[00:00:00] Speaker 02:
Our next case this afternoon is number 242174, Intellectual Pixels Limited versus Sony Interactive Entertainment.

[00:00:12] Speaker 02:
Okay, Mr. Wilson.

[00:00:14] Speaker 04:
Thank you, Your Honors. May it please the Court, Douglas Wilson on behalf of Appellant Intellectual Pixels Limited. This case is back for a second time on appeal because the Board violated the mandate.

[00:00:26] Speaker 04:
On remand, the Board completely reversed itself and overturned fact findings that were not challenged in the prior appeal, and this Court did not overturn. And indeed, one of those fact findings this Court even acknowledged.

[00:00:39] Speaker 04:
That violated this Court's mandate. And even if you ignore the mandate rule issues, Wiltshire never discloses compressing any image, such that the Board's decision was not supported by substantial evidence.

[00:00:55] Speaker 00:
Can I ask you a question about the mandate rule? Sure. You know, in the cases that you cite, like Latrum and other cases, they really are dealing with the scenario where a party is arguing that under the mandate rule, a new legal issue can't be raised, as opposed to a subsidiary factual question that underlies an issue.

[00:01:20] Speaker 00:
like what you have here. And it seems to me there's an important distinction between those when it comes to the mandate rule. What is your view on that?

[00:01:29] Speaker 04:
I don't think there's any distinction at all under the mandate rule. And the case that I would cite to your honor is Bit Management v. United States. It's a court of federal claims decision in which the case was vacated and remanded, sent back to the court of federal claims for a determination of damages. When it came back up on the second appeal, this court said...

[00:01:50] Speaker 04:
the Court of Federal Claims properly acknowledged that in considering damages, it was bound by its prior fact findings relating to damages, and it listed those off in the opinion. And so when those were challenged, this court said...

[00:02:08] Speaker 04:
The Court of Federal Claims was, in fact, bound by those prior findings. Despite the vacate and remand on damages specifically, those fact findings were binding.

[00:02:17] Speaker 00:
What about the breadth of our remand? I mean, if you look at the last paragraph of our opinion, we say that we disagree with the fact finding that is central to the case. We send the case back for further proceedings consistent with our decision. If our fact finding on one limitation... would lead the board to realize that it also had to change its view on another limitation. Why isn't that within the scope of the mandate?

[00:02:45] Speaker 04:
Because, Your Honor, that, in fact, is specifically precluded by the mandate rule. So, for example, let's talk about BIT management for a second.

[00:02:54] Speaker 01:
BIT management involved in... I'm sorry.

[00:02:58] Speaker 01:
Can we talk about this case a little bit more? Because I'm confused if... Why would we remand it if everyone could see that in the first time around the board already decided that Sony failed to show compressing?

[00:03:17] Speaker 01:
And that would be a positive failure. So if the board had done that, I don't know why... There even would have been a first appeal, but much less, why would there be a remand? This case would have been over.

[00:03:29] Speaker 04:
Because the board didn't take it that far. The board did not decide that Sony had failed to show the compressing limitation. It didn't decide the compressing limitation. It didn't address that limitation specifically.

[00:03:41] Speaker 01:
So then there was nothing to be appealed with respect to compressing the first time around.

[00:03:46] Speaker 04:
I disagree, Your Honor. There were clear, explicit fact findings relating to the compressing.

[00:03:51] Speaker 02:
You can appeal fact findings that have no consequence for the judgment?

[00:03:56] Speaker 04:
You can argue that substantial evidence did not support them and that they should be overturned.

[00:04:02] Speaker 02:
Really? What case says you can appeal fact findings that have no effect on the judgment?

[00:04:07] Speaker 04:
So what this court's case law says is that you must raise every issue you can.

[00:04:16] Speaker 02:
No, you're not answering my question. If there's a stray fact finding in an opinion, how can that be appealed if it has no effect on the judgment?

[00:04:26] Speaker 04:
So if the party wanted to challenge that finding, so there's...

[00:04:35] Speaker 04:
A few ways this can be done, right? If they are the appellant, when they come up, they can challenge everything that they think is unsupported by substantial evidence.

[00:04:42] Speaker 02:
No, but you're not answering my question. There's a fact finding that has no effect on the judgment. How can you appeal that?

[00:04:49] Speaker 04:
You simply raise it and say this is a finding that's unsupported by substantial evidence.

[00:04:53] Speaker 02:
We don't review opinions. We review judgments. And if something doesn't have an effect on the judgment that's being appealed, you can't appeal it.

[00:05:02] Speaker 02:
If they tried to raise that, The first time around, we would have said, that's not before us. That's not an issue.

[00:05:10] Speaker 02:
We're here dealing with a generating limitation. That's the only ground.

[00:05:15] Speaker 04:
Respectfully, I disagree, Your Honor. I think they would have to raise it because the mandate rule requires that. If they let it go and it goes back...

[00:05:26] Speaker 04:
This is exactly the issue in bid management software. There's this host of fact findings that were pertinent to damages that the Court of Federal Claims didn't find damages in the first appeal.

[00:05:36] Speaker 04:
And this court said, you messed up. We're going to vacate and remand for finding out damages, but you are nevertheless bound by all those fact findings that are pertinent to damages.

[00:05:47] Speaker 04:
I mean...

[00:05:49] Speaker 04:
They had to raise it in the first appeal, or it was waived.

[00:05:54] Speaker 02:
What case, aside from bid management, says that you can appeal a fact-finding which has no effect on the judgment?

[00:06:04] Speaker 04:
So...

[00:06:11] Speaker 04:
I don't have a case site to give you, but I think there are many. I mean, I think this is straightforwardly a part of the mandate rule. The cases say the purpose is efficiency so that we don't end up in a second appeal, right? Let's resolve everything that needs to be resolved in the first appeal. It's incumbent upon the appellant to raise everything they intend to challenge in an opinion below, in that first shot.

[00:06:37] Speaker 00:
And if they don't do it, it's wait. My concern, again, goes back to whether you're confusing issues with, like, individual findings underlying an issue.

[00:06:50] Speaker 00:
You might have to raise every issue that has been decided by the court below, but you don't have to raise fact findings that aren't going to have an impact on an on the judgment or changing outcome of an issue in the case.

[00:07:07] Speaker 04:
So let me read to you. Do you have another case? No. This is Bit Management Software.

[00:07:19] Speaker 01:
So suppose for a second that you're right, that they had to raise their challenge to this fact finding that had no impact on the judgment. How do you explain what we did in this case in saying the sole issue on appeal is generating and then remanding? Why would we have said the sole issue on appeal is generating and why would we have bothered to remand? And plus, why didn't you point out, because I don't think you did in the first case, Your Honors, we're kind of wasting our time here because there's an unappealed...

[00:07:58] Speaker 01:
essentially dispositive fact-finding that will preclude them from ever showing compressing.

[00:08:04] Speaker 04:
So we actually couldn't – number one, we did raise that issue. In our brief, we said the first finding that the – Wilshire does not disclose the content or origin of that compressed MPEG file. We did actually raise that and say that it was supported by substantial evidence in our opposition brief. Sony said nothing in its reply brief. So we did, in fact, raise that. But let me also clarify. We actually couldn't raise it in the context of saying this is an alternate basis to affirm because –

[00:08:40] Speaker 02:
It wasn't part of the judgment. It wasn't part of the judgment. That's why you couldn't raise it, right?

[00:08:46] Speaker 04:
We couldn't raise it because it was, in fact, part of the judgment, but there was no judgment on the compressing limitation. So we couldn't raise that as an alternative basis to affirm this court only reviews board decisions for basis.

[00:09:01] Speaker 02:
Same reason they couldn't raise it. It's not part of the judgment.

[00:09:05] Speaker 04:
But I disagree, Your Honor. I mean, let me read to you from Bit Management. It says, Indeed, many of the findings on which the Court of Federal Claims based its damages award are not and cannot be challenged. They were findings originally made in connection with the first trial and were before us but not disturbed by us in Bit 2.

[00:09:27] Speaker 04:
Hence, as the trial court recognized, these findings cannot be challenged at this stage.

[00:09:32] Speaker 01:
Thank you. It's hard for me to remember. I think you have the exact same panel that was on bit management, but it's some time ago.

[00:09:41] Speaker 01:
Didn't those findings have something to do with the underlying judgment?

[00:09:47] Speaker 04:
So the underlying judgment was that the – and I can take you to the original case, actually. The underlying judgment in bit management one was that there was no liability because the – the Navy, in fact, had a license, right, an implied license. This court said, well, yes, they had an implied license, but it turns out they breached that implied license, so they lost their – they lose on the copyright claim.

[00:10:17] Speaker 04:
So it sent it back for a determination of copyright damages.

[00:10:22] Speaker 04:
So there were findings that were made in the original case that were pertinent to damages, But there were no damages assessed because it was an implied, the Court of Federal Clearance done on an implied license.

[00:10:32] Speaker 01:
The question for you is what case stands for the proposition that an appellant has a right to appeal with respect to fact findings, assuming they're fact findings that have nothing to do with the judgment. You say fit management is not support for that.

[00:10:48] Speaker 04:
That's exactly right, Your Honor. Precedential decision from this Court.

[00:10:53] Speaker 04:
So I see that I'm into my rebuttal time, but let me make a few quick points, even pushing aside the mandate rule issues. The decision here is not supported by substantial evidence.

[00:11:08] Speaker 04:
Sony relies on only two passages in Wiltshire for disclosure of the compressing new images limitation. The first is that compressed MPEG file. And the board's finding originally was that the content or origin of that compressed MPEG file, Wiltshire does not disclose the content or origin of that compressed MPEG file. If that finding is applicable, then clearly they don't get – then clearly the board's decision must be reversed.

[00:11:38] Speaker 04:
But there are three things mentioned in that sentence.

[00:11:43] Speaker 02:
The sentence – the first sentence – It talks about compression, right?

[00:11:47] Speaker 04:
Oh, for sure it does, Your Honor. It says, in fact, the image may – It does, Your Honor. It says the image may include any type of graphical information, including a bitmap, a JPEG file, a TIFF file, or even an encoded audio-video stream, such as a compressed video MPEG stream.

[00:12:06] Speaker 04:
Our expert, Dr. Hart, explained that the JPEG file, the TIFF file, and the encoded compressed video impact stream are all preexisting on the server, and a person of ordinary skill in the art would understand that. That testimony is unrebutted. It was unrebutted before the board. The only other passage they have to rely on is the passage that states the bandwidth requirement can be further reduced using data compression techniques. It says nothing about what is compressed or when. There is no evidence in Wiltshire of active compression of any image, much less a new regenerated image.

[00:12:48] Speaker 04:
And for those reasons, we think the Board's decision should be reversed.

[00:12:53] Speaker 04:
I'll reserve the rest of my time.

[00:12:55] Speaker 02:
Okay.

[00:12:57] Speaker 02:
Mr. Niles?

[00:13:02] Speaker 03:
Good afternoon, Your Honor. This is Jim Dowd on behalf of the appellant. May it please the Court.

[00:13:10] Speaker 03:
The Board did not reach the compressing limitation in its first decision, and so that limitation could not have been appealed to this Court, and no findings related to that could be appealed to this Court in the first round. The board's decision was based solely upon the generating limitation. SUNY appealed that decision, appealed that judgment, specifically challenged the findings upon which it was based, and this court reversed and vacated the board's findings.

[00:13:41] Speaker 00:
What is your best site for saying that the board's first decision never addressed compression?

[00:13:51] Speaker 03:
I think the

[00:13:52] Speaker 00:
Like looking at the analysis and the board's opinion?

[00:13:55] Speaker 03:
I think it would just be the board's opinion itself. If you go through it, it says we're addressing the generating limitation in the portions that my colleague cites at A26 and A27 as well as A30. Those are all within the context of the generating limitation. There's never any discussion of the compressing limitation. And, in fact, the panel last time, picking up on Judge Stark's point, the panel last time asked, let's say we find with you on generating limitations can we just reverse, and that's the end, and we had to say, no, you have to remand because generating wasn't, I'm sorry, compressing wasn't reached successfully.

[00:14:33] Speaker 03:
And to me, that was the moment at which my colleague should have said, well, that would be a futile act because you didn't appeal that issue. But the point is, we actually could not have appealed that issue because there was no decision on compressing.

[00:14:49] Speaker 01:
There was no decision, but I think at least in passing, there was this statement, Wilshire's disclosure is completely silent as to the content or origin of the compressed video MPEG stream.

[00:15:04] Speaker 01:
why shouldn't I view that as a finding of fact that at least has some impact on the compressing analysis and that the board should have treated itself as bound by?

[00:15:15] Speaker 03:
Because that specific, those two statements, that's actually the second statement that council raises. The first one's at 826 and 27.

[00:15:25] Speaker 03:
They are a little interrelated, so I want to answer your question directly and then show the interrelationship. That specific opinion was challenged and was reversed by this court, and that's at A43. The first opinion, which is at A26 and A27, and why they're related, was the statement, but Wilshire does not teach that using the operation disclosed in Figure 2 with DOOM And we find nothing in Wilshire to suggest that a person of ordinary skill in the art would have understood Wilshire's system could possibly have supported that game in the manner proposed by the district.

[00:16:04] Speaker 02:
Well, we set aside that. We specifically reversed that.

[00:16:07] Speaker 03:
That's my point, Your Honor. That is exactly what was reversed. And they're saying that that was undisturbed and therefore part of the mandate.

[00:16:13] Speaker 02:
No, their argument has to rest on the other supposed finding.

[00:16:17] Speaker 03:
And the other supposed finding was... Having said Doom can't be part of Figure 2, we're now going to look at the casino game embodiments, and that gets us to 830. And there, what the board had said in the original opinion was, citing Dr. Hart's testimony about pre-encoded files, they found that persuasive that these were pre-encoded, and therefore they were only pre-existing images, not necessarily generated in real time. And then there's what my co-counsel cites as, We therefore, therefore, based on the pre-existing testimony, agree with patent owner that Wilshire's disclosure is silent as to the content or origin.

[00:16:59] Speaker 03:
That, too, was specifically challenged and specifically rejected. That's at A43.

[00:17:08] Speaker 03:
And I would take your honors to, I'm sorry, A42. The discussion there is, First says, Wilshire's disclosure generates a new image contrary to the board's conclusion. That wipes out that finding. You then go on to describe Dr. Hart's testimony about pre-existing images, pre-existing files, and say the board's conclusion based on Dr. Hart's testimony that Wilshire does not disclose generating a new image are incorrect.

[00:17:40] Speaker 01:
Your view must be that all of those statements were in aid of the generating conclusion, and therefore were subject of your appeal, and we reversed them, and so the board had to go with what we said about them. Is that correct?

[00:17:57] Speaker 03:
That is exactly correct.

[00:17:59] Speaker 02:
Well, that's not right about the statement we were just talking about. That was in the context of the compression limitation. The board said something about the compression limitation.

[00:18:17] Speaker 02:
you have to have a new image, and Wilshire doesn't disclose a new image.

[00:18:21] Speaker 03:
Respectfully, Your Honor, they accept that compressing is disclosed in Wilshire. What they say is Wilshire is silent as to the content and origin of the compressed MPEG-2.

[00:18:34] Speaker 02:
Yeah, but it's in the context of compression. That doesn't have to do with generating. We weren't addressing that particular finding because that particular finding had nothing to do with what we were reviewing.

[00:18:44] Speaker 03:
Your Honor, we're definitely reviewing generating. This statement was made in the context of the generating discussion, and to the extent that... I don't read it that way.

[00:18:52] Speaker 02:
That doesn't make sense.

[00:18:54] Speaker 03:
Okay. Fair enough, Your Honor. I think counsel focused a lot on bit management. I think they are over-reading... what happened there. As I understand that case, there was actually a decision that on remand, these facts were found. They were not challenged in the second appeal, therefore there wasn't a mandate issue raised. And the panel observed, and they couldn't have challenged them because they weren't challenged in the first instance. That, respectfully, is dicta.

[00:19:25] Speaker 03:
I think that the closer case here is actually the integrated technologies case that we cite. where there was a finding in the first round with respect to whether there had been misconduct at trial. That was not appealed. The case was reversed. The findings were vacated. And then what the court said in the second round was the court on remand had to consider that anew and the defendant was allowed to challenge the fact finding with respect to this misconduct because those findings have been vacated as a part of reversing the prior judgment.

[00:20:01] Speaker 03:
That, I think, is pretty consistent.

[00:20:03] Speaker 01:
When you stood up initially, you said something to the effect of we could not have appealed anything related to compressing because it was not part of the judgment.

[00:20:15] Speaker 01:
and therefore couldn't have been part of your mandate, is integrated technologies what you would cite for that proposition?

[00:20:22] Speaker 03:
If not, what would you cite for that proposition? I don't think so, Your Honor. I don't have a specific case in mind, but my recollection is consistent, I think, with Judge Dyke's articulation, which is you appeal judgments, not the subsidiary findings.

[00:20:37] Speaker 03:
What we did do is we appealed the decision.

[00:20:39] Speaker 02:
It's not subsidiary findings to the judgment. This finding has nothing to do with the judgment. That's why it's not appealable.

[00:20:46] Speaker 03:
Fair enough, Your Honor. I didn't mean to gloss that. I just meant to agree that I don't think it was appealable. What was appealable was the generating issue, and we did challenge the facts upon which generating was based, and therefore I think if you walk through...

[00:21:05] Speaker 03:
We did this just because I wanted to be sure about it. We literally just walked through and lined up.

[00:21:10] Speaker 03:
If you look at the statement that IPL raises at A27, that's challenged in our brief repeatedly. A3491, A3531, I could go on. And then at A43, this court reversed on that issue, found it to be error-free.

[00:21:27] Speaker 03:
A30, the statement there was the one about the casino embodiments from the figures for A through 9D, challenged specifically at A3531, A3541, and then in this Court's decision at A42, the Board's conclusion based on Dr. Hart's testimony was incorrect. So I think we did challenge what we could challenge. It was reversed. It was disturbed. Those findings specifically were disturbed, and therefore, The mandate rule required the board to do what it did.

[00:21:59] Speaker 03:
It did not prohibit the board from doing what it did.

[00:22:04] Speaker 03:
With that, I would switch briefly to substantial evidence, unless there are more questions on mandate.

[00:22:11] Speaker 01:
One evidence question I have. What record evidence, if any, do we have that dual required compression?

[00:22:19] Speaker 03:
So I don't think that the DOOM program required compression, Your Honor. I think compression is required by Wilshire's disclosure of what happens at Step 230 of Figure 2. And so if I can take, Your Honor, to that figure, it's at A1336.

[00:22:38] Speaker 03:
In that figure, there's a dashed line in the middle, and what's happening above the dashed line is at the server. What's happening below the dashed line is at the client.

[00:22:48] Speaker 03:
And then there's a loop back around through steps 260 and 270 showing that commands from the client can then be delivered to the server to affect the game operation.

[00:22:59] Speaker 03:
So after initializing the system at the top, at step 210, we have a game program that is executing on the server. And what this court found last time was that game program can be Doom, and it was undisputed that Doom generates images in real time in response to user commands, like let's walk up a set of steps or some other command.

[00:23:24] Speaker 03:
If Doom generates a new image, then we'd go to the next step, 220. Do we need to update the image? There the answer would be yes. And then step 230, send video stream to client. And it's that video stream that compresses. It's when you send that you compress. And that's at column 7, Your Honor. And it's expressed in Wilshire. Wilshire says...

[00:23:53] Speaker 03:
In stage 230, an image is sent from the server host computer 110 to client terminal computer 120. The image may include, and now I'm reading from lines 16, an encoded audio-video stream such as a compressed video MPEG stream. And it goes on to specifically remind us the image is generated by the game computer program.

[00:24:20] Speaker 01:
You're reading at 1355, I assume?

[00:24:23] Speaker 03:
1355, yes, Your Honor.

[00:24:24] Speaker 03:
And so the board found, and this is at A91, the board found that this disclosure of Wilshire disclosed the compressing limitation, and as you may appreciate, the compressing limitation describes the compressing and then the transmission of a compressed image. And then it goes on to recite how you can have compressed files and decompressing, and it found that part came from Saha. So the board looked at this disclosure, also looked at the disclosure at the bottom of column 7 where it describes using data compression techniques to reduce the bandwidth requirement.

[00:25:00] Speaker 03:
And that disclosure supports, more than amply supports, its findings with respect to Wiltshire.

[00:25:08] Speaker 03:
I'd also note that there was some reference to Dr. Hart in Council's presentation. Dr. Fuchs was our expert, and he laid out in some great detail exactly why all of this worked in the way that the Board found.

[00:25:26] Speaker 03:
His testimony is at A1055-64. That's his opening declaration. A2324.

[00:25:37] Speaker 03:
Through 2328 is his reply declaration. He explains exactly how a person of skill in the art would understand a video stream. That's what's referenced in box 230, 2B8, and I'm quoting, sequence of frames or pictures where each frame is an image of a video sequence. He then goes on to explain how MPEG compressing is a well-known technique in And I would note here that the 109 patent concedes that it's a well-known standardized technique and has no greater disclosure about what MPEG compression is than Wilshire.

[00:26:16] Speaker 03:
Dr. Fuchsen explains SAHA and its teaching of how MPEG includes compressed frames, decompression of those frames, how a person of skill would recognize that Wilshire's use of MPEG is for the intended purpose described by SAHA. That's at A1063.

[00:26:35] Speaker 03:
And then in rebuttal to an argument that I think Dr. Hart had raised about whether this would be hard for a person of skill in the art to do this in real time, Dr. Fuchs opined no, that it was not, that it was well understood how to do that, and that's where he corroborated his testimony with the Lavoie reference, which describes this as, quote, straightforward, close quote, and that's at A-1025 in his opening declaration of and A2329 in his reply.

[00:27:06] Speaker 03:
So I would submit that the board's decision is amply supported by the evidence. They had the ability to weigh the evidence, make an assessment between Dr. Hart and Dr. Fuchs, and they just credited Dr. Fuchs, and that was within their ability to do.

[00:27:25] Speaker 03:
So unless there are further questions with respect to either issue, I would respectfully request affirmance.

[00:27:32] Speaker 02:
All right. Thank you.

[00:27:39] Speaker 04:
Thank you, Your Honors. Let me start by jumping back to the Board's actual decision, and that's at Appendix 93. If you read through the Board's actual analysis there, you will find none of what my colleague here just articulated. In fact, you will find nary a mention of compressing at all.

[00:28:04] Speaker 04:
If you read through their analysis, they don't go through the passages in Wiltshire. They simply say, we find Dr. Fuchs' testimony persuasive and consistent with the court's guidance as to Wiltshire's disclosure. They felt compelled.

[00:28:21] Speaker 01:
I'm not sure I'm following you. At 891, turning now to the compressing aspect of this limitation, they seem in that paragraph to go through pretty much everything we just heard from counsel.

[00:28:34] Speaker 01:
What am I missing?

[00:28:38] Speaker 01:
There's Stage 230, there's Wiltshire Figure 2, there's Dr. Fuchs' Credible, there's Saha.

[00:28:44] Speaker 04:
So if we go to A92, they there start to refute the patent owner's argument. Wiltshire does not disclose on-the-fly creation and compression of an MPEG stream, but instead could have used a pre-existing MPEG stream. And they point to Dr. Hart's testimony.

[00:29:02] Speaker 04:
And they talk about the findings and then say, we're walking away from this finding based on what the Federal Circuit told us to do.

[00:29:12] Speaker 01:
By the time they get there, they've already spent a whole paragraph saying, we are persuaded that petitioner has shown that Wiltshire teaches compressing the updated image, et cetera. Why is that not substantial?

[00:29:24] Speaker 04:
Because, Your Honor, for the reasons I articulated earlier, which is Wiltshire doesn't say or doesn't describe the creation of any image. Wiltshire says in the unrebutted expert testimony is that the JPEG file, the TIFF file, and the compressed impact stream are all preexisting on the server. That is unrebutted. And if I may add, going back to the mandate rule issue, I heard my colleague, the sole distinction he raised for bit management was that the passage in question was dicta.

[00:29:58] Speaker 04:
He didn't say the case didn't stand for what I articulated. Let me point out that right before the portion that I quoted, it says there is no clear error in any of the Court of Federal Claims findings, and we discern no abuse of discretion in its damages judgment. It was not dicta. The Court was saying we're bound by those findings.

[00:30:17] Speaker 02:
Whether it's dictum or not, if you read it that way, it's inconsistent with about 100 other cases.

[00:30:23] Speaker 02:
But never mind.

[00:30:25] Speaker 04:
Okay.

[00:30:26] Speaker 02:
Thank you, Your Honor. Thank you.