We'll hear your argument next in Sky Technologies versus SAP, Appeal 1606 from 2008. Good morning. Welcome to the court. Good morning, Your Honor. Chief Judge Michelle, other members of the panel may it please the court. My name is Paul Graywell and I represent the appellants SAP AG and SAP America Inc. This morning I would like to focus my remarks on three particular subjects raised by the Interlocutorial Appeal. First, why Aakazawa affirmed a long standing requirement of both Congress and the Supreme Court that all transfers of patent title to a science under Title 35 be in writing. Second, why the operation of Massachusetts law? Normally when we talk about a requirement of writing we mean as opposed to all of it. But I don't understand there to be any issue in here about an oral conveyance or alleged conveyance. There may be an issue about whether the writing's constituted assignment but the writings were definitely writing. Your Honor, there were definitely writings which Sky points to and supported its argument that it satisfied the requirements of Section 261. But there's very much dispute as to whether any of those writings manifested by their land which a present intent to pass title to the assign. Go ahead. The third issue your Honor, I'd like to address with time for meeting is why the Guard Variety Article 9 security interests that are among those writings that are pointed to by the appellees in this case do not meet the requirements for written assignment under Section 261 of the patent
. Well there aren't any requirements in 261 others in the word writing. It can't be oral it has to be in writing but in 261 says nothing else at all that I I could recall that's required. Your Honor 261 is explicit that an assignment that is a transfer of title to an assigned be by instrument in writing. Yes. I'll agree completely that it is a close one requirement must be in writing that it doesn't have any other requirement. That's correct Your Honor but it is that requirement which is at the heart of this dispute and which form the basis for the district courts area. That's why I'm having problems. There is a conveyance I may be getting ahead of where you were but since we started in on you let me continue. There are certain I'm just going to know from out because I would that there's at least one category of transfers that would not be deemed to be within the in writing requirement of the assignment rule. I can think of a couple maybe certainly one other say a forfeiture. If there's a forfeiture of property then presumably that wouldn't be subject to the writing requirement. It could happen by operation of law I think you agree with that. I would agree very much that Akazawa recognize at least one exception. So I think there are other exceptions as well right? Well Congress can certainly agree on that
. That's still with state law. I mean state law could say for example forfeiture of property occurs under the following circumstances. And what's more the party that obtains the forfeiture has full title to the property right and that would be the end of it. There wouldn't be any writing requirement under 261 you agree with that right? I don't think so you're under in light of agger as well as under at least before talking about Massachusetts state law the Barton case which we discussed. I haven't gotten there yet but I'm actually focused on the forfeiture first. I want to try to see if we have common ground on that. Well again you're out I'm not aware of the specific issue of forfeiture being addressed but the Supreme Court and agger did address the general issue of whether for example and a pointy of a receiver under state break or see law would have the title to a patent. The requirements of section 261 that was standing or at least the written requirement that was in effect at the time of ag. And in that particular case the Supreme Court like the Massachusetts Supreme Court in the Wilson case which followed in Barton agreed that that general appointment under state law is insufficient to vest title. There has to be a particular there has to be a particular written assignments that is an instrument writing under section 261 in order to accomplish that. Well anger was just a judgment creditor situation right it wasn't secured interest. There was no secured interest in agger because of course the UCC had not been enacted. Well but they certainly had secured interest back then they this just wasn't one of them. All that happened as far as I could tell from the facts of agger where somebody had a cause of action won this case
. There was a judgment and went out to execute the judgment and wanted to execute on the patent and the court said not so fast. Well I think in agger there was not only a judgment but a decree issue as well as a writ of fear of action. Right right that's the way you execute on judgment. Right in those days. That's right in that particular instance even where there was a judgment of a court applying state law and a 1787 at the time. Even in that instance as in the instance where you have a receiver appointed under state law title may not transfer to a sign absent or right. It's a very clear and I will agree with the chief judge a sparse requirement but it's a requirement and the lesson for very important reasons. This is not a technicality of any kind there are very important policy reasons that this court and the Supreme Court is recognized behind section 261 requirement. I would for example direct the court to its discussion of this issue in the Enzo case where Enzo describes the certainty requirements behind section 261. The need to provide members of the public potentially interested parties with certainty as to who has title so that we don't have the type of revisionist history that was a problem in that particular case and frankly a problem in this case. We have the CMS case which we also say which makes that same point that it is important to provide public with adequate notice that in fact title has transferred to the assigned. Well I know that you you call with the opposing side on the issue of what exactly Massachusetts law provides but let's assume for the moment that Massachusetts law does not require any kind of confirmatory writing in order for pure legal title to be applied. The past setting aside such things as my car title piece of paper which I need in order to show you somebody that I actually own things like that but if it is true that the typical rule in say Massachusetts is that after the forfeiture sale occurs that the purchaser at a forfeiture sale has full legal title. Why shouldn't that be sufficient to satisfy any concerns there might be with the imponderables the lack of clarity just as in test to see the laws of in test to see would solve those problems if if a state recognizes the passage of legal title as in Akizawa
. I think there are two points to consider here I think we're finally at Barton which we discussed just a minute ago and in Barton I would encourage members of the panel to go back and review that case. In Barton the Supreme Judicial Court of Massachusetts looked at a provision of the state legislature an act of the state legislature in Massachusetts and noted and in fact affirmed that it understood that the intent of the legislature was to vest title in the receiver under the under the court. Under the appointment under Massachusetts law that intent notwithstanding Barton said that you had to go out and get a written instrument in order to transfer title to the assign and the reason was Congress the federal Congress has imposed a sparse but very specific requirement compelling a written assignment. So I think Barton rejects the notion that the Massachusetts legislature frankly any other state legislature may vest title in and assign absent an instrument and write. Are you saying that 261 implicitly regulates all transfers of title not just assignments but every possible mode of transferring title. I'm saying that it regulates to use your phrase all transfers of title to assigns and I distinguish between assigns which are identified in section 154A of title 35 from airs and I make that distinction because that's the exact distinction that this court made an act is out. So unless we're talking about an air under 154A or patty the two other categories of title holders we are talking about an assign and that- Well, no, it goes so fast. That's what I'm not so clear on. Certainly would be a literal reading of 261 to say where you're talking about an attempt to assign it has to be in writing or it's automatically defective. But it's not clear to me that by requiring assignments to be in writing the Congress was also requiring all other transfers of title to likewise be in writing. You know, I think the if Akazawa isn't enough to resolve that issue I believe it to be the case that it is that that issue is resolved in Akazawa. I would direct your attention to the arachnate case for example which I believe was a 1991 case of this court in which this court discussed the three separate classes of punitive title holders and specifically relied upon Supreme Court precedent and the Crown die case. Supreme Court will not look back to Crown die which are wrapping discusses the some length made very clear that there are under the title 35 provisions three specific categories and where you're talking about airs Akazawa provides the answer states may and I suppose under Akazawa even foreign governments may vest title in airs if they so provide explicitly. But that's not the case within the sign I would just answer judge Bryson's earlier question completely there's an important reason to distinguish between a transfer of title to a sign and a transfer of title to an air
. Of course the purpose the fundamental purpose this court recognize in the end case was certainty that's the whole point of section 261 and when you're talking about an air of course unfortunately there is no way to understand what the decedence present intent is with respect to the court. So the question is if the state is in effect departing the title we're stuck and so in that particular instance it's appropriate to turn to state or foreign law which explicitly vest title. That is a recognition of this court that airs really do stand separate apart from the signs but if you're talking about signs in that particular instance the requirement is not a burdensome to say the least. And then either the Supreme Court decision Wilson from the Massachusetts Supreme Judicial Court all recognize that in cases where you're dealing with a punitive transfer to an assign there has to be a writing not a complicated writing not a formalistic writing but a manifestation of a present intent to part the title. Now what was the reference moment ago that the basis for your saying that there are only three categories and that assign much essentially is everyone except the inventor and an air. What was the your source for that? My source for that is 35 USC 154A. 154A? Yes. As well the discussion of that particular statute in a Pizzala I would also direct the court to the Iraqi case from 1991 which we discuss at length in our brief. It's sites to a Supreme Court precedent crown die which I believe was authored by Chief Justice TAP which also discusses in the context of the provisions of the patent act in force at that time the patent act of 1870. So I think the three specific categories that must apply. And again this is not a discretionary matter Congress has spoken to this issue Congress has made very clear that there is an important policy difference between a transfer of title to an assign and a transfer of title to an air. And you're on if that may turn to the issue of Massachusetts law from. So are you saying that Congress has to be viewed as having required all transfers to be by the method we call assignment except transfers to air. Unless Congress for example you're on in the film tech case which we discuss also on our brief that there's an example in that particular case of a separate statute passed by the federal Congress which provided for transfer of title to the government in the case of certain research done under a non nuclear energy research act in the program
. So Congress certainly has the authority itself to create other mechanisms by which title may pass without a writing to parties other than airs. But in the case of a state legislature or a state court there are numerous cases that we cited to from Massachusetts but also from other states and from federal courts which may clear that there has to be an instrument in writing. And you're on if I may turn to the Massachusetts issue. That there has to be we're going to you're going to that was I was just going to turn your on into the question of whether under Massachusetts law. Title in fact vested in the cross Atlantic secured creditor following the foreclosure but of course that was the decision of that was the conclusion of the district court in this case and district court relied upon provisions 610 and 617 of article 9 under the Massachusetts implementation of the UCC. You're on if one studies those provisions very carefully as well as the underlying provisions in the agreement itself the two agreements themselves that we're talking about. You'll see there's no discussion of title transfer whatsoever in fact Massachusetts is explicit in section 619 that title passes or may pass following foreclosure not as a result of the foreclosure. If there any doubt about Massachusetts own interpretation of its laws you could look further to section 202 of article 9 which we also discussed in our brief or Massachusetts explicitly disclosed any particular title theory when it passes the universe of uniform commercial code. So Massachusetts for its part is not only disclaiming any particular title theory if you look at both 202 and the commentary to section 202 as well as 619 under the Massachusetts UCC you'll see Massachusetts instructing parties not to rely upon Massachusetts UCC law in order to resolve questions of title. In this particular case where you have a federal statute with an explicit requirement for a writing there can't be any disagreement that a writing is required. I see that I'm into my rebuttal time your honor. A little bluerist story your rebuttal time let's hear now from this white. Thank you. Thank you, Your Honor
. May a peace of court. I represent sky technologies and I think it's important to begin by clarifying the nature of this dispute as the appeal has been framed by SAP it is a request for what would be a new and a broad rule of federal preemption. That is because the transfers that SAP is challenging were done in strict compliance with the terms of the uniform commercial code as it has been adopted in Massachusetts. And the UCC adopted in Massachusetts article 9-617 states with crystal clarity that I secured creditors disposition after default transfers to a transfer for value all of the debtors rights in the collection. This was a valid state law property transfer at the moment that cross-Atlantic repurchased Osro's assets at public auction. But SAP does want to ruling that Osro is nonetheless who was the debtor in this case is nonetheless still the patent owner because it says 50 states UCC law notwithstanding a written security agreement properly enforced in accordance with the UCC is ineffective to transfer the funds. The transfer ownership to a secured creditor by virtue of one sentence from the federal patent act. Do you think that what happened here before closure sale constitutes an assignment as that term is used in title 35? We think that Judge Fulson correctly analyzed this law as outside the realm of assignment which is spoken of in section 261. But we think that regardless of whether this court views this case as falling within the Akhazawa decision as being a non-assignment that security interests are something different, a different animal or whether this court views the case as falling within section 261 is immaterial here because we have no less than four written documents in this case. Each of which list these patents with crystal clarity and explain the secured creditors rights upon default and those agreements they are the term sheet, the two security agreements which were consolidated with cross-Atlantic and then another written settlement agreement. How does the term sheet not bind on anybody? The law in Massachusetts and we would submit this is a fact issue that needs to be resolved by the district court if there is before any court can rule that Osroe is the patent owner. But the law in Massachusetts on that is a term sheet is binding if all of the material terms are set forth in the agreement irrespective of whether parties contemplated some further documentation. Language in a term sheet contemplating further documentation is but one factor to consider when determining the parties intent. The critical question that a Massachusetts court would look at to determine whether this term sheet is a valid binding contract in and of itself is did the parties intend to be bound and on that the only evidence in the record whatsoever is before the court and the joint appendix
. We have the affidavits from Glenn Riger of cross-Atlantic and Jeffrey Conklin of Osroe both stating that they viewed this as an agreement between cross-Atlantic, Osroe and Osroe, or Conklin's new company, Newco effective on the date that the agreement was signed. There is no contrary evidence of a intent and it is also significant. What does the term sheet add by way of terms to the other document? It really doesn't. I don't understand why you lead off by talking about the terms. Let me be clear. I think what is evidenced in the four written documents in this case is a series of transactions where the parties were really attempting to belt and suspenders this. All of the agreements are in writing and they are all consistent with what? What are the four documents you think most clearly purports to transfer titles to these patents? I believe that the security agreements themselves are probably the best evidence of an assignment if one is required by Section 261 of the Patent Act. Now, SAP has said that there must be a writing post default. If that is required, then the term sheet and the settlement agreement are the best written evidence of that. But if I could, I would like to turn to the security agreements themselves. The security agreements were entered into between Osborne and Cross-Atlantic and state that they list all of the patents. They were filed with both the PTO and as an accordance with the UCC and they state that upon default, upon the event in occurrence and continuance of an event of default, Cross-Atlantic has all of the rights and remedies of a secured creditor under the uniform commercial code. Those are explicitly incorporated into the agreement. I don't understand what that kind of language means
. It sounds like it is just saying what the law already is in some statute. That doesn't create any new or different rights. That is just like saying the U.S. code exists. Well, yeah, sure. That doesn't create any special new agreement between Judge Bryson and me that we negotiated in one of our terms in our signed agreements as the U.S. code exists. And the agreements go on to specifically delineate what those rights are. Cross-Atlantic can take, sell, possess, dispose of that property at a public or private sale. It lists the requirements. So there can be no dispute. Should the UCC be amended in the future about what the parties had agreed to do at the time of this agreement? I'm not so sure I agree with you
. It looks to me like that language can be read as what the directors assumed the law would be and how it would apply in a certain circumstance in the future. That isn't necessarily the same as I hereby convey to you William Bryson my car. And there's a good reason why these parties wouldn't have wanted to enter into an agreement that says I hereby convey to you my car upon an event of default. Because Osro had a right under the uniform commercial code to demand that cross-Atlantic sell its property at a public auction. That auction was advertised to the public in the Philadelphia Inquirer and the Global Edition of the Wall Street Journal. Had a third party come to that auction and bid on these patents for more than $4,131,844 that Osro owed cross-Atlantic, then Osro was entitled to the remainder. So there is a good state law reason that a debtor will want to enter into an agreement like this when a secured creditor performs in accordance with the agreement. That agreement which incorporates the state uniform commercial code including 9-617 which says that secured creditor's exercise of its post-default remedies and disposition entitles it to all of the debtor's rights in the collateral. There is a good reason for this court not to hold that such agreements are ineffective. The same reasoning that this court used in the Achazawa decision applies here because notably the court recognized in the Achazawa decision that because of Japanese and test-to-see law requiring a writing at the time it would have been required would actually have been to require annulity. Because of the Massachusetts uniform commercial code and specifically 9-617 which says that at the moment of repurchase cross-Atlantic has all of the rights of the debtor. It would have been annulity to require what SAP would have this court hold here which is a post for closure writing conveying the patents to cross-Atlantic. I didn't understand the opposing counsel to insist on any particular timing of the writing. I understood him to insist that the writing amount to a conveyance by its terms. And this writing does amount to a conveyance by its terms, Your Honor. The security agreements themselves but allow the council to... The problem is that if I convey to Chief Judge Michelle my bicycle in the event that I should injure myself while writing it, the questions have I assigned my bicycle? Probably not. I've made a agreement to assign the bicycle, maybe a promise to assign the bicycle but as I understand our cases we probably haven't assigned the bicycle, don't you think? I would disagree, Your Honor, and I think what's significant... Keep in mind our cases dealing with agreements to assign. Take that as the fabric that we're engaged in trying to control here. Understood, Your Honor, and I think what's significant about those cases is that in each case where this court has held there is actually an agreement to assign something in the future, there is language in the agreement contemplating a future further than the past. Under written document we have no such language in this agreement. Rather what our agreement says and it sets forth the conditions is that when cross-Atlantic performs in accordance with those conditions it is entitled to all of the rights and remedies of a secured creditor under Massachusetts law, there is no language in the security agreements that says, and after such exercise we will execute a written assignment transferring the documents. We do have assignment language in the security agreements, it's at section 9 of the security agreements and it refers to in the context of discussing perhaps reinvesting Osro with the secured property should Osro satisfy its obligations under the agreements
. And this writing does amount to a conveyance by its terms, Your Honor. The security agreements themselves but allow the council to... The problem is that if I convey to Chief Judge Michelle my bicycle in the event that I should injure myself while writing it, the questions have I assigned my bicycle? Probably not. I've made a agreement to assign the bicycle, maybe a promise to assign the bicycle but as I understand our cases we probably haven't assigned the bicycle, don't you think? I would disagree, Your Honor, and I think what's significant... Keep in mind our cases dealing with agreements to assign. Take that as the fabric that we're engaged in trying to control here. Understood, Your Honor, and I think what's significant about those cases is that in each case where this court has held there is actually an agreement to assign something in the future, there is language in the agreement contemplating a future further than the past. Under written document we have no such language in this agreement. Rather what our agreement says and it sets forth the conditions is that when cross-Atlantic performs in accordance with those conditions it is entitled to all of the rights and remedies of a secured creditor under Massachusetts law, there is no language in the security agreements that says, and after such exercise we will execute a written assignment transferring the documents. We do have assignment language in the security agreements, it's at section 9 of the security agreements and it refers to in the context of discussing perhaps reinvesting Osro with the secured property should Osro satisfy its obligations under the agreements. It says it talks about reinvesting Osro with the collateral assigned here under. That is the only assignment language that we have in these agreements and it talks about the patents being assigned here under to cross-Atlantic. It is in the nature of a conditional assignment and I would submit that this court's case law is distinguishable because in those cases there was... I don't mean conveying under certain circumstances but if I have already been assigned the patent I don't need an exclusive license. I can give somebody else an exclusive license but I don't need one myself, I am the outright owner of the title. That is correct your honor and that right is cumulative of the other rights. You will see it on page 176 of the Joint Appendix. It says that cross-Atlantic shall be given an exclusive royalty free license to use the intellectual property, basically use the invention itself. Which rights shall be cumulative to and not exclusive of any of the other rights and remedies which are set forth in the agreement. That is a right in addition to and not a right exclusive of the rights that cross-Atlantic was given to dispose of the property upon default. Thanks. I am having a little difficulty in trying to sort out the alternative arguments here because on the one hand you are saying that the
. It says it talks about reinvesting Osro with the collateral assigned here under. That is the only assignment language that we have in these agreements and it talks about the patents being assigned here under to cross-Atlantic. It is in the nature of a conditional assignment and I would submit that this court's case law is distinguishable because in those cases there was... I don't mean conveying under certain circumstances but if I have already been assigned the patent I don't need an exclusive license. I can give somebody else an exclusive license but I don't need one myself, I am the outright owner of the title. That is correct your honor and that right is cumulative of the other rights. You will see it on page 176 of the Joint Appendix. It says that cross-Atlantic shall be given an exclusive royalty free license to use the intellectual property, basically use the invention itself. Which rights shall be cumulative to and not exclusive of any of the other rights and remedies which are set forth in the agreement. That is a right in addition to and not a right exclusive of the rights that cross-Atlantic was given to dispose of the property upon default. Thanks. I am having a little difficulty in trying to sort out the alternative arguments here because on the one hand you are saying that the... security instrument created in fact affected and the sign... conditional assignment but in assignment nonetheless which is valid under section 261. On the other hand you say if that is not right then what happened at the moment of the for-furture sale was a transfer by operation of law which was not an assignment and therefore is not subject to the writing requirement of 261. I am not sure that those arguments are as mutually exclusive as you have put them. I think they feel somewhat intention. Correct. Let me say this. This courts jurisprudence has recognized what it calls an operation of law transfer where there is a written agreement and where there is not a written agreement. The latter case would be the Akazawa decision. The former where there is a written agreement are the DDB Technologies case, the Film Tech case, the SpeedPick Play versus BeeBot case
... security instrument created in fact affected and the sign... conditional assignment but in assignment nonetheless which is valid under section 261. On the other hand you say if that is not right then what happened at the moment of the for-furture sale was a transfer by operation of law which was not an assignment and therefore is not subject to the writing requirement of 261. I am not sure that those arguments are as mutually exclusive as you have put them. I think they feel somewhat intention. Correct. Let me say this. This courts jurisprudence has recognized what it calls an operation of law transfer where there is a written agreement and where there is not a written agreement. The latter case would be the Akazawa decision. The former where there is a written agreement are the DDB Technologies case, the Film Tech case, the SpeedPick Play versus BeeBot case. All of which involved what is in the nature of a conditional assignment. So I am not sure that the term operation of law excludes there being some written agreement. Let me be clear. We do not believe that a written assignment is necessary in the context of a security interest. We believe that Judge Folsom correctly analyzed the law on that point but if a written assignment is required and Chief Judge Michele correctly recognized the law. I said that is a very limited just written instrument requirement in Section 261. Then our position is that the security agreements or the settlement agreement any one of those would satisfy that very limited federal requirement. There is certainly no occasion on these facts to hold the Article 9-617 which transferred to Cross Atlantic. All of the debtors rights in the collateral is preempted, rendered, ineffective, null and void by virtue of one phrase from the Federal Patent Act. I would like to address one argument that was raised by my by SAP and it regards Section 154 which this court will know describes merely how to title a patent. It does not purport to delineate every category of persons who can own a patent nor did Akhazawa address and it certainly would have been dictated in the context of the decision had it done so but it did not purport to address the exhaustive category of persons who could hold ownership rights in a patent. The decisions which come the closest to the patent. We do not have any argument here that the purported transferee is ineligible to own a patent. I understand the argument to be there was no valid transfer
. All of which involved what is in the nature of a conditional assignment. So I am not sure that the term operation of law excludes there being some written agreement. Let me be clear. We do not believe that a written assignment is necessary in the context of a security interest. We believe that Judge Folsom correctly analyzed the law on that point but if a written assignment is required and Chief Judge Michele correctly recognized the law. I said that is a very limited just written instrument requirement in Section 261. Then our position is that the security agreements or the settlement agreement any one of those would satisfy that very limited federal requirement. There is certainly no occasion on these facts to hold the Article 9-617 which transferred to Cross Atlantic. All of the debtors rights in the collateral is preempted, rendered, ineffective, null and void by virtue of one phrase from the Federal Patent Act. I would like to address one argument that was raised by my by SAP and it regards Section 154 which this court will know describes merely how to title a patent. It does not purport to delineate every category of persons who can own a patent nor did Akhazawa address and it certainly would have been dictated in the context of the decision had it done so but it did not purport to address the exhaustive category of persons who could hold ownership rights in a patent. The decisions which come the closest to the patent. We do not have any argument here that the purported transferee is ineligible to own a patent. I understand the argument to be there was no valid transfer. I would like to do with the status of the alleged transferee, the failure of the transfer instrument according to the other side. I believe and I want to make sure I'm understanding the argument you're referencing. I believe SAP's position has been that the transfer was somehow invalid under Massachusetts law because of the failure to execute a transfer statement which is what's mentioned in 9-619 of the Uniform Commercial Code. As Judge Bryson I believe alluded to the transfer statement is widely recognized under the Uniform Commercial Code to be merely a public records tool. It is a method to facilitate recording either in some public registry the fact that ownership has changed. You're arguing about 154. I take it as a response to the contention that that statute in effect serves as a definitional provision saying that there are only three categories of patent. Correct, Your Honor. And I think even a patent. And you say no, that that's not intended to be definitional or restricted. Correct, Your Honor. I think even a passing reading of that section reveals that it really doesn't address or purport to address the categories of persons who can own a patent. With my remaining time I would like to emphasize however that if there is any doubt about the effectiveness of the newly discovered term sheet which was produced by a third party after the briefing was originally completed before the district court that is an issue which should be sent to the district court on remand. We think it is unnecessary in this case because Judge Fulton correctly analyzed the law
. I would like to do with the status of the alleged transferee, the failure of the transfer instrument according to the other side. I believe and I want to make sure I'm understanding the argument you're referencing. I believe SAP's position has been that the transfer was somehow invalid under Massachusetts law because of the failure to execute a transfer statement which is what's mentioned in 9-619 of the Uniform Commercial Code. As Judge Bryson I believe alluded to the transfer statement is widely recognized under the Uniform Commercial Code to be merely a public records tool. It is a method to facilitate recording either in some public registry the fact that ownership has changed. You're arguing about 154. I take it as a response to the contention that that statute in effect serves as a definitional provision saying that there are only three categories of patent. Correct, Your Honor. And I think even a patent. And you say no, that that's not intended to be definitional or restricted. Correct, Your Honor. I think even a passing reading of that section reveals that it really doesn't address or purport to address the categories of persons who can own a patent. With my remaining time I would like to emphasize however that if there is any doubt about the effectiveness of the newly discovered term sheet which was produced by a third party after the briefing was originally completed before the district court that is an issue which should be sent to the district court on remand. We think it is unnecessary in this case because Judge Fulton correctly analyzed the law. But if this court is inclined to reverse Judge Fulton on the legal issue we believe that a remand is necessary so that Judge Fulton can address the factual disputes regarding this term sheet. Including the arguments that SAP has raised in its brief about authority and effectiveness and intent of the party, all of which would be governed either by the facts or Massachusetts law. Thank you. Mr. Graywell, three minutes of rebuttal. Thank you, Your Honor. Just to start with the final point raised by Council regarding the term sheet. As we pointed on our gray brief, this term sheet was produced before Judge Fulton issued his opinion before this court today. It was produced by a third party which is represented by the same council representing Scott. And so under Federal rule of Eleprisied or Ten, that document is not properly part of the record before this court and should not be considered by this court as part of this appeal. Judge Bryce, and I want to go back to the tension you identified between the various positions of Scott has presented as to when title added to pass from Osro to cross Atlantic. In the red brief at page 10, Scott takes an absolutely unequivocal position that title passed upon events of default. And of course, Judge Fulton rejected that conclusion and specifically held that title did not pass at default. It was his conclusion that title in fact passed at foreclosure
. But if this court is inclined to reverse Judge Fulton on the legal issue we believe that a remand is necessary so that Judge Fulton can address the factual disputes regarding this term sheet. Including the arguments that SAP has raised in its brief about authority and effectiveness and intent of the party, all of which would be governed either by the facts or Massachusetts law. Thank you. Mr. Graywell, three minutes of rebuttal. Thank you, Your Honor. Just to start with the final point raised by Council regarding the term sheet. As we pointed on our gray brief, this term sheet was produced before Judge Fulton issued his opinion before this court today. It was produced by a third party which is represented by the same council representing Scott. And so under Federal rule of Eleprisied or Ten, that document is not properly part of the record before this court and should not be considered by this court as part of this appeal. Judge Bryce, and I want to go back to the tension you identified between the various positions of Scott has presented as to when title added to pass from Osro to cross Atlantic. In the red brief at page 10, Scott takes an absolutely unequivocal position that title passed upon events of default. And of course, Judge Fulton rejected that conclusion and specifically held that title did not pass at default. It was his conclusion that title in fact passed at foreclosure. But default is very much the position that sky presents in its red brief at page 10. And default is according to sky the point at which title passed from Osro to cross Atlantic. Now the McDonald case from Massachusetts rejects this notion that default alone is adequate to pass title. Now in terms of Massachusetts law and what Massachusetts provides, it is clear that in section 9-617 of the UCC, Massachusetts law provides that a transfer rate takes certain rights that were previously owned by the debtor or properly of the debtor. But the distinction between debtors rights and ownership and title is a very important and critical distinction. It's a distinction that this court made, again in the very first paragraph of the background section in the arachnocase. This court recognized that ownership interest, excuse me, are not co extensive and not immediately tied to title. Those are distinct questions in my opinion. You're talking about legal ownership versus equitable ownership. Is that really what you're saying? Or are you saying something more formalistic with respect to title? I've owned that car before I got a copy of that piece of paper from the state. Not only was I equitable owner, I was the legal owner. I didn't have a title yet from the state, but I was the legal owner. You didn't have legal title, you're honor. I didn't
. But default is very much the position that sky presents in its red brief at page 10. And default is according to sky the point at which title passed from Osro to cross Atlantic. Now the McDonald case from Massachusetts rejects this notion that default alone is adequate to pass title. Now in terms of Massachusetts law and what Massachusetts provides, it is clear that in section 9-617 of the UCC, Massachusetts law provides that a transfer rate takes certain rights that were previously owned by the debtor or properly of the debtor. But the distinction between debtors rights and ownership and title is a very important and critical distinction. It's a distinction that this court made, again in the very first paragraph of the background section in the arachnocase. This court recognized that ownership interest, excuse me, are not co extensive and not immediately tied to title. Those are distinct questions in my opinion. You're talking about legal ownership versus equitable ownership. Is that really what you're saying? Or are you saying something more formalistic with respect to title? I've owned that car before I got a copy of that piece of paper from the state. Not only was I equitable owner, I was the legal owner. I didn't have a title yet from the state, but I was the legal owner. You didn't have legal title, you're honor. I didn't. Did you not have that piece of paper from the state? You had to have the piece of paper from the state in order to have legal title of the car. And if the piece of paper I lost legal ownership of the car? You retained ownership, your honor, but title is separate. Well then you're using the word title in a very formalistic way. I'm using it to me, not to me, legal ownership. I'm using it in exactly the same way that this court used it in the arachnocase. In arachnocase, this court explained that legal title is a prerequisite to standing in order to bring a claim for patent infringement. But that's your assuming that they were using it in a very formalistic way that you were using it. Well, so if I would say, for example, that if you lose the piece of paper with the red ribbon around it, you no longer have ownership of the patent. Well, it's not only this court in arachnocase, but it is Massachusetts itself which distinguishes between the debtors' rights and ownership claims and legal title. That's why if you look at section 202 of the UCC and Massachusetts, Massachusetts disclaims and instructs parties not to rely upon the UCC in order to provide title. That distinction between title and ownership, your honor, is important. It's despositive in this case because absolutely legal title, we are instructed by earlier opinions of this court, there cannot be standing. Standing depends upon legal title. Legal title, if you're talking about a transfer to an assigned, depends upon a righting, an instrument in righting
. Did you not have that piece of paper from the state? You had to have the piece of paper from the state in order to have legal title of the car. And if the piece of paper I lost legal ownership of the car? You retained ownership, your honor, but title is separate. Well then you're using the word title in a very formalistic way. I'm using it to me, not to me, legal ownership. I'm using it in exactly the same way that this court used it in the arachnocase. In arachnocase, this court explained that legal title is a prerequisite to standing in order to bring a claim for patent infringement. But that's your assuming that they were using it in a very formalistic way that you were using it. Well, so if I would say, for example, that if you lose the piece of paper with the red ribbon around it, you no longer have ownership of the patent. Well, it's not only this court in arachnocase, but it is Massachusetts itself which distinguishes between the debtors' rights and ownership claims and legal title. That's why if you look at section 202 of the UCC and Massachusetts, Massachusetts disclaims and instructs parties not to rely upon the UCC in order to provide title. That distinction between title and ownership, your honor, is important. It's despositive in this case because absolutely legal title, we are instructed by earlier opinions of this court, there cannot be standing. Standing depends upon legal title. Legal title, if you're talking about a transfer to an assigned, depends upon a righting, an instrument in righting. And there is no instrument in righting which manifested intent on the part of Azeroth to part with its title. And if you have any doubt about that, take a look at the settlement agreement that Cross-Atlantic signed with Mr. Conflin. Prior to the foreclosure which took place in this case, in that settlement agreement, Cross-Atlantic pledges to use best efforts to do what? To obtain title. And why would Cross-Atlantic have signed a settlement agreement with Mr. Conflin to obtain title that it already had? It couldn't have. It knew full well that it had to go out and secure title in order to proceed with the transaction with Mr. Conflin and the new company. So, the final point I'll make your honor, I think Chief Judge Michelle, you raised this question of why there would be a license in the security agreement itself if title and factored passed upon default. There of course would be no reason for that. And if you look at the particular provision providing for license in both of these security rooms, they're actually two of them. It provides that a non-exclusive or in the other case, an exclusive license is provided simply for purposes of affecting rights and remedies under the UCC. With that, your honor, I'll rest. All right
. We thank both Council and the appeal of submitted