[00:00:00] Speaker 05: We will hear argument next in case number 241783, Ortiz and Associates Consulting versus Vizio. [00:00:10] Speaker 05: Mr. Ramey. [00:00:12] Speaker 00: Good morning. [00:00:13] Speaker 00: My name is William Ramey, and I represent Appellate Ortiz and Associates Consulting LLC. [00:00:19] Speaker 00: If it pleases the court, may I begin? [00:00:21] Speaker 00: Ortiz seeks a reversal of the fee shifting under 35 USC section 285 because the district court [00:00:27] Speaker 00: abused its discretion in finding the case exceptional because it was legal error for the district court to use the alleged failure to mark the alleged failure to have damages to support an award under Section 285. [00:00:40] Speaker 00: Now, that was only one of the four factors the court did, but that was the one that was clearly legal error. [00:00:46] Speaker 00: And the court first, when it dismissed the case of prejudice, that was the first sanction. [00:00:52] Speaker 00: It's well established under Fifth Circuit law that dismissal with prejudice is a sanction. [00:00:57] Speaker 00: Ortiz decided not to appeal that dismissal and went on down the road. [00:01:01] Speaker 00: And the 285 motion was then filed because we have a situation where there was a 285 that considered that fact of the alleged failure to mark, alleged failure to have a viable damage claim to support a factor in the totality of the circumstances that justifies an award under Section 285. [00:01:21] Speaker 00: However, there's nothing unusual about this case. [00:01:23] Speaker 00: Nothing stands out for the rest. [00:01:24] Speaker 00: The other three factors chosen by the district court [00:01:27] Speaker 00: were one that the Ortiz failed to live up to the discovery obligations, failed to serve infringement contentions. [00:01:34] Speaker 00: That was something that was never raised by Vizio in the case in chief. [00:01:39] Speaker 00: They never brought that to the district court's attention until in the Pleading for the Motion for Fees. [00:01:44] Speaker 00: The fact that Vizio hadn't served discovery, or the Ortiz hadn't served discovery, [00:01:49] Speaker 04: Shouldn't be a question. [00:01:50] Speaker 04: Do I remember right? [00:01:53] Speaker 05: Tell me if I'm wrong that the district court's fee opinion never says, even if the failure to plead compliance with 287 is not [00:02:17] Speaker 05: does not make the case brought exceptionally meritless, the other factors would support my fee award even by themselves. [00:02:28] Speaker 05: Is that right? [00:02:30] Speaker 00: The district court did say that. [00:02:32] Speaker 00: Did say what? [00:02:33] Speaker 00: The district court did say that it's totality of the four circumstances. [00:02:37] Speaker 04: Right. [00:02:38] Speaker 04: I'm not asking my question clearly enough. [00:02:40] Speaker 05: I took it from the district court's opinion that the judge never said [00:02:48] Speaker 05: even if there was no exceptionally bad failure to plead marking, that the other factors would alone support [00:03:00] Speaker 05: characterizing the case as exceptional? [00:03:04] Speaker 00: I didn't take that from the district court's opinion, Your Honor. [00:03:07] Speaker 00: What I took from it was he was balancing all four of them. [00:03:09] Speaker 00: And the first one where I found there was clearly glare. [00:03:12] Speaker 00: Getting into the other three factors, the not following the discovery requirements of the court, we never had brought to our attention that infringement contentions weren't served. [00:03:21] Speaker 00: There was a procedure under the miscellaneous rule 62 in the Northern District of Texas where we could have applied to serve infringement contentions. [00:03:30] Speaker 00: The record evidence before the court is that Ortiz planned to do that after he got passed the motion to dismiss stage. [00:03:36] Speaker 00: The other factor within that discovery obligation of the court were not serving discovery. [00:03:41] Speaker 00: It's not uncommon in many courts, as in the Western District of Texas, that we don't even start discovery until after the markment. [00:03:47] Speaker 00: There was still plenty of time on the court's order, doctor control order, for Ortiz to serve discovery, get responses, and build its case. [00:03:54] Speaker 00: They planned to do that later on, because serving fees for both the plaintiff and the defendant [00:03:59] Speaker 00: until after the motion to dismiss the page. [00:04:03] Speaker 00: It's the third factor that the court used in assessing fees that made a settlement demand that was well below the merits of the case. [00:04:18] Speaker 00: Ortiz's settlement demand very early on in the case was $149,000. [00:04:24] Speaker 00: The fee motion that Vizio submitted only requested fees of $162,000. [00:04:29] Speaker 00: 66, I think. [00:04:30] Speaker 00: 66, part 166. [00:04:32] Speaker 00: My bad, I'm reading that. [00:04:34] Speaker 00: And that includes the briefing on the motion for fees. [00:04:36] Speaker 00: So before that, the $149,000 was right along with what the parties have spent to date. [00:04:41] Speaker 00: And it's not uncommon for clients that can't afford to go into seven-digit figures spending on litigation to try to balance the cost of litigation with their settlement demands. [00:04:52] Speaker 01: And so, earlier on in the case... Council, just so we level set, you agree that the patents were expired, right? [00:04:59] Speaker 00: Yes, Your Honor. [00:05:00] Speaker 00: Okay. [00:05:00] Speaker 01: And so, in light of that, then you'd be looking for, obviously, past damages of anything, not future, right? [00:05:07] Speaker 01: Yes, Your Honor. [00:05:09] Speaker 01: Okay. [00:05:12] Speaker 01: Because of kind of the circumstances of this case, do you disagree that you would need to plead something sufficient to show that you would have some plausible entitlement to past damages? [00:05:25] Speaker 00: We address that in our response to the motion to dismiss the first amended complaint. [00:05:31] Speaker 00: We'll be brought to the court's attention that we did [00:05:38] Speaker 00: that we had, in fact, pled, we were saying that we were non-practicing any with no products to mark. [00:05:44] Speaker 00: And that in all of our licensees, they didn't, the way of the settlement license, or there were a few of them prior to my time, that they weren't producing a patented Article IV under Ortiz's patents. [00:05:55] Speaker 00: And that's how we pled it in a response to the motion to dismiss. [00:05:58] Speaker 00: And that's, had we been provided a chance to amend our complaint, we would have added that back into the complaint. [00:06:03] Speaker 00: That's what we were asking for, was a chance to amend the complaint. [00:06:06] Speaker 00: But the decision was made at that time not to appeal the dismissal. [00:06:10] Speaker 00: And so that's what finds kind of a unique procedural history as it works. [00:06:13] Speaker 05: So let me just see if I understand. [00:06:16] Speaker 05: I think you just said that in opposing the motion to dismiss, you said there is no license. [00:06:29] Speaker 05: We have no licensee practicing this patent. [00:06:35] Speaker 05: But you did not put that into your either original complaint or the amended complaint. [00:06:44] Speaker 00: That's correct, Your Honor. [00:06:45] Speaker 00: We were anticipating having the court providing some guidance as to whether or not we were required to plead that when we put it into our motion to dismiss response. [00:06:55] Speaker 03: So your position is, which was not in the first amended complaint, but nonetheless your position now is that [00:07:05] Speaker 03: I take it that there was no marking requirement because neither, in this case, Roku or Panasonic was practicing either of the two patents. [00:07:17] Speaker 03: Is that right? [00:07:20] Speaker 00: My understanding from talking to the client tonight when we were drafted the brief is that I wasn't involved in those cases, Your Honor. [00:07:25] Speaker 00: Right. [00:07:25] Speaker 00: I understand. [00:07:26] Speaker 03: But what I take it you're saying now is that Roku and Panasonic did not practice the patents, and therefore there's no marking requirement. [00:07:37] Speaker 00: They did not believe they practiced the patents. [00:07:39] Speaker 03: Right. [00:07:39] Speaker 03: But then why did you sue them in the first place? [00:07:42] Speaker 03: Ortiz firmly believes they were friends of the patents. [00:07:44] Speaker 03: Well, but I think you just said that Ortiz [00:07:48] Speaker 03: advise you that they didn't practice the patents? [00:07:51] Speaker 00: That the defendants, Panasonic and Roku, believed that they were not infringing the patents. [00:07:56] Speaker 00: No, the defendants believed that, but what did Ortiz believe? [00:08:00] Speaker 00: Ortiz believed that they were infringing the patents, and that's why they filed the Patent Infringement Act. [00:08:07] Speaker 00: We take that to be a different type of license, that that's a license to end litigation, which [00:08:12] Speaker 00: we referred to in our briefing as a settlement license. [00:08:15] Speaker 00: This court has viewed settlement licenses, notice the distinction between settlement licenses and licenses to produce a patented article. [00:08:22] Speaker 00: In the strict language of Section 287A, the intent of the parties has to be to produce a patented article for or under the patents at issue. [00:08:32] Speaker 00: And here the defendants, my understanding is from the Roku and Panasonic, contended they did not infringe, and that they were not producing a patented article for or under [00:08:41] Speaker 00: the Ortiz patents from this. [00:08:43] Speaker 01: In the settlement agreements, did you have a provision relating to marking? [00:08:48] Speaker 00: In those prior settlement agreements, I don't believe that those settlement agreements were considered in the case below until the fee motion. [00:08:57] Speaker 00: And those were just motions to dismiss. [00:08:59] Speaker 00: And so I don't believe that's part of the record you're on in this case. [00:09:03] Speaker 03: Well, it was just a motion to dismiss, and it was [00:09:07] Speaker 03: It was dismissed, a naked motion dismissed. [00:09:10] Speaker 03: It didn't say anything about marking, right? [00:09:14] Speaker 00: Have you seen those motions? [00:09:16] Speaker 00: Maybe I misunderstood the question. [00:09:17] Speaker 00: I'm sorry, Your Honor. [00:09:18] Speaker 03: Well, I was just following up on Judge Cunningham's question. [00:09:22] Speaker 03: Have you seen the motions to dismiss in those two prior cases? [00:09:29] Speaker 00: Your Honor, I did not review them in preparation for the hearing today. [00:09:32] Speaker 00: The motions of those prior cases, I did not review them. [00:09:36] Speaker 00: So my apologies for that. [00:09:37] Speaker 00: So we would simply say that the licenses that Ortiz was granted were licensed in litigation. [00:09:45] Speaker 00: The defendants, the high-cost litigation, the uncertainty of litigation. [00:09:49] Speaker 00: So it's a different type of a license. [00:09:50] Speaker 00: And by the strict language of 287A, it requires a patentee who's practicing the invention to mark or a patentee who has licensed his inventions for another to practice those claims to produce. [00:10:04] Speaker 00: a patented article. [00:10:05] Speaker 00: And here, neither of those Roku or Panasonic defendants. [00:10:07] Speaker 00: And that leads us back to the fact that it was legal error for the district court to use that as a factor in determining whether or not this case was exceptional. [00:10:17] Speaker 00: But I promised to get to all four of the factors. [00:10:19] Speaker 00: And the one factor, the fourth factor that the judge talked about, well, let me talk about the settlement demands a little bit. [00:10:25] Speaker 00: The court said that a $149,000 settlement was a nuisance value settlement. [00:10:30] Speaker 00: And I would say that that isn't a nuisance value settlement for the stage of the case. [00:10:34] Speaker 00: that the median income in America, I put it into the briefing, is far less than that at the time. [00:10:40] Speaker 00: So that can't be considered a nuisance value. [00:10:42] Speaker 00: And the costs that Vizio sought in the case of that was not a nuisance value. [00:10:46] Speaker 00: So that's a clear error in fact that the district used in assessing fees under Section 285. [00:10:52] Speaker 00: And the last one that Ortiz dismissing many lawsuits about the motion to this. [00:11:00] Speaker 03: Would you agree, though, that the proposition [00:11:04] Speaker 03: that I think the district court was basing its ruling on this issue on, that a nuisance value, i.e. [00:11:15] Speaker 03: a settlement offer for less than the prospective cost of the defense, is a factor that can be considered in determining whether [00:11:23] Speaker 03: there is this is an exceptional case. [00:11:26] Speaker 03: Would you agree with that proposition? [00:11:28] Speaker 00: I would not. [00:11:29] Speaker 00: I've toiled with this one for a lot and a lot of different cases reading different opinions of this court. [00:11:34] Speaker 00: And while I see that low settlement offers an extractive settlement from a defendant had been determined by this court to be a factor supporting an exceptional case findings, what that value is and whether or not. [00:11:48] Speaker 03: No, but just as an abstract matter, in other words, [00:11:52] Speaker 03: Defendant is looking at, well, if I go all the way through a motion to dismiss or have to go through summary judgment with the attendant discovery, this is going to cost me somewhere between $200,000 and a million dollars, let's say. [00:12:07] Speaker 03: If that's the defendant's calculation, and you offer a settlement for $100,000 or $150,000, do you regard that as a factor that the court can take into account in determining whether there is an exceptional case in the instance? [00:12:22] Speaker 00: No, Your Honor. [00:12:23] Speaker 00: The only evidence in this case, the record evidence, is that it's a practice of many of the plaintiffs that are represented, that we start with a lower settlement offer, but we raise our settlement offer as we go on through the case. [00:12:34] Speaker 00: So that we approach it. [00:12:35] Speaker 00: Right. [00:12:36] Speaker 03: But that practice, as this Court has said, can be abusive. [00:12:39] Speaker 03: Because what you can be either fairly or unfairly, depending on your perspective, accused of is having taken advantage of the fact that legal fees are very high these days. [00:12:52] Speaker 03: You can offer something that is plenty enough to satisfy your client, but forces the other side to choose between defense and getting out of the case for less. [00:13:03] Speaker 03: In many instances, they'll get out of the case for less. [00:13:05] Speaker 03: That, this Court has said, at least nakedly expressed, is abusive. [00:13:10] Speaker 00: If the way that it's handled is abusive, then I can see this Court finding that as abusive. [00:13:14] Speaker 00: However, the way that this was handled in this particular case, looking solely at this case, [00:13:19] Speaker 00: It was not abusive. [00:13:20] Speaker 00: And we're not applying generalities to settlement offers. [00:13:23] Speaker 00: But this court places a high value on resolving cases. [00:13:27] Speaker 00: And to take away the ability to resolve cases early on, there's not all defendants that can afford, all plaintiffs that can afford a seven-figure defense or a seven-figure going out there and suing people. [00:13:39] Speaker 00: So that's why the settlements are often structured so that they can resolve cases before we get to that seven figures being spent by the plaintiff. [00:13:47] Speaker 00: That's what contingent fees are for. [00:13:50] Speaker 00: Yes, Your Honor. [00:13:51] Speaker 00: And in some cases, yes, Your Honor. [00:13:54] Speaker 00: So I want to do a little bit more if I could real quick, and then I'll reserve the rest of my time. [00:14:00] Speaker 00: But I don't think, if you look at the facts of this case, there's nothing to indicate that it was abusive. [00:14:04] Speaker 00: So just as being a general factor, it wasn't abusive in this case. [00:14:08] Speaker 00: So it shouldn't be used as something to support an award of fees. [00:14:13] Speaker 00: And briefly, on the fourth one that we filed many lawsuits and dismissed, [00:14:19] Speaker 00: Before the motion to dismiss states, they're just the district court didn't take any evidence of what those dismissals were and this court has said in the risk rescue case that 594 fed third 860 that we need more to base that as a factor and I'll reserve the rest of my time for mayor. [00:14:40] Speaker 04: Thank you [00:14:52] Speaker 02: Good morning, Your Honors. [00:14:53] Speaker 02: May it please the Court, Stephen Hartzall on behalf of Vizio. [00:14:56] Speaker 02: The only issue before this Court today is whether the District Court abused its discretion in finding this case exceptional and awarding peace. [00:15:03] Speaker 02: The District Court did not abuse its discretion. [00:15:06] Speaker 02: All the factors that the District Court considered and its factual findings are supported by this Court's precedents and the record. [00:15:12] Speaker 02: I'd like to first start with the marking issue. [00:15:17] Speaker 02: The issue here is Ortiz [00:15:20] Speaker 02: This court is very clear in ARTCAT that it is the patentee's burden to plead compliance with the marketing statute. [00:15:27] Speaker 02: And district courts, again, as Your Honor pointed out, the only damages available in this case were past damages. [00:15:33] Speaker 02: There are a lot of district courts that say, particularly when you're trying to seek past damages, you must plead compliance with the marketing statute. [00:15:41] Speaker 05: What in the circumstances of what [00:15:45] Speaker 05: Ortiz's situation would have sufficed as a pleading. [00:15:53] Speaker 02: I think that answer has two components. [00:15:55] Speaker 02: First, Ortiz would need to address itself. [00:15:57] Speaker 05: So I think Ortiz... You say, we don't make any goods, so we got nothing to mark. [00:16:01] Speaker 02: Ortiz would probably say, yes, we don't make any products, and therefore we have nothing to mark. [00:16:06] Speaker 02: But the marking statute also applies to licensees. [00:16:09] Speaker 02: If Ortiz is admitted, it does have licensees. [00:16:11] Speaker 05: The marking statute does not use the word licensee, does it? [00:16:15] Speaker 05: No, but the court's precedents have said that Martin doesn't. [00:16:18] Speaker 05: Well, maybe not all licensees are of a piece. [00:16:20] Speaker 05: 287 says it's four or under. [00:16:25] Speaker 05: Four or under. [00:16:26] Speaker 05: Not matched. [00:16:29] Speaker 05: And here, I think the district court didn't go further than saying there were two companies, Panasonic and Roku, that had settled suits with dismissal with prejudice. [00:16:47] Speaker 05: What more should Ortiz have pled? [00:16:51] Speaker 05: Would it have been enough if it had pled what it said in its opposition to dismiss? [00:16:55] Speaker 02: I think with the licensee issue, there's three issues. [00:16:58] Speaker 02: I think it would need to say, one, we have no licensees, and therefore there's no other entity that ostensibly has to mark. [00:17:05] Speaker 02: Two, they would have to say that their licensees did mark, substantially marked, plead some facts or something like that. [00:17:14] Speaker 02: Or three, they would have to say that whatever products were being made or are subject to the license are not patented articles that don't fall under the statute. [00:17:23] Speaker 02: So I think in order for, in this case, for OTs who have made a pleading, it would need to have said, again, we OTs, we're a nonpractice entity, we don't have products to mark. [00:17:32] Speaker 02: Furthermore, we either don't have licensees. [00:17:34] Speaker 02: which I don't think Ortiz could make that statement under Rule 11, because it has licensees. [00:17:39] Speaker 05: Well, suppose it had said, we don't have licensees in a sense that would be sufficient to say that their products are made for or under, I think the language is the patentee, not even under the patent. [00:17:54] Speaker 05: Under the patentee, that's right. [00:17:55] Speaker 03: It's been patentee. [00:17:56] Speaker 03: It's been construed that way. [00:17:57] Speaker 05: Yeah, it's a little bit odd. [00:17:59] Speaker 05: But for or under the patentee, the two, we have certain settlements, two of them [00:18:09] Speaker 05: are ones in which we believed that, based on the information we had at the time we sued, that the defendants had products that infringed, but the two defendants insisted otherwise. [00:18:24] Speaker 05: It seems to me like that would be enough. [00:18:31] Speaker 05: And if that were enough, how in the world were you harmed by their failure to say that? [00:18:37] Speaker 02: Potentially, it would have been enough. [00:18:38] Speaker 02: I think it would depend on the wordings of whether, again, whether the district court would find that they've pleaded sufficient facts to allow it to make a claim for damages such that the district court could actually grant relief by the lawsuit. [00:18:52] Speaker 02: Here, though, we apprised Ortiz of the requirement to plead marking. [00:18:58] Speaker 02: This is Articat. [00:19:00] Speaker 02: In our first motion to dismiss, as well as all the case law, Ortiz filed an amended complaint [00:19:06] Speaker 02: that Ortiz ignored all of the case law and evidence that we presented in our first motion to dismiss. [00:19:13] Speaker 02: And again, it filed a complaint that didn't address marking or damages warning of the case law at all. [00:19:19] Speaker 02: It essentially just doubled down and said, we don't have to do it. [00:19:23] Speaker 02: And the district court and so the district court in dismissing this case found it found that [00:19:29] Speaker 02: It found that Roku and Panasonic had licenses by operational law. [00:19:33] Speaker 02: But as an independent basis, the district court said that Ortiz was on notice of the requirement to plead compliance with the marking statute. [00:19:44] Speaker 02: And it failed to do it. [00:19:45] Speaker 02: It didn't say anything. [00:19:48] Speaker 02: And as for the harm, in filing this lawsuit, you know, Vizio must. [00:19:54] Speaker 03: Again, to follow up on Judge Gerardo's question, [00:19:58] Speaker 03: difference did that make in terms of the injury to you? [00:20:03] Speaker 02: The injury is, again, because only past damages were available, courtes must make a requisite pleading in order to unlock those past damages. [00:20:14] Speaker 02: By not doing so, this case is frivolous in that there's nothing the district court can do. [00:20:19] Speaker 03: If the district court is right in thinking that the marking [00:20:24] Speaker 03: requirement applied in this case, then all those past damages go away. [00:20:29] Speaker 03: But that happens whether they pleaded or not. [00:20:34] Speaker 03: In other words, if this case went on, you would be able to say, number one, we think the marking requirement applies. [00:20:44] Speaker 03: And number two, they weren't marked. [00:20:46] Speaker 03: Therefore, you get no past damages. [00:20:50] Speaker 03: Yes. [00:20:51] Speaker 03: And why was the fact that that wasn't in the pleading injurious to you? [00:20:57] Speaker 02: It's injurious to us because they filed the complaint, and that requires Visio to read the patents, look up defenses, start looking at the products at issue, participate in scheduling conferences. [00:21:13] Speaker 02: Visio has to spend a lot of time, money, and resources in starting to defend itself against a case [00:21:19] Speaker 02: in which no viable damage theory was ever pled. [00:21:23] Speaker 02: Thus, the district court would never be able to offer any relief. [00:21:28] Speaker 02: That's how busy his injury. [00:21:30] Speaker 02: I think probably the point you're getting at is, in this case in particular, I think had they made the requisite pleading, I think we would probably ultimately, at the end of the day, based on what's kind of come out in some of the briefing, have wound up at this point maybe in a summary judgment context. [00:21:46] Speaker 02: And it would have just been, again, [00:21:49] Speaker 02: even more time and money in deferred. [00:21:51] Speaker 03: Now, the assumption that the district court made, I think it's an assumption, was that if the back damages were unavailable, given the fact that the patent had expired, then there would be no damages at all. [00:22:09] Speaker 03: But as I understand the record, and correct me if I'm not right about this, but [00:22:15] Speaker 03: There's a six-year statute of limitations. [00:22:18] Speaker 03: The case was filed in 23. [00:22:20] Speaker 03: So that takes us back to 17. [00:22:25] Speaker 03: But the two settlements, I think, were in 19. [00:22:29] Speaker 03: So even if those two settlements constitutes licenses for which there were marking requirement applied, then there still would be damages where they're not between 17 and 19? [00:22:42] Speaker 03: But again, I also think this comes to the district courts. [00:22:46] Speaker 02: But didn't the district court kind of assume away all of the back damages? [00:22:51] Speaker 02: Well, the district court dismissed the order based on two things. [00:22:55] Speaker 02: One is what I would call the operation by law of Panasonic and Roku. [00:23:00] Speaker 02: The district court agreed with our legal analysis and logic, and Ortiz did not dispute any of that in their opposition. [00:23:09] Speaker 02: But the district court also said, just as an independent basis, [00:23:14] Speaker 02: Ortiz never pled anything. [00:23:16] Speaker 02: And that in and of itself was an independent basis to wipe out all past damages, because it never made any pleading that would allow it to receive any type of past damages, even if only a fraction. [00:23:29] Speaker 02: If I could turn briefly to the other issues, the district court also found, I think rightly, that in this case, it's undisputed that Ortiz did not serve infringement contentions, initial disclosures, or anything like that. [00:23:44] Speaker 02: The district court scheduling order is very clear. [00:23:47] Speaker 02: I think it's appendix page 563 that the pendency of a Rule 12 motion does not stay the litigation absent an order from the court. [00:23:57] Speaker 02: Ortiz never took it upon it, never went to the district court and said, can we pause this until the court rules on the motion to dismiss? [00:24:04] Speaker 02: Ortiz admits in its briefing to the district court that it unilaterally took it upon itself to say, we're not going to serve any of this stuff and we'll take care of it later. [00:24:13] Speaker 02: when and if we survive the motion to dismiss. [00:24:17] Speaker 02: I heard counsel talk about the rules, the Texas patent rules that allow you to amend, that allows you to make amendments for good cause. [00:24:25] Speaker 02: That's usually for we've added products, we've used source code, and we want to refine our theories. [00:24:31] Speaker 02: I do not think the good cause is I unilaterally decided not to follow the court's rules, and now I want to do over. [00:24:40] Speaker 02: Can I ask a question? [00:24:42] Speaker 05: We have some cases, and just correct me about these premises. [00:24:46] Speaker 05: I guess I think of the Rembrandt case that talks about how the fees that are awarded have some nexus, causal connection to the conduct that made the case exceptional. [00:25:04] Speaker 05: How would that be true of the failure to file infringement contentions? [00:25:13] Speaker 05: I understand how it would be true if the case from the get-go was exceptionally under-pled, because then the whole case would be the result. [00:25:28] Speaker 05: But how does this failure to file infringement contentions [00:25:34] Speaker 05: cause any excess fees? [00:25:37] Speaker 02: I'm not sure it goes to excess fees, but I think it goes to the Supreme Court's octane fitness, where it's also, you consider the manner in which the case was litigated. [00:25:48] Speaker 02: And so I think octane fitness talks about substantial weakness of your litigating position, as well as the manner in which you litigated the case. [00:25:56] Speaker 02: And here, I think this is a good idea. [00:25:58] Speaker 05: I guess part of what I'm trying to figure out is, for purposes of this question only, if I had some doubts about the failure to plead ground, whether it really could be the case that either the fee that was awarded or any fees could rest on the other bases that the district court considered. [00:26:24] Speaker 02: I think this answers your question. [00:26:25] Speaker 02: I don't read the district court's opinion as saying that the four factors that it considered, that each one in and of itself is an independent basis that allows fees. [00:26:37] Speaker 02: I understand the district court's opinion to say the district court has considered these four factors. [00:26:43] Speaker 02: And when you consider the four factors in totality, the district court said that this case was exceptional. [00:26:48] Speaker 05: Can I change the subject to this nuisance offer business and this concept of abusiveness? [00:27:00] Speaker 05: What exactly is abusive or wrong about, and now I'm going to make up some facts, a moneyless patent owner bringing lawsuits against a variety of defendants that I'm going to assume here now [00:27:19] Speaker 05: is substantively non-frivolous and hoping that a few of the defendants will pay up to get out of the suit. [00:27:35] Speaker 05: Again, non-frivolous claims providing the plaintiffs some money to go up against the wealthy defendants who have vast resources [00:27:45] Speaker 05: to outspend the plaintiff that the plaintiff could not possibly match without getting funding. [00:27:54] Speaker 05: What's abusive about that? [00:28:00] Speaker 02: In the abstract, I think, I haven't really given this much thought, but I would think if the claims are not frivolous, then the patentee would, the patent owner would [00:28:16] Speaker 02: be able to really articulate a case on the merits. [00:28:18] Speaker 02: I think the problem with this case is the settlement demand that was made was, as Ortiz pointed out in his briefing to the district court, was based on Ramey LLP, the litigation law firm's practice. [00:28:35] Speaker 02: It's not even Ortiz's practice. [00:28:37] Speaker 02: It wasn't based on the value of the technology. [00:28:43] Speaker 02: It's not based on [00:28:45] Speaker 02: any of the merits of the case. [00:28:47] Speaker 02: Here, it seems to be, and this is what the district court found. [00:28:50] Speaker 05: We have this kind of unavoidable fact that patent litigation is fantastically expensive. [00:28:59] Speaker 05: The cost of it can never be outside the real world view of both parties in how to proceed. [00:29:13] Speaker 05: I guess what I struggle with here and have been struggling with even outside this case is how to think about this phenomenon of bringing multiple suits as bearing on an inquiry without the premise of, I'm going to just call it frivolousness of the suit. [00:29:37] Speaker 05: And I'm using a broad concept of frivolous to include here, for purposes of this question, failure to plead something. [00:29:50] Speaker 02: If I understand your question, I think one of the hallmarks of this court should consider is really whether the patent owner is willing to test the merits of its case. [00:30:00] Speaker 02: And here, the district court [00:30:05] Speaker 02: looked at the prior litigation history and noticed that, I think before, Ortiz, Sued, Vizio, there had been 11 suits that had been filed and almost all... They're too poor to test it unless they get some settlements to provide funding to test it against the big players. [00:30:23] Speaker 02: I think they need to test the merits of their case. [00:30:31] Speaker 02: I'm not sure if that answers your question. [00:30:32] Speaker 02: I also see that I'm over my time. [00:30:35] Speaker 01: Besides the issue on marketing, is there anything else the court pointed to regarding the substantive weakness of a litigation position? [00:30:44] Speaker 02: No. [00:30:44] Speaker 02: The court, we raised other what I would call technical issues about within the claims and whether systems and service and all that kind of stuff. [00:30:54] Speaker 02: But we raised all that in our briefing. [00:30:56] Speaker 02: But the district court did not address that in its opinion. [00:30:59] Speaker 02: It confined itself to the marketing issue. [00:31:01] Speaker 03: If I could ask one more question along the lines of what you kind of asked question. [00:31:07] Speaker 03: What, in your view, would have been minimally sufficient to put in the complaint to satisfy the marking requirement under circumstances in this case in which, number one, obviously, the patentee is not making and selling the goods themselves? [00:31:27] Speaker 03: And number two, let's assume that the patentee [00:31:31] Speaker 03: it will treat the settlements as licenses, but has information that the licensees do not regard their sales of their products as being covered by the patents. [00:31:48] Speaker 03: Under those circumstances, what exactly is the minimally sufficient pleading that should have shown up in the First Amendment complaint? [00:31:57] Speaker 02: Again, we need to say [00:31:58] Speaker 02: We Ortiz are non-practicing. [00:32:00] Speaker 02: We don't have products to mark. [00:32:02] Speaker 02: And then as far as the licensees, again, I don't think the case law, I think the case laws, it really doesn't matter what the licensee thinks. [00:32:11] Speaker 02: It's whether the claim language reads on the patent. [00:32:15] Speaker 02: So if the licensee has a license to the 299. [00:32:19] Speaker 03: Right, but if the licensee doesn't think that the products are covered by the patents, they're not going to mark. [00:32:29] Speaker 02: But that can be, whether you have an obligation to mark or not, that's something that can be put into settlement agreements. [00:32:37] Speaker 02: And if you're in a settlement agreement. [00:32:40] Speaker 03: Well, I know. [00:32:40] Speaker 03: But take these facts. [00:32:42] Speaker 03: So you've got exactly this case. [00:32:44] Speaker 03: Plus, we'll assume Ortiz knows that the Roku and Panasonic do not believe that their products are covered by the patents. [00:32:54] Speaker 03: Under those circumstances, what should have been in the complaint [00:32:59] Speaker 03: about the Roku and Panasonic products. [00:33:04] Speaker 02: Then I think Ortiz would have needed to have, going back to what I said earlier, pleaded that the products are not covered for whatever facts and reasons they can plead. [00:33:21] Speaker 03: Well, Ortiz can hardly say that they weren't covered since Ortiz sued them. [00:33:26] Speaker 02: And I kind of think that's the position of the court. [00:33:28] Speaker 02: But you can say that they don't believe they were covered, and that's why they're not marked. [00:33:32] Speaker 02: And Ortiz would also need to plead facts showing that they undertook reasonable steps and efforts to get its licensees to mark the patents. [00:33:43] Speaker 02: And again, I think that would be something that the district court then would have to decide whether that was sufficient or not. [00:33:50] Speaker 02: Right. [00:33:50] Speaker 02: If there are no other questions, I thank the court for its time. [00:33:52] Speaker 02: Thank you. [00:34:02] Speaker 00: Your Honor, if I may address a couple of things very quickly. [00:34:08] Speaker 00: The district court's order, in my opinion, places a new burden on a patent claimant to plead compliance with Section 287A when some other lawsuit has been dismissed with prejudice. [00:34:21] Speaker 00: That could be taken from this holding. [00:34:23] Speaker 00: I think that 287A is a very specific statute, as the court was addressing with my colleague on the other side. [00:34:31] Speaker 00: a patentee who produces a patent article to mark, or a patentee who licenses another to produce a patent article under the patentee. [00:34:39] Speaker 00: And that is correct language. [00:34:42] Speaker 00: And here, regardless of whether Ortiz settled lawsuits with other defendants, if those settlements weren't of such, which aren't in this record, but if they weren't of such character that they were to produce a patented article under the patentee's patents, that wouldn't trigger 28070 by the express language. [00:35:00] Speaker 00: of 287A. [00:35:02] Speaker 00: And I go back to this court's arctic cat holding that section 287 is a limitation on damages, not an affirmative defense. [00:35:10] Speaker 00: And that even comes back from 1984 from the Motorola versus United States case at 729 Fed 2nd, 765. [00:35:18] Speaker 00: And maybe more importantly for this court's resolution of this appeal is that compliance with section 287 is a question of fact. [00:35:26] Speaker 00: And we're at the pleading stage. [00:35:28] Speaker 00: At a pleading stage, all reasonable answers are taken for the patentee. [00:35:31] Speaker 00: We request a plea to amend if the district court found that we needed to put something else in, and that wasn't granted. [00:35:36] Speaker 00: We didn't appeal that, but that's why we reviewed the legal error for the district court to consider that as a factor. [00:35:42] Speaker 01: But you mentioned Articat, and it does specifically state that the patentee bears the burden of pleading and proving he complied with the 287A. [00:35:51] Speaker 01: Mark your requirement. [00:35:52] Speaker 00: Yes, Your Honor. [00:35:53] Speaker 00: And so I like to look at the facts. [00:35:55] Speaker 00: RDCAC was very specific, right? [00:35:57] Speaker 00: We had a patentee who licensed a third party, maybe I'm going to forget that, but licensed Honda to produce a patented article. [00:36:06] Speaker 00: Honda said, oh, we're not going to mark our products in the settlement agreement. [00:36:10] Speaker 00: And then they went on, and Honda wasn't marking their products. [00:36:13] Speaker 00: The patentee went off and sued someone else. [00:36:15] Speaker 00: That other person brought up the fact that, hey, Honda hasn't been marking their patents. [00:36:18] Speaker 00: And this court said, here. [00:36:20] Speaker 00: Even though by that time, Articact had quit producing their own product, so they weren't an MPE. [00:36:24] Speaker 00: By that time, they were previously producing a patented article. [00:36:28] Speaker 00: And then so this court then said, [00:36:30] Speaker 00: Well, in this particular case, here's a license agreement that says, hey, Honda, you're here. [00:36:35] Speaker 00: I believe it's Honda. [00:36:35] Speaker 00: My apologies if I'm wrong. [00:36:36] Speaker 00: But to go on and produce this patented article, and you have to, you know. [00:36:40] Speaker 00: And then Honda said, well, we're not going to put a patent number on that. [00:36:42] Speaker 00: Specifically, the court found that that MP, that under those circumstances, under those facts, an MP does have to mark it. [00:36:49] Speaker 00: We're not disagreeing with that. [00:36:50] Speaker 00: If we were out there, if we had licensed Roku to say, hey, you're to produce this patented article. [00:36:56] Speaker 00: And Roku said, yeah, we're not going to mark. [00:36:57] Speaker 00: That would be a very different set of facts than what we have here. [00:37:00] Speaker 00: Here we have Rogan saying, we just want out of this litigation. [00:37:03] Speaker 00: And Pena-Sai, we just want out of this litigation. [00:37:05] Speaker 00: That's very different. [00:37:06] Speaker 00: then if I'm going to continue, I'm out of time now, but I'll tie it up. [00:37:10] Speaker 00: Did I address your question, Your Honor? [00:37:12] Speaker 00: If you had more to answer, I want to hear the complete answer. [00:37:16] Speaker 00: I think that that's a very specific set of facts that 100% means that MPEs that license someone to produce a patented article, and that person does produce that patented article, have an obligation to mark. [00:37:27] Speaker 00: And I think that we go back to what the intention of the parties is when they enter into that settlement agreement, settlement license, or licensing agreement. [00:37:36] Speaker 00: That's just not on the record here, but that's what's going to tell whether there was an obligation to mark. [00:37:41] Speaker 01: So this is my last question to you. [00:37:42] Speaker 01: Are you contending that there should be a different rule for NPEs with respect to what our cap requires? [00:37:49] Speaker 00: No, Your Honor. [00:37:50] Speaker 01: Versus all their companies. [00:37:50] Speaker 00: I'm sorry. [00:37:51] Speaker 00: I don't think there should be a different rule. [00:37:52] Speaker 00: I think that NPEs should be held to the exact same standards. [00:37:56] Speaker 00: And it's whether you're licensing for or under the patentee's patents. [00:38:01] Speaker 00: And to produce a patent article, if the [00:38:04] Speaker 00: Other sides are saying they're doing that. [00:38:06] Speaker 00: You're never going to have case to settle if then that just could be an impediment to settle. [00:38:09] Speaker 00: Here I'm saying that they're, it just goes back to contract interpretation. [00:38:14] Speaker 00: Just go back, what did the parties intend when they entered into this? [00:38:17] Speaker 00: I mean, a patentee, a plaintiff can intend all day long. [00:38:20] Speaker 00: that the defendant needs to mark. [00:38:23] Speaker 00: And if the defendant says, no, we're never going to mark, the case will never resolve. [00:38:26] Speaker 00: And so if the parties are clear in their intentions in the agreement, that settles this issue for the court. [00:38:31] Speaker 00: Because the courts, just because this is a patent infringement case, or someone sued someone for patent infringement, doesn't change the age-old doctrine that we go back to state law and look at what was the intent of the parties expressed in the writing. [00:38:43] Speaker 00: that every clause in there has meaning. [00:38:45] Speaker 00: This can be given effect. [00:38:46] Speaker 00: You can't read out. [00:38:47] Speaker 00: Certainly, if the defense says, hey, we don't infringe, we're not marking. [00:38:52] Speaker 00: We don't infringe. [00:38:53] Speaker 00: And Patty says, well, there's a disagreement on infringement, a disagreement on validity. [00:38:57] Speaker 00: But we just want to end this litigation. [00:38:59] Speaker 00: That makes it a very different license, settlement license, or whatever you want to call it, than a license to produce a patented article for or under the patentees' patents. [00:39:09] Speaker 00: And that's all I mean by that. [00:39:11] Speaker 00: And with that, I thank the court. [00:39:13] Speaker 00: If there's any questions, I can answer. [00:39:16] Speaker 00: I thank you all very much. [00:39:17] Speaker 00: Thank you. [00:39:17] Speaker 00: Thanks a lot, counsel. [00:39:19] Speaker 00: Case is submitted.