[00:00:00] Speaker 02:
First case for argument this morning is 24-1669, GoTV streaming versus Netflix.

[00:00:07] Speaker 02:
Mr. Alavi.

[00:00:09] Speaker 01:
Good morning, and may it please the court.

[00:00:11] Speaker 01:
My name is Amir Alavi, and I'm appearing on behalf of the appellant GoTV streaming LLC.

[00:00:19] Speaker 01:
There are numerous issues on appeal before this court.

[00:00:22] Speaker 01:
But we submit that this appeal raises an important issue on damages.

[00:00:28] Speaker 01:
And that is, may a party, whether it's the defendant or the plaintiff, publish the amounts paid under license agreements that are admittedly not technically comparable.

[00:00:40] Speaker 02:
Can I ask you just a in the weeds kind of question?

[00:00:43] Speaker 01:
Yes, Your Honor.

[00:00:44] Speaker 02:
Which is, it seemed to me, but I want you to confirm or deny this,

[00:00:48] Speaker 02:
Some of the damages issues go to kind of daubric questions about the admissibility of the reports, et cetera.

[00:00:54] Speaker 02:
But quite a number of them, and I think some of the key ones, seem to go with just testimony at trial, things said by the witnesses that weren't necessarily part of the report.

[00:01:06] Speaker 02:
They were just coming up.

[00:01:07] Speaker 02:
And you objected to at least some of them.

[00:01:09] Speaker 02:
And the court rejected your objected.

[00:01:11] Speaker 02:
So this issue, the threshold issue about how this order was only a one word order,

[00:01:18] Speaker 02:
That wouldn't take care of necessarily the stuff that happened at trial that you're complaining of, the statements at trial.

[00:01:27] Speaker 02:
Am I right about that?

[00:01:28] Speaker 02:
Or how do you see what happened at trial versus the Daubert kind of report issue?

[00:01:32] Speaker 01:
Your Honor, I think you're right.

[00:01:33] Speaker 01:
I think some of these issues are commingled.

[00:01:35] Speaker 01:
So for example, and I'll try to parse it out as best I can, the fundware

[00:01:43] Speaker 01:
application development agreements.

[00:01:46] Speaker 01:
That was covered by the Dow bear motion and the one word order and that was Ms.

[00:01:52] Speaker 01:
Bennis's affirmative part of her affirmative testimony on damages on the defense side.

[00:01:58] Speaker 01:
The funware pricing sheet that was also dealt with squarely in the Dow bear order because that was only used by Ms.

[00:02:06] Speaker 01:
Bennis in her affirmative opinion.

[00:02:10] Speaker 01:
Then we get to the Netflix Settlement Agreements, the 13 Settlement Agreements.

[00:02:17] Speaker 01:
The three where there is a dispute as to whether or not they are technically comparable or economically comparable was raised squarely in the Dow-Behr briefing and was part of Ms.

[00:02:29] Speaker 01:
Bennis' affirmative report.

[00:02:31] Speaker 01:
So all of those issues are, we believe, resolved by the one-word order issue.

[00:02:37] Speaker 02:
But I guess some of the confusion, maybe because there are just too many different issues floating around in these three buckets, was how much the stuff could have come in if it were coming in for a limited purpose.

[00:02:49] Speaker 02:
So the Dabir issue may be different.

[00:02:52] Speaker 02:
than some of the statements made by those witnesses.

[00:02:56] Speaker 02:
And that's where I'm kind of confused.

[00:02:57] Speaker 01:
I was going to get to those very ten licenses.

[00:03:01] Speaker 01:
We disagree that the price, the amount of the licenses come in for any purpose.

[00:03:08] Speaker 01:
We filed a Dow bear motion on those ten licenses because they were within miss Bennis's Report and she was relying on them under Georgia Pacific factor 2 So she relied them on them for price and she also relied upon them for the form of the agreement that Netflix preferred lump-sum agreements the court denied our Dow bear motion on that we also had a mill of

[00:03:33] Speaker 01:
uh... that was submitted simultaneously says if you're gonna allow miss bennett's to talk about the form of the motion uh... of the licenses you should not allow her to talk about the price because the price for non

[00:03:45] Speaker 03:
put up a demonstrative that showed the things with the price, correct?

[00:03:49] Speaker 01:
It did show it with the price, and that was done.

[00:03:50] Speaker 01:
And this is what's close to your point.

[00:03:52] Speaker 02:
So you're agreeing that maybe some of her testimony could have come in in terms of testifying about lump sum licenses, but not the other stuff.

[00:04:01] Speaker 02:
That's why I think there's some parsing that goes on between the Daubert and the testimony at trial.

[00:04:05] Speaker 02:
I don't quite know how to do that.

[00:04:08] Speaker 03:
Were you making an argument that under factor two, the non-comparable licenses can't be admitted for any purpose, including to show a preference for lump sum?

[00:04:21] Speaker 01:
No, Your Honor.

[00:04:22] Speaker 01:
I want to answer both questions.

[00:04:23] Speaker 01:
No, Your Honor.

[00:04:24] Speaker 01:
We made the argument that they were not technically comparable, so they should not be included for any purpose.

[00:04:31] Speaker 03:
That's what I mean.

[00:04:32] Speaker 01:
We did make that argument.

[00:04:34] Speaker 03:
Including just to show a preference for a particular type of arrangement.

[00:04:38] Speaker 01:
That's correct, Your Honor.

[00:04:39] Speaker 01:
We made that argument in the district court.

[00:04:41] Speaker 01:
We also, through a motion in Lumine, argued, if you're going to let it in, because the defendant's position was, while they admitted they weren't technically comparable, they should come in for lump sum, the price should not be shown to the jury.

[00:04:53] Speaker 01:
And both of those, the Daubert motion and the Mill, were denied in a one-word order.

[00:04:58] Speaker 01:
Judge Russ, I'm trying to get back to your question, which was,

[00:05:05] Speaker 01:
We disagree that non-comparable, technically comparable licenses can be used to show preference for lump sum, particularly when the defendant did not produce all their licenses in the case.

[00:05:17] Speaker 01:
But having said that, if the court

[00:05:20] Speaker 01:
If the judge disagreed with us and if this panel disagrees with us, there's a simple way for Ms.

[00:05:24] Speaker 01:
Bennis to get that testimony out or to cross Mr. Dell about lump sum, which is to say there are 13 licenses and all of them are lump sum.

[00:05:33] Speaker 01:
There's no need to put up a demonstrative that puts the price of those lump sum agreements up.

[00:05:39] Speaker 02:
And you said that the challenge to the demonstrative came in on a motion to eliminate or based on what happened at trial?

[00:05:48] Speaker 01:
Both.

[00:05:49] Speaker 01:
We didn't know about the demonstrative.

[00:05:50] Speaker 01:
We had a motion and limiting on, don't show the price to the jury of any non-technically comparable licenses.

[00:05:57] Speaker 01:
That was denied in a one word order.

[00:05:59] Speaker 01:
Then at trial, because we did not exchange demonstratives for cross-examination, the first time we saw the demonstrative was during Mr. Dell's cross-examination.

[00:06:08] Speaker 01:
And I objected at that time.

[00:06:10] Speaker 01:
And the objection was overruled by the district court.

[00:06:13] Speaker 01:
And the lead up

[00:06:15] Speaker 01:
to the demonstrative.

[00:06:16] Speaker 01:
This was not used with Mr. Dell, for example, on the issue of lump sum.

[00:06:21] Speaker 01:
The lead-up question, and I'll give you the appendix site because it's at page 631, was have you seen the pricing of the Netflix licenses?

[00:06:31] Speaker 01:
That's the first question that they asked Mr. Dell.

[00:06:35] Speaker 01:
Then they put up the demonstrative.

[00:06:36] Speaker 01:
And the title of the demonstrative, it's not about lump sum.

[00:06:39] Speaker 01:
The title of the demonstrative was Netflix patent licenses colon lump sum payments under $2 million.

[00:06:46] Speaker 04:
Right.

[00:06:47] Speaker 04:
I mean, you're arguing the merits now.

[00:06:49] Speaker 04:
And you have a perfectly clear argument about the merits that the bottom line comparing apples to rabbits, it's just

[00:06:59] Speaker 04:
Incredibly irrelevant and you just can't do that and it it skews the horizon and all that stuff Your test your experts testimony was about a what a per customer Charge right and what for the life of the patents amount therefore ending up in a lump sum of

[00:07:23] Speaker 04:
not ending up in a running royalty or future litigation until these patents finally expire.

[00:07:30] Speaker 01:
Your Honor, in his expert report, he had a running royalty opinion.

[00:07:36] Speaker 01:
So that was through the time of trial.

[00:07:38] Speaker 01:
And then a fully paid up lump sum.

[00:07:41] Speaker 01:
Both used the same methodology, which was to rely on a Learfield application development that charged a per subscriber percent.

[00:07:50] Speaker 04:
You know, I'm asking what may just be a trivial question.

[00:07:53] Speaker 04:
If you got all the damages requested here, would your relations with respect to these patents, with Netflix, be over and done with?

[00:08:04] Speaker 04:
These patents last for a while.

[00:08:06] Speaker 04:
Not that long, but 2029 or 2031, in maybe one case.

[00:08:12] Speaker 01:
We asked for a running royalty at trial.

[00:08:15] Speaker 01:
And if it was a running royalty, then it would have been a running royalty through trial, and then we would have had

[00:08:20] Speaker 02:
future future damages through either post verdict running royalty or but the jury ultimately awarded a lump sum of Forget the exact number, but I think it was two million dollars or two point five two point five million dollars your honor That brings to mind just another side question, and we'll ask both sides to come in on this This is just more housekeeping, but there are pending IPRs there are related to these am I what I understand is that with for the

[00:08:47] Speaker 02:
175 of the 214.

[00:08:50] Speaker 02:
I have the numbers wrong, but there you lost with respect to all the claims that are in dispute in this case.

[00:08:59] Speaker 02:
Is that correct?

[00:08:59] Speaker 01:
Your honor, you're correct that we lost with respect to the claim that we elected to go to trial with, but with respect to claims that were live before trial, there are claims that survived.

[00:09:10] Speaker 01:
So on remand, whether or not Judge Klausener will

[00:09:14] Speaker 01:
forces to go to trial on the selected claims or reopen.

[00:09:18] Speaker 01:
It depends on whether or not the 865 is back in the case.

[00:09:21] Speaker 01:
It depends on whether or not the court reverses on inducement.

[00:09:25] Speaker 01:
If we have to go back to the beginning, we believe we can elect different claims to retry the case.

[00:09:32] Speaker 01:
That's going to be a discretion to the district court, I believe, as to how far he reopens the case.

[00:09:38] Speaker 01:
And it depends on the scope of this court's opinion if you reverse and remand.

[00:09:42] Speaker 02:
And on the 865,

[00:09:45] Speaker 02:
Netflix lost and they haven't appealed, correct?

[00:09:48] Speaker 01:
That's correct.

[00:09:49] Speaker 02:
Can I just take you back to the damages for one global question because it's hard, I think virtually essentially all the damages issues I've had have involved the patentee, the patent owner.

[00:10:02] Speaker 02:
and their failure to apportionment and their comparability issues.

[00:10:05] Speaker 02:
I can't recall.

[00:10:07] Speaker 02:
I'm sure maybe I have.

[00:10:09] Speaker 02:
From this side, if they wanted to put forward a global license, which they did in this case, did that global license include any of the patents in dispute here?

[00:10:21] Speaker 02:
Because if it did,

[00:10:23] Speaker 02:
there'd be no prejudice to the patent owner if they didn't apportion it, didn't apportion, right?

[00:10:30] Speaker 02:
I mean, if I have a global license that includes all of these patents and 4,000 others, and it's for $10,000, there's no prejudice to you that I haven't apportioned them.

[00:10:41] Speaker 01:
Well, some of the licenses, are you talking about, I think you're asking about the 10 Netflix licenses.

[00:10:47] Speaker 01:
Yes.

[00:10:47] Speaker 01:
Some of those licenses I do not believe were

[00:10:51] Speaker 02:
What about the three, the three remaining Netflix licenses?

[00:10:54] Speaker 01:
I believe one of them, the AST license, was not a portfolio license.

[00:10:58] Speaker 01:
I believe it was either a license for one patent or two patents.

[00:11:03] Speaker 01:
I'd have to go back and look at the record, but I think across the 13 licenses, some of the licenses that

[00:11:12] Speaker 01:
Netflix relied on were portfolio licenses.

[00:11:14] Speaker 04:
But these were licenses not of your patents.

[00:11:17] Speaker 01:
They're not of our patents.

[00:11:18] Speaker 04:
They don't even include.

[00:11:20] Speaker 04:
OK, well, that was my special question.

[00:11:21] Speaker 01:
And I misunderstood your question, Your Honor, and I apologize.

[00:11:23] Speaker 01:
The 13 Netflix licenses were Netflix's own settlement agreements with other parties and did not include.

[00:11:32] Speaker 02:
Over other patents.

[00:11:33] Speaker 02:
So the patents here weren't included.

[00:11:35] Speaker 02:
So there's a comparability thing, but not an apportionment.

[00:11:39] Speaker 01:
That's right.

[00:11:40] Speaker 01:
There's no comparability issue.

[00:11:41] Speaker 02:
And there's an important one of them didn't miss Venice or somebody say the claim was like very much like one of the claims here.

[00:11:49] Speaker 02:
I don't.

[00:11:50] Speaker 01:
Yeah.

[00:11:50] Speaker 01:
So there's again, we have a total of 13 settlement agreements from Netflix, 10 of them.

[00:11:57] Speaker 01:
were admittedly not technically comparable.

[00:11:59] Speaker 01:
On three of them, there were opinions of technical comparability from Dr. Villasenor that Ms.

[00:12:06] Speaker 01:
Bennis relied on, on just three.

[00:12:08] Speaker 01:
We're challenging on appeal the technical comparability analysis of two of those.

[00:12:12] Speaker 01:
One of them is unchallenged.

[00:12:14] Speaker 01:
We at least as the as the patent owner agreed that one of the Netflix licenses of the 13 There was a sufficient technical comparability Opinion from dr. Wilson or but of course we challenged the economic comparability analysis or quite frankly the lack of it by miss Venice She simply took the number recited

[00:12:34] Speaker 01:
You have to look at Georgia-Pacific factor, all the Georgia-Pacific factors, and did nothing else.

[00:12:39] Speaker 01:
But now we're getting into the weeds of the appeal.

[00:12:41] Speaker 01:
But we've challenged all of the Netflix settlement agreements for the lack of economic comparability analysis, or at least a sufficient non-gloss analysis.

[00:12:52] Speaker 04:
Can I ask you this question?

[00:12:55] Speaker 04:
If we agree with you that the district court erred in dismissing the inducement claim, then what will be and also, because either that alone or that and also erred in finding the 865 indefinite, is there a new trial on

[00:13:23] Speaker 04:
liability in full or liability just on the 865 and just on inducement with damages.

[00:13:36] Speaker 04:
Again, assuming also we agree with you that there were harmful errors with respect to how the damages proof

[00:13:46] Speaker 04:
came in.

[00:13:47] Speaker 04:
And that, too, needs to be redone.

[00:13:49] Speaker 04:
I didn't see any discussion of the scope of a new trial in the briefs.

[00:13:55] Speaker 01:
So Your Honor, you're right.

[00:14:00] Speaker 01:
Neither party discussed that issue.

[00:14:03] Speaker 01:
And it's a bit of a thorny one.

[00:14:04] Speaker 01:
I know the answer, that if you just find it on damages, it's theoretically possible for the court to remand it back just on a damaged trial.

[00:14:11] Speaker 04:
Right.

[00:14:12] Speaker 04:
But I didn't see any Champlain refining

[00:14:15] Speaker 01:
No, that's our fault.

[00:14:17] Speaker 01:
There's no discussion of the permutation.

[00:14:20] Speaker 01:
We've asked for a new trial on all issues.

[00:14:22] Speaker 01:
So maybe we could have asked for a new trial only on the 865, only on, I think it's

[00:14:30] Speaker 01:
Well, wait.

[00:14:30] Speaker 01:
I think, but I think I'm sorry to interrupt if you want to finish your answer.

[00:14:35] Speaker 01:
And so we did not parse it.

[00:14:37] Speaker 01:
And it may be a mistake on our part.

[00:14:38] Speaker 01:
We did not parse it and say, if we went on everything remand and no new trial on the patent where we did find infringement.

[00:14:45] Speaker 01:
We did not parse the requested relief.

[00:14:48] Speaker 01:
And that's maybe a mistake on our part.

[00:14:50] Speaker 01:
And if the court would like supplemental one page

[00:14:54] Speaker 01:
briefing as to whether or not it's appropriate to do as you suggested which is send it back just on damages on this on I guess it was the I'm getting my patent numbers confused on the 715 on the 715 but send it back for liability and damages

[00:15:15] Speaker 01:
on the 715 damages only liability on the 865 and 245 on everything.

[00:15:20] Speaker 04:
Without any discussion, I assume that default is this is something that should be considered on a remit.

[00:15:29] Speaker 01:
I think that's right, Your Honor.

[00:15:32] Speaker 04:
And that would include even, I guess, reversing on inducement would also potentially bring back a liability question for the 245.

[00:15:46] Speaker 01:
That's right, Your Honor.

[00:15:46] Speaker 01:
It would be an indirect.

[00:15:47] Speaker 01:
Which the jury said there was no direct infringement.

[00:15:50] Speaker 01:
That's right.

[00:15:50] Speaker 01:
Because it was direct infringement based on testing by Netflix.

[00:15:53] Speaker 04:
And the inducement, who are the potential direct infringers?

[00:15:57] Speaker 01:
The end users.

[00:15:58] Speaker 01:
So it would be.

[00:15:59] Speaker 04:
End users?

[00:15:59] Speaker 04:
Or is it the, like,

[00:16:02] Speaker 04:
is reference to AWS.

[00:16:04] Speaker 01:
It's not AWS.

[00:16:05] Speaker 01:
It's the end user because it's the device that's claimed in the claim of the patent.

[00:16:13] Speaker 02:
OK.

[00:16:15] Speaker 03:
If we were to reverse on inducement and indefinite, you want a new trial on liability, don't you?

[00:16:21] Speaker 01:
On the inducement, yes, and on the 865, yes, Your Honor.

[00:16:25] Speaker 03:
How does that feed into the question of whether or not we have a new trial, including a new trial on damages?

[00:16:31] Speaker 01:
Well, we believe that if you reverse on damages, of course, we get a new trial on damages.

[00:16:37] Speaker 03:
But if you reverse on liability, we do believe we get a new trial on damages because the damage... I mean, the reverse on damages, isn't there a question, if there's a Daubert violation, isn't there a question of whether or not you remand to the district court and say, please explain.

[00:16:51] Speaker 03:
You didn't give us a sufficient basis.

[00:16:53] Speaker 03:
I mean, that's the whole trigger for the one-line denial is we don't know what the district court thought.

[00:17:00] Speaker 03:
So in some instances, I think there's a remand and say, please explain.

[00:17:03] Speaker 03:
I think that's what your adversary is asking for if we find fault.

[00:17:08] Speaker 03:
And I think you're asking for a brand new trial, at least on damages, assuming there were no other issues involved.

[00:17:15] Speaker 01:
That's right.

[00:17:15] Speaker 01:
At least in the city of Pomona case from the Ninth Circuit, the remand was for a new trial.

[00:17:20] Speaker 01:
It was not a remand for explanation.

[00:17:21] Speaker 01:
And we think in this context, it would be a waste of time.

[00:17:25] Speaker 03:
But I just don't know what you're really asking us to do here.

[00:17:29] Speaker 01:
So we're asking for a remand for a new trial.

[00:17:32] Speaker 03:
Assume the circumstances were that we decided all the issues.

[00:17:37] Speaker 03:
We decided inducement and indefinite is in your favor.

[00:17:42] Speaker 01:
It would be a new trial on liability for inducement, new trial on the 865, and a new trial for damages on all three patents.

[00:17:49] Speaker 01:
And I don't have the...

[00:17:50] Speaker 03:
Aren't you arguing that you may have some different theories of damages if inducement and indefinites go your way?

[00:17:57] Speaker 01:
We would.

[00:17:58] Speaker 01:
That's why we'd have a new trial both on the liability question of inducement and the 865, but also damages, because the damage model would change if you had the 865 back.

[00:18:08] Speaker 01:
In fact, it did change at the district court level because the date of the hypothetical negotiation changed, and so some of the functions that went into Mr. Dell's calculation

[00:18:17] Speaker 01:
change because of data.

[00:18:18] Speaker 02:
On that question, firstly, I think it's disputed, and I assume your friend will get up, because a lot of their brief was that it was the same amount of damages for each thing.

[00:18:29] Speaker 02:
So at least leaving inducement aside, because the liability there may change the damages picture.

[00:18:36] Speaker 02:
But just on the indefiniteness claim, their argument is there wouldn't be any more money.

[00:18:41] Speaker 02:
It's all irrelevant to increase that.

[00:18:44] Speaker 01:
And so we disagree for two reasons.

[00:18:45] Speaker 01:
If you look at Mr. Dell's expert report where he also calculated lump sum, and I'm going to use the appendix sites.

[00:18:53] Speaker 01:
When the summary judgment was granted on the 865, the hypothetical negotiation date shifted.

[00:19:00] Speaker 01:
By 18 months.

[00:19:01] Speaker 01:
By 18 months.

[00:19:03] Speaker 01:
And what ended up happening is one of the inputs that went into his lump sum calculation is the cost of capital, the average cost of capital whack.

[00:19:12] Speaker 01:
And that went down or up from 5% to 9%.

[00:19:18] Speaker 01:
So the damage number actually changed and went down, even though the hypothetical negotiation date went forward.

[00:19:26] Speaker 01:
And so if the 865 is back in the case,

[00:19:30] Speaker 01:
He now uses the new hypothetical negotiation date and the WAC number, which is the discounting component.

[00:19:37] Speaker 01:
He uses it for the 865 hypothetical negotiation date, and the damages go up.

[00:19:42] Speaker 01:
So we presented a damage number at trial, potentially, that was lower.

[00:19:46] Speaker 01:
We ended up doing the running royalty, but we could have presented the lump sum at trial if we had so chosen.

[00:19:54] Speaker 04:
something wrong with our saying, it's perfectly clear that a remand is necessary and a new trial on a number of things is necessary.

[00:20:08] Speaker 04:
But we are not ourselves going to address some of the arguments about the, you know, one of the arguments is there's a unruled on

[00:20:21] Speaker 04:
intent challenge or basis for trying to get inducement out of the case, which the district court didn't rely on.

[00:20:29] Speaker 04:
So we would say the district court can rely, can address that, possibly eliminating inducement on that separate ground.

[00:20:39] Speaker 04:
Although this would be an emotion to dismiss.

[00:20:42] Speaker 04:
It's not clear how one could do that.

[00:20:46] Speaker 04:
But there would be an argument that the other side could make.

[00:20:49] Speaker 04:
Similarly, maybe,

[00:20:51] Speaker 04:
an argument that the other side could make that the 865 does not itself have to be tried because as a result of stipulations and whatnot, it can't possibly make a difference, but that we wouldn't have to get into that.

[00:21:06] Speaker 04:
That could be argued on remand.

[00:21:09] Speaker 01:
So on inducement, I'm going to take each one in turn.

[00:21:13] Speaker 01:
On inducement,

[00:21:14] Speaker 01:
If this panel makes clear that there's no categorical rule that a complaint cannot be relied on by an amended complaint for notice, I don't think the court could take care of the intent issue, which I think is a fact issue.

[00:21:32] Speaker 01:
You're not going to get a dispute for me that you have notice, but we still have to prove intent.

[00:21:38] Speaker 01:
And there could be arguments that they didn't have enough time to change their software, et cetera.

[00:21:43] Speaker 01:
Those, I don't think, can be resolved at the motion to dismiss stage, because we've pled specific intent.

[00:21:49] Speaker 01:
We've pled intent.

[00:21:50] Speaker 01:
And so if you take our pleadings to be true, there could be other.

[00:21:55] Speaker 01:
There could be a summary judgment.

[00:21:57] Speaker 04:
Summary judgment.

[00:21:57] Speaker 01:
Your Honor, we could go take depositions.

[00:22:00] Speaker 01:
There could be a summary judgment.

[00:22:01] Speaker 01:
Conceivably even.

[00:22:02] Speaker 01:
Conceivably.

[00:22:03] Speaker 04:
Conceivably even, there could still be a 12b6.

[00:22:07] Speaker 04:
But because it's Twombly standard, it might not be very promising.

[00:22:11] Speaker 04:
But that was not something we would have to decide.

[00:22:13] Speaker 01:
I would use language even harsher than not promising.

[00:22:16] Speaker 01:
But Your Honor, correct.

[00:22:17] Speaker 01:
There's theoretically, I can't think of it because of the way it was pled.

[00:22:21] Speaker 01:
I think it was pled properly.

[00:22:25] Speaker 01:
Judge, this is not the first time that this is.

[00:22:27] Speaker 01:
What about the other?

[00:22:28] Speaker 01:
What about the other?

[00:22:29] Speaker 01:
So on the indefiniteness, let me try to remember the question.

[00:22:33] Speaker 04:
I think the other side has an argument.

[00:22:36] Speaker 04:
We don't need to get to the 865, because it couldn't possibly matter to the bottom line result on remand.

[00:22:47] Speaker 01:
I could be misstating in which case, Mr. Saunders.

[00:22:58] Speaker 01:
the expert's damage model changed when the 865 was thrown out of the case.

[00:23:03] Speaker 01:
That's because of the timing.

[00:23:04] Speaker 01:
That's because of the timing of the hypothetical negotiation.

[00:23:06] Speaker 01:
Mr. Dell says, look, the parties to the hypothetical negotiation don't change.

[00:23:11] Speaker 01:
The book of wisdom doesn't change.

[00:23:12] Speaker 01:
But the timing does change.

[00:23:15] Speaker 01:
What discounting factor do you think?

[00:23:17] Speaker 04:
The scope of any possible inducement liability change according to whether it's the 865 or the 715 or 245?

[00:23:24] Speaker 01:
I don't believe so, Your Honor.

[00:23:28] Speaker 01:
And so we have to make tactical decisions when we go to trial.

[00:23:32] Speaker 01:
And so we present a running royalty damage model.

[00:23:35] Speaker 01:
We did not present the lump sum damage model.

[00:23:37] Speaker 01:
Those factors all change depending on what patents are in the case.

[00:23:40] Speaker 02:
Is inducement only with respect to the 715?

[00:23:44] Speaker 01:
No, the inducement was as to all three of the patents.

[00:23:48] Speaker 01:
But we have we we can prove direct infringement of one of them obviously we've done so in the eight six five can be done both direct and in inducement we wouldn't very likely not try an inducement case on the eight in the even.

[00:24:03] Speaker 04:
In inducement, I think you said before that the direct infringer was the end user, and you think that's true not only for the client-side patent, but for the two server-side patents.

[00:24:13] Speaker 01:
There are other claims in the patent, which we elected to only go to trial on a limited number of claims the week before trial.

[00:24:21] Speaker 01:
There are other claims in the patent, and depending on what

[00:24:23] Speaker 02:
Claims we elect there may be an inducement even even on this so-called server side patents not just the client-side one Well, I I don't remember if they'd six five has and I can look for the your honor if it has Client-side components or not what you're previewing for us on a remand Eris, but you know is going back to square one I mean you're talking about alleging make alleging claims that weren't previously left and

[00:24:49] Speaker 01:
No, Your Honor.

[00:24:51] Speaker 01:
So the way the district court handled it was we identified our claims.

[00:24:57] Speaker 01:
There were expert reports on numerous claims of each patent.

[00:25:01] Speaker 01:
And as we got to trial, we had to limit claims.

[00:25:04] Speaker 01:
And so we limited the claims we were going to try.

[00:25:07] Speaker 01:
It's very difficult to try 15, 16 claims in a single case.

[00:25:11] Speaker 01:
We limited our claims about two claims, two to three days before trial and went to trial on those.

[00:25:17] Speaker 02:
So you think that would be undone here?

[00:25:20] Speaker 01:
I think at the district court's discretion.

[00:25:22] Speaker 01:
I think the district court could look at the factors and decide.

[00:25:27] Speaker 01:
We've looked at this.

[00:25:28] Speaker 01:
There's case law that says that if you get reversed, you're back to where you were before you tried the case.

[00:25:33] Speaker 01:
And there were numerous live claims in the case.

[00:25:36] Speaker 01:
And just like affirmative defenses, the first time you try a case, you may not try one of the affirmative defenses.

[00:25:40] Speaker 01:
The second time you pled it, there is discovery on it and you try it.

[00:25:44] Speaker 01:
You have some discretion on a remand to restructure your case.

[00:25:48] Speaker 04:
But it's also possible that stipulations you made or statements you made later in the case might have closed some doors that would otherwise be open.

[00:25:59] Speaker 01:
That's true.

[00:26:00] Speaker 01:
And that's outside the scope of this appeal.

[00:26:01] Speaker 01:
And if they raise that at the district court, we'll address it at the district court at that time.

[00:26:07] Speaker 01:
I see I've gone well past my time.

[00:26:09] Speaker 01:
Thank you, Your Honor.

[00:26:10] Speaker 02:
OK, we'll return somebody about all time.

[00:26:12] Speaker 02:
Let's hear from Mr. Sanders.

[00:26:19] Speaker 05:
May it please the court.

[00:26:20] Speaker 05:
I'm happy to address any topic, but just to talk about some of these cross-cutting issues, if having relied on the same four cent royalty theory regardless of the number of patents, there isn't any further remedy to be had if the damages judgment is upheld.

[00:26:40] Speaker 05:
On top of that, I do want to highlight too that on the server side patents, the 865 and

[00:26:46] Speaker 05:
and the 715, there was a stipulation in the case that we've highlighted in our brief that essentially let them convert any theories on those claims into direct infringement theories.

[00:26:59] Speaker 05:
And so regardless of what you're doing on inducement, on the server side of things.

[00:27:04] Speaker 04:
I'm not sure I'm going to benefit from asking this question.

[00:27:10] Speaker 04:
I did not understand what you said in the brief as well about that.

[00:27:15] Speaker 04:
conversion into direct infringement.

[00:27:18] Speaker 04:
Try to help me, but that may be going down a rabbit hole.

[00:27:21] Speaker 04:
I don't want to.

[00:27:21] Speaker 04:
Sure.

[00:27:21] Speaker 05:
So it was a simulation.

[00:27:22] Speaker 05:
Imagine to prove inducement on the server-side patents.

[00:27:27] Speaker 05:
The question is, who would you be inducing?

[00:27:30] Speaker 05:
It wouldn't be the end user there.

[00:27:32] Speaker 05:
It would be the ISP, the company, the entity that is operating the server.

[00:27:40] Speaker 05:
And on those, the stipulation is Netflix, internet service providers, ISPs do not perform the functionality that GoTV accused of infringement.

[00:27:50] Speaker 05:
This helped them because it got them around divided infringement problems, but basically the deal with the stipulation was

[00:27:59] Speaker 05:
Netflix isn't going to argue, oh, that's being done by somebody else.

[00:28:04] Speaker 05:
It let them consolidate the focus of their infringement case to say everything that's being done is being done by Netflix.

[00:28:11] Speaker 05:
It let them present it as a direct infringement case in exchange for them not seeking discovery into these

[00:28:19] Speaker 05:
So if they were to try to revive something on inducement with this stipulation that already let them focus on Netflix, there's no distinct inducement claim that can be presented there when you have a stipulation that the ISPs don't perform the function.

[00:28:37] Speaker 05:
And then the third cross-cutting issue, just before I get into some of the details and damages, is of course our section 101 cross appeal, which if we win on section 101 would move everything else.

[00:28:49] Speaker 05:
On the damages, for the 10 Netflix licenses that received the most discussion, I just want to be crystal clear, those licenses were not part of the numbers that were presented by our experts.

[00:29:05] Speaker 05:
Ms.

[00:29:06] Speaker 05:
Bennis.

[00:29:07] Speaker 05:
She put up a slide, this is a 10-846 of the appendix in volume 3, showed a range of agreements.

[00:29:16] Speaker 05:
It had the three comparable Netflix licenses highlighted, the six Funware licenses, and the Learfield licenses they were relying on.

[00:29:25] Speaker 05:
And the questioning was, are these the agreements that you reviewed?

[00:29:28] Speaker 05:
Yes, they are.

[00:29:29] Speaker 05:
And did you focus on the 10 agreements, the seven funware, and the three that are highlighted and identified as?

[00:29:35] Speaker 05:
Did you focus on those?

[00:29:37] Speaker 05:
Answer, I did.

[00:29:37] Speaker 05:
And tell us why you focused on those.

[00:29:40] Speaker 05:
I focused on the 10 that are highlighted.

[00:29:42] Speaker 05:
Again, we're talking about the three Netflix and seven funware, because they were identified as being the most technically comparable to the elements of the patents that issue here.

[00:29:51] Speaker 05:
She then proceeds with her remaining slides.

[00:29:54] Speaker 05:
Which were you just reading from?

[00:29:55] Speaker 05:
That is from 788 through 789 of the appendix in volume 1.

[00:30:01] Speaker 05:
And the slide I think is the clearest in volume 3 of the appendix at 1086.

[00:30:08] Speaker 05:
So it's the slide and the accompanying testimony.

[00:30:15] Speaker 05:
No numbers on the slide.

[00:30:16] Speaker 05:
Is there agreement for review?

[00:30:20] Speaker 05:
It's 1 0 8 4 6.

[00:30:23] Speaker 05:
1 0 8 4 6 in volume 3 of the appendix.

[00:30:43] Speaker 05:
Okay, and this slide is what Miss Bennis presents.

[00:30:49] Speaker 05:
She presents... This slide has no numbers except for dates.

[00:30:54] Speaker 05:
Correct.

[00:30:55] Speaker 05:
And what she highlights is these... What is highlighted is what she's going to rely on for anything to do with numbers.

[00:31:04] Speaker 05:
She does say sort of all 13 Netflix licenses inform her opinion on whether there would be a lump sum or not.

[00:31:12] Speaker 05:
But for purposes of the number, she's only focusing on the comparable agreements.

[00:31:16] Speaker 05:
And then in the slide pages that follow, every number that she is presenting in her testimony related to the agreements is related to those three comparable Netflix licenses and the fund.

[00:31:27] Speaker 05:
That's in her testimony.

[00:31:28] Speaker 05:
So this is putting aside the slide using the cross.

[00:31:31] Speaker 05:
Exactly.

[00:31:31] Speaker 05:
So the only issue on those 10 Netflix agreements is that brief cross of their expert, Mr. Dow.

[00:31:39] Speaker 05:
And on that, I think the key question, which came up in the new trial motion, is that of prejudice.

[00:31:46] Speaker 05:
And the district court, who sat through the trial, saw it in context, found that there wasn't prejudice.

[00:31:53] Speaker 05:
They were up so briefly.

[00:31:55] Speaker 05:
They were cumulative of everything else that was presented.

[00:31:58] Speaker 02:
Is this where he did address the issue on Jamal?

[00:32:01] Speaker 02:
Because he said nothing.

[00:32:02] Speaker 02:
I mean, you said the district court said stuff.

[00:32:04] Speaker 02:
He didn't say anything in the orders.

[00:32:06] Speaker 05:
In the new trial motion.

[00:32:07] Speaker 05:
So the issue is, the demonstrative of the 10 Netflix licenses gets used in the cross-examination of Mr. Dow, GoTV's expert, very briefly.

[00:32:17] Speaker 05:
And the district court, and they move for a new trial on that.

[00:32:21] Speaker 05:
And the district court denies the new trial saying there wasn't any prejudice here.

[00:32:29] Speaker 05:
And to be clear, to take you through the sequence, so the demonstrative is put up.

[00:32:35] Speaker 05:
There are two questions about the demonstrative.

[00:32:39] Speaker 05:
At that point, the court interjects.

[00:32:41] Speaker 05:
So I'm at page 632 of the appendix.

[00:32:44] Speaker 05:
This is volume 1.

[00:32:45] Speaker 05:
The court interjects and asks the witness, these patents are not necessarily the similar patents to the one we're talking about today, right?

[00:32:52] Speaker 05:
The witness says, that's correct.

[00:32:55] Speaker 05:
There's one more set of questions.

[00:32:58] Speaker 05:
And then the court refuses to admit them into evidence.

[00:33:03] Speaker 05:
It says in open court before the jury, I'm going to grant the objection.

[00:33:07] Speaker 05:
These are not patents necessarily similar to the ones you're talking about.

[00:33:11] Speaker 05:
They would be irrelevant.

[00:33:14] Speaker 05:
Those 10 patents and the numbers that are used in them then, as the district court found, don't come up again at any point.

[00:33:21] Speaker 05:
All the numbers that are used by Ms.

[00:33:23] Speaker 05:
Bennis are from the comparable agreements.

[00:33:25] Speaker 05:
All the numbers that are used in the closing statements are from the comparable agreements.

[00:33:29] Speaker 05:
And that was in open court.

[00:33:31] Speaker 05:
Open court.

[00:33:32] Speaker 05:
And so the district court, who was the one who was in the room, saw the effect of this on the jury, in connection with the new trial motion, makes a finding of no prejudice.

[00:33:41] Speaker 03:
Is it demonstrative in question?

[00:33:43] Speaker 03:
Is that the one that follows the page you cited?

[00:33:47] Speaker 05:
Yes.

[00:33:49] Speaker 03:
And to be clear, that's a two-page demonstrative?

[00:33:54] Speaker 05:
No, the demonstrator.

[00:33:55] Speaker 03:
I'm trying to actually look for the one that was presented.

[00:33:58] Speaker 05:
Correct.

[00:33:59] Speaker 05:
It is at volume 3, page 10868.

[00:34:02] Speaker 05:
10868.

[00:34:03] Speaker 05:
Yes.

[00:34:05] Speaker 05:
And to be clear, it's in the joint appendix, sort of following Ms.

[00:34:11] Speaker 05:
Benes's slide.

[00:34:12] Speaker 05:
But it wasn't, you can see from the document number, it shifted.

[00:34:15] Speaker 05:
This wasn't a slide that was used with Ms.

[00:34:17] Speaker 05:
Benes.

[00:34:17] Speaker 05:
This was the demonstrator that was used for Mr. Bell.

[00:34:23] Speaker 04:
I mean, why is this not, as a matter of law, like the old Uniloc, skew the damages horizon principle?

[00:34:35] Speaker 04:
You can't just say, we never pay more than $2 million and say, jury, now please ignore that for irrelevant things.

[00:34:46] Speaker 05:
So one important difference from Unilock is that this court found the cumulativeness of this year, right?

[00:34:53] Speaker 05:
So everything that had been presented within the same damages range based on the comparable licenses fully supported Ms.

[00:35:04] Speaker 05:
Bennis's opinion.

[00:35:05] Speaker 05:
And so having some more licenses that are

[00:35:11] Speaker 05:
consistent with that range and below what the jury actually awarded in that context wouldn't properly lead to a finding of prejudice.

[00:35:23] Speaker 05:
One of the other things is that the numbers appear there as part of these are the lump sums.

[00:35:29] Speaker 05:
Yes?

[00:35:30] Speaker 05:
To avoid this issue, they could be presented without the numbers.

[00:35:36] Speaker 05:
But the numbers were presented.

[00:35:37] Speaker 05:
They're in connection with testimony that Mr. Dell had been offering that wasn't about comparable licenses or not.

[00:35:45] Speaker 05:
It was sort of sweeping testimony about Netflix's policies in general.

[00:35:50] Speaker 05:
and saying Netflix doesn't have a policy against lump sum licenses.

[00:35:54] Speaker 05:
And so they put up all of the Netflix licenses in the record to say, here are all of the lump sums.

[00:36:03] Speaker 05:
Their complaint is with the dollar figure, but in the context of this case, when you have so many other licenses that come in that support Mrs. Bennis's opinion, she doesn't affirmatively rely on these licenses.

[00:36:17] Speaker 05:
They're presented so briefly, the court interjects, asks the question to the witness, interjects, and says these are irrelevant.

[00:36:24] Speaker 04:
Am I misremembering that?

[00:36:27] Speaker 04:
some of the licenses that came in on her testimony are also in dispute here?

[00:36:34] Speaker 04:
Yes, so then in addition, they dispute... So the cumulativeness might go away if there was merit to the challenge to some of those.

[00:36:44] Speaker 04:
Right, correct.

[00:36:45] Speaker 05:
And so I'd like to take you through why there is no merit to that.

[00:36:49] Speaker 05:
So on the three Netflix licenses,

[00:36:52] Speaker 05:
Their complaint was that our expert didn't do adequate technical comparability.

[00:36:59] Speaker 05:
Dr. Villasenor, technical expert, had gone through in his report and found a comparable patent in each of the license.

[00:37:06] Speaker 05:
And these are ones like for the R2 license.

[00:37:09] Speaker 05:
It's a server for delivering an interactive application to a client.

[00:37:13] Speaker 05:
It's configured to modify the application based on at least one characteristic of the client.

[00:37:18] Speaker 05:
Like we're talking squarely in the same technology.

[00:37:21] Speaker 04:
I guess I have some trouble with that.

[00:37:25] Speaker 04:
It's a kind of trouble having to do with this same idea you have that is presented by the 101 issue, that the level of specificity matters rather a lot.

[00:37:39] Speaker 04:
Put aside the 101 thing for now.

[00:37:45] Speaker 04:
a patent on some sort of customization or something seems to me if that's a very it could be a extremely low value patent when another patent on under some broad category of customization for example might be a very very high value patent just to say that they're kind of in the same

[00:38:13] Speaker 04:
I don't know, technological family at some level hardly seems to get to the actual underlying question of comparable economic value.

[00:38:26] Speaker 04:
Which all has to do with what alternatives you have and what benefits you're going to get and all of that.

[00:38:31] Speaker 05:
Well, it does.

[00:38:32] Speaker 05:
But to be clear, the patents in suit here were never licensed in a patent license.

[00:38:42] Speaker 05:
So everyone in this world is often happening.

[00:38:46] Speaker 05:
You mean the three patents?

[00:38:48] Speaker 05:
Correct.

[00:38:48] Speaker 05:
There's no patent license.

[00:38:49] Speaker 05:
Everybody's trying to do the second best, right?

[00:38:52] Speaker 05:
And so we have a series of funware agreements.

[00:38:54] Speaker 05:
Ms.

[00:38:55] Speaker 05:
Bennis begins her damages theory with the funware agreements, which were really software licenses.

[00:39:03] Speaker 05:
Including the one that they relied on?

[00:39:04] Speaker 05:
Including the one they relied on, right.

[00:39:06] Speaker 05:
So if anything, they're

[00:39:09] Speaker 05:
They're hard to value because they're performing the work of actually doing the software and somewhere in there is an implicit patent license.

[00:39:18] Speaker 05:
So she sets her range based on those agreements.

[00:39:22] Speaker 05:
She then turns to the three Netflix agreements, which are all within that same range.

[00:39:29] Speaker 05:
as further confirmation to say, in these other areas.

[00:39:34] Speaker 05:
So it's a step out.

[00:39:35] Speaker 05:
It's not these direct patents themselves.

[00:39:38] Speaker 05:
But we're in the same sort of tailoring it to the vice.

[00:39:42] Speaker 05:
The R2 license claim, if you dig in to look at that claim, it's anything broader than these claims here.

[00:39:48] Speaker 05:
But the fact that Netflix is paying for a similar claim

[00:39:57] Speaker 05:
And everything else that comes along with that, and it's still within the same range, is confirmation of her opinion.

[00:40:03] Speaker 05:
And this goes to Judge Prost's question about the defense side versus the plaintiff side, which is, if a plaintiff comes in and has 1,000 patent license and says, I want that dollar figure,

[00:40:16] Speaker 05:
it can be very problematic.

[00:40:17] Speaker 05:
When the defense comes in and says, here's 1,000 patent license, and at least a portion of it is technologically comparable, that's a conservative opinion.

[00:40:27] Speaker 05:
You're offering, at the very least, you're getting the value here, and then so much.

[00:40:34] Speaker 05:
to boot.

[00:40:35] Speaker 05:
So that was going on with the technological comparability of that.

[00:40:38] Speaker 05:
On the funware licenses, I think all the complaints really are mistaking this issue of what would it have cost to develop the software for Netflix, which is not the question on a bear.

[00:40:52] Speaker 04:
patent license and on the the three that the so-called Netflix patent licenses this isn't that Netflix was a licensee not the license or right correct, okay, and on those Do I remember right that there was no?

[00:41:10] Speaker 04:
effort at a per customer or per unit calculation so that these were all one had was essentially a total dollar value and

[00:41:22] Speaker 05:
Right.

[00:41:23] Speaker 05:
Ms.

[00:41:24] Speaker 05:
Benes presents them as a lump sum.

[00:41:26] Speaker 05:
The big picture context.

[00:41:28] Speaker 04:
But a lump sum can, if you have something to divide it by, you can figure out a per customer, per use, per what, a unit, something.

[00:41:37] Speaker 04:
But there was no such information as to these three Netflix as licensee patents, right?

[00:41:45] Speaker 05:
Correct.

[00:41:45] Speaker 04:
Correct.

[00:41:46] Speaker 05:
But one thing that's very important here, remember, we're talking about technology where they're saying that the advantage this gives you is it simplifies your development process.

[00:41:54] Speaker 05:
Netflix operates on four platforms.

[00:41:56] Speaker 05:
It could write its software for the four of those, or it could allegedly use this method.

[00:42:03] Speaker 05:
So the entire construct that we're going to do a royalty that is based on this per user month method

[00:42:13] Speaker 05:
It doesn't make any sense in that context, where it's really talking about the savings to Netflix.

[00:42:19] Speaker 05:
So that's why Ms.

[00:42:19] Speaker 05:
Bennis is approaching it from that context.

[00:42:21] Speaker 05:
She's saying, you were willing to develop the entire software portfolio, license the patent, and do all the work for this amount.

[00:42:29] Speaker 04:
Why would it not make any sense if you've got...

[00:42:33] Speaker 04:
150 million customers regularly using as opposed to, I don't know, 10,000 customers using.

[00:42:44] Speaker 04:
Really, the value doesn't have a difference in market value just based on that?

[00:42:55] Speaker 05:
We don't see that differentiation in the license, but the idea is

[00:43:01] Speaker 05:
What this is saving you is you don't have to do it twice.

[00:43:06] Speaker 05:
You don't have to do a version for Apple iOS and a separate version for an Android system.

[00:43:13] Speaker 05:
The idea of, oh, this is going to save you from doing it on each device is that is the operator side focus.

[00:43:22] Speaker 05:
As you think about this construct, Netflix wouldn't have agreed

[00:43:28] Speaker 05:
to this vastly inflated royalty race.

[00:43:31] Speaker 05:
And again, this is the fight that went to the jury on the centerpiece of their

[00:43:35] Speaker 05:
damages theory.

[00:43:37] Speaker 04:
So it was specifically the experts were disagreeing with each other about whether a per customer basis for a payment was an appropriate one or not?

[00:43:51] Speaker 05:
Correct, yes.

[00:43:52] Speaker 05:
And so the point about the Learfield license is you take all of these possible data points of licenses, and GoTV has rejected every single one of them but the Learfield,

[00:44:02] Speaker 05:
which has one tier where it was talking about different users.

[00:44:06] Speaker 05:
And they've latched onto that because they were trying to leverage that into a per user royalty.

[00:44:12] Speaker 05:
It really was the outlier here.

[00:44:17] Speaker 05:
Unless the court has other questions on it.

[00:44:19] Speaker 02:
Let me just go back to where I started, at least, because you're obviously and your friend much more familiar with the record than I. Hypothetically,

[00:44:26] Speaker 02:
I mean, one straightforward thing to do on the damages front would be to remand to give the district court another opportunity to explain himself.

[00:44:35] Speaker 02:
But doing that would not take care of some of the other issues that have been raised about the testimony during the trial.

[00:44:43] Speaker 02:
So we've got to kind of cover both of those.

[00:44:46] Speaker 02:
Is that right?

[00:44:48] Speaker 02:
Right.

[00:44:48] Speaker 05:
So I think everything that the one word order

[00:44:55] Speaker 05:
would meaningfully apply to would be everything other than the 10 Netflix licenses we've been talking about.

[00:45:00] Speaker 05:
The 10 Netflix licenses, the real key is the harmlessness, the prejudice, what happened at trial.

[00:45:07] Speaker 02:
And you raised a suggestion in your brief that if we sent it back on the failure to articulate a rationale, your denials get thrown in there too.

[00:45:18] Speaker 02:
And I don't see a basis for your having not appealed that for sending all of the determinations the district court judge made on your motions.

[00:45:27] Speaker 05:
Well, no.

[00:45:27] Speaker 05:
I would respectfully disagree.

[00:45:29] Speaker 05:
So if you look at our notice of cross-appeal on 11-869,

[00:45:37] Speaker 05:
When we broadly cross-appealed from any and all adverse orders, ruling findings, we specifically mentioned the pretrial rulings that are 341 and 346, which are the subject of these one-word orders.

[00:45:51] Speaker 05:
And then in our first brief before the court, we argued to you, and hope I can address today, why there shouldn't be any remand on these one-word orders.

[00:46:00] Speaker 05:
But we say in that principal brief

[00:46:02] Speaker 05:
But if they're getting a remand for lack of explanation, then we would want an explanation as well that could be reviewed on the failure to exclude Mr. Dowd's testimony as well.

[00:46:15] Speaker 05:
So given the scope of what is in the cross-appeal and the fact that in our first brief we make this contingent argument, it is preserved.

[00:46:23] Speaker 04:
Now on this issue of the one word, I trust you would say it doesn't matter that in the red brief you didn't make that argument in the cross-appeal section.

[00:46:32] Speaker 05:
Not in the crossbow section, because we had already made the contingency clear earlier.

[00:46:38] Speaker 05:
And so we didn't repeat it as a separate argument.

[00:46:41] Speaker 05:
On the one word order, though, I think there was no, unlike in the City of Pomona case, the Ninth Circuit case they cite, where there was an objection to the procedure being used, there was no objection in the district court to the lack of evidence.

[00:47:00] Speaker 05:
So in city Pomona, the district court has given an opportunity.

[00:47:03] Speaker 02:
But in that opinion, they didn't rest on the fact that yes, and they preserved it by filing an objection.

[00:47:09] Speaker 02:
There was no discussion of that objection.

[00:47:11] Speaker 05:
Right.

[00:47:11] Speaker 05:
Well, I'd flip it, which is that the other side didn't argue this isn't preserved because there had been an abjection.

[00:47:18] Speaker 05:
So it just didn't come up for the Ninth Circuit there.

[00:47:21] Speaker 05:
But the basic background principle, because otherwise, just to be clear, you would be announcing a per se rule requiring this explanation

[00:47:32] Speaker 05:
on all pretrial motions.

[00:47:34] Speaker 05:
There are 37 pretrial motions in this case.

[00:47:36] Speaker 05:
So the logic of their position is if the district court doesn't have an opinion or an explanation of the ruling on every single one of those, then someone can come up on appeal and say, aha, I've got you.

[00:47:49] Speaker 05:
I get a remand.

[00:47:50] Speaker 05:
And I wonder how far this logic extends.

[00:47:55] Speaker 05:
The judge doesn't have to rule on motions in limine.

[00:48:00] Speaker 05:
He can always defer judgment to see it at trial.

[00:48:03] Speaker 05:
But is a one word, sustained, overruled, is that not permissible because it's a one word ruling?

[00:48:10] Speaker 05:
I think we are going to go down a path here.

[00:48:13] Speaker 05:
If you don't require, as there was in Pomona, some form of objection, some form of chance to let the judge contemporaneously provide this explanation,

[00:48:23] Speaker 05:
where you're going to really discourage rulings on pretrial rulings and a lot of sort of gotchas on appeal.

[00:48:32] Speaker 05:
I mean, it's only a small fraction of those rulings that they're complaining about on appeal, but the logic is there needs to be a written opinion on all 37 of them.

[00:48:44] Speaker 05:
Even if you were to rule that, as Judge Clevenger picked up on it, at most, this is not getting them to a new trial.

[00:48:49] Speaker 05:
This would be if there is explanation that's required, then the remedy is to get the additional explanation from the district court.

[00:48:57] Speaker 05:
But if it provides that explanation and sticks with the same

[00:49:01] Speaker 05:
ruling.

[00:49:02] Speaker 02:
With the exception of what you noted, the exception that dealing with the objections of the trial.

[00:49:08] Speaker 02:
Right.

[00:49:08] Speaker 05:
I think that one just gets subsumed within the question of he came in, is there prejudice in that context?

[00:49:15] Speaker 03:
To what extent does the fact that we're supposedly applying the law of the Ninth Circuit

[00:49:20] Speaker 03:
affect these issues.

[00:49:23] Speaker 03:
The Ninth Circuit seems to say that if you have a one-line order, at least on the Daubert side, that's insufficient.

[00:49:33] Speaker 03:
And that you don't have to object, other than any further than what happened here.

[00:49:40] Speaker 05:
Well, that's where I respectfully disagree with you.

[00:49:42] Speaker 05:
The Ninth Circuit in the city of Pomona case, where there was an objection,

[00:49:46] Speaker 05:
didn't have to decide the issue of do you get this relief even in the absence of an objection.

[00:49:53] Speaker 05:
So you take the background principle of if there is an objection, you're entitled to more explanation.

[00:49:58] Speaker 03:
And they're relying on the federal rule of evidence that says if the denial is flat, if it's unequivocal, then you don't need to make a further objection.

[00:50:07] Speaker 05:
Right, but that's entirely different.

[00:50:08] Speaker 05:
I mean, that goes to the substance, right?

[00:50:10] Speaker 05:
If you presented the substance of your argument pre-trial and had a definitive ruling one way or another,

[00:50:16] Speaker 05:
then you don't have to object again at trial.

[00:50:20] Speaker 03:
But their disagreement here is- Going beyond what you told us in your briefs, right?

[00:50:24] Speaker 03:
Now, this argument you're making about subsidies.

[00:50:29] Speaker 05:
Right.

[00:50:29] Speaker 05:
So the first time I think that we saw the reference to the rule is in their reply brief.

[00:50:35] Speaker 05:
So this is our first opportunity to respond to that.

[00:50:38] Speaker 05:
But this one word, ruling, it's distinct from

[00:50:41] Speaker 05:
the concern about the merits of the objection.

[00:50:44] Speaker 05:
It is an objection to the procedure and what the judge did.

[00:50:49] Speaker 05:
And so that isn't, I've given you my definitive ruling on the merits.

[00:50:53] Speaker 05:
You don't have to renew the objection.

[00:50:54] Speaker 05:
That is, the way you did it was procedurally improper.

[00:50:59] Speaker 05:
And requiring an objection in that context then gives the district court the opportunity to cure that.

[00:51:06] Speaker 03:
There's an obligation on the movement to say something to the judge about more than just procedural.

[00:51:13] Speaker 03:
Like, oh, I don't like your one-liner.

[00:51:16] Speaker 03:
You've failed as a matter of substance to deal with this.

[00:51:21] Speaker 05:
It could be.

[00:51:22] Speaker 03:
I mean, or it could be the one.

[00:51:23] Speaker 03:
I mean, it could be... Is there page law in other circuits that support what you're telling me now?

[00:51:29] Speaker 03:
This distinction between a procedural objection and a substantive objection?

[00:51:35] Speaker 03:
I hear you talking, counselor, but I don't know what that body of law is.

[00:51:40] Speaker 03:
I'm unfamiliar with it if it's there.

[00:51:42] Speaker 05:
Well, I think it's the one word issue is a distinct issue.

[00:51:47] Speaker 05:
The Ninth Circuit has sort of in city of Pomona gone far down this road of saying, yes, we're going to

[00:51:53] Speaker 03:
Well, but they also cite earlier cases in that circuit that certainly suggest that the one-liner is just insufficient.

[00:52:01] Speaker 03:
It's abuse of discretion, period, regardless of whether it's substantive or procedural.

[00:52:06] Speaker 03:
And the setting of that phenomenon is a little odd, because what happened was that what looked like a flat order, the judge raised the question about it, right?

[00:52:19] Speaker 05:
I'm not sure if I'm right.

[00:52:21] Speaker 03:
So the city of Pomona wasn't a clean case where the appellate court was dealing with just a flat, no explanation, no attempt to say, I'm reserving, I'm rethinking about it.

[00:52:35] Speaker 03:
Right.

[00:52:36] Speaker 05:
There were a lot of motions in city of Pomona.

[00:52:40] Speaker 05:
Some of them, there was a little bit more explanation that dribbled out.

[00:52:45] Speaker 05:
For some of them,

[00:52:47] Speaker 05:
There wasn't, and it was just a flat unexplained.

[00:52:50] Speaker 02:
Before you get to the 101, could you just briefly talk about the one issue I'd like you to address is that the argument back and forth about how the value for one is the value for all.

[00:53:02] Speaker 02:
One, do you agree that if we change the inducement piece of this, that that changes things and none of the stipulations would apply with the scope of the alleged infringement changing?

[00:53:16] Speaker 05:
No, I mean, if the inducement comes in.

[00:53:18] Speaker 05:
So there, the testimony at trial, so on the 715 and 245 patents, the testimony in trial was, quote, my opinion is that the royalty rate would be the same, $0.04, whether it was entitled to one or both of the patents at issue, because the benefits from Netflix's use of both of those patents are the same.

[00:53:40] Speaker 05:
That's 621 of the appendix.

[00:53:42] Speaker 05:
Think of them as mirror images.

[00:53:44] Speaker 05:
One is the server-side perspective.

[00:53:47] Speaker 05:
One is the user-side perspective.

[00:53:49] Speaker 05:
Throughout the case, GoTV's position was it didn't make any difference.

[00:53:56] Speaker 05:
All the patents are the same.

[00:53:57] Speaker 05:
Their expert report, 12.164, the technical benefits attributed to each of the patents are similar, if not the same.

[00:54:05] Speaker 05:
When the 865 drops out of the case, my reasonable royalty opinion remains unchanged on the running royalty.

[00:54:12] Speaker 05:
So there's nothing more to be gotten on inducement.

[00:54:15] Speaker 05:
They went to trial on the 715 patent, which is the server-side perspective.

[00:54:20] Speaker 05:
They presented a 4-cent royalty theory.

[00:54:24] Speaker 05:
And their base was the entirety of every Netflix customer and every use.

[00:54:31] Speaker 05:
and the jury rejects that theory.

[00:54:34] Speaker 05:
And so they can't come back now on the user side and say, oh, well, if we've been able to present inducement, it wouldn't have been any different, right?

[00:54:42] Speaker 05:
For each one, if it's Netflix and the user,

[00:54:46] Speaker 05:
They already presented the full damages theory on one side.

[00:54:49] Speaker 02:
What about your friend's discussion of the 18-month time differentiation?

[00:54:56] Speaker 05:
Right.

[00:54:56] Speaker 05:
So that comes at the end of the analysis.

[00:54:59] Speaker 05:
So the way that their expert constructed his lump sum

[00:55:04] Speaker 05:
is it's the exact same upfront theory.

[00:55:06] Speaker 05:
It's a $0.04 per user per month royalty, goes through the analysis, converts that to the lump sum.

[00:55:13] Speaker 05:
The only thing that changed when the 865, which was the indefinite patent, dropped out of the case, was a different discount rate to try to reduce that to a lump sum.

[00:55:24] Speaker 05:
But everything you have to get through to get to that discount rate at the end

[00:55:31] Speaker 05:
was the theory that was presented to the jury that it rejected.

[00:55:34] Speaker 05:
I mean, I think we are in very serious danger of inconsistencies from one jury to another.

[00:55:42] Speaker 05:
And I will say, Judge Toronto, on your question, if there has to be a reset on inducement indefiniteness, I submit that under gasoline products, there really has to be a reset on everything.

[00:55:54] Speaker 05:
If this is because their damages theory

[00:55:58] Speaker 05:
depends on the extent of use, then we need to make sure that the jury that's considering extent of use is relying on the same infringement theory and understanding as the jury that was even finding infringement on the 715 patent.

[00:56:17] Speaker 05:
So given how untangled all of these are, if we end up in a proceeding where they're going back on

[00:56:24] Speaker 05:
Damages for something or some of these new theories.

[00:56:27] Speaker 05:
I think it gets so entangled even with that original verdict that you That there's you can't know whether you're gonna run into those inconsistencies Okay, just a couple minutes on 101.

[00:56:40] Speaker 02:
Yes.

[00:56:40] Speaker 05:
Thank you So I think on on 101, you know the what we have here is patents they're fundamentally directed to this abstract idea of

[00:56:50] Speaker 05:
of presenting the data from the server in a way that's customized to the user device.

[00:56:58] Speaker 05:
And the alleged data structures here are at such a level of generality, it doesn't change the focus of the claim.

[00:57:07] Speaker 05:
The custom configuration.

[00:57:09] Speaker 05:
is just saying dictate the look and feel of the app through things like what text to use, what font color to use, what background color to use.

[00:57:19] Speaker 05:
Or anything else that would dictate the look and feel.

[00:57:23] Speaker 04:
Well, not anything else, the size might.

[00:57:26] Speaker 04:
It seems to me, and I frankly could not understand all of the terminology, and some of it, I guess none of the claim constructions had occurred yet, but I guess it seemed to me that if you're trying to figure out what's the screen going to look like, there are certain aspects of the configuration, relative position of things

[00:57:52] Speaker 04:
Color may be one although that could depend on the device abilities too and that are not strictly dependent on the on the device properties and some of them I think that that are I guess that were were enumerated are you know the the the

[00:58:14] Speaker 04:
size of the display, the colors available, the resolution of the display, the processing power, if it's going to be not static, things like that.

[00:58:24] Speaker 04:
And that this back and forth between the client

[00:58:29] Speaker 04:
that the user at the client device and the server then produces a couple of different customizations.

[00:58:39] Speaker 04:
One is customizing to the particular app, which is independent of the particular properties of the device, and then others that are dependent on the particular properties of the device with the server, then putting it all together.

[00:58:55] Speaker 04:
and sending to a given device something that has been, I'm going to call it, doubly customized.

[00:59:02] Speaker 04:
That seems to, I mean, I don't quite understand intuitively what the value, what the needs are for this splitting up of different aspects or different issues that need to be resolved in order, at the end of the day, to get something on a particular device's screen.

[00:59:25] Speaker 04:
But there's a fair bit of that splitting up that's going on in the claim.

[00:59:31] Speaker 05:
So I think Your Honor may be thinking about the 865 claim.

[00:59:37] Speaker 04:
Yeah, but I didn't see really a material difference in the 101 analysis among the three claims.

[00:59:43] Speaker 05:
Yeah, because I'm just not sure on the double customization.

[00:59:47] Speaker 05:
I mean, really, if you think of the 765, the claim that was found to be infringed at trial, it's transmitting the custom configuration, transmitting the compiled content,

[01:00:01] Speaker 05:
The custom configuration there, the things they were pointing to at trial was you have a play button.

[01:00:08] Speaker 05:
And the custom configuration was black text on a white background.

[01:00:14] Speaker 05:
And then the content comes over.

[01:00:18] Speaker 05:
And you might have rows of pictures.

[01:00:20] Speaker 05:
So this could be as simple as the custom configuration is I want to use blue text on a black background.

[01:00:30] Speaker 05:
And then the compiled content comes over, and it says what the text should say and maybe what the picture is on the page.

[01:00:39] Speaker 05:
Now, if there's a screen that can only do black and white, it might say, don't use blue text on a black background, use white text.

[01:00:48] Speaker 05:
I mean, we're talking about that level here.

[01:00:53] Speaker 05:
Sending over just those details, text, font color, background color, that could be the look and feel of the page, and then sending the content without limit on what that content is.

[01:01:04] Speaker 05:
The rendering blocks receiving this, this is just pre-existing drop-down menus, text fields, images fields.

[01:01:11] Speaker 05:
And all this is in using background languages that are available that are device generic.

[01:01:18] Speaker 05:
And so at the very least, the idea that we couldn't even make it past step one of Alice was incorrect.

[01:01:26] Speaker 05:
And I would submit to you on both steps of Alice here, what this really is is confusing language designed to dress up fundamentally this idea of customizing this content from the server.

[01:01:38] Speaker 05:
Send over the customization, send over the content.

[01:01:41] Speaker 02:
But do you agree that we could not, even if we agreed with you on step one, step two, we'd have to go back for a factual analysis?

[01:01:48] Speaker 05:
I mean, I think in the context like this, there are examples where this court has gone ahead and done

[01:01:58] Speaker 05:
both step twos, but step two was not addressed by the district court at the time because it threw us out under step two.

[01:02:05] Speaker 04:
And this was all done on the pleadings, right?

[01:02:08] Speaker 04:
And then eventually you decided, I think just after the claim construction, that you would accept judgment against your 101 counterclaim with no further factual development.

[01:02:23] Speaker 04:
So all of this

[01:02:25] Speaker 04:
characterization of the details.

[01:02:32] Speaker 04:
I don't mean to be tendentious about the word details.

[01:02:35] Speaker 04:
So the details, this confusing language in the claim language, which does, I think, actually match what's in the spec.

[01:02:46] Speaker 04:
So it's pretty much the same as really amounting to

[01:02:51] Speaker 04:
highly general ideas that are perfectly conventional to the extent that they are specific at all, there is no record to support any of this.

[01:03:03] Speaker 04:
It's just lawyer argument, because this is not a case where the spec confesses the conventionality of everything claimed.

[01:03:12] Speaker 05:
Right.

[01:03:13] Speaker 05:
And step two, we don't have that same trip.

[01:03:16] Speaker 05:
So there might have to be further development on it.

[01:03:18] Speaker 05:
It's also not a case where the complaint itself

[01:03:22] Speaker 05:
allege the lack of conventionality and certainly provided that.

[01:03:26] Speaker 04:
But yes, the context here is we- So the only thing that was ever ruled on was essentially a Twombly-based plausibility assertion, which Twombly borrowing from 1226 into 1230

[01:03:38] Speaker 04:
C, which I think is pretty standard, that what is claimed here is plausibly specific and not purely functional.

[01:03:51] Speaker 04:
And if that's the question, I have a hard time seeing it on 12C.

[01:03:55] Speaker 05:
So if Your Honor can't get there on 12C, we should still get past the step

[01:04:02] Speaker 04:
I mean, this is where the step one and the step two, I think, bleed rather a lot into each other.

[01:04:09] Speaker 04:
Because I think we've talked about, in some of our cases, A, about how they bleed into each other, but also when the argument is this is nothing but what's available in computers generally or normal distributed processing, that's factual stuff.

[01:04:30] Speaker 05:
But that is our step two argument here, our step one argument.

[01:04:38] Speaker 04:
I thought your argument that the district court was wrong about step one, which is the only basis that the district court reached, is an argument that the words here simply are not specific enough to reflect

[01:04:57] Speaker 04:
real differences in how you go about doing things.

[01:05:03] Speaker 04:
How is that second part, that second aspect, not inherently factual?

[01:05:14] Speaker 05:
has traditionally been approaching it.

[01:05:16] Speaker 05:
It's done de novo review of step one, treating it as the district court did here as a question of law.

[01:05:23] Speaker 05:
What is this directed to and focused to?

[01:05:26] Speaker 05:
And so the conventionality of it

[01:05:30] Speaker 05:
is squarely within step two.

[01:05:33] Speaker 05:
Some of it has over time bled into step one.

[01:05:36] Speaker 05:
But we're not depending on factual conclusions regarding conventionality.

[01:05:42] Speaker 05:
It is an issue of law that this court reviews de novo in terms of deciding the focus of the claim.

[01:05:49] Speaker 05:
What are these claims directed to?

[01:05:52] Speaker 05:
And they're cast at a high enough level

[01:05:57] Speaker 05:
that a court itself can decide these are directed to the abstract idea.

[01:06:03] Speaker 05:
The district court here didn't say, oh, this is a Twombly issue.

[01:06:08] Speaker 05:
Oh, I need more facts here.

[01:06:11] Speaker 05:
The district court ruled as a matter of law that you have lost because I find that these claims are not directed to your abstract idea.

[01:06:21] Speaker 05:
We then come back.

[01:06:23] Speaker 05:
The parties hash this out.

[01:06:25] Speaker 05:
There's stipulation.

[01:06:26] Speaker 05:
The court accepts it.

[01:06:27] Speaker 05:
The court says that its denial of our motion, quote, constitutes the court's judgment as a matter of law that the claims of the asserted patents are not invalid under section 101 and conclusively resolves section 101 issues for purposes of this case.

[01:06:45] Speaker 05:
So if there's more factual development to be done,

[01:06:49] Speaker 05:
It doesn't mean that you affirm the judge's ruling as a matter of law against us.

[01:06:54] Speaker 05:
You should rule on that as a matter of law.

[01:06:59] Speaker 05:
If you think more is done, then we should have that be vacated and remand for more proceedings on that.

[01:07:06] Speaker 02:
We will see it.

[01:07:07] Speaker 02:
So we'll reserve a minute of rebuttal if your friend deals with the 101.

[01:07:12] Speaker 02:
And we're going to try to keep it even.

[01:07:15] Speaker 02:
So we exceeded by 10 on your side.

[01:07:19] Speaker 02:
We exceeded by 25.

[01:07:21] Speaker 02:
Is that it?

[01:07:22] Speaker 02:
We'll give you 12 minutes of rebuttal if you need it.

[01:07:26] Speaker 02:
I mean, a lot of this exercise has been filled with questions.

[01:07:28] Speaker 02:
So if there are no more questions, I don't think you need 12 minutes.

[01:07:32] Speaker 02:
But we'll give you 12 minutes.

[01:07:34] Speaker 01:
Thank you, Your Honor.

[01:07:36] Speaker 01:
And I hope to not use 12 minutes, unless there are a lot of questions.

[01:07:42] Speaker 01:
I want to address at the outset one of the things that my colleague mentioned, which was an argument that Ms.

[01:07:49] Speaker 01:
Bennis did not rely or reference the 10 Netflix agreements, the 10 non-comparable agreements in her affirmative opinion.

[01:07:56] Speaker 01:
And I'd ask the panel to look at

[01:07:59] Speaker 01:
page 775 of the appendix and 776.

[01:08:02] Speaker 01:
So it's APX 00775, carrying over to the next page.

[01:08:08] Speaker 01:
This is Ms.

[01:08:08] Speaker 01:
Bennis' testimony.

[01:08:10] Speaker 01:
This is the introduction to her testimony, where she's asked what her opinion is.

[01:08:15] Speaker 01:
And she gives her opinion on lines three through seven, which I won't read, which is that it would be a lump sum payment between $500,000 and $1.7 million.

[01:08:24] Speaker 01:
And then she's asked, now can you just preview for us, how did you reach your opinion?

[01:08:30] Speaker 01:
Answer.

[01:08:31] Speaker 01:
So the attempt here, as always, is really take comprehensive approach and look at all the evidence.

[01:08:36] Speaker 01:
What does all the evidence show?

[01:08:38] Speaker 01:
So I look specifically at these funware software agreements, and she discusses them, and then on the next page, starting at line four, I looked at the Netflix agreements that we've heard about.

[01:08:49] Speaker 01:
Netflix has paid for patent licenses before for similar technology, so that was a good benchmark.

[01:08:54] Speaker 01:
It's also what are the benefits of these patents, how are they helpful to Netflix, if Netflix has to take a license to them, or even so, and she goes on.

[01:09:03] Speaker 01:
This is at the beginning of her testimony.

[01:09:06] Speaker 01:
This is before she puts any Netflix licenses up.

[01:09:09] Speaker 01:
She is referencing back to the Netflix licenses that Mr. Dell was questioned about.

[01:09:15] Speaker 01:
the 10, including the 10 non-technical licenses.

[01:09:19] Speaker 01:
And that's consistent with her expert report.

[01:09:22] Speaker 01:
Her expert report, to get to the number that she testified at trial, considered a lot of different factors that she didn't necessarily always talk about at trial.

[01:09:31] Speaker 01:
And that included those 10 licenses under Georgia Pacific Factor II.

[01:09:35] Speaker 01:
So I think it's not fair to say that Ms.

[01:09:38] Speaker 01:
Bennis, when she testified, ignored the 10 licenses.

[01:09:42] Speaker 01:
She brought them back in.

[01:09:43] Speaker 01:
they knew everyone knew what was going on when the all the licenses and the license amounts go up and everyone knows what's going on when the defense damage expert mentions the Netflix licenses we've seen and she testifies that she based her opinions on those because that's consistent with how her expert report was drafted so I think with respect to the 10 Netflix licenses it's not just an evidentiary

[01:10:10] Speaker 01:
Issue it's also in a doubt bear issue because we move to exclude her reliance or discussion of those ten agreements as part of her affirmative opinion the the the other issue that my Colleague raised the idea that these ten licenses are cumulative there was a lot of other Testimony to support the number and he pointed to the fun where licenses are

[01:10:35] Speaker 01:
and the three Netflix licenses.

[01:10:37] Speaker 01:
Of course, if you agree with us on our challenge to those licenses, the cumulative issue goes away.

[01:10:43] Speaker 01:
But I'd like to make a slightly different point.

[01:10:45] Speaker 01:
That's the point.

[01:10:47] Speaker 01:
The point was to put up as many licenses below $2 million as possible to

[01:10:55] Speaker 01:
anchor the jury to that number.

[01:10:59] Speaker 01:
If you look at the licenses, if you look at the bare license agreements, the patent licenses, not these software development agreements, there were a total of 13 discussed in the trial.

[01:11:11] Speaker 01:
They're all Netflix settlement agreements.

[01:11:13] Speaker 01:
10 out of 13 were not technically comparable.

[01:11:15] Speaker 01:
That's over 76%.

[01:11:17] Speaker 01:
of the total number of agreements.

[01:11:20] Speaker 01:
And we all know that for a jury, a license agreement, a bare patent license, is easy to understand.

[01:11:26] Speaker 01:
The mumbo jumbo about here was a software development agreement.

[01:11:29] Speaker 01:
This software developer was paid X amount of dollars.

[01:11:32] Speaker 01:
I'm going to make all these mathematical adjustments.

[01:11:35] Speaker 01:
Not as persuasive to the jury.

[01:11:37] Speaker 01:
But if you include those, there were a total of 19 agreements, 10 of which were not technically comparable.

[01:11:44] Speaker 01:
50%, over 50%.

[01:11:47] Speaker 01:
This was, I don't think that it's reasonable to conclude that it did not impact the jury.

[01:11:55] Speaker 01:
The point of it was to be cumulative, to stack the deck against Mr. Dell's testimony by pointing to it's not just three settlement agreements, it's 13.

[01:12:10] Speaker 01:
It's not just nine of these.

[01:12:13] Speaker 01:
software development agreements, which you may not buy.

[01:12:15] Speaker 01:
You've got 13 other license agreements.

[01:12:18] Speaker 01:
That's what Netflix pays.

[01:12:20] Speaker 02:
Can I just ask you, I should know the answer to this, but this record has escaped my mind.

[01:12:25] Speaker 02:
You had the two patents before the jury.

[01:12:27] Speaker 02:
As far as the number you were asking for, did you differentiate?

[01:12:33] Speaker 02:
Was your position, if one or both of these, this is the number we deserve and we do?

[01:12:39] Speaker 01:
The royalty rate, yes.

[01:12:41] Speaker 01:
Your Honor, the royalty rate was four cents per subscriber based, and I wanted to address that, based on the benefit that Netflix

[01:12:49] Speaker 01:
received from those patents.

[01:12:50] Speaker 01:
If you had an inducement claim, we'd be looking at device counts.

[01:12:53] Speaker 01:
So everyone who has a Netflix account doesn't just watch it on one TV.

[01:12:58] Speaker 01:
So subscribers are a different royalty base than device counts.

[01:13:01] Speaker 01:
So as to the point as to whether or not

[01:13:04] Speaker 01:
If you sustain the damage award, if you don't reverse it, whether or not that fully compensates for the inducement claim, we would have a different damage model.

[01:13:11] Speaker 01:
And we'd look at different benefits, which is the benefits to Netflix customers and what that would be worth to Netflix.

[01:13:18] Speaker 01:
And that was never in front of the jury.

[01:13:21] Speaker 01:
And I didn't do it in my opening remarks, but I did want to talk about these six fund wear agreements.

[01:13:28] Speaker 01:
Because there's a nuance that's very important

[01:13:30] Speaker 01:
as to why there was no technical comparability as to those agreements.

[01:13:36] Speaker 01:
Those were software developments.

[01:13:41] Speaker 01:
These were all software development agreements.

[01:13:48] Speaker 01:
the defendant's technical expert, and his report said he could not determine if those pieces of software that were developed for the customers practiced the asserted patents.

[01:13:59] Speaker 01:
He couldn't figure out, didn't have enough information.

[01:14:02] Speaker 01:
He then said, but Dr. Malek, the plaintiff's expert, found that a piece of software developed for Learfield did practice the patents.

[01:14:12] Speaker 01:
And because these other six software applications used something called MOS content management, if Dr. Malik thinks they infringe, that Learfield infringes, these do too.

[01:14:25] Speaker 01:
And that's his technical opinion.

[01:14:28] Speaker 01:
He made an incorrect assumption that Dr. Malik

[01:14:32] Speaker 01:
concluded that it was mass content management that practiced the patents.

[01:14:36] Speaker 01:
That was not his opinion.

[01:14:37] Speaker 01:
And if you look at appendix 05745, what Dr. Malik looked at was he looked at this Learfero product, and they had taken the mass custom configuration, which is an off-the-shelf software.

[01:14:51] Speaker 02:
I'm getting a little uncomfortable about this simply because we don't want you to raise the spectro where your friend gets to respond.

[01:14:58] Speaker 02:
Fair enough.

[01:14:59] Speaker 02:
I may think so.

[01:15:00] Speaker 02:
If my colleagues had questions about it, certainly.

[01:15:03] Speaker 01:
Fair enough.

[01:15:03] Speaker 01:
And I just wanted to, I didn't address it.

[01:15:05] Speaker 01:
And my colleague had raised it.

[01:15:06] Speaker 01:
But if you look at it, there is at least a technical challenge.

[01:15:11] Speaker 01:
Unless the panel has questions about anything else, we've gone an hour and a half.

[01:15:17] Speaker 01:
And I'm very thankful.

[01:15:18] Speaker 04:
I guess I just want you to talk for a minute about 101 and why this case is on one side or the other side

[01:15:27] Speaker 04:
very, very important line about a required level of concreteness of technique, not how to use it or how to make it, but just concreteness of the technique itself that is important in a fair number of our cases at step one of Alice.

[01:15:52] Speaker 01:
Your Honor, and I agree that some of step two has carried over into step one.

[01:15:57] Speaker 01:
And so we think that this is very much like the visual memory case.

[01:16:02] Speaker 01:
So there is a problem, a technical problem, to be solved, which is at the time of the invention, this was the Blackberry time.

[01:16:12] Speaker 01:
Thousands and thousands of different devices with different types of capabilities, memory, GPS, screen size, screen resolution, et cetera.

[01:16:23] Speaker 01:
in order to roll out an app.

[01:16:26] Speaker 01:
If you're an app developer, you couldn't roll out one app.

[01:16:29] Speaker 01:
You'd have to roll out an app developed for every single file.

[01:16:32] Speaker 04:
But you understand that you have not yet gotten to the only point that matters is whether the solution was relevantly concrete.

[01:16:42] Speaker 04:
We understand what the problem is.

[01:16:45] Speaker 01:
I do, Your Honor.

[01:16:45] Speaker 01:
And we do think it is.

[01:16:47] Speaker 01:
The concept of a wireless device generic template, custom configuration, page description, those are all

[01:16:55] Speaker 01:
concrete steps of taking, in some instances, aspects that reside on the device and moving them to a distributed architecture.

[01:17:06] Speaker 01:
But the wireless device generic template is a novel item.

[01:17:10] Speaker 01:
It's not even taking an item from the device and moving it to

[01:17:15] Speaker 01:
the server, it's creating a new intermediary element.

[01:17:19] Speaker 01:
And if you go through the claim limitations, and we discuss it with the brief, there are a number of items like that, including the page description that are all described in the claim itself, and then are all described in further detail in the specification.

[01:17:37] Speaker 03:
In visual memory, wasn't there

[01:17:40] Speaker 03:
computer system that was trying to sort of do the same thing, and the patent there was improving the computer functionality?

[01:17:47] Speaker 03:
Yes.

[01:17:48] Speaker 03:
And my question is here, when I read this, I'm saying a cool idea came up, which was to do all this on the server and relieve the app supplier and the owner of the device from having to do something.

[01:18:01] Speaker 03:
And so somebody really smart had to write some software.

[01:18:05] Speaker 03:
And they went to somebody's software and they said, now just go put this on a computer.

[01:18:11] Speaker 03:
And that's what they did.

[01:18:12] Speaker 03:
So what's the improvement in the computer functionality or capability?

[01:18:18] Speaker 03:
There was a one in visual memory because the previous way in which the memories were structured, right, created inefficiencies.

[01:18:29] Speaker 03:
And the invention there was, we'll do something that's actually working on the computer.

[01:18:34] Speaker 03:
So why isn't this simply a matter of a really cool software writer writing the software and then handing it over to the machine people and saying, go find a computer that's powerful enough to do this?

[01:18:47] Speaker 01:
Because there are improvements.

[01:18:49] Speaker 01:
So the improvements... Where are they?

[01:18:50] Speaker 03:
Specifically to the functioning of the computer.

[01:18:54] Speaker 03:
So here... We're talking now about the server computer, right?

[01:18:58] Speaker 01:
You're talking about the original application is housed entirely on the device.

[01:19:05] Speaker 01:
This now goes to a distributed architecture system where some of the capabilities are housed on the server and some are housed on the device.

[01:19:15] Speaker 01:
And what's created that's new is this wireless device generic template and page description.

[01:19:21] Speaker 01:
Because otherwise, what you do is you have to generate

[01:19:24] Speaker 01:
a unique page description for each device.

[01:19:29] Speaker 01:
Instead, what you do is you create, and this is what's not in the software before the invention, the generic template that is then filled in by the information from the server.

[01:19:41] Speaker 01:
So that's the unique addition to the system.

[01:19:43] Speaker 03:
We're improving the distributed system, not the computers.

[01:19:47] Speaker 01:
Pardon me?

[01:19:48] Speaker 03:
What are we improving here?

[01:19:50] Speaker 01:
You're improving on systems.

[01:19:53] Speaker 01:
the distributed system.

[01:19:55] Speaker 01:
It was originally not distributed.

[01:19:57] Speaker 01:
It was solely on the server side.

[01:20:00] Speaker 03:
You move to a distributed system and you add to it... You're not actually affecting the computers, the phone or the server capable of doing all this.

[01:20:12] Speaker 01:
You're improving the way they interact with one another to improve the performance.

[01:20:19] Speaker 03:
Of what?

[01:20:21] Speaker 01:
Of the application residing on

[01:20:23] Speaker 03:
not of the computer.

[01:20:25] Speaker 01:
Not of the computer, but I don't see the court's precedent as requiring an improvement, for example, to memory.

[01:20:33] Speaker 01:
It can be an improvement to how a distributed architecture works.

[01:20:37] Speaker 03:
A number of our software patents have actually dealt with the conclusion that there was an improvement in the way the computer was functioning.

[01:20:45] Speaker 01:
That's true.

[01:20:45] Speaker 01:
This is an improvement in the way

[01:20:48] Speaker 01:
server and the network communicate with one another to prevent the problem of having to create individualized programs for every type of phone.

[01:21:02] Speaker 02:
Thank you.

[01:21:02] Speaker 05:
Thank you your honor.

[01:21:10] Speaker 05:
Oh, but use the live your time, John.

[01:21:11] Speaker 05:
I was trying to be fast.

[01:21:12] Speaker 05:
I think Judge Cobb is exactly right on visual memory in terms of the improvement to the memory system itself.

[01:21:18] Speaker 05:
Here, what we really have is the use of the computer as the tool and just this basic customization.

[01:21:23] Speaker 05:
I want a page with a picture.

[01:21:25] Speaker 05:
And if it's going to go to a device with a high-res screen, then I might use a high-res picture.

[01:21:31] Speaker 05:
If it's going to be a low-res screen, I might use a low-res picture.

[01:21:34] Speaker 05:
It's going to go to device with a color screen.

[01:21:36] Speaker 05:
I might have the color of my trademark font that's the look and feel, the blue color I mentioned before on a black background, change it to a white on a black background if there isn't color on the screen.

[01:21:47] Speaker 05:
It is all pitched at such a high level of generality, not on the details of this, but the broad concepts of a custom configuration

[01:22:00] Speaker 05:
child concept.

[01:22:01] Speaker 05:
They're claiming it at that conceptual level in a way to try to sweep in all of this customization.

[01:22:09] Speaker 02:
Thank you.

[01:22:10] Speaker 02:
We thank both sides.

[01:22:11] Speaker 02:
Appreciate that you've both tried to be very helpful.

[01:22:13] Speaker 02:
We obviously had a lot of trouble.

[01:22:15] Speaker 02:
So thank both sides for cases submitted.