[00:00:00] Speaker 02:
Our final case for argument today is 24-2118, Willis Electric versus Poly Group.

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

[00:00:09] Speaker 01:
May it please the court.

[00:00:11] Speaker 01:
We raised two issues on this appeal, obviousness and damages.

[00:00:15] Speaker 01:
I'd like to start with the obviousness question.

[00:00:19] Speaker 01:
We started in this case, there were over 100 claims, multiple IPRs, and we're down to one claim, claim 15.

[00:00:28] Speaker 01:
And the facts here and the evidence

[00:00:30] Speaker 01:
I think should lead the court to conclude that claim 15 would have been obvious.

[00:00:35] Speaker 01:
Let's start with the things that are fairly sure.

[00:00:39] Speaker 01:
There's no dispute over the scope and content of the prior art.

[00:00:42] Speaker 01:
The Loomis GKI tree is in the prior art.

[00:00:46] Speaker 01:
Barrel connectors, coaxial connectors, were well known.

[00:00:50] Speaker 01:
Willis's experts said they are standard, well known, readily available.

[00:00:56] Speaker 01:
So we know that, and there's no dispute in the record on that.

[00:01:00] Speaker 01:
The Loomis GKI tree and a coaxial barrel connector, those two in combination meet every limitation of claim 15.

[00:01:12] Speaker 01:
I don't think there's any dispute as to that either.

[00:01:14] Speaker 01:
Again, Willis's expert, Dr. Dickens, said to use a coaxial connector.

[00:01:18] Speaker 02:
You've got a lot of issues to cover.

[00:01:20] Speaker 02:
Can we just jump to the motivation to combine?

[00:01:22] Speaker 01:
I was just getting to it.

[00:01:23] Speaker 01:
Thank you, Your Honor, because that's really where the issue is.

[00:01:27] Speaker 01:
We know from the record here, the trend in the industry was toward LED lights and they use low voltage DC power.

[00:01:37] Speaker 01:
Coaxial barrel connectors, a common way to connect the low voltage.

[00:01:44] Speaker 02:
Yes, but this is not a question of law.

[00:01:46] Speaker 02:
This is a substantial evidence question.

[00:01:48] Speaker 01:
It is a substantial evidence.

[00:01:49] Speaker 02:
And the board cited particular pieces of evidence, which you and I can walk through right now, because that's what I'm struggling with.

[00:01:56] Speaker 02:
It's not for me to decide whether I agree with you that a skilled artisan would make this combination or would be motivated to try it or anything else.

[00:02:05] Speaker 02:
It's whether there's substantial evidence for the board's fact finding contrary to what you're arguing.

[00:02:10] Speaker 02:
And so can we really just focus on that?

[00:02:13] Speaker 02:
Because the board raised

[00:02:14] Speaker 02:
pointed specifically to facts and expert testimony about the many design challenges that would be faced with attempting to make this modification that would lead a skilled artisan away from considering the combination and the board also ultimately concluded there was even a teaching away because the original reference the notch and dimple design was you know the novelty of it and you'd have to abandon that novelty to now

[00:02:44] Speaker 02:
make this change, and the board found that all of those facts led it to conclude that there was not a motivation to combine.

[00:02:53] Speaker 02:
And I have to say, do those facts, which the board pointed to, constitute substantial evidence?

[00:02:59] Speaker 02:
And it seems like evidence.

[00:03:01] Speaker 02:
Whether I agree with it is not the question, but it seems like evidence.

[00:03:04] Speaker 01:
It is evidence, but it's not relevant evidence.

[00:03:07] Speaker 01:
It's not evidence that shows that there was no motivation to combine.

[00:03:11] Speaker 01:
The district court here looked at the evidence, which the jury also considered, and specifically said that you would have to make design or structural changes.

[00:03:25] Speaker 01:
That's not the test.

[00:03:27] Speaker 01:
We've characterized that as bodily incorporation.

[00:03:30] Speaker 01:
I'm sure the district court didn't use that term.

[00:03:34] Speaker 01:
But if you look at the two pages of Dr. Dickens' testimony,

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And that's really what it comes down to.

[00:03:40] Speaker 01:
And you look at the reasons he gave that someone wouldn't combine these two.

[00:03:45] Speaker 01:
They have to do with physically incorporating a coaxial connector into the Loomis GKI tree.

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So he says, there are such things as you'd have to redesign the connector housings.

[00:03:58] Speaker 01:
OK.

[00:03:59] Speaker 01:
You'd have to adapt the tree to use coaxial connectors.

[00:04:02] Speaker 01:
OK.

[00:04:03] Speaker 01:
There would have to be necessary design changes.

[00:04:05] Speaker 01:
Those are the things the district court cited.

[00:04:08] Speaker 01:
Those are not reasons that are contrary to a motivation to combine.

[00:04:12] Speaker 01:
The test isn't whether the combination would require design or structural changes.

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This court's law on bodily incorporation has said that many times.

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It's whether the references together would have taught what's claimed, what it would have been obvious, not that you had to be able to physically change one for the other.

[00:04:33] Speaker 01:
Sure, there would be design changes required, for example,

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the molding would have to be changed.

[00:04:40] Speaker 01:
That was well within the skill of the art.

[00:04:42] Speaker 01:
It doesn't affect the motivation to combine.

[00:04:44] Speaker 01:
The fact that you would combine a coaxial barrel connector with the Loomis GKI tree.

[00:04:50] Speaker 01:
Now the use of coaxial connector here, it would actually reduce the manufacturing steps.

[00:04:56] Speaker 01:
You don't need the dimple or the slot.

[00:05:00] Speaker 01:
So that's not something that would teach away from the motivation to combine.

[00:05:06] Speaker 01:
And in fact,

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I don't think you'll find that the district court said anything about teaching away.

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And the most you'll find in the record is, again, Dr. Dickens.

[00:05:14] Speaker 01:
I think there's a stray statement where he suggests that the prior taught away because it didn't essentially come up with the invention.

[00:05:23] Speaker 01:
That, again, is also not the test.

[00:05:24] Speaker 01:
An alternative design.

[00:05:25] Speaker 02:
Let's look at that.

[00:05:26] Speaker 02:
It's on page 2636.

[00:05:27] Speaker 02:
Yes.

[00:05:29] Speaker 02:
That's where the expert said, and looking at these two, there's no motivation to do it.

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And he said, in fact, it was teaching away from it.

[00:05:38] Speaker 02:
The GKI lumistry was teaching to put this fixed orientation in there, a better design of the fixed orientation.

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So now all of a sudden, we're going to completely go away from all those teachings where it taught how to do that and come up with something totally new.

[00:05:51] Speaker 02:
That's an invention.

[00:05:53] Speaker 01:
That's what he said.

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And that's the sum and substance of teaching away.

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That's not what the law requires for teaching away.

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There has to be criticism or somehow derogation of what was suggested.

[00:06:06] Speaker 02:
Well, he says that basically the notch and dimple prior art was the novelty

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And that would have destroyed the entire notion of the Loomis GKI trees basic objective.

[00:06:21] Speaker 02:
And so why would a skilled artisan make this combination, which would really move completely away from the novelty of this Christmas tree?

[00:06:34] Speaker 02:
What a great time for this case.

[00:06:35] Speaker 01:
It is.

[00:06:35] Speaker 01:
It is a great time.

[00:06:37] Speaker 01:
Very appropriate.

[00:06:39] Speaker 01:
Well, you don't need the dimple or the slot if you use a coaxial connector.

[00:06:46] Speaker 02:
That sounds kind of like hindsight.

[00:06:48] Speaker 02:
The question isn't, do you need it?

[00:06:49] Speaker 02:
The question isn't, could somebody jump through all these different steps to get it done?

[00:06:54] Speaker 02:
The question is, would a skilled artist be motivated to do that?

[00:06:57] Speaker 02:
And this expert said, no, they wouldn't.

[00:07:00] Speaker 02:
It's just you're fundamentally disregarding the novelty and the importance around this patent.

[00:07:05] Speaker 02:
You wouldn't look at it and then say, let's throw out everything they did that was good and make all these changes to get to this invention.

[00:07:13] Speaker 02:
That feels very hindsight-like to me, and that's a concern for me, especially in, I don't mean to degrade your Bible, but it seems relatively simple to at least understand technology.

[00:07:23] Speaker 01:
It is.

[00:07:25] Speaker 01:
Well, first of all, we're talking about an actual product, the Lumis GKI Tree.

[00:07:30] Speaker 01:
And the expert saying that the objective of it was a slot and a dimple.

[00:07:36] Speaker 01:
That's not what the designer of it said.

[00:07:38] Speaker 01:
He said the objective of his tree was internal power.

[00:07:43] Speaker 02:
But see, that's a question of fact.

[00:07:45] Speaker 02:
I can't.

[00:07:46] Speaker 02:
I'm not going to overturn an expert witness that's talking about what he perceives a novelty to be.

[00:07:53] Speaker 01:
Of this tree.

[00:07:54] Speaker 01:
Right.

[00:07:55] Speaker 01:
Well, I don't think that's the right way to look at it because this court's case law on teaching away says just because there's an alternative design doesn't mean that teaches away.

[00:08:07] Speaker 01:
What we have is an alternative design that used incandescent lights and because of that needed an alignment feature.

[00:08:15] Speaker 01:
When you go to low-power LED lights, you can use a low-power connector.

[00:08:21] Speaker 01:
You don't need those things.

[00:08:23] Speaker 01:
These trees, when they make them, they don't start with a slot and a dimple.

[00:08:27] Speaker 01:
You have to add those.

[00:08:29] Speaker 01:
And so when you're adding a barrel connector, you just don't perform those steps.

[00:08:34] Speaker 01:
That's not teaching away.

[00:08:37] Speaker 01:
That's something of a motivation to combine.

[00:08:38] Speaker 01:
As long as you're motivated to use a barrel connector,

[00:08:43] Speaker 01:
which you would be for a low-power LED, there's no reason you couldn't put it into the Loomis tree.

[00:08:50] Speaker 01:
And even their experts said, I'm not saying you couldn't do it.

[00:08:54] Speaker 01:
So there's nothing like we have no expectation of success here.

[00:09:00] Speaker 01:
It could readily be done.

[00:09:03] Speaker 02:
What's the motivation to do it?

[00:09:06] Speaker 01:
The industry trend was towards low-power LEDs.

[00:09:10] Speaker 01:
You don't use two-prong high-voltage plugs for that.

[00:09:13] Speaker 01:
The most common one available was a barrel connector.

[00:09:17] Speaker 01:
You use a barrel connector, you meet every limitation of the claims.

[00:09:22] Speaker 02:
But the question isn't, is it a good idea to combine LEDs and coax cables?

[00:09:27] Speaker 02:
The question is, would somebody have modified this one piece of prior art in this other way?

[00:09:33] Speaker 02:
How is it not relevant for the expert to say, this would require way too many changes?

[00:09:37] Speaker 02:
A skilled artist wouldn't do this, and he wouldn't move away from the primary objective of that first tree, because he or she would be starting with the notion that this is what was important about it.

[00:09:48] Speaker 02:
And you wouldn't just abandon what was important about it.

[00:09:50] Speaker 02:
But it's a question of fact.

[00:09:51] Speaker 02:
That's my problem.

[00:09:52] Speaker 02:
So you see the dialogue we're having now?

[00:09:54] Speaker 02:
You're not saying anything unreasonable.

[00:09:56] Speaker 02:
I'm just not sure that it's my place to overturn those kinds of fact findings.

[00:10:02] Speaker 01:
I understand, Your Honor.

[00:10:04] Speaker 01:
I think the way to look at it is that expert's testimony and what the district court relied on is not substantial evidence to support the jury verdict, because it does not negate a motivation to combine.

[00:10:17] Speaker 01:
To say you need to make physical design changes in order to incorporate a barrel connector is not the test.

[00:10:24] Speaker 01:
That's why we call it bodily incorporation.

[00:10:26] Speaker 01:
And as Florida said, just because you would need to make those changes doesn't mean it's not obvious to combine them or that there would be a motivation.

[00:10:35] Speaker 04:
But you did present all this to the jury, is my understanding.

[00:10:38] Speaker 04:
That's right.

[00:10:38] Speaker 04:
And so for us to grant relief that you're asking for today, we need to find, I think,

[00:10:43] Speaker 04:
that no reasonable juror could have concluded anything other than that you proved a motivation to combine by clear and convincing evidence.

[00:10:51] Speaker 01:
That's right.

[00:10:52] Speaker 01:
And we think on our side of the ledger, it's there.

[00:10:54] Speaker 01:
On their side, they have the two pages of the expert's testimony, which rely on irrelevant facts that you would have to make physical design changes to the tree.

[00:11:05] Speaker 01:
That does not negate a motivation to combine.

[00:11:08] Speaker 01:
That's something that's within the skill of the artist.

[00:11:10] Speaker 00:
But to be clear, the motivation to combine and the analysis of obviousness was all in the jury instructions?

[00:11:17] Speaker 01:
There was no objection to the jury instructions.

[00:11:19] Speaker 01:
They got the standard instructions on obviousness.

[00:11:22] Speaker 01:
But this evidence doesn't measure up.

[00:11:26] Speaker 01:
I'll turn to damages if I could briefly.

[00:11:29] Speaker 01:
Here we have an apportionment issue with Willis' damages expert not apportioning down to claim 15.

[00:11:38] Speaker 01:
As I said, we started out with there were 100 claims, multiple patents.

[00:11:43] Speaker 01:
We ended up with one dependent claim and no attempt at all to apportion down to the value of that claim as compared to what was in the prior art, which included internal power, which was in claim 10.

[00:11:57] Speaker 01:
And the expert didn't do that.

[00:11:59] Speaker 01:
Now, I'll give you one example.

[00:12:01] Speaker 01:
One of the things Ms.

[00:12:02] Speaker 01:
Riley did is she compared, she looked at the profits on Lewis's one-plug trees versus non-one-plug.

[00:12:10] Speaker 01:
And one-plug means, you know, has internal power.

[00:12:14] Speaker 01:
There are many other features that are associated with one-plug trees that are not with non-one-plug trees.

[00:12:20] Speaker 01:
It wasn't an apples-to-apples comparison.

[00:12:23] Speaker 01:
What there was, and which they could have done,

[00:12:26] Speaker 01:
There were one-plug trees that used coaxial connectors, and there were one-plug trees that used two-prong connectors.

[00:12:33] Speaker 01:
She could have compared those, and she didn't.

[00:12:36] Speaker 01:
That would have been something that would have portioned down to claim 15.

[00:12:40] Speaker 02:
Did you all bring this up on cross-examination?

[00:12:44] Speaker 01:
There was a lot of cross-examination about claim 15.

[00:12:48] Speaker 01:
I don't know that we asked the question of why you didn't do it this way.

[00:12:52] Speaker 02:
You had the opportunity to elucidate this problem in her methodology, both at the Dalbert stage and also in front of the jury.

[00:13:02] Speaker 02:
You had the opportunity to point out that she has swept into her analysis trees that might not even infringe this claim.

[00:13:11] Speaker 01:
That came out very clearly.

[00:13:13] Speaker 01:
It was mentioned many times that one plug trees included non-coaxial connectors.

[00:13:19] Speaker 01:
And even the district court said it in the opinion on JMOL.

[00:13:23] Speaker 02:
So here's my problem with this and treating it as a methodological flaw that ought to result in a Dalbert ruling is I feel like you've teed up

[00:13:35] Speaker 02:
a circumstance that's going to make it almost impossible for a patentee to ever prove damages, because there's always going to be some different features.

[00:13:43] Speaker 02:
Maybe this one's red and this one's blue.

[00:13:47] Speaker 02:
Like you said, this case involved a lot of claims, a lot of issues.

[00:13:52] Speaker 02:
Can we really expect the damages expert to account for every single variation between products?

[00:14:01] Speaker 02:
The methodology, is it best in estimation?

[00:14:05] Speaker 02:
an attempt to guide, you know, so I don't, I mean, my problem is you've identified problems, absolute problems, clear problems with her methodology, but I'm just not sure those problems are meant to be solved at the methodological Dalbert step as opposed to given to the jury to take into account when assessing the credibility to give her numbers.

[00:14:30] Speaker 01:
Well, I think Rule 702 says that it has to be handled at the Daubert and the admissions stage.

[00:14:35] Speaker 02:
Why?

[00:14:35] Speaker 01:
Because it has to do with reliability of the expert's opinion.

[00:14:39] Speaker 01:
The law is very clear that a person... But there's uncertainty.

[00:14:43] Speaker 02:
There's uncertainty about what impact these issues you're raising has on the outcome.

[00:14:55] Speaker 02:
her damages analysis I mean they're just there's so much about any damages analysis that involves uncertainty you know in the apportionment space I'm just really I'm really anxious about ecofactor the not the one today but the one that we issued and damages I'm really anxious about that ending up with too broad a sweep and making damages virtually impossible

[00:15:25] Speaker 02:
for a patentee to ever offer testimony on because of factual contentions of error in underlying expert testimony.

[00:15:36] Speaker 02:
And so how can you assuage me that there's like, what is your best?

[00:15:41] Speaker 02:
You have a lot of things that you point to that you think are wrong with her testimony, but like what's, what's your best one that you think is absolutely a methodological Lee unsound problem that ought to raise to the seven Oh two level.

[00:15:55] Speaker 02:
and ought to implicate Daubert, as opposed to the kind of thing that creates a fact question that a jury ought to be able to consider.

[00:16:05] Speaker 02:
What's your best of all your errors?

[00:16:07] Speaker 02:
What's the one?

[00:16:08] Speaker 02:
Because that went on a lot of times.

[00:16:09] Speaker 02:
Let's talk about the one that seems most methodological.

[00:16:14] Speaker 01:
Well, I did mention the profits on the one-plug trees.

[00:16:17] Speaker 01:
I think that one is something that could have been done differently to compare apples to apples, and she did not.

[00:16:23] Speaker 01:
She compared one plug that had both coaxial and noncoaxial to nonplug.

[00:16:29] Speaker 01:
That's just wrong.

[00:16:31] Speaker 01:
Apportionment requires apportioning down to claim 15 and not including what's in claim 10, which is invalid.

[00:16:39] Speaker 01:
There was no attempt to do that.

[00:16:41] Speaker 01:
That's methodologically unsolved.

[00:16:44] Speaker 02:
So what do you mean?

[00:16:45] Speaker 02:
You mean there were products?

[00:16:48] Speaker 02:
I don't understand that argument.

[00:16:50] Speaker 02:
I'm going to give you more time.

[00:16:51] Speaker 02:
Don't worry about that.

[00:16:52] Speaker 02:
You're our last case.

[00:16:54] Speaker 02:
Um, help me understand what you mean by that, the claim 10 versus claim 15, because again, I mean, Mr. Jakes, you represent people on both sides.

[00:17:04] Speaker 02:
And I mean, we can't have patentees have this ridiculous burden to try to demonstrate any entitlement to damages that they have to somehow tether everything.

[00:17:16] Speaker 02:
not just to a patent, but to a claim.

[00:17:18] Speaker 02:
What does that mean?

[00:17:19] Speaker 02:
Does that mean that other licenses, if they're to the patent, have to be thrown out because those licenses were to the patent and not to a particular claim within a patent as a comparator?

[00:17:29] Speaker 02:
Do you see?

[00:17:29] Speaker 02:
I'm concerned that many of these little errors that you've identified would spiral into a scenario that would make damages impossible to ever establish.

[00:17:41] Speaker 01:
I don't think it's impossible.

[00:17:43] Speaker 01:
I think in one sense,

[00:17:45] Speaker 01:
It's up to the experts to do the economic analysis.

[00:17:48] Speaker 01:
Now, I would point to the Proletec case, which we thought was very helpful.

[00:17:53] Speaker 01:
It's Judge Bryson's opinion from the district court.

[00:17:56] Speaker 01:
Not binding, but very educational, where he said, we have dependent claims.

[00:18:01] Speaker 01:
You have to be confined to the value added by the dependent claim, not the invalid independent claim.

[00:18:07] Speaker 01:
So the expert had to do that.

[00:18:09] Speaker 02:
Now, I'm not.

[00:18:11] Speaker 02:
So let's go back to my hypothetical, though.

[00:18:14] Speaker 02:
Could you use a comparator license that was a license to the patent, when some of the claims of the patent, in fact, the more broad ones, have all been invalidated?

[00:18:21] Speaker 02:
Like now, does that mean that license gets thrown out, and it's methodologically unsound to rely on it because you can't prove that the value of that license flowed by virtue of that one dependent claim?

[00:18:32] Speaker 02:
This is the very practical real world problems I'm worried about causing based on some of the arguments you've made.

[00:18:41] Speaker 01:
Well, let's look at the HS CRAFT license, which is the one the expert said was the most significant.

[00:18:48] Speaker 01:
It was to multiple patents and patent applications, not confined to either this particular patent and obviously not confined to Claim 15.

[00:18:59] Speaker 01:
Now, there was no effort to apportion.

[00:19:02] Speaker 02:
No, but go back to what I understand.

[00:19:05] Speaker 02:
And I know why you want tethered to that.

[00:19:06] Speaker 02:
But my concern is the rule that you're asking for is going to create that situation I just described.

[00:19:12] Speaker 02:
where if you successfully invalidate a bunch of the claims and a patent, now the next argument's going to be you can't rely at all on these licenses because there's no reason to think those licenses were only to claim 15 or that this person needed to claim 15.

[00:19:25] Speaker 02:
You understand what I'm saying?

[00:19:26] Speaker 02:
I do.

[00:19:26] Speaker 02:
I'm worried about, I'm not as worried, I know I should be worried about your case, I am worried about your case, but I'm also worried about the implications that a decision has in this case.

[00:19:35] Speaker 01:
I understand.

[00:19:35] Speaker 01:
So just looking at that HS crap license,

[00:19:39] Speaker 01:
I think there are two things.

[00:19:41] Speaker 01:
One, in this case, it was not comparable and should have been thrown out.

[00:19:45] Speaker 01:
If the expert... Why?

[00:19:46] Speaker 02:
It was to the same patent.

[00:19:49] Speaker 01:
Because the expert did not apportion.

[00:19:51] Speaker 02:
If she had... So the license can't be thrown out.

[00:19:54] Speaker 02:
Doesn't matter with the expert apportion.

[00:19:55] Speaker 02:
The license is independent evidence that could have been introduced to help support damages even if the expert didn't testify.

[00:20:01] Speaker 01:
The expert would have to testify because otherwise the jury's left at sea with an agreement that they don't know what to do with.

[00:20:07] Speaker 01:
The expert has to explain

[00:20:09] Speaker 01:
how that relates to the claim that's at issue.

[00:20:11] Speaker 01:
And say, look, it covers all these features, but the claim at issue only covers the use of a coaxial barrel connector.

[00:20:19] Speaker 01:
Now, it got $2 allowing some apportionment.

[00:20:24] Speaker 01:
And this is what economists do.

[00:20:27] Speaker 01:
They figure out what's the value down to this one feature.

[00:20:31] Speaker 01:
We see it all the time in multi-featured products.

[00:20:33] Speaker 01:
This is a feature, a barrel connector that no one sees inside.

[00:20:38] Speaker 01:
a Christmas tree.

[00:20:40] Speaker 01:
Now, I understand your concern.

[00:20:42] Speaker 01:
I think one of the problems is, in a lot of cases, there will be very little value ascribed to these if you do a true economic analysis.

[00:20:51] Speaker 01:
I think that's the case here, where reasonable royalty might be $0.10 rather than $4.00.

[00:20:57] Speaker 02:
But in that HTS, is that right?

[00:21:02] Speaker 01:
HS-Craft.

[00:21:02] Speaker 02:
HS-Craft license.

[00:21:03] Speaker 02:
Sorry, I got myself.

[00:21:05] Speaker 02:
But in the HS-Craft license,

[00:21:08] Speaker 02:
The expert agreed that the license had differences from what was going to be licensed in this case.

[00:21:15] Speaker 02:
She did not give a detailed analysis, really any meaningful analysis for sure, but she definitely agreed it would be different and also wasn't her royalty rate

[00:21:27] Speaker 02:
less.

[00:21:27] Speaker 02:
I don't remember what's not so natural.

[00:21:29] Speaker 02:
But in the end it was.

[00:21:31] Speaker 01:
The agreement has $2 in it and she gave an opinion that a reasonable royalty would be $5.

[00:21:39] Speaker 01:
She used the Georgia-Pacific factors, qualitative factors, using up arrows to boost the reasonable royalty to $5 from the $2 license.

[00:21:48] Speaker 02:
When you say up arrows, what do you mean by that?

[00:21:51] Speaker 01:
Oh, it's a typical thing that experts do.

[00:21:53] Speaker 01:
They go through the Georgia-Pacific factors and say, this one would result in an increase, and they put an up arrow next to it.

[00:22:01] Speaker 01:
And this factor would result in an increase, and they put an up arrow next to it.

[00:22:05] Speaker 02:
And do you think there's something wrong with that?

[00:22:07] Speaker 01:
Well, it's not a substitute for apportionment.

[00:22:10] Speaker 01:
I think this court's Zhejiang superlighting recently said that.

[00:22:14] Speaker 02:
That was an objective.

[00:22:15] Speaker 01:
Well, it specifically called out the up arrows and the down arrows as not being a substitute for an unreliable opinion.

[00:22:24] Speaker 01:
You can't just invoke Georgia-Pacific and say, oh, I considered this license and increased the royalty to $5.

[00:22:31] Speaker 01:
That's not apportionment.

[00:22:32] Speaker 01:
She had to do more than that to get down to claim 15.

[00:22:36] Speaker 01:
And simply starting with that agreement, maybe there's a way to justify using that agreement.

[00:22:42] Speaker 01:
As it stands, it's not comparable because the experts

[00:22:45] Speaker 01:
didn't do the correct comparison.

[00:22:49] Speaker 02:
Why?

[00:22:49] Speaker 02:
Why isn't saying the fact that this patent cover or this license covered multiple patents and the license here, the hypothetical negotiation and reasonable royalty rate here will be just to this patent.

[00:23:03] Speaker 02:
So by virtue of that, I'm going to put a down arrow on this because how?

[00:23:10] Speaker 02:
I mean, I feel like, again, my big concern is it's kind of easy

[00:23:16] Speaker 02:
to criticize these things.

[00:23:18] Speaker 02:
And it seems hard for me to imagine how any expert could do it more precisely without it being completely speculative and unfounded.

[00:23:29] Speaker 02:
Like how to determine what an individual license is and the rate of the rate, especially because you don't even know what really mattered to the licensee in that case.

[00:23:42] Speaker 02:
In that particular case, that licensee

[00:23:45] Speaker 02:
understanding what really mattered to them.

[00:23:47] Speaker 02:
Maybe the rest of the patents were thrown in just because that happens a lot, right?

[00:23:51] Speaker 02:
That's true.

[00:23:52] Speaker 02:
So it's just hard.

[00:23:54] Speaker 02:
The problems you're describing seem very hard for me to wrap my head around how patentees would survive and ever be able to prove damages if I said all these little things that you're identifying are problems and that they needed to do this much more and this much more and this much more.

[00:24:10] Speaker 02:
I'm really, I'm kind of terrified.

[00:24:14] Speaker 01:
I understand that.

[00:24:15] Speaker 01:
I think the plaintiffs will find a way.

[00:24:16] Speaker 02:
I mean, you might put yourself right out of a job if you win.

[00:24:19] Speaker 02:
There'll be no more damages, just like there's no more injunctions.

[00:24:21] Speaker 02:
There'll be no more damages.

[00:24:23] Speaker 01:
I think the plaintiffs and their experts will find a way, but they have to make the effort.

[00:24:27] Speaker 01:
And that's clearly what's lacking here, is there was no attempt to apportion.

[00:24:32] Speaker 01:
Now, I could come up with ways that they could have done it, and maybe we'll see those on remand.

[00:24:37] Speaker 01:
If we're successful in convincing you that we should get a new trial, maybe we'll see how they do that apportionment down to claim 15 and the use of a coaxial connector.

[00:24:46] Speaker 01:
There are things like surveys.

[00:24:48] Speaker 01:
There's comparing the profits apples to apples.

[00:24:51] Speaker 01:
There's comparing the cost.

[00:24:52] Speaker 01:
Does this one cost?

[00:24:54] Speaker 01:
It's the kind of thing economists do.

[00:24:56] Speaker 02:
So when you think that she compared the wrong thing to the wrong thing, that makes it methodological.

[00:25:02] Speaker 02:
She compared the wrong thing.

[00:25:03] Speaker 02:
That makes it methodologically unsound.

[00:25:07] Speaker 02:
as opposed to a fact question that can be brought out and elucidated for the jury because there's no doubt that some of those trees for sure had the coax cable and others might have had the plug or whatever like this.

[00:25:20] Speaker 02:
So all of that could have been brought out and presented to the jury.

[00:25:24] Speaker 02:
So it's not like

[00:25:25] Speaker 02:
She didn't compare the wrong thing.

[00:25:27] Speaker 02:
She just might have used an overly broad subset where not everything would be covered by this particular claim.

[00:25:32] Speaker 02:
And so why isn't that the kind of thing that should just go to the jury for the jury to sort out?

[00:25:37] Speaker 01:
Because she had to tailor it to this particular claim.

[00:25:40] Speaker 01:
That's why it's methodologically wrong.

[00:25:44] Speaker 01:
Because that had to be done.

[00:25:47] Speaker 01:
From this court's precedent, from Gerritsen on down, you have to apportion down to the value

[00:25:53] Speaker 01:
of what is claimed, and she didn't do that.

[00:25:54] Speaker 02:
But she did with, like, thumbs ups and thumbs down.

[00:25:57] Speaker 02:
I mean, you want her to quantify the apportionment.

[00:26:00] Speaker 02:
Why?

[00:26:01] Speaker 02:
Why?

[00:26:02] Speaker 02:
Who says that?

[00:26:04] Speaker 01:
I believe that's required.

[00:26:05] Speaker 02:
By what?

[00:26:06] Speaker 01:
By the law of apportionment.

[00:26:07] Speaker 02:
Which one?

[00:26:09] Speaker 01:
Well, you have to assign value to the features that are claimed that are not in the primary.

[00:26:13] Speaker 02:
She's an economist.

[00:26:15] Speaker 02:
Her job is to simplify this for laypeople.

[00:26:18] Speaker 02:
And so theoretically, she has considered the quantitative impact

[00:26:23] Speaker 02:
She's an expert.

[00:26:24] Speaker 02:
Does she have to explain to the jury why she came up with the number more than telling them, I raised it for this, I lowered it for this, that's how I came up with this number?

[00:26:36] Speaker 02:
Why does she have to tell them what amount she raised it by and what amount she lowered it by?

[00:26:41] Speaker 01:
Because that's not apportionment.

[00:26:43] Speaker 01:
And she had to do apportionment.

[00:26:44] Speaker 02:
It's not apportionment for her to say, I raised it for this and I lowered it for this?

[00:26:47] Speaker 01:
That's right.

[00:26:48] Speaker 01:
That is not apportionment.

[00:26:49] Speaker 02:
No, it is.

[00:26:50] Speaker 02:
It's qualitatively apportionment.

[00:26:51] Speaker 02:
You just want to impose a quantitative requirement for apportionment.

[00:26:56] Speaker 01:
Well, when you're assigning value to a feature, that usually means money.

[00:27:00] Speaker 02:
That doesn't mean... Right, but she told the jury the dollar amount in the end.

[00:27:03] Speaker 02:
After all those ups and downs, she told them what she thought the ultimate dollar value was, so she did assign value.

[00:27:08] Speaker 01:
Well, that's true, but it's really the way she got there is not apportionment.

[00:27:12] Speaker 01:
It does not assign a portion of value to claim 15 separate from the unpatentable features.

[00:27:19] Speaker 01:
That's what she had to do.

[00:27:21] Speaker 01:
She didn't do it.

[00:27:22] Speaker 02:
Thank you.

[00:27:23] Speaker 02:
I appreciate this.

[00:27:24] Speaker 02:
Obviously, it's an important issue.

[00:27:26] Speaker 02:
I wouldn't have kept you up here for 12 extra minutes trying to work through it.

[00:27:30] Speaker 02:
So, Mr. Fleming.

[00:27:36] Speaker 03:
Good morning, and may it please the court.

[00:27:38] Speaker 03:
Mark Fleming from Lomer Hale, together with Nora Zhou on behalf of Lewis Electric.

[00:27:42] Speaker 03:
I think this is a case where the standard of review really matters.

[00:27:45] Speaker 03:
This court is not a jury.

[00:27:47] Speaker 03:
There are no issues of law in this appeal.

[00:27:49] Speaker 03:
The obviousness challenge is purely factual.

[00:27:51] Speaker 03:
There are multiple reasons why the jury could have found that Polygroup didn't carry its burden of proof by clear and convincing evidence.

[00:27:58] Speaker 03:
The court only needs to find sufficient evidence of one of them in order to affirm.

[00:28:01] Speaker 03:
We can start with motivation to combine.

[00:28:03] Speaker 03:
Polygroup's expert testimony on motivation to combine was rushed, and it was cursory.

[00:28:08] Speaker 03:
The expert's only suggestion for why a field artisan would have been motivated to take a coaxial connector and combine it with the lumus tree was because of this move from incandescence to LEDs in the market.

[00:28:19] Speaker 03:
But our expert, Dr. Dickens, explained, without contradiction, that there were a tremendous number of LED-appropriate connectors available.

[00:28:28] Speaker 03:
In fact, Polygroup concedes that in their reply brief in this court on page 7.

[00:28:31] Speaker 03:
You could choose high voltage or low voltage.

[00:28:34] Speaker 03:
And so the question for the jury was, as this court said in WBIP versus Kohler, whether a skilled artisan would have plucked one reference out of the sea of prior art for a combination with the other reference.

[00:28:46] Speaker 03:
The question of motivation, which is factual, includes whether a skilled artisan would have picked a coaxial connector specifically as opposed to the hundreds of other electrical connectors they could have used.

[00:28:56] Speaker 03:
And the only reason to choose a coaxial connector was if you wanted to implement

[00:29:01] Speaker 03:
rotational independence because you already knew of the patented invention.

[00:29:04] Speaker 03:
That is hindsight.

[00:29:06] Speaker 03:
Our expert explained that to the jury.

[00:29:07] Speaker 03:
The jury could well have credited our expert over their expert's conclusory assertion.

[00:29:12] Speaker 03:
There wasn't any discussion by Mr. Jakes of secondary considerations, but that is an independent basis to affirm the verdict in this case.

[00:29:19] Speaker 03:
On objective indicia and on nexus,

[00:29:20] Speaker 04:
There is also not discussion of, and I would like to have your view on this, I think a fundamental question that stretches across both obviousness and damages, which is, what is the scope of the claim that we're interested in?

[00:29:34] Speaker 04:
They seem to assume that we only look at the limited difference between claim 15 and the invalidated claim 10, from which it depends.

[00:29:45] Speaker 04:
But that's not the view that I think you take.

[00:29:47] Speaker 04:
I think you say we have to look at all of claim 15 in its totality, both for determining whether obviousness was proven here as a matter of law and for whatever damages analysis.

[00:29:58] Speaker 04:
Do I understand your position?

[00:30:00] Speaker 03:
You understand that perfectly, Judge Stark.

[00:30:01] Speaker 04:
Can you help me?

[00:30:03] Speaker 04:
Why do you think you're right on that?

[00:30:06] Speaker 04:
If claim 10 stands, as I think is conceded, stands as invalid today,

[00:30:12] Speaker 04:
Why don't we only look at the incremental difference between claim 10 and claim 15?

[00:30:17] Speaker 03:
I think this Court has answered that question in the intervening decisions on which we put in 28-J letters, DDR, CROI, and Inland Diamond, that because the invalidation occurred

[00:30:27] Speaker 03:
under two different legal regimes, because it was an IPR appeal.

[00:30:31] Speaker 03:
So claim 10 was construed under its broadest reasonable interpretation, which, of course, does not apply here, where the district court construed the limitations of claim 10 under Phillips and has specifically found that a different construction of independent of rotational orientation was appropriate.

[00:30:47] Speaker 03:
So there's no collateral estoppel based on the different claim construction and also a different burden of proof.

[00:30:53] Speaker 03:
In the IPR, claim 10 was invalidated by a preponderance of the evidence.

[00:30:57] Speaker 03:
Here, invalidation would have to be by clear and convincing evidence.

[00:31:00] Speaker 03:
So as this court said most recently in Inland Diamond, not even two months ago, those are the two reasons why an invalidation of claim 10 has no collateral estoppel effect regarding validity in this case.

[00:31:13] Speaker 03:
With respect to damages, it's the same.

[00:31:15] Speaker 03:
Actually, on both for obviousness, you can look at WBIP versus Kohler.

[00:31:20] Speaker 03:
For damages, you can look at AstraZeneca versus Apotex.

[00:31:23] Speaker 03:
Or Judge Bryson's opinion for the district court in Prolatech.

[00:31:27] Speaker 03:
They both say this.

[00:31:28] Speaker 03:
What you look at is the novel combination of features.

[00:31:31] Speaker 03:
It is not the case that you just ignore everything that was by hypothesis in the prior art and just look at what the dependent claim added.

[00:31:38] Speaker 03:
You look at the novel combination of features, which is the phrase this court has used over and over again.

[00:31:43] Speaker 03:
And here, the novel.

[00:31:44] Speaker 03:
I'm sorry, your honor.

[00:31:44] Speaker 04:
So the apportionment question here, first of all, you agree that apportionment is required, right?

[00:31:50] Speaker 04:
Of course.

[00:31:51] Speaker 04:
But the apportionment, if I understand correctly, if I were to agree with what you just said about the scope of the claim we're interested in, the expert needs to apportion down to the value created by claim 15 as a whole, not just the difference between claim 15 and claim 10.

[00:32:11] Speaker 04:
Is that what you're saying?

[00:32:12] Speaker 03:
Well, so the answer is yes.

[00:32:16] Speaker 03:
And I want to just be very clear about what we're talking about when we say Claim 10.

[00:32:20] Speaker 03:
We mean Claim 10 as it was construed and invalidated in the IPR and the IPR appeal.

[00:32:26] Speaker 03:
So we do not mean the version of the limitations of Claim 10 construed under Phillips, which has not been appealed.

[00:32:32] Speaker 03:
And that's what the district court applied here.

[00:32:34] Speaker 03:
And so what that means is the innovation of Claim 15 over what was invalidated in Claim

[00:32:42] Speaker 03:
is not just the coaxial connector, but it's the coaxial connector implementing in rotational independence.

[00:32:49] Speaker 03:
So the ability to put the trunk pieces together regardless of how they're oriented, and you make the mechanical and the electrical connection at the same time.

[00:32:56] Speaker 03:
That is how the district court

[00:32:58] Speaker 03:
construed this claim, they haven't appealed that.

[00:33:00] Speaker 03:
So as this case comes to the court, that is the innovation against which objective indicia need to be measured and for purposes of apportionment.

[00:33:08] Speaker 03:
And that is exactly what our experts apportion to.

[00:33:11] Speaker 03:
I'm happy to go to that, but I do want to plant a flag for objective indicia because that is something that the jury had in front of it.

[00:33:18] Speaker 03:
I beg your pardon?

[00:33:19] Speaker 02:
Move on.

[00:33:20] Speaker 02:
Don't talk about interjected.

[00:33:22] Speaker 02:
You're not going to win on it because you don't show a nexus.

[00:33:25] Speaker 02:
You don't have a limited amount of time.

[00:33:26] Speaker 02:
And I'm hoping not to have to give you 12 minutes over like I did Mr. Jakes.

[00:33:30] Speaker 02:
But it was valuable.

[00:33:31] Speaker 02:
But I don't want to spend my wheels on stuff that isn't valuable.

[00:33:33] Speaker 03:
So focus on what is.

[00:33:35] Speaker 03:
I would welcome an opportunity to convince you.

[00:33:36] Speaker 03:
But if I'm not going to, I know to take the hint.

[00:33:39] Speaker 03:
I think the easiest way through the damages issues

[00:33:42] Speaker 03:
is to recognize that Ms.

[00:33:44] Speaker 03:
Riley's comparable license approach, the market approach, was fully supported by Mr. Loomis's license to the O42 patent, which Poly Group has never denied is comparable to the hypothetical negotiation.

[00:33:56] Speaker 03:
We raised this in our brief.

[00:33:57] Speaker 03:
They didn't respond and reply.

[00:33:58] Speaker 03:
They can't dispute

[00:34:00] Speaker 03:
that Mr. Loomis's 042 patent is comparable to that federal negotiation because their own damages expert, Ms.

[00:34:06] Speaker 03:
Davis, relied on a license to the 042 patent as a comparable.

[00:34:10] Speaker 03:
Now it was a sham license because Poly Group already owned that patent when they signed the license, so the jury was entitled to

[00:34:17] Speaker 03:
to disregard that license, but it shows why they aren't disputing, unlike what they say about H.S.

[00:34:23] Speaker 03:
Craft, they aren't disputing that a license to the 042 patent is comparable.

[00:34:27] Speaker 03:
Focus on the Boston Warehouse License Agreement.

[00:34:30] Speaker 03:
Poly Group's damages expert admits that that is a pure license agreement just to the 042 patent.

[00:34:36] Speaker 03:
The title is literally, Patent License Agreement.

[00:34:38] Speaker 03:
It's on 4796 of the appendix.

[00:34:40] Speaker 03:
The royalty in that license agreement is 5%.

[00:34:43] Speaker 03:
And on an average sale price for polygroup trees of $100, that's $5.

[00:34:47] Speaker 03:
And that is exactly the number that Ms.

[00:34:50] Speaker 03:
Riley put in front of the jury.

[00:34:51] Speaker 03:
So even if Your Honors were to agree with what Mr. Jakes is saying about the HS craft license, we don't think you should agree with him, but even assuming, arguing that you do,

[00:35:01] Speaker 03:
Even if all her testimony about HS Kraft had been stricken retroactively, you still would wind up with sufficient evidence and certainly no abuse of discretion in allowing her to testify to a $5 figure because it was fully supported by the Loomis licenses.

[00:35:16] Speaker 03:
So as the district court found, and this is on page 25, even if there had been a problem with her analysis of the HS Kraft license, it would have been harmless.

[00:35:24] Speaker 03:
And they have not challenged that as an abuse of discretion at all.

[00:35:28] Speaker 03:
So any asserted error regarding HS Kraft

[00:35:30] Speaker 03:
is at most a harmless error.

[00:35:34] Speaker 03:
I'll correct one thing Mr. Jakes said.

[00:35:37] Speaker 03:
Mr. Jakes suggested that our experts said that the HS-Craft license was the most significant.

[00:35:41] Speaker 03:
She never said that.

[00:35:43] Speaker 03:
What she in fact said was she was asked which of those agreements are, plural, the most significant to your analysis.

[00:35:50] Speaker 03:
And then she mentioned not only the HS-Craft license, but also four agreements that I also considered important.

[00:35:56] Speaker 03:
That's on page 1653.

[00:35:58] Speaker 03:
The district court, in its post-trial opinion, suggested that the HScraft was the most significant, but that's not a correct statement of the expert testimony.

[00:36:07] Speaker 03:
And of course, in reviewing admission of the expert testimony, you look at the methodology the expert used, not its characterization by the district court.

[00:36:15] Speaker 03:
Mr. Jates mentioned the Prolatech case.

[00:36:18] Speaker 03:
Again, I think Ms.

[00:36:19] Speaker 03:
Riley did exactly what Judge Bryson, in that opinion, called for.

[00:36:22] Speaker 03:
She apportioned to the value of the, quote, novel combination of features, which is the implementation in which mechanical and electrical connection are made simultaneously, regardless of rotational orientation.

[00:36:35] Speaker 03:
This issue about the limited run of one-plug trees that did not use coaxial connectors.

[00:36:42] Speaker 03:
That is something that Ms.

[00:36:43] Speaker 03:
Riley excluded from the category of one plug trees in her analysis.

[00:36:48] Speaker 03:
She expressly excluded it.

[00:36:49] Speaker 03:
It's on 4486 footnote 9 of her report.

[00:36:52] Speaker 03:
She explains there were seven models branded as one plug.

[00:36:56] Speaker 03:
that did not fully embody claim 15.

[00:36:58] Speaker 03:
For purposes of her analysis, they were not identified as one-plug products.

[00:37:01] Speaker 03:
That is how she dealt with it.

[00:37:03] Speaker 03:
She could have been cross-examined on this.

[00:37:05] Speaker 00:
She was not.

[00:37:06] Speaker 00:
Could you clarify this issue of the district court also provided no citation for a statement that not all one-plug trees practiced

[00:37:14] Speaker 00:
claim 15 because some use non coaxial connectors.

[00:37:18] Speaker 00:
Is that true or is that only the old trees from way back before 2012?

[00:37:24] Speaker 03:
It's true in a limited sense that there were some trees that were branded as one plug that used a fixed alignment connector, and I'll explain why in a moment, but I want to be very clear.

[00:37:35] Speaker 03:
The damages expert, Ms.

[00:37:36] Speaker 03:
Riley, did not include those as one-plug trees in her analysis.

[00:37:40] Speaker 03:
She expressly excluded them.

[00:37:42] Speaker 03:
That's footnote nine on 4486.

[00:37:44] Speaker 03:
She wasn't crossed on this.

[00:37:45] Speaker 03:
The cross-examination of Ms.

[00:37:46] Speaker 03:
Riley was very short, 19 pages.

[00:37:49] Speaker 03:
And they didn't mention this at all.

[00:37:50] Speaker 03:
They could have, but they didn't.

[00:37:51] Speaker 03:
The reason that it happened the way it did is because Lowe's made a last-minute request for a tree that had incandescent lights with the one-plug connection.

[00:38:03] Speaker 03:
Billis Electric wasn't able to do that in time, so what they did was they provided a fixed alignment one using two prongs.

[00:38:10] Speaker 03:
Lowes didn't like that.

[00:38:11] Speaker 03:
Lowes complained about that.

[00:38:12] Speaker 03:
They were clear that they wanted coaxial.

[00:38:15] Speaker 03:
That's 1539 and 40 and 1569 and 70, the testimony of Mr. Chen.

[00:38:19] Speaker 03:
So there's no evidence whatsoever that either whether we talk about industry praise or commercial success or whether we talk about damages,

[00:38:26] Speaker 03:
that there was any interest in a non-coaxial one plug tree.

[00:38:31] Speaker 03:
It was a very limited run, and that's why she excluded it from her analysis.

[00:38:38] Speaker 03:
There's plenty of evidence.

[00:38:40] Speaker 03:
that Ms.

[00:38:42] Speaker 03:
Riley relied on to show that customers valued the coaxial connectors more than fixed alignment.

[00:38:49] Speaker 03:
I mentioned that Lowe's complained about the limited run of fixed alignment trees that they got in 2012.

[00:38:54] Speaker 03:
Ms.

[00:38:54] Speaker 03:
Riley in her report, this is 4392, cites customer feedback.

[00:38:59] Speaker 02:
Was her report before the jury?

[00:39:00] Speaker 03:
Not before the jury, but this is a seven and two challenge to her methodology.

[00:39:04] Speaker 03:
So we certainly look at the report.

[00:39:06] Speaker 03:
That's the whole point of the report.

[00:39:07] Speaker 03:
She's not required to testify to everything to her report in order to defend against a methodological challenge, particularly one after the fact that's bringing up issues that were not raised at Daubert and were not the subject of any trial objection.

[00:39:20] Speaker 03:
We cite the global traffic case and federal rule of evidence 705.

[00:39:23] Speaker 03:
For that, they have no authority on the other side, and I think it would be

[00:39:27] Speaker 03:
it would be remarkable if once a methodological challenge came up after trial, we couldn't rely on the report.

[00:39:33] Speaker 03:
So if you look at paragraph 274 of her report, she says, she cites customer feedback that the fixed orientation tree was a nightmare to assemble because it is hard to align the plugs while holding a very heavy section of the tree.

[00:39:45] Speaker 03:
Polygroup's own evidence showed the advantages of coaxial connectors over fixed alignment.

[00:39:52] Speaker 03:
They ran a survey.

[00:39:53] Speaker 03:
where 97% of their respondents said the infringing quick-set technology was an appealing feature, 98% were willing to pay more for it.

[00:40:00] Speaker 03:
Some said they'd pay over $25.

[00:40:01] Speaker 03:
This is 12-8-29.

[00:40:03] Speaker 03:
Poly Group's own CEO admitted in his deposition, which the jury heard, that a rotationally independent design was drastically different and a big improvement on a fixed alignment design because, quote, I like the fact that you can plug it in in any direction and start the insertion in any direction.

[00:40:19] Speaker 03:
That is apportionment directly to claim 15.

[00:40:22] Speaker 03:
into the rotational independence that is enabled by use of a coaxial connector pat poly groups own patent application in 2011 says that miss Riley summarized for the jury on 1666 this is all this all goes to sort of it's really nice it's a big part of what we like about the tree but what do you say to the

[00:40:40] Speaker 00:
your opponent's argument about the sort of confounding features of when comparing the one-plug trees, for example.

[00:40:49] Speaker 00:
There's other aspects that weren't taken into account.

[00:40:51] Speaker 00:
The shape, size, number of lights, etc.

[00:40:54] Speaker 00:
of the one-plug trees versus the non-one-plug trees.

[00:40:57] Speaker 03:
Thank you, Your Honor.

[00:41:00] Speaker 03:
They most certainly were taken into account because they were done using an average.

[00:41:03] Speaker 03:
So those other features, whether the tree is of a different color, whether it has flocking, whether it has berries on it, what kind of lights it has.

[00:41:11] Speaker 03:
you had one plug trees that had those different features, you had non one plug trees that had those features.

[00:41:16] Speaker 03:
The theme in their advocacy is that the one plug trees had all the high end features and the non one plug trees were the cheap versions.

[00:41:24] Speaker 03:
That's not the case.

[00:41:25] Speaker 03:
There's no witness ever said that.

[00:41:27] Speaker 03:
And if you look at table 10.2 to Ms.

[00:41:29] Speaker 03:
Riley's report, she itemizes all the different products that she looked at and they all show they have different

[00:41:35] Speaker 03:
different colors, different flocking features, different barriers, different needle styles.

[00:41:42] Speaker 02:
Did she explain how she treated those different features?

[00:41:45] Speaker 03:
She averaged them out, which is what she would do when you had some infringing products.

[00:41:49] Speaker 02:
Did she explain she averaged them out in her report?

[00:41:51] Speaker 03:
Oh yes, most certainly.

[00:41:52] Speaker 03:
And that's not disputed, I don't think, that she averaged them out.

[00:41:55] Speaker 03:
She puts slides in front of the jury showing that she averaged them out for each year during the damages period.

[00:42:00] Speaker 03:
And you know those features you can have them in the one plug version you can have them in the non one plug version And that's how you account for them by saying all right.

[00:42:09] Speaker 03:
We have the infringing trees.

[00:42:10] Speaker 03:
We have the non infringing trees

[00:42:11] Speaker 03:
We average them out together.

[00:42:13] Speaker 03:
The difference between the two is allocable to the claimed invention.

[00:42:18] Speaker 03:
Now, Polygram may not like the results.

[00:42:20] Speaker 03:
They could have cross-examined her on that.

[00:42:22] Speaker 03:
They put in an opposing expert witness who did their own analysis.

[00:42:28] Speaker 03:
But that's not an abuse of discretion to let that methodology in.

[00:42:31] Speaker 03:
That's a valid methodology for apportioning to the infringing technology.

[00:42:36] Speaker 02:
What about the arguments that I had with Mr. Jakes or the portion of the argument, his argument, where we were discussing the thumbs up, thumbs down concept?

[00:42:46] Speaker 02:
He was suggesting that an expert fails to adequately apportion and should be methodologically struck if that expert doesn't quantitatively assess and only qualitatively assesses, at least in their testimony,

[00:43:02] Speaker 02:
Because we assume the expert has quantitatively assessed, even if that quantity isn't made clear in the testimony or even the expert report.

[00:43:14] Speaker 02:
Do you think that amounts to a methodological flaw that ought to cause an expert's opinion to be struck, the failure to apportion?

[00:43:23] Speaker 02:
Because when they do this thumbs up or thumbs down or arrow up or arrow down, that isn't adequately explaining what

[00:43:31] Speaker 02:
the quantification process ought to be.

[00:43:34] Speaker 03:
I think it will depend on the situation, frankly.

[00:43:36] Speaker 03:
And again, I think the standard of review does matter.

[00:43:38] Speaker 03:
I mean, if you were reviewing a district judge who had decided to exclude testimony relying on that kind of a theory, I think you'd be in a different position from where you are here, where you're reviewing for abuse for discretion the denial of a new trial motion.

[00:43:51] Speaker 03:
If all the expert does is say, I considered the Georgia Pacific factors and here's where I wound up, then maybe that isn't enough.

[00:43:58] Speaker 02:
No, but OK, here's where I wound up.

[00:44:00] Speaker 02:
And that resulted from me starting with this license at this rate.

[00:44:04] Speaker 02:
And then I would have raised the percentage rate for these reasons.

[00:44:08] Speaker 02:
I would have lowered the percentage rate for these reasons.

[00:44:11] Speaker 02:
Here's where I end up without quantifying how much you would raise for those reasons and how much you would like.

[00:44:18] Speaker 02:
You know, obviously, I guess one could surmise the delta because there's where you started and where you ended up.

[00:44:24] Speaker 02:
But how do you question the expert on

[00:44:28] Speaker 02:
how much to increase or how much to decrease, and what factors went into it?

[00:44:33] Speaker 03:
I mean, I think, as the question you're on or asked, and Mr. Jay sort of points out, if an expert offers a number, it does sound somewhat speculative.

[00:44:45] Speaker 03:
Say I go up, well, I'm going to go up by 1%, or I'm going to come down by 3%.

[00:44:48] Speaker 03:
There might be reasons in an individual case to do that.

[00:44:51] Speaker 03:
There might be evidence supporting doing that.

[00:44:53] Speaker 03:
But another way to do it is to say, these are the factors that go one way.

[00:44:56] Speaker 03:
These are the factors that go another way.

[00:44:57] Speaker 03:
some of them cancel out, and so this puts me at the higher end of the range or the lower end of the range.

[00:45:02] Speaker 02:
Remember, she didn't just say... And you don't think she needed to quantify the things that made her go up or down, exactly how much each individual thing made her go up or down?

[00:45:10] Speaker 03:
Not in the context of her opinion in this case, and here's the reason why.

[00:45:14] Speaker 03:
It wasn't just let's go up or down starting from one license, right?

[00:45:18] Speaker 03:
She had the income approach where she assessed the incremental profit.

[00:45:22] Speaker 02:
I know, but divorce the other approaches.

[00:45:23] Speaker 02:
Focus on this question.

[00:45:24] Speaker 03:
Well, but they're all put together, right?

[00:45:26] Speaker 03:
That's how she used Georgia Pacific, where she developed a range using the two other approaches.

[00:45:30] Speaker 03:
She started at the profit analysis, led to a range of $430 to $20.

[00:45:35] Speaker 03:
She then looked at the comparable licenses and used that to constrain the range.

[00:45:39] Speaker 03:
So she went up with a range between $4.30 and $5.

[00:45:43] Speaker 03:
Very tight range, right?

[00:45:44] Speaker 03:
But $4 to $5.

[00:45:46] Speaker 03:
And then she used Georgia Pacific to say, all right, where in that range do I think the parties would have come out in the hypothetical negotiation?

[00:45:53] Speaker 02:
And there she said it's going to be behind her.

[00:45:55] Speaker 02:
You're just totally not answering my question.

[00:45:56] Speaker 02:
I'm so sorry.

[00:45:57] Speaker 02:
Is there a methodological flaw with an expert saying I would have gone up or down

[00:46:05] Speaker 02:
up for these reasons, down for those reasons, here's where I start, here's where I end up.

[00:46:10] Speaker 02:
Is that methodologically unsound if the expert doesn't, for the jury, quantify how much up, how much down?

[00:46:18] Speaker 02:
Or is that something that she, he or she can be crossed on?

[00:46:22] Speaker 02:
And if she, at the end of the day, has no answer, then of course there's a methodological problem.

[00:46:25] Speaker 02:
Like if she says, oh, well, how much, well, you know, that's a problem.

[00:46:28] Speaker 02:
But is there a problem

[00:46:31] Speaker 02:
with us not knowing or her not presenting as part of her testimony how much up and how much down for each individual thing.

[00:46:39] Speaker 03:
I don't think this court has ever suggested that that is something that needs to be done as a condition of admission and certainly not as an abuse of discretion to let it in.

[00:46:50] Speaker 03:
I can't think of a case where this court has said that.

[00:46:52] Speaker 04:
In fact, I think we have cases where, I'm sure you know, it often happens at district court that the expert will say they exactly cancel each other out, or as a conservative estimate, against my client's interest, I'm going to say they exactly cancel each other out.

[00:47:09] Speaker 04:
You recall us ever saying that that's a methodological error.

[00:47:13] Speaker 03:
I have a similar lack of recollection.

[00:47:17] Speaker 03:
But again, I think the easiest way through this would be to point out that even if you disregarded everything she said, even if that should have been stricken retroactively, but for the reliance on the comparable licenses between Mr. Loomis and GTI on the one hand and Boston Warehouse on the other, for the comparable 042 patent, which they'd never deny.

[00:47:39] Speaker 03:
is comparable.

[00:47:40] Speaker 03:
That was a 5% royalty on the sale of each tree.

[00:47:46] Speaker 03:
And that, on a $100 average price for Poly Group, which they've also never disputed, gives you the $5.

[00:47:51] Speaker 03:
The jury, of course, awarded less than that, as was its right.

[00:47:56] Speaker 03:
Unless the court has further questions, we would respectfully request that the judgment be affirmed.

[00:48:01] Speaker 02:
OK, thank you, Mr. Takes.

[00:48:02] Speaker 02:
Three minutes left.

[00:48:12] Speaker 01:
I think you've heard most of what I had to say, but I'll just make a couple of points.

[00:48:17] Speaker 01:
One on the motivation to combine.

[00:48:19] Speaker 01:
Council pointed out the experts said that there were many connectors that could have been used.

[00:48:24] Speaker 01:
That may be true.

[00:48:25] Speaker 01:
The fact is he also said that barrel connectors were standard, readily available, common.

[00:48:33] Speaker 01:
It's not really a selection case.

[00:48:36] Speaker 01:
On the question of rotational independence and what's the scope of claim 15,

[00:48:40] Speaker 01:
Does it include claim 10?

[00:48:43] Speaker 01:
We recognize the recent cases say there's no estoppel as to the board's findings.

[00:48:53] Speaker 01:
We might disagree with that for the reasons that were expressed in the dissent in the Croy case.

[00:48:58] Speaker 01:
But you don't have to really, it doesn't turn on that.

[00:49:01] Speaker 01:
Because if you have the Loomis JKI tree and a coaxial connector, you meet all the limitations of claim 15.

[00:49:09] Speaker 01:
whatever they are, rotational independence.

[00:49:12] Speaker 01:
They throw in one step.

[00:49:13] Speaker 01:
Loomis was a one-step tree as well.

[00:49:15] Speaker 01:
So regardless, the prior art taught all those limitations.

[00:49:19] Speaker 01:
So there's not something.

[00:49:20] Speaker 01:
It's some distinguishing feature.

[00:49:23] Speaker 01:
Also, as with respect to claim 10, claim 10's in the public domain.

[00:49:29] Speaker 01:
Anyone is free to use claim 10 without a barrel connector.

[00:49:32] Speaker 01:
So that's why the apportionment has to be done down to claim 15.

[00:49:39] Speaker 01:
On the HS craft license, counsel suggested that even if that is thrown out and the expert didn't do the correct apportionment, that would be harmless error.

[00:49:50] Speaker 01:
It can't be harmless error.

[00:49:51] Speaker 01:
There may be other evidence that they rely on.

[00:49:54] Speaker 01:
But even if it was one of the significant licenses, having that in front of the jury is not a harmless error.

[00:49:59] Speaker 01:
And we should get a new trial for that fact alone.

[00:50:03] Speaker 02:
I don't understand that point.

[00:50:05] Speaker 02:
Why?

[00:50:06] Speaker 02:
If she said that there were five licenses that drove her thinking about it, and the other four are right on point, and there's a wart on this one, simply because she didn't explain the difference in value attributed to claim 10 versus claim 15, or the three patents versus the one patent, why does that amount to harmless error?

[00:50:27] Speaker 01:
It's not harmless error.

[00:50:28] Speaker 02:
I mean, why is it not harmful error?

[00:50:30] Speaker 02:
Sorry.

[00:50:31] Speaker 01:
Because she said it was a significant license.

[00:50:33] Speaker 01:
It was her starting point.

[00:50:34] Speaker 02:
She said there were five.

[00:50:35] Speaker 01:
That's true, but it was one of the significant ones.

[00:50:39] Speaker 01:
We don't know what the jury relied on.

[00:50:41] Speaker 01:
If they could have relied on that, that's harmful error.

[00:50:44] Speaker 01:
If you give the jury two theories and one of them is bad.

[00:50:47] Speaker 02:
But that's not two theories, that's two facts.

[00:50:50] Speaker 02:
These licenses are each facts.

[00:50:53] Speaker 02:
The licenses are a statement of fact about what somebody else was willing to pay.

[00:51:00] Speaker 02:
Are you saying you think her opinion would have been different if she could only have properly relied on four licenses as opposed to five?

[00:51:08] Speaker 01:
It could have been, but it's not just her opinion.

[00:51:10] Speaker 01:
Inadmissible evidence taints the jury.

[00:51:13] Speaker 02:
I don't see how that license is inadmissible.

[00:51:14] Speaker 02:
You complained that she failed to articulate apportionment theories.

[00:51:20] Speaker 02:
That doesn't make the evidence inadmissible.

[00:51:22] Speaker 01:
Well, to use that license, she had to do that.

[00:51:25] Speaker 02:
See, I disagree with you on this fundamental point.

[00:51:27] Speaker 02:
I think you can introduce licenses and you don't even need an expert.

[00:51:30] Speaker 02:
I don't think you need a patent expert.

[00:51:32] Speaker 02:
I don't understand what law has ever said you must have an expert to explain it to a jury.

[00:51:35] Speaker 02:
Lawyer could say, look, everybody else paid 5%.

[00:51:38] Speaker 02:
You should just be paying 5% too.

[00:51:39] Speaker 01:
Well, this court has said that it's the burden of the patent owner to the proponent of the license agreement to show that it's comparable.

[00:51:47] Speaker 01:
So simply introducing the license agreement is not enough.

[00:51:51] Speaker 01:
They have to show that it's comparable.

[00:51:53] Speaker 01:
This court has said that.

[00:51:55] Speaker 01:
It's their burden as the proponent.

[00:52:00] Speaker 01:
OK.

[00:52:01] Speaker 01:
The one-plug versus non-one-plug, the only evidence in front of the jury was that there were non-coaxial one-plug trees.

[00:52:12] Speaker 01:
Buried in her expert report in a footnote in hundreds of pages, she says she separated that out.

[00:52:19] Speaker 01:
That never came out.

[00:52:20] Speaker 01:
That's just looking back at the expert report that was not admitted.

[00:52:24] Speaker 02:
But why does it have to come out if it's true?

[00:52:26] Speaker 02:
Why, if she actually separated them out, and what she was presenting to the jury was the separate category, who cares that she didn't tell the jury how she separated them out?

[00:52:37] Speaker 01:
Because the only thing the jury heard was that there are one-plugged trees that are not coaxial.

[00:52:42] Speaker 02:
But she only presented a value for the ones that were separate and actually had the patented coax.

[00:52:50] Speaker 01:
But the jury didn't know that.

[00:52:51] Speaker 01:
They were told that the only... Why does that matter?

[00:52:55] Speaker 01:
It would have been a relevant fact.

[00:52:59] Speaker 02:
Why?

[00:52:59] Speaker 02:
It doesn't matter what she labeled them.

[00:53:01] Speaker 02:
You say she should have said, I'm giving you a number that represents the value of one-plug trees.

[00:53:09] Speaker 02:
And you're saying she should have said, I'm giving you a number that represents the value of one-plug trees using the coaxial cable.

[00:53:15] Speaker 02:
Yes.

[00:53:15] Speaker 02:
But why, if the number is the same?

[00:53:17] Speaker 02:
She presented the right number to the jury.

[00:53:20] Speaker 02:
There's no question.

[00:53:21] Speaker 02:
that she presented the right number based on her expert report in that footnote.

[00:53:24] Speaker 01:
Because the jury was otherwise told that one plug included non-coaxial trees.

[00:53:30] Speaker 01:
If you thought that was a relevant fact for the jury to know, you could have brought it out, couldn't you?

[00:53:34] Speaker 01:
You could have.

[00:53:34] Speaker 01:
Yes.

[00:53:35] Speaker 01:
And finally, there's a suggestion that we didn't make this argument on Daubert about comparability.

[00:53:43] Speaker 01:
We did argue it after trial, and Willis's response was, it's the same as what you said in your Daubert motion.

[00:53:49] Speaker 02:
Thank you.

[00:53:50] Speaker 02:
OK.

[00:53:50] Speaker 02:
I thank both counsel in this case for taking under submission.