [00:31:21] Speaker 01: Because there's no symmetry. [00:31:22] Speaker 01: We're back to the statute. [00:31:24] Speaker 01: Mr. Trout correctly quoted the statute. [00:31:27] Speaker 01: The statute with regard to the economic problem says industry existing relating to or with respect to those products or articles. [00:31:38] Speaker 01: Articles is the word, not products, articles. [00:31:40] Speaker 01: And Motorola in this court's case law, in fact, in Motorola, I believe Mr. Trout referred to that as well, [00:31:47] Speaker 01: Motorola dealt with a component. [00:31:50] Speaker 01: And the Federal Circuit, this court said, components can be part of the industry, even though the patent claim doesn't read on. [00:31:57] Speaker 05: Can we enforce that view? [00:31:58] Speaker 05: Why won't we have watered down the domestic industry so much that we render it the economic prong toothless, as Apple contends? [00:32:07] Speaker 05: If we adopt your view, they say we would render the economic prong toothless. [00:32:12] Speaker 01: Well, first of all, in the facts of this case, that clearly doesn't apply because Apple isn't even challenging the significance of the quantity of our expenditures. [00:32:20] Speaker 01: They're not even alleging that our quantity isn't enough or not significant. [00:32:24] Speaker 01: So in this case, we clearly showed the industry, with respect to the articles, actually had an article, many revisions of the article, they all exist at the time, and the findings by the Commission repeatedly are that they are representative, and your question about A, D, and E, the physical item, [00:32:48] Speaker 01: The reason why the commission was careful in saying with respect to the design A or with respect to design D, that's because there's more than one. [00:32:55] Speaker 01: If you look at the 70490 of the joint appendix, Massimo explains the quantities that they made of each revision. [00:33:08] Speaker 01: So to say you need to show that that particular one operated is borderline silly. [00:33:16] Speaker 01: There were many. [00:33:17] Speaker 01: There was a dozen of each, at least a dozen of each revision, and that's explained at 70490, an exhibit that Apple introduced at the trial, which was our interrogatory responses, explaining the design and the history and the software and the firmware in each of the physical items. [00:33:34] Speaker 03: What about prosecution latches? [00:33:38] Speaker 03: These patents were first filed in 08. [00:33:41] Speaker 03: Seems like there was a continuation filed every two years until, what, 2019. [00:33:49] Speaker 03: Why wasn't prosecution latches relevant? [00:33:55] Speaker 01: Well, first of all, that issue has been waived. [00:33:57] Speaker 01: They did not raise it with any specificity to the commission. [00:34:00] Speaker 01: So the commission didn't even touch prosecution latches. [00:34:03] Speaker 01: And later on, the denial of stay specifically found that they had waived that argument. [00:34:08] Speaker 03: Now, if you want... I thought the ALJ rejected the defense and the commission adopted that. [00:34:17] Speaker 01: Yes, but then when they raised it on the motion to stay, the commission then said, you didn't even preserve that for review. [00:34:25] Speaker 01: So whether they adopted or not on the merits, the adoption piece, the ALJ correctly found with no dispute that there was no delay in the prosecution. [00:34:35] Speaker 01: There was nothing unfair. [00:34:37] Speaker 01: Everything was done publicly. [00:34:39] Speaker 01: The initial application published in 2018 and that this patent produced, this application produced many patents. [00:34:49] Speaker 01: And there was no support for Apple's allegation that these filings somehow had something to do with the Apple watch. [00:34:54] Speaker 01: And to show the silliness of that argument, they did not introduce pulse oximetry to the best they could until COVID in 2020. [00:35:05] Speaker 01: And they tried to act like these filings had something to do with their series 0, series 1, series 2, series 3. [00:35:11] Speaker 01: Those didn't even have pulse oximetry in them. [00:35:13] Speaker 01: So there's no factual support for any of the allegations. [00:35:17] Speaker 01: And this is why the judge rejected outright all of the prosecution latches defenses. [00:35:25] Speaker 03: Thank you, Mr. Ray. [00:35:25] Speaker 01: Thank you, Your Honor. [00:35:29] Speaker 03: Mr. Mueller, we'll give you four minutes. [00:35:32] Speaker 00: Thank you, Your Honor. [00:35:35] Speaker 00: So let me start with this question of the mismatch between the technical prong and the economic prong and the lack of symmetry. [00:35:41] Speaker 00: Mr. Wray said that the statute permits that lack of symmetry, which is evident in the administrative law judge's decision that that lack of symmetry was part of her analysis, and the commission adopted it, which was error. [00:35:53] Speaker 00: The statute itself answers the question. [00:35:55] Speaker 00: And if we go to 1337A3, I'm reading from the statute. [00:35:59] Speaker 00: For purposes of paragraph two, paragraph two describes the technical prong and precedes this, an industry in the United States shall be considered to exist if there, I'm sorry, paragraph two describes the intellectual property violations. [00:36:13] Speaker 00: This goes on to say, an industry in the United States shall be considered to exist if there is in the United States with respect to, with respect to the articles protected by the patent [00:36:26] Speaker 00: And it goes on to list copyright and trademark. [00:36:29] Speaker 00: A, significant investment in plants and equipment. [00:36:31] Speaker 00: B, significant employment of labor or capital. [00:36:34] Speaker 00: Or C, substantial investment in its exploitation. [00:36:38] Speaker 00: And it continues. [00:36:39] Speaker 00: The only problem that the commission relied on was B, substantial or significant employment of labor or capital. [00:36:45] Speaker 00: That needs to be with respect to, according to the words of the statute, with respect to the articles protected by the patent. [00:36:55] Speaker 00: So the statute answers the question for this. [00:36:57] Speaker 00: There needs to be symmetry between the technical prong and the economic prong. [00:37:02] Speaker 00: The subject of the technical prong inquiry needs to be identical to the subject of the economic prong inquiry. [00:37:09] Speaker 00: That's exactly consistent with the rigor and precision that this court required in the Zircon case. [00:37:14] Speaker 00: And it's exactly consistent with the language of the statute. [00:37:18] Speaker 00: Here it's lacking, which is forcing Massimo to retreat to the argument the statute permits the asymmetry. [00:37:24] Speaker 00: It does not. [00:37:25] Speaker 00: and retreat to the argument that this court, your precedent, allows for this project-based theory that was used for the economic prong, not for the technical prong, but for the economic prong. [00:37:37] Speaker 00: And again, as Mr. Wray acknowledged, and I agree with him, there's no case that supports that theory. [00:37:43] Speaker 00: There's no case that says a project-based form of domestic industry that's more nebulous, generalized, [00:37:49] Speaker 00: research and development project would be sufficient. [00:37:52] Speaker 00: It would be particularly insufficient in a case in which in the process... Is that what we said in Motorola? [00:37:58] Speaker 00: So in Motorola, Your Honor, there the issue was components in the form of certain operating system software and some other components used in the patent practicing products. [00:38:08] Speaker 02: But there's just a lack of symmetry there. [00:38:10] Speaker 00: No, not so, Your Honor. [00:38:12] Speaker 00: As far as I can know, there's no lack of symmetry there. [00:38:14] Speaker 00: The complaint was that the expenditures were being devoted to components, and there the idea was that the components were used in the products. [00:38:23] Speaker 00: So if here the expenditures had been for things used in Rev A, Rev D, Rev E, we'd have a different case. [00:38:29] Speaker 05: To your question, Judge Jargon. [00:38:31] Speaker 05: On your reasoning, components could never be the basis for an investment that would qualify, because there can't be symmetry between non-practicing components and a larger practicing product. [00:38:44] Speaker 00: not so your honor the way it would work we would suggest is the technical problem would assess what practices and then there could be an assessment as to the economic expenditures that are with respect to those products and I'll give you an example if there was a manufacturing line set up that means there's no symmetry you're not requiring symmetry if you're saying investment [00:39:03] Speaker 05: Let's just posit a world in which the investment only goes to one tiny component of a larger patent practicing product, okay? [00:39:11] Speaker 00: Yes, sir. [00:39:11] Speaker 05: So the larger patent practicing product is relied on at the technical prong, but at the [00:39:18] Speaker 05: economic problem, we're only relying on investments going to the component. [00:39:24] Speaker 05: You say that's allowed, but then you admit symmetry is not required. [00:39:29] Speaker 05: That's not symmetry. [00:39:30] Speaker 00: I respectfully disagree, Your Honor. [00:39:32] Speaker 00: If they're both, the starting point would be the patent practicing product. [00:39:35] Speaker 00: And the question would be, for the economic expenditures, what's with respect to? [00:39:38] Speaker 00: Circle and Wings were offered up for practicing the 745 patent, which is not part of the same family. [00:39:45] Speaker 00: It's the Zircon issue all over again, just at the prototype stage. [00:39:48] Speaker 00: The last thing I'll say, Your Honor, the Joint Appendix 27241, the Commission acknowledged that it was undisputed as of December of 2023, and I quote, Massimo was not selling his W-1 watch in the United States in any meaningful quantity and does not intend to widely market that product in the United States. [00:40:05] Speaker 00: Why does that matter to your question, Judge Stark? [00:40:08] Speaker 00: To take this proposed regime of a project-based form of domestic industry would water that requirement down to nothing. [00:40:16] Speaker 00: It's inconsistent with the statute, and at a minimum, there should be a remand for the symmetrical application of the technical prong and the domestic prong, and the assessment of whether using the same article that the statute requires [00:40:29] Speaker 00: There were sufficient economic expenditures and a sufficient showing of the technical prompt and that they matched. [00:40:34] Speaker 00: That's what the statute requires, and that's what good policy would dictate as well, Your Honor. [00:40:38] Speaker 02: You're almost out of time, but I wanted you to be sure to address the prosecution latches issue. [00:40:44] Speaker 00: Yes, Your Honor. [00:40:45] Speaker 00: So on prosecution history latches, there's a couple points I'd make briefly. [00:40:48] Speaker 00: Number one, the original priority application was in 2008. [00:40:51] Speaker 00: There was a series of continuation applications filed over a three-year period. [00:40:56] Speaker 00: Starting in 2010, there was no continuation application filed for a five-year period. [00:41:01] Speaker 00: There was some prosecution activity on the older applications, but no new continuation applications for five years. [00:41:07] Speaker 00: which is a strong indication that the natural organic growth of the portfolio was coming to a close, at least with respect to filing new continuations. [00:41:14] Speaker 03: Wasn't your argument waived? [00:41:16] Speaker 00: No, Your Honor, for a couple of reasons. [00:41:17] Speaker 00: Number one, this is fully addressed by the administrative law judge. [00:41:20] Speaker 00: Number two, the commission did address this squarely in their own decision. [00:41:25] Speaker 00: Number three, the only statement of waiver was not made in the final determination, which is the only decision before this [00:41:31] Speaker 00: this court at this point. [00:41:38] Speaker 05: That's right. [00:41:40] Speaker 00: In the state decision, in the decision denying our request for a stay at the exclusion order, for the very first time the commission said that the Latchy's argument was waived, they did not say that in their review of the administrative law judge's final determination. [00:41:59] Speaker 02: They addressed it, but they didn't reach a resolution on it. [00:42:02] Speaker 00: They adopted the ALJ's finding that there was no prosecution latches. [00:42:06] Speaker 00: And this is analogous to the Department of Homeland Security case that we cited in our briefs, where the rescission order with respect to the DACA immigration regime, the rescission order was followed by a later memorandum providing further explication of the reasons for the rescission order. [00:42:20] Speaker 00: The Supreme Court held the later memorandum needed to be ignored. [00:42:23] Speaker 00: So to hear the later justification on latches, where the commission is saying after its final determination that there was a waiver, but did not say so in the four corners of the decision on appeal. [00:42:35] Speaker 03: Thank you, counsel. [00:42:36] Speaker 03: I think we have both arguments. [00:42:38] Speaker 03: The case is submitted, and you can walk for our decision. [00:42:41] Speaker 00: Thank you very much, Your Honor.