I'm in case for argument this morning is 151642 macro saw in coerces government employees insurance thank you your honor may it please the court this is a case that should never have been brought macro saw had no reasonable basis to accuse new eggs mobile application of infringement what macro saw of accused as meeting the questionnaire and series of questions requirements in the claims was plainly no such thing it is merely a listing of product categories it is no more a questionnaire with a series of questions than a restaurant menu would be this is a frivolous assertion it was frivolous it should have been frivolous to macro saw the moment that it looked at this pattern and looked at what it was accusing now well the problem for you is that supreme court has told us that we have a differential standard of review here and the district court's got a standard under high market octane in which they get to assess he or she in the instance gets to assess whether this case stands out among others what is there under the deferred highly deferential standard of review that gives us a basis for overturning the judge in this case well I think perhaps the most important reason why little death little to no deference is out in this case is because the district court gave very scant attention to the majority of the arguments that were made by new egg in connection with its motion the questionnaire and series of questions issues are not touched at all in a district courts analysis so right there is not a single finding to which the district court should be given any deference because there there simply wasn't any analysis by the district court and they're presumed he's presumed to have reviewed the arguments he does a decent sign coming upon him to address every single argument that's made by your side well I think it is incumbent upon him when octane fitness says that the totality of the circumstances are required to be addressed and specifically calls out that the parties litigating positions are part of that analysis so when there are substantial arguments made by new egg about litigating positions taken by macrosol throughout this case to the district court not to expressly analyze and dispose of those arguments we think is error and requires at a minimum a remand to address those issues in this case we don't know that a remand would be required because the issues are very very clear under governing law as a matter of law these issues must be resolved in new eggs favor it would be an abusive discretion not to the questionnaire series of questions issue being the most the most obvious one this is a legal issue having to do with claim scope and for whatever reason the district court declined to to actually resolve it but what the district court did resolve was a dispute over whether the term questionnaire standing alone requires the presence of both questions and statements and in this case the district court said well it doesn't have to have questions you know phrased with who what one where why or with a question market the end it can include certain kinds of statements not any statements but only certain kinds of statements that call for a response the example that the district court gave a page that has actually bullet points with different options and so I obviously have to choose between those options would that be a questionnaire of sorts I think depending on how the options were presented it may be a question or within the district court's construction say there's no question much all this is select one and then there's five different options I think that at most might be a single question but the claims here requires a require a series of questions so that one select one and hear your options would be at most a single question not a series of questions but the claims do require at least the assertive claims require that there be not one but a series of questions involved well one of the things that the magistrate judge relied on on the bad faith question is that the court adopted positions of Microsoft's post-claimed construction on disputed terms and rejected most of UX attempts to narrow claims through further construction that's a finding is that reviewable under abusive discretion and how is that an abuse of discretion well I think the the mere finding that some of Microsoft's claim construction positions were accepted over new eggs is at best a preliminary finding along the way to the ultimate merits regardless of what the constructions were or that the district court adopted that does not make Microsoft's infringement case have merit or not that's only one piece of it and in fact here even the term questionnaire which from Microsoft arguably one still requires that the statements that are allowed to be present as part of that questionnaire be of a certain character the kind that call for a response we don't believe a list of product categories could meet that definition on the under any reasonable lens but here we don't even have to rely on that because the claims go much further and distinguish between mere questionnaires that might include things other than questions and actual question questionnaires likely asserted claims so we happen to have a strong claim differentiation in this case where the asserted claims require series of questions in the questionnaire other unasserted claims do not the specification here is actually quite clear at distinguishing between a question and other kinds of statements or things that prompt for a response from a user column eight includes reference all your arguments obviously you won the case on the mayor I mean you're going to win the case on the mayor it all of that support that conclusion but nothing even the dialogue we're having this morning calls out to me question the district courts evaluation of this case is not having stood out based on the totalities circumstances against all others is being well again you're on I think the problem is the district court did not delve into the facts as presented to it and as required by octane fitness for example I mean our case is about much more than just the position on questionnaire it's about the motivation and what we think is a bad faith motivation on macrosolves part it's about other issues where macrosolve could not have reasonably expected to get proof of infringement and what the district court actually did to deal with those arguments was incredibly cursory for example despite a considerable amount of evidence of macrosolve settlement history macrosolve inability to tie the settlements to exposure on the part of any of those defendants the district court dismissed all of that evidence in a single sentence that just says that macrosolve asserted the 16 patent against a wide variety of defendants and settled many of those for significantly less than litigation costs does not alone show bad faith and that's at page a eleven in the record well that is a tiny fraction of the evidence that was presented to the district court and under a very very statement such as that in in the in the district court opinion and it got me to think in about the totality of the circumstances when when or when how do we determine what in dishia do we look for that would indicate to us that the totality of the circumstances was considered by the district court other than just maybe using the words are you saying that all of the theories that are advanced need to be addressed yes I think that's exactly what it means I think that if a party raises three different challenges to a parties to a plaintiffs infringement case I think that those three challenges need to be addressed again octane fitness goes beyond requiring a consideration of the totality but specifically calls out an analysis of the parties litigating positions so merely looking at one out of three or a portion of one or portion of two is not enough and I addressed the you don't like what she said or he said but they addressed the evidence you put on on settlements and large number of suits they addressed that they thought there was some give in terms of the theories that were presented by the theories weren't for less some of them were winners knew I kept changing its position what more should they have addressed why I think they should have addressed the evidence I think that's incumbent on a district court when asked to analyze the totality of the circumstances and the litigating positions that it's not enough to find one fact that cuts in a party's favor and decide that that disposes of the entire argument without accounting for the evidence and law that is on the the losing side of that argument as the district court found it so in the settlement context for example we have the district court not addressing the fact that macro solve was unable to tie the you know the five figure nuisance value sums to any exposure by any defendant and here we have if you look at a 1593 to 94 in the record we have several dozen settlements companies big and small all-round numbers all within a range that we think is nuisance value and as this court held in kilopass if there was a good faith basis for why those numbers were the way they were and if macro solve is correct that it's just because this technology is used only in small one-off infringements then that evidence is squarely would have been squarely in macro solve's possession and we should expect macro solve to come forward with that macro solve did no such thing and as a defendant trying to prove bad faith this court is recognized in kilopass that we are at a disadvantage to get those smoking gun admission so what we have is a considerable amount of circumstance 11 and showing that macro solve story about what these settlements were paid and why these settlements were paid excuse me why these settlements were paid how the amounts were calculated there's nothing macro solve can offer to substantiate that but if I can just go back to to to circle back on the damages issue I'm sorry on the settlements issue for a moment so their position is that these are a bunch of small one-off settlements which would imply that macro solve you know does not believe the patents are valuable and yet they turn around and tell new egg that new egg goes 350,000 up to 32 million and they tell Geico at the same time that it owes 13
.2 million this is tremendously inconsistent with their story that these are just small one-off inventions this is just how their invention is is valued and what it's worth in the marketplace now that alone might not show bad faith but at the same time that they're telling new egg that they might owe these huge damages amounts they're also telling new egg at a 36.99 in the record that hey this case is about to get expensive and you're aware of the average settlement and we would hope for a counteroffer at least that not at least near that number now that we think is the best evidence of a smoking gun that we could hope to find in a case like this notably macro solve is not talking about the merits of the case against new egg they're not talking about the merits of the cases against all those other defendants they're simply saying hey we've asserted this patent a lot this is the average settlement you should pay it and again this is against the backdrop of demanding many orders of magnitude more from new egg in its expert report did did Microsoft initiate suit against other defendants to the course of this this matter yes you're under it did and it initiated 11 new lawsuits after the re-examination petition was granted and so it had been instituted and and we think that's an important fact because there'd been a decision yet on the re-examination at the time those lawsuits were filed no there had not been a determination by the but it settled with with the other defense it already settled with I believe the majority if not all of the other defendants at the time how many was it you said dozens are we talking about I believe the total number is 63 as of the time that macro solve represented that figure to the patent office there may be a handful more 63 63 settlement licenses averaging $75,000 each so I see I'm into my rebuttal time so I will reserve side thank you morning good morning may please the court madden tenneling for macro solve I want to start with the series of questions issued that my my friend started with and macro solve was not surprised here when new egg moved for fees that was not a surprise it's not a surprise that we're here on a pill but was it actually an area that yes sir it was not a surprise when when new egg moved for fees that was not surprising to us but what was a surprise was the nature of the arguments that were raised and what was alleged have been alleged have been in baseless position below an unreasonable position below and the reason those those issues were surprises was they were both issues on which new egg teed up the issue for markmen tried to try to distinguish our infringement theory as a claim instruction issue and they were both issues on which knew he got their lost issue or abandon the issue and this this series of questions example that my friend focused on I think is is all focus on that one as well there was a second one and the same kind of kind of reason applies my friend says that the district court abused its discretion judge Mitchell beesers question and judge neither then in turn abuse his discretion in in in not accepting those arguments because they barely barely touched them but the truth of the matter is that new egg barely touched those arguments below if you look at new eggs opening brief seeking fees they were they were primarily focused on this other issue it was a few sentences on the series of questions issue in the opening brief and when it came time the file objections to judge the district court judge judge Schneider new egg dropped it this was not a big issue below and so when the district court not give a lengthy discussion of that issue but instead focused on the other example that that was purely in line with the way the issues were argued below and that's the reason for that but in any event on on the substance of those issues on that issue we do not lose the the district court actually ruled in our favor of whether they're why did you settle them excuse me why did you settle and dismiss a lawsuit for it's completely or for a reason judge right now for what completely or for a reason completely unrelated reason what what happened was the there was a reexamination what are the reasons is that he didn't have the resources to continue the lawsuit right no sir that's not it is not okay the reason so macrosol have had a separate source of litigation funding was it wasn't causing macrosol to continue these lawsuits what what did cost macrosol was the patent office actions and the reason why this settlement this lawsuit was dropped so you can't know it was dropped as well as every other lawsuit that was pending at the time was because what happened in the patent office what happened in the patent office was there was a reexamination that had been separately filed by New Eggs co-definite Geico and it came a point where there was an office action a final office action rejecting the claims and at that point macrosol decided that we are not going to spend more money in the patent office the writings on the wall this patent's going to be invalidate that was macrosol's belief at that point and for that reason macrosol said we're going to do the right thing we're not going to continue this lawsuit and the date was a day after or second day you can infringe an invalidated pen can't you excuse me you could still infringe a pen that's been invalidated the patent was going to be invalidated in front of the patent office before we ever got to judgment in the district court the decisions and so you can't infringe a patent it's invalid in the sense that the claims can be infringed but you can't have liability for infringement at the end of the day of the patent's invalid and it was clear that this patent was going to be invalidated at that point based on what was happening in the patent office and macrosol immediately what the timing was interesting there was a mediation with new egg scheduled with the day after or two days after and we came into that mediation and said hey something new has happened here in the patent office and based on that we are not going to do this lawsuit when we didn't just dismiss against new egg we just dismissed against Geico who was also at the mediation but we dismissed against every other case that was pending and that was the end of this enforcement campaign so in a situation like what happens to all your licenses you settled that was 60 defendants do they stay the way they are in what sense well do you return the money do you know so the settlements are of course negotiated so that the money is not returned and they risk that I mean the settlements are actually obviously uncompromised of issues like defenses of infletory that could be raised the patent might be invalid I say that because it seems to me that in the course of a lawsuit there's many stages where the parties are re-evaluating their their strengths and weaknesses and and some will sell on a perceived weakness and others may continue on a perceived strength you sell on a on a weakness on a perceived weakness but yet you brought lawsuit you were wrong I mean when in bringing the lawsuit we did not file a single lawsuit after the event in that office so the timing was the the adverse event that we that affected us that affected macro-solves ability to to continue to go forward did that think the patent office was going to find in your favor yes sir the the the re-exam was instituted it was it was insisted on prior that had nothing to do with our case it was totally separate separate arguments but at some point during that re-examination process when we got to a final adverse action we said look this is this is looking like it's not a poll battle not only that but then an additional re-exam was filed an IPR and this was right contemporaneous with you know statements from from former chief judge raider calling calling these IPR processes desquads macro-solves was was scared of of pushing more money into the patent office was fighting this to fight this multi-front front more I wanted to focus on its continuation application with the funds that had available so but at that point that was the first adverse action that happened in the entire history of this campaign and that's the point at which we abandoned it and said we're not going to continue this we could have spent money continue to appeal at that patent office and try to get to a judgment first we didn't do that we had done that you sure be hearing from new way today that that was the wrong course of action that was the abuse of action what about the argument that the district court of the magistrate judge never addressed most the vast majority of the argument so that that's not true it the district court addressed everything that new egg advance judge post so there were essentially two arguments on the merits the one having to do with question error and the one having to do with the user causing the termination staff and on those two issues the judge Mitchell said that the not only didn't it wasn't an issue where these were closed we had a debate about how close they were the issue was that these were teed up as claim construction disputes and it wasn't there's that new egg had shifting an inconsistent claim construction positions and and were kind of bad actors for that reason we're not going to address these things the point that was made in the judge Mitchell's decision was those shifting in the state claim constructions actually show that the arguments that new egg was making on its theme ocean were not reasonable arguments they the word that the district court uses that judge Mitchell uses was they were feuded those arguments and the reason that is is that new egg gave these are either lost these arguments or gave them up on the series of questions new egg has a whole argument it doesn't agree that we we want we think we want we lay that all out our briefs the reasons why we think we want on that issue I think it's clear and I think it's at least a reasonable reading of the district court's decision judge Mitchell's decision but let's let's if you gave new egg all the benefit of the doubt on those issues you assumed that we actually the the district court did not rule on our favor on that issue and if you soon like I think you would have to to to make new eggs argument work that we unreasonably construed the district court's decision that's still when it get new egg where it needs to be because all the only place that would leave new egg is that the issue was still left open for the district court rule that a questionnaire can it doesn't have to be the it's not just questions but it's any kind of statement the calls for response and new eggs whole argument is well we still have the series of questions to hang our hand hat off that by the way that was a brand new argument raised for the first time at the market here so it's a new egg did not do a good job of actually trying to get the court the rule on that issue which now says is the obvious day one issue that made Mac or so case frivolous from the beginning on that on that series of questions are you know if you accept everything that new egg tells you all is is leaving the issue open and so then the question becomes was it was it outlandish was it crazy for Mac or so I'll take the position that when I want a questioner can include statements calling for responses was it outlanded from Microsoft say well okay the when the claim says there's questions that comprise the questionnaire those questions are in the make up the questionnaire those can be the state those can also be statements calling for responses they don't have to have in the you know jeopardy in the form of a question with a question mark doesn't have to be that that was not an outlandish position and there's certainly nothing if it was such a crazy outlandish position it's one that should have been been raised earlier what about the argument that that your assertions of infringement were improbable that it would it would have been even in the most remote situation that infringement could have occurred and with that also address the argument with respect to the the inducement so those are even sent around this this termination these are have to terminate the the the connection that we've discussed and we have a very similar history on on markman and I won't go through all that but it's right in the discourse decision with the district let me see if I understood that correctly the in the claims that you assert termination is part of the process correct yes and and in the the the accused methods termination is not part of the process but yet you argue well termination could occur if there's a week single you walk into a basement something happens and then you reconnect so you you can have termination in under any circumstance did I get there right I do not agree with that judge Rayna that that distinction is not accurate I do not believe okay and here's why I did not agree with that but what the claims of this pattern were about were it's happened what we're accusing of infringement so there was a set of steps it had to do with creating the questionnaire sending the questionnaire to the device tokenizing the questionnaire and that's an important feature for other reasons sending these questionnaires to the devices and and and then in the course of filling out the devices there are there are steps where you establish network connections and and terminate network connections so at every step it seems like you you take a step and then you would terminate connection with respect to the preceding step not not in every step there was there was an establishing step and a terminating step and they happened the timing of those steps was actually at least in two steps right yes those two steps for that termination happened correct I never read I never read the that the accused method had any type of termination in it it does and so the what was accused of infringement was was in New Eggs mobile app for example when a a person is choosing options on some kind of questionnaires there are other questionnaires where they're filling out forms we actually demonstrated this in our expert report by sort of creating an artificial network outage by using airplane mode and we'd be in the middle of typing in some some information we create the artificial network outage using airplane mode we'd see that the information was still there we then moved to that we could fill in more information we then flip the connection back on using the airplane mode off and then you'd be able to continue and that's that was exactly what was required by the claims and that was the whole purpose of the patent the patent was all about these mobile devices used to collect information in a situation where you have unreliable networks and that's what the dispute about this this terminating this the mark would dispute about this terminating connections was all about the connect the dispute that was teed up was new eggs that it's just not networks just going down sort of on their own it's got to be a user terminating the connection and new egg eventually a during the market process after we opposed filed out we filed our mark and brief first we explained why that was wrong we explained that it's really about unreliable networks that's what the whole patent is about new egg in its response band in that position and they say they didn't really abandon it that they were they were leaving it open somehow but they abandoned any attempt to have the court actually construe that to require it to be a user causing the the termination so these terminations happen now we get all kinds of arguments that were had nothing to do it was was below but like in the reply brief we get arguments that the odds of this ever happening were effectively zero and and those kind of arguments are brand new they don't have any evidentiary support but in any event we have they're just arguments and we had evidence on our side our expert said these things have happened there were millions of new circumstantial evidence obviously we didn't know we didn't know that with respect to you know John Dell the network went down at 1230 on Tuesday and one of these things happened but what we had was the kind of circumstantial evidence about the nature of these networks their unreliability the fact that these kind of connections and Wi-Fi connections and cellular connections are always going down on a routine basis and we had millions and millions and hundreds of millions of screen renderings through the use of the of the new egg mobile app and that was enough to be sure that this was happening at least to some extent so that was the basis of our infringement analysis but let's be clear Newy's not saying all Newy's not saying that it's impossible to have proven this so even if our indirect evidence wasn't enough that doesn't mean our case was exceptional and Newy's Newy's not come forward with any evidence saying that to show that this doesn't happen so the idea that this was some case that from day one was obviously flawed and should have never been brought that that just doesn't fall from anything Newy's has argued here. Thank you. A few brief points about the idea that Newy lost her abandon its arguments I think our briefing is clear about that the issue of whether our questionnaire was limited to questions was moot because the asserted claims require a series of questions and as far as what a series of questions means I think everybody understood I think the district court understood that by limiting or by not limiting questionnaire two questions that clearly a expressed statement in the claims that questions were required did require questions the spec is consistent with that a column eight 12 through 14 you have series of questions or statements being referred to a column eight line 52 it refers to a quote form that asks the user different questions Perenn are you a man or a woman question mark is just nothing in the spec here that would say that series of questions means anything other than questions as we ordinarily understand the term as far as the new egg abandoned the user has to take action to disable the first connection again that's sort of a moot point because the way macrosol the cues new eggs app was beat was requiring actions by a user and that's the only way it ever could have accused new egg because new egg does not control customers phones into airplane mode or not new egg does not control Wi-Fi networks and cellular networks so it was inevitable whether we got an expressed construction or not that macrosol could never have proven the new egg controlled that step or the new egg actively was able to encourage that step my friend here says that new egg never actually briefed the questionnaire issue at a 31 14 through 15 and a 31 20 we have new egg arguing those issues to the district court in in the very short you know 15 page opening brief and a five-page reply brief we've got about three pages of argument to that issue the district court should not have been able to ignore that also at a 36 89 through 90 in the reply brief that is as far as the reexam we really think the reexam is largely a side show and it's somewhat irrelevant because the premise of our exceptional emotion was that macrosol brought a frivolous infringement case and did so in bad faith the fact that that assaults patent was also invalid which it doesn't disagree with because it never challenged the reexam on that basis certainly doesn't help macrosol and doesn't excuse it from bringing frivolous claims in bad faith as the record shows the idea that it was inevitable to you know I'm gonna finish my final point here the idea that it was inevitable that this infringement would occur that was never an acceptable theory under this court's precedent when this case was brought you look at the tacheta case knowledge that infringement might possibly occur has never been enough for active inducement of infringement and if it is so clear that infringement necessarily must have occurred then this court in e-pass recognized well then macrosol should have had no trouble finding at least one instance where it did but the precise context of these claims made it so unlikely as to be impossible and that's why macrosol came up empty handed after two years of discovery thank you we thank both counsel the case is submitted and that concludes our proceedings all rise the honorable court is adjourned until tomorrow morning at 10 o'cloc