Legal Case Summary

The United States Department of Appeals, the Federal Circuit is now open and accepting of the eight United States and its honorable forces. Please be seated. Good morning. The first case on the docket is 2008-1462. I guess there's possibly a little confusion here because of very recently filed documents with this court which we've solved for the first time this morning. I was wondering if it would be helpful to the court if the parties that are involved in this recent submission, so it would be Mr. Wright and Mr. Scher, if they're here, it would be helpful to the court if they could approach and perhaps respond to our questions with regard to what the status of the particular cases and so forth. Mr. Scher, and Mr. Wright? Okay. We've seen this document. Let me be clear. We've got two different cases pending. So whatever we got is exclusively for 1474 and 1477, with respect to that appeal and not with respect to the other appeal. Now if you tell us this is framed as a joint notice of dismissal and withdrawal of appeals, can you tell us, and it also refers to the fact there's an appendix A which we have not received, at least we hear of not received. I'm not sure if it's on our clerk's office or not, but do you know this just happened in the past hour. So could you tell us what is happening and what you were seeking from this court and what the status of the appeal is? Well, Your Honor, we have filed in the district for a joint stipulated dismissal later. And I believe that was appendix A in what was filed with the clerk's office yesterday afternoon at 457. Okay. And I apologize what happened is that the Taurus offered on Tuesday to withdraw its entire case against Hyundai. And then it took us until yesterday afternoon. No, and I appreciate it. I mean, I think the appeal will be living. So I understand that if the case can be resolved appropriately, then that's fine. But the court has therefore not acted. Is the district court acted on the motion, as I said, that I haven't seen that the appeal is not yet acted on

. The stipulated dismissal. Okay. What is your view under Rule 42 or otherwise as to the process, therefore, that has to follow? She first has to grant the motion. And then what is the status of the appeal and what is your authority to get the appeal withdrawn? I mean, you're not moving. This is not a motion to dismiss the appeal in front of us. This says it's a joint notice of dismissal and withdrawal appeals. So you are notifying us that you are withdrawing the appeal. Is that what it is? Well, do you, again, I don't want to do that. Because this is, you know, just happened. But it seems to me just printing out Rule 42 for dismissal appeals. It all provides for the circuit court dismissing it, may dismiss. Or it all turn to be provides for an appeal, may be dismissed on the appellant's motion, on the terms of agreed to by the parties. My own personal experience as I recall it right now is that parties have typically moved to dismiss the appeal. And we have nothing before us other than a joint notice of dismissal. Well, if a motion is the appropriate vehicle, it would be appropriate for us to make that joint motion. What I would prefer, and I'm, you know, I'm felt with my colleagues in a moment, is that I think since this has all happened, I don't want to lead you astray. Or so I think perhaps the most prudent course. And also, I mean, I don't know if that motion would have to proceed the grant of the motion, or you would want our granting of motion, if that's what you decide to file, to proceed the district court's acting on the motion of dismissal. So it's something you want to think about. I mean, you've moved to dismiss. She hasn't granted your motion. So I don't know if I mean right now, well actually, it may be though that she doesn't even have the case, right? Because the case is here on a field. So I'm not sure if she can grant the motion before we. In any event, I think it's, I don't want to tell you what to do because I'm not sure of the appropriate course. I haven't consulted with our clerk's office. What I think would possibly be the most prudent way to proceed right at this moment, not to hold everyone else up, is at least if you would agree the appeal, as far as I can tell, is still before us

. If you want to agree to waive or a argument for this morning's purposes, that I think the panel would be prepared to grant. And then we can all, after this proceeding is over, step back, and you can perhaps consult with our clerk's office as appropriate, and find out the best way to resolve this. And if it's not resolved, we, and if necessary, we've waived argument, but we could, you know, the case is still before us, and we could decide it on the briefs. So I, money, if my colleagues would be immutable. I agree, but I also have a question, I'd like to ask. So if the, let's say that the motion was to be granted and the dismissal takes effect, does that mean that Mercedes is the only defendant left in this appeal? Well, and the two appeals that we're talking about right now, which are, I think, 1474 and 1477, the only defendant in those two appeals is Hyundai. We have two different case numbers because Hyundai also has a cross appeal. So Hyundai, the only, the only defendant in those two appeals, and of course, those appeals were consolidated with appeals involving Mercedes and Chrysler. So Mercedes and Chrysler would still be in the case. So as I understand, I think the only, thank you, gee, the only person who would be not arguing would be you, Mr. Chair. You're the only person who would not be arguing with Chrysler. Mr. Right would still be arguing with respect to the appeal against Mercedes. And then, I would say that Mercedes and the name of Chrysler. Yes, 1452. And I am prepared to waive oral argument. As a source. So we'll reach a waive oral argument and then we'll proceed either to act and dismissal of the case or, and we still have the case before us, so we could argue and decide and embrace it. Okay, thank you very much for your patience. Thank you. So we will still, everyone anticipates that that means that the other appeal is still pending before us. The 1462, the 1565, the 455, and that we will proceed if we're with argument, if we're into that appeal. So why don't we proceed since there's a, this is an occasion of a lit argument, even in the absence of high end A, it would be helpful, I think, to the panel of when you get up, you tell up which issues you're going to be dealing with versus your co-confil. Morning, your owners. I plan to address two issues in my remarks

. Sanctions. And we just start with sanctions. The district court views its discretion by sanctioning Orion and the District Court. It's saying, in verbi, out providing specific notice of the conduct that could be sanctionable, and without providing an opportunity to be heard in full before sanctions were imposed. Those who require a set forth of a set of circuit in the Johnson and Beach Sheriff's Kit. So with regard to the final point on, in full, I mean, you got to argue it. I mean, it was clearly an opportunity to discuss and debate and to put all your arguments forth, but is your position that what happened, the district court did not allow additional briefing, or briefing on this matter, and that's what you call the failure to be heard? That's a very good question. Let's describe what the district court did. The district court held a hearing, which Mr. Anderson was called to testify. In the open court, both parties were permitted to examine Mr. Anderson, but then the district court led in camera and excluded Orion and Mr. Spangler's counsel from the proceedings, heard further testimony from Mr. Anderson. And I think most importantly, reviewed an unredacted copy of the letter that Mr. Anderson had sent to Mr. Butler. And this after all is the key exhibit in this supposed witness intimidation. This is the letter from Mr. Anderson to Mr. Butler that was the side of these. Orion's counsel and Mr. Spangler's counsel never saw an unredacted copy of that letter at the time of the hearing. Still today, I've never seen an unredacted copy of that. That was the first time the district court asked for, once are you arguing with the city that the in-camera meeting was unauthorized or improper? The court always has the right to go in camera, but where the abuse of discretion occurred, Orion, was in then not entering an order to show cause at the seven circuit in the Larsen case as the proper procedure. And you have Mr

. Spangler and Orion a full chance to respond to the allegations that were made. Instead, she suddenly imposed sanctions when she came out of the in-camera proceeding to which the attorneys representing Orion and Mr. Spangler at the time had been excluded. She came out of this hearing in camera, clearly angered and stated that in her view, Mr. Spangler and Bird was responsible for what she did was serious and have to intimidate a witness. Did you have a chance to argue with the appropriate sanction once you knew that the judge was going to issue a sanction? Did you have the opportunity to argue what was the appropriate sanction? Yes, and the attorneys at that time in open court did argue that, but the law is clear in the seven circuit, Johnson, be sure that you need to have, you need to be afforded a full opportunity to argue against the imposition of sanctions before they are imposed. And that was not given because the district court came out of that in-camera hearing and said there will be sanctions. And then immediately shifted the discussion as you're on a relative to what the sanctions should be. And my clients at Ryan and Mr. Spangler did file a motion for reconsideration on that issue, but that's after the fact. And the law in the seven circuit, the controlling precedent, Johnson, be sure makes it very clear that you have to have a full opportunity to be heard before sanctions are imposed. And in this case, our client didn't have at the time, still does not have a full copy of the letter that was the basis of the sanction. Did not have an opportunity to even hear a letter on Crosses Amman, Mr. Anderson during his extensive in-camera testimony. But they did, you did have an opportunity to cross-examine Mr. Before. Right. But the sanctions were imposed immediately after coming out of an in-camera hearing. What did the district court said about the basis for the sanctions? Wasn't that information that you had access to? And what she wrote arguing the relied on at awarding sanctions was not made, did not go to matters necessarily that were in camera. You all knew about that testimony. We still do not know the full extent of the testimony that was in the case. Here I put, she was relying on in terms of her imposing sanctions. And that, that, that, you knew about, correct? We had her summary, we had no opportunity to cross-examine Mr. Anderson. We had no opportunity to call. But that's not my question

. I mean, there are different parts of this. I'm talking about what you knew about and you're distinguishing between in-camera and not-and-camera. And I'm suggesting, and you can say I'm wrong, that what the conduct upon which she relied in awarding the sanctions, wasn't that conduct that was disclosed and discussed in the open hearing and you had an opportunity to cross-examine and accept that. Right? I disagree with that. Because the conduct was sending the letter. And we still, to this day, do not know what was in that letter. Because all we have is a redacted count. What do you think they can do over? I mean, given if we agreed what you said, it wouldn't require consent. The sanctions should be reversed. If it is to be remanded, it should be sent to a different judge and, according to the seven-circuit rules. And the district court can consider whether the issue should be taken up again. But at a minimum at that point, we should get a full 100-acted copy of the letter or the sanctions issue should go away. Now, you said that's one issue. Was there another issue? The second one is the breach of contract, Your Honor. Of course, the sanction that was imposed was that the jury got to hear only half of the story. But even before that, the district court had committed a legal error by extending the warranty and rep provisions of the settlement agreement that had been entered into the Tungal Ryan and Chrysler. To expand beyond the patents that were the subject of the litigation that was the subject of the settlement. Review of contract, a interpretation is legal matter, an oval review by this court. And the contract is clear. It was entirely limited from start to finish to the Orion patents, which were defined and exhibited to the agreement, appendix A to the agreement. The license was limited to that. The district court so far, the release was limited to that. And the warranty provisions were all limited to that. Other were three clauses in the warranty. The first one was limited to a representation that Orion owned the Orion patents. Second was that the Orion patents were valid and enforceable

. The third clause was that they had not transferred or assigned anything related to the Orion patents or the litigation. The litigation was limited to the Orion patents. The entire agreement was limited to the Orion patents. And any question on this was eliminated by the additional clause in the warranty and representation section of the agreement. And this is clause 8.1 B4, and this is at the appendix site 92.84, where the agreement said nothing contained in this agreement shall be construed as conferring by implication, stopp or otherwise, aton either party, any right or license under other patents, except for the rights and licenses expressly granted to your under. It could not have been clearer. Had Chrysler wanted rights, a warranty, a representation, a license, whatever, under the 6.5 A patent, they would have explicitly negotiated that and put it in the agreement. Had they wanted freedom to operate their websites, they would have put that explicitly in the agreement. So when one first brought suit, it owed the pen that it asserted the Wisconsin correct. That's correct. For five days and then transferred it and the other instance is clear as Chrysler has admitted, they were aware of that transfer at the time that they were negotiating the agreement. They could not have been under any misapprehension that vague language that they point to now and that the district court improperly relied upon could have given them rights in the 6.5 A patent. The patent they knew no longer was in the hands of Orion, the party that they were negotiating with. And Chrysler is a sophisticated company, and they know how to protect themselves in an agreement. They got exactly what they bargained for in this agreement, and it did not include any representations, any warranties with respect to the 6.5 A patent, because that patent was not involved in the litigation. It was not on the list of patent rights that they explicitly received in the settlement agreement. So it's our position that that was legal error, that if you never should have gone to the jury, and certainly should have gone to the jury, listening to all kinds of one-sided parole evidence from Chrysler about their supposed intentions when they negotiated the agreement without full evidence. And that should be reversed in our here. Mr. Herr, thank you. I will be seated

. You're right. I will be seated. Mr. Right. Good morning, John right on behalf of the appellant Torris, I'll be primarily addressing the sanctions that we're levied against Torris under Section 285. May I please the court, there are two independent bases for why the District Court Section 285, exceptional case finding, the next Torris should be reversed. First, in finding that the cats who were statuously litigated, the District Court improperly punished the patent or a torus, but the conduct of the Third Court in breach of contract, defendant, Serrayan and Mr. Spamberg, despite not having pierced the Torris' corporate bail. Because the Rian and Mr. Spamberg were not parties to the patent case, could you address the sanctions of attorney fees and the application of Texas law to the Sanctus law? Well, there would be no application of Texas law to the attorney fees that were awarded to Torris under Section 285. Because that case was brought in Wisconsin by Torris against the defendants in that case. So it's just under Section 285 that those attorneys fees were awarded. And because Mr. Rian and Mr. Spamberg were not parties to the patent case, and because Torris' corporate form was upheld, it was clear error for the District Court, defined with the case of effect, patiently litigated based on conduct. So it was clear error for the Court, but the case was not in the case of Rian and Mr. Spamberg. The second reason why the Section 285 findings can be reversed is that the District Court did not come close to meeting the exacting standard of Section 285 requires for finding a patent case exceptional. None of the cases that the District Court relied upon support its findings in that regard. In fact, two of the primary cases that it relied on were subsequently overturned by this Court on a field. And the District Court simply did not show by clear and convincing evidence that Torris has had infringement to on the mayor's objective rebaseless. And the second, the Court didn't make any findings with respect to whether Torris later subjectively formed a good faith belief in pursuing its infringement contentions, even post-locking. You know, either of those two bases, Section 285 damages for finding the case exceptional can be reversed. So I'm one question at 195 of the joint appendix. As I understand it, the District Court awarded against Torris, one in 644906, right? Yes, sir. Now, how is that for the conduct simply with respect to the 285? Well, what the District Court saw is the 285 violation? That's what the District Court said

. It's not clear how she arrived at that $1.6 million number. At A188 in the appendix, the District Court kind of proportioned the damages between the patent infringement case and the warranting of the Court. And the patent infringement case damages were $2,487,000, and after the breach of warranty claim, it was on the order of $1.3 million. Now, the grant total there is the $3.8 million. Now, at A212 where the District Court actually awarded the damages, she awarded against Torris in the 1.6 million number. I don't know where she got that number against the Ryan. It was actually broken out to $2.2 million. But again, those two numbers, the 1.6 and the 2.1 add up to the total from the apportionment at A188. But it's not clear to us how she arrived at the numbers when she actually awarded the damages. So you're not clear to whether the 1.6 is simply for what she views a $2.85 case. I think the 1.6 is for what she viewed as the $2.85 case. But I don't know how she arrived at that number. Now, just one other question. I think you are correct that we reversed in the tab light, and also I guess, please find, were the facts of those cases different in this one? In defice, fine, the facts were different. I think in the metronic case, the facts were much closer

. They were different in the sense of that case that already gone through a appeal and then went back to the district court on sanctions. But the district court, they're, or sorry, this court, in the returning that case, since relied on the fact that the electronic had returned to its experts, post-markman, they had gone through and done a supplemental infringement report in its motions opposing the summary judgment. And that's precisely what Torres did here post-markman. It returned to its experts, it returned to the source code, you got a supplemental infringement report, and had a good faith basis for receiving. And importantly, the judge's decision did not have any, in the district court, didn't break out that subjective component of the two-part test for finding a case exception under Section 285. A mindful of eating into the rebuttal time, the exercise. And now that's fine, I mean, we'll retain the rebuttal time, and since you've gone over, at least with the theft of the issue, the eat disgust of the other side needs more time, you've gone over a few minutes. Thank you. I'll award that to them. So, Mr. Stockle. Morning, Your Honor. Mr. Stockle, I'm representing Mercedes-Benz. Okay, and are you covering how are you splitting the issue? Yes, Your Honor. So I will be addressing any questions about jurisdictional issues, as well as the sanctioned issue and the patent issues. This would work as representing Chrysler, will be focusing on the breach of contract and the expert fee issue under Texas law. So I guess you get a little couple more minutes extra in light of the questioning for your friend on the other side. Thank you, Your Honor. So I'll start with the sanctioned issue. And I want to back up and make sure the court understands the timing of the sanctioned issue. The furthest they before trial, Mr. Spanningberg called Mr. Anderson and suggested to Mr. Anderson that he believed Butler was going to purge himself. Mr

. Anderson, with a former Chrysler lawyer and a current lawyer for one of Mr. Spanningberg's companies, working out of Spanningberg's office. Mr. Anderson called Mr. Spanningberg's Council of Record and the Orion Tase, the Doris Tase, pulled the summary judgment order, modal letter, Mr. Butler, prepared the letter, called Mr. Butler Friday afternoon before trial, the week before trial began, sent the letter. Over the weekend, he prepared a declaration suggesting the possibility of surgery and tender that. Now, all of this happened right after on the furthest afternoon, we had a status call with the court and an offer of proof and we had indicated to the court what our offer of proof was and that we had finally confirmed that Mr. Butler, who was a third party witness, was actually going to appear at trial because that was uncertain. He had to voluntarily appear as the Honolulu speaker. That's when this whole chain of events was set in motion. On Monday morning, we filed our motion requesting a hearing, laying out the seven-circuit authority that says when you're confronted with potential witness tampering, the proper course for the district court is to convene an evidentiary hearing and in the motion, we specifically said that this is an extremely serious misconduct, cited the cases on that and suggested that the sanctions could range from dismissal to defense suppression to adverse instructions. On Tuesday, the hearing was conveyed. The court ordered Mr. Anderson to show up as well as counsel for Ryan and Taurus and Mr. Spanginburg was also in the courtroom as the record reflects. Now, with respect to the claim that a Ryan was somehow prejudiced by not being able to appear in camera, I'd like to direct the court to the record on that. So, at A, 10, 126. You want to tell us what volume that is? Yes, I'll go on. What's the page number again? 10, 126. The court was asking how to persuade, and I was explaining, we're willing to enable to call witnesses, this is at line 13, and explaining we have the issue that dealt with witness tampering, which ought to be dealt with in open court. And then we ought to have the issues relating to Mr. Anderson's employment in Christ or dealt with in camera. You turn over to the next page, the court asked a few questions about what I'm in by open court, and that was everybody was there. All of a Ryan's lawyers, Mr. Spanginburg was there, that was the examination of Anderson in open court. And the only in camera exclusion was for the testimony from Mr. Anderson about his work at Christ or Mr. Camelie, who was a Ryan Spanginburg's counsel, said, we agree, we love to see the truth come out. However, we're best able to accomplish that, we certainly would be supportive of that. So then we had the examination of Mr. Anderson in open court, Mr. Camelie crossed the exam with him. We got to the end of this Ross examination prior to going back to Mr. Camelie's statement. Was there any objection to having an ink hammer hearing at that point? Not, no, your honor. And in fact, when we got to the end of the examination of Mr. Anderson in open court, Mr. Camelie had asked a few questions that got into the substance of Anderson's work at Christ or those were objected to on privileged grounds. So then he said at 8101890, that's the page after he'd asked the questions with the work that got to do on privileged grounds. As the court was going into the ink hammer hearing, a couple things, your honor. I think this is a true fine emission. These questions have to be asked. I would have no objection to you conducting an examination. I think I would like to share with you some areas that you should probe, although I think you're well versed with what are the critical areas here. In preceded to show those. That is a 10890, sorry, a101890. So the other objection that has been lodged is that Spanenberg or Inurion did not have a chance to see the full copy of the letter. Your honor, Mr. Anderson was wearing two hats. He was Spanenberg's lawyer

. Spanginburg was there, that was the examination of Anderson in open court. And the only in camera exclusion was for the testimony from Mr. Anderson about his work at Christ or Mr. Camelie, who was a Ryan Spanginburg's counsel, said, we agree, we love to see the truth come out. However, we're best able to accomplish that, we certainly would be supportive of that. So then we had the examination of Mr. Anderson in open court, Mr. Camelie crossed the exam with him. We got to the end of this Ross examination prior to going back to Mr. Camelie's statement. Was there any objection to having an ink hammer hearing at that point? Not, no, your honor. And in fact, when we got to the end of the examination of Mr. Anderson in open court, Mr. Camelie had asked a few questions that got into the substance of Anderson's work at Christ or those were objected to on privileged grounds. So then he said at 8101890, that's the page after he'd asked the questions with the work that got to do on privileged grounds. As the court was going into the ink hammer hearing, a couple things, your honor. I think this is a true fine emission. These questions have to be asked. I would have no objection to you conducting an examination. I think I would like to share with you some areas that you should probe, although I think you're well versed with what are the critical areas here. In preceded to show those. That is a 10890, sorry, a101890. So the other objection that has been lodged is that Spanenberg or Inurion did not have a chance to see the full copy of the letter. Your honor, Mr. Anderson was wearing two hats. He was Spanenberg's lawyer. And he was a former Christ or lawyer. He wrote the letter. He was Spanenberg's agent. Spanenberg was the person that caught him, aimed at Mr. Butler and had him fire off that letter on Mr. Spanenberg's computer. In Mr. Spanenberg's office, the notion that there do process rights for violating these circumstances is just as not hold water. I think the other issue we have here is sort of the selection of the sanction. We argued that the sanction of suppressing the reliance, the fact, was simply insufficient. And we put into our briefs the Texas case law that said if the breach of warranty provision is integrated into the contract in writing there is no reliance element. Now I would note that when Orion replied they acknowledged that that was a proper reading of Texas law and shifted areas and said well the real harm here was not the suppression of the reliance defense. It is the suppression of their ability to tell their side of the story. We would have been objecting to any evidence concerning reliance on the ground that it was not an element under Texas contract law for us to prove the judge could have excluded as more prejudicial and pro-div. Here the sanction simply did that. In other words, the choice of sanction was actually relatively mild despite the egregiousness of the conduct. I want to move on to addressing force's exceptional case points. You know regardless of an A.V. you are going to do that anyway but I just wanted to make sure it is covered for my interest. You heard in my colleague when Mr. Wright that he pointed to the one way and six figure and said that I think I have a correct name. He said that he was his understanding that that was for the 285 issue exceptional case but that he wasn't clear exactly as to how the judge derived that figure. Do you agree with him that that one way and six figure is solely for the exceptional case? Yes, that is in fact how we present the evidence to the court in terms of what was the figure to 35 U.S. Section 7

. And he was a former Christ or lawyer. He wrote the letter. He was Spanenberg's agent. Spanenberg was the person that caught him, aimed at Mr. Butler and had him fire off that letter on Mr. Spanenberg's computer. In Mr. Spanenberg's office, the notion that there do process rights for violating these circumstances is just as not hold water. I think the other issue we have here is sort of the selection of the sanction. We argued that the sanction of suppressing the reliance, the fact, was simply insufficient. And we put into our briefs the Texas case law that said if the breach of warranty provision is integrated into the contract in writing there is no reliance element. Now I would note that when Orion replied they acknowledged that that was a proper reading of Texas law and shifted areas and said well the real harm here was not the suppression of the reliance defense. It is the suppression of their ability to tell their side of the story. We would have been objecting to any evidence concerning reliance on the ground that it was not an element under Texas contract law for us to prove the judge could have excluded as more prejudicial and pro-div. Here the sanction simply did that. In other words, the choice of sanction was actually relatively mild despite the egregiousness of the conduct. I want to move on to addressing force's exceptional case points. You know regardless of an A.V. you are going to do that anyway but I just wanted to make sure it is covered for my interest. You heard in my colleague when Mr. Wright that he pointed to the one way and six figure and said that I think I have a correct name. He said that he was his understanding that that was for the 285 issue exceptional case but that he wasn't clear exactly as to how the judge derived that figure. Do you agree with him that that one way and six figure is solely for the exceptional case? Yes, that is in fact how we present the evidence to the court in terms of what was the figure to 35 U.S. Section 7. You are here and agreement on that. No, I was. Marant, but that is what that is for. Correct, you are right. And just to be clear, the way we always understood the order is, TORRIC is liable for that portion. A Ryan would be liable for the whole portion but a TORRIC pays the 1.6 or Ryan will only pay the difference between 1.6 and 3.8. So it is not, or she was not trying to double count it there. And one of the, we argue that all TORRICs are the hook forers that were in the insects. Correct, you are right. That is our understanding of the judge. And the reason there is a slight difference between the TORRICs patent calculation and the Orion Patin calculation has in part to do with TESA's law. And the breach of contract claims part of the patent defense damages on the Orion Ode or expert fees, which under this court's authority require more than just the exceptional case. And we were already getting that from a Ryan's, we did not try to prove that it is fact and perspective for us. Now on the claim that there was never a finding on the objective prong or the subjective prong. So let me start with the subjective prong. There was testimony in trial by Mr. Spangler. The question that was asked was, the question was asked what is the difference between, what is the TORRICs litigation related to? And this is an A9887 through A8. And Mr. Spangler, for Spangler, testified that the 6-5-8 patent, that was occurring behind the website, so there is a service side and a user side, I think the 6-5-8 patent goes to the service side of the equation, not the user side of the equation. The district court cited this because it was completely contradictory to the entire theory in which the case had been brought. The theory in which the case had been brought was that the user, the user side, the web server, infringes the patent. Mr

. You are here and agreement on that. No, I was. Marant, but that is what that is for. Correct, you are right. And just to be clear, the way we always understood the order is, TORRIC is liable for that portion. A Ryan would be liable for the whole portion but a TORRIC pays the 1.6 or Ryan will only pay the difference between 1.6 and 3.8. So it is not, or she was not trying to double count it there. And one of the, we argue that all TORRICs are the hook forers that were in the insects. Correct, you are right. That is our understanding of the judge. And the reason there is a slight difference between the TORRICs patent calculation and the Orion Patin calculation has in part to do with TESA's law. And the breach of contract claims part of the patent defense damages on the Orion Ode or expert fees, which under this court's authority require more than just the exceptional case. And we were already getting that from a Ryan's, we did not try to prove that it is fact and perspective for us. Now on the claim that there was never a finding on the objective prong or the subjective prong. So let me start with the subjective prong. There was testimony in trial by Mr. Spangler. The question that was asked was, the question was asked what is the difference between, what is the TORRICs litigation related to? And this is an A9887 through A8. And Mr. Spangler, for Spangler, testified that the 6-5-8 patent, that was occurring behind the website, so there is a service side and a user side, I think the 6-5-8 patent goes to the service side of the equation, not the user side of the equation. The district court cited this because it was completely contradictory to the entire theory in which the case had been brought. The theory in which the case had been brought was that the user, the user side, the web server, infringes the patent. Mr. Spangler, a spirit trial in trying to say the 6-5-8 patent case was not related to the Texas legation, was oh no, that's the backside. That only has to do with the data managers, the users who have control over the database and can actually change the rules, put the rules and edit the rules. That was completely contradictory to the entire theory of the case. It showed so objectively that the case was brought in bad faith. And it was also correct, the judges' construction of those terms were correct. The key kind of construction dispute was not over whether the user had to put in a set of rules, it was who had to put in a set of rules. Forrest itself construed relationship information to relate to the rules that connected these data elements. The parties were disputing whether user defined meant the user had to put the information or the computer had to put the information in. The court correctly found that the user had to put the information in. That was in the claim language. That's what the specification thought and that's what the prosecution history taught. And we intend the prosecution history disclaimed any use of just the software in the computer to create the rules. The judge ruled on that and found in our favor on the claim construction, while counsels correct that the court later reversed the accused's spine and the brain lab cases. The court still reaffirmed the principle that if a ligand proceeds after an unfavorable claim construction ruling, that is grounds for an exceptional case ruling. That's exactly what happened here. It could not have been clear from the court's construction that in fact, web surfers were not users, they were not creating or editing rules. I have really no other points to address on those. I do want to point out one issue on the jurisdictional front. Well, we want to be brief because they're eating into your colleagues' talk. Well, I apologize, Your Honor. Just briefly, there is a distinction in Texas law between veil piercing for substantive purposes and veil piercing for jurisdictional purposes. The Texas Supreme Court has found those standards are different and I would refer to court to recent cases, the grand area for eternal order of equals, behavior, 2013, less law, 163981. What do you case the starting year? They were not. This is the January 13, 2013 case. The court notes, sorry, Your Honor, 2013, less law, 163981, where the court notes that jurisdictional veil piercing is the state from substantive veil piercing. So for jurisdictional veil piercing, you simply have to show the entities are fused as one for substantive veil piercing

. Spangler, a spirit trial in trying to say the 6-5-8 patent case was not related to the Texas legation, was oh no, that's the backside. That only has to do with the data managers, the users who have control over the database and can actually change the rules, put the rules and edit the rules. That was completely contradictory to the entire theory of the case. It showed so objectively that the case was brought in bad faith. And it was also correct, the judges' construction of those terms were correct. The key kind of construction dispute was not over whether the user had to put in a set of rules, it was who had to put in a set of rules. Forrest itself construed relationship information to relate to the rules that connected these data elements. The parties were disputing whether user defined meant the user had to put the information or the computer had to put the information in. The court correctly found that the user had to put the information in. That was in the claim language. That's what the specification thought and that's what the prosecution history taught. And we intend the prosecution history disclaimed any use of just the software in the computer to create the rules. The judge ruled on that and found in our favor on the claim construction, while counsels correct that the court later reversed the accused's spine and the brain lab cases. The court still reaffirmed the principle that if a ligand proceeds after an unfavorable claim construction ruling, that is grounds for an exceptional case ruling. That's exactly what happened here. It could not have been clear from the court's construction that in fact, web surfers were not users, they were not creating or editing rules. I have really no other points to address on those. I do want to point out one issue on the jurisdictional front. Well, we want to be brief because they're eating into your colleagues' talk. Well, I apologize, Your Honor. Just briefly, there is a distinction in Texas law between veil piercing for substantive purposes and veil piercing for jurisdictional purposes. The Texas Supreme Court has found those standards are different and I would refer to court to recent cases, the grand area for eternal order of equals, behavior, 2013, less law, 163981. What do you case the starting year? They were not. This is the January 13, 2013 case. The court notes, sorry, Your Honor, 2013, less law, 163981, where the court notes that jurisdictional veil piercing is the state from substantive veil piercing. So for jurisdictional veil piercing, you simply have to show the entities are fused as one for substantive veil piercing. The Texas courts and the statute have different requirements. Would you say that the jurisdictional bar is lower than that for liability? Absolutely, and that's what the Texas case is hold. In fact, Orion's reply brief cited a shook bewildering case that came without after Judge Graves' opinion and refers to it. In that case, they actually agreed with Orion's or Judge Graves' reading of the Texas statute of read with her analysis, find that equitable principles govern whether to actually pierce the veil. They concluded they're not going to do that in that case because they would have imposed the corporation's contractual liability on the individual shareholder. That's not what was happening here. Here, the jurisdictional veil piercing simply attributed the individual conduct contacts of Spanienberg and Taurus to Orion for purposes of holding Orion to its agreement and avoiding the injustice of forcing Chrysler and Mercedes to defend patent infringement claims at the rocket docket that Taurus chose in a way that they would not have been able to press their best defense namely the subtle agreement. So here, jurisdictional veil piercing was appropriate. All of the findings that the court made on all three go. None of them are challenged on clear air grounds by Orion. Why don't we hear from Mr. Woodward? If you could just tell me, when you checked in with the clerk, you had a split time of 4 and 2. Are you trying to deal with the cross appeal issue? I am. We drove a cross appeal and we had reserved two minutes of our bottle time, but we're not assuming that it's brought up in a fly. May a peace record come for Orion. May the point this morning that Chrysler is a sophisticated company and that with respect to this settlement agreement that they got exactly what they bargained for. We actually agree. The issue that is what was it that Chrysler bargained for? The undisputed evidence in this case and this is found at ADD 13 and ADD 63 in the court's opinion is that when Chrysler was negotiating to settle the taxis litigation with Orion, that it's intent it was bargaining for a comprehensive settlement. So they would never face the threat of lawsuit with respect to the exchange website technology from Orion or any of the Stanginburg patent holding companies again. This intent is expressly reflected in the two provisions of the settlement agreement that are an issue in this appeal. It's important to understand how these provisions work together in the settlement agreement. First, there is a license provision. That's section three of the agreement. There's no dispute as to the scope of the license. It defines what the license activities are and what the license patents were. But separate and apart from the license, there was a release provision in section 2

. The Texas courts and the statute have different requirements. Would you say that the jurisdictional bar is lower than that for liability? Absolutely, and that's what the Texas case is hold. In fact, Orion's reply brief cited a shook bewildering case that came without after Judge Graves' opinion and refers to it. In that case, they actually agreed with Orion's or Judge Graves' reading of the Texas statute of read with her analysis, find that equitable principles govern whether to actually pierce the veil. They concluded they're not going to do that in that case because they would have imposed the corporation's contractual liability on the individual shareholder. That's not what was happening here. Here, the jurisdictional veil piercing simply attributed the individual conduct contacts of Spanienberg and Taurus to Orion for purposes of holding Orion to its agreement and avoiding the injustice of forcing Chrysler and Mercedes to defend patent infringement claims at the rocket docket that Taurus chose in a way that they would not have been able to press their best defense namely the subtle agreement. So here, jurisdictional veil piercing was appropriate. All of the findings that the court made on all three go. None of them are challenged on clear air grounds by Orion. Why don't we hear from Mr. Woodward? If you could just tell me, when you checked in with the clerk, you had a split time of 4 and 2. Are you trying to deal with the cross appeal issue? I am. We drove a cross appeal and we had reserved two minutes of our bottle time, but we're not assuming that it's brought up in a fly. May a peace record come for Orion. May the point this morning that Chrysler is a sophisticated company and that with respect to this settlement agreement that they got exactly what they bargained for. We actually agree. The issue that is what was it that Chrysler bargained for? The undisputed evidence in this case and this is found at ADD 13 and ADD 63 in the court's opinion is that when Chrysler was negotiating to settle the taxis litigation with Orion, that it's intent it was bargaining for a comprehensive settlement. So they would never face the threat of lawsuit with respect to the exchange website technology from Orion or any of the Stanginburg patent holding companies again. This intent is expressly reflected in the two provisions of the settlement agreement that are an issue in this appeal. It's important to understand how these provisions work together in the settlement agreement. First, there is a license provision. That's section three of the agreement. There's no dispute as to the scope of the license. It defines what the license activities are and what the license patents were. But separate and apart from the license, there was a release provision in section 2.1. And this is sure Chrysler that neither Orion nor any of the related companies would bring claims with respect to the license websites in the future. And finally, the warranty provision in 8.1, ensure Chrysler that Orion had not previously transferred any calls of action relating to this technology to a third party. With the three provisions together, Chrysler achieved what it referred to in the record as quote, piece on the product. Turning first to the warranty, Orion represented it had not transferred a calls of action relating to the litigation. After properly interpreting this clause, the court left the jury the only unresolved factual dispute, which was, is torus's claim for infringement of the 658 patent related to the tax litigation. The jury found it was an ad determination to support it by substantial evidence. Orion's argument that the verdict should be set aside because Chrysler could not prove reliance. That fails for three independent reasons. Number one is Mr. Sockel has just explained, reliance is not a proper defense where the warranty is integrated in the final written contract. And Orion has conceded as much in its reply brief. But even if this was an offense, there were two. It was properly excluded as a result of the dissanctional conduct of Mr. Sengenberg. And number three, with respect to the knowledge that Orion relies upon, it's knowledge of the patent was transferred. But what this representation says is a cause of action has not been transferred. And there's no evidence nor could there be that Chrysler knew that a cause of action relating to the litigation had been transferred. Turning to damages, the district court properly ruled that neither expert testimony nor our age or retrial was necessary in this case with respect to the quantification of attorneys fees that would be awarded. Aside from these legal alleged errors, Orion has made no complaint with respect to the $3.83 million award. So what about the Texas cases that do seem to say that you need expert opinion when you're dealing with attorney fees? First and foremost, I think the court went through a rigorous analysis and determined that it actually shouldn't apply Texas law on its base. Rather, it needed to apply in the eerie doctrine of federal law because that Texas law that you're talking about is not a substantive legal policy that's trying to get a behavior outside the courtroom. Rather, it's just an evidentiary or procedural rule with respect to economies of litigation. Therefore, the court looked to the seven circuits federal law where it was sitting and determined that expert testimony was not necessary on the reasonableness of the attorney fees

.1. And this is sure Chrysler that neither Orion nor any of the related companies would bring claims with respect to the license websites in the future. And finally, the warranty provision in 8.1, ensure Chrysler that Orion had not previously transferred any calls of action relating to this technology to a third party. With the three provisions together, Chrysler achieved what it referred to in the record as quote, piece on the product. Turning first to the warranty, Orion represented it had not transferred a calls of action relating to the litigation. After properly interpreting this clause, the court left the jury the only unresolved factual dispute, which was, is torus's claim for infringement of the 658 patent related to the tax litigation. The jury found it was an ad determination to support it by substantial evidence. Orion's argument that the verdict should be set aside because Chrysler could not prove reliance. That fails for three independent reasons. Number one is Mr. Sockel has just explained, reliance is not a proper defense where the warranty is integrated in the final written contract. And Orion has conceded as much in its reply brief. But even if this was an offense, there were two. It was properly excluded as a result of the dissanctional conduct of Mr. Sengenberg. And number three, with respect to the knowledge that Orion relies upon, it's knowledge of the patent was transferred. But what this representation says is a cause of action has not been transferred. And there's no evidence nor could there be that Chrysler knew that a cause of action relating to the litigation had been transferred. Turning to damages, the district court properly ruled that neither expert testimony nor our age or retrial was necessary in this case with respect to the quantification of attorneys fees that would be awarded. Aside from these legal alleged errors, Orion has made no complaint with respect to the $3.83 million award. So what about the Texas cases that do seem to say that you need expert opinion when you're dealing with attorney fees? First and foremost, I think the court went through a rigorous analysis and determined that it actually shouldn't apply Texas law on its base. Rather, it needed to apply in the eerie doctrine of federal law because that Texas law that you're talking about is not a substantive legal policy that's trying to get a behavior outside the courtroom. Rather, it's just an evidentiary or procedural rule with respect to economies of litigation. Therefore, the court looked to the seven circuits federal law where it was sitting and determined that expert testimony was not necessary on the reasonableness of the attorney fees. Finally, Chrysler, cross the P.O.C. What is the authority that the district court relied on to consult semisircut law? Sure, that's just consistent with the eerie doctrine, which is when you're sitting in a federal district... I understand that that's in Texas and she first consulted and distinguished Texas law, and it's clear that under Texas law that expert opinion is necessary for attorney fees. It is, but she determined that that was not a substantive law, that that was just a law devoted to improving the accuracy of litigation. Therefore, it wasn't something that could override federal law with respect to evidence and what was necessary for that cause of action. The other thing that I would say, and she again went through this analysis, she went very thoroughly through Texas. She couldn't find an explicit statement as to why that was found, but what she did find that what was required was actually a very low threshold. And it's a threshold that Chrysler was prepared to meet at the jury trial. Chrysler was prepared to go forward with the testimony of both in-house counsel for Chrysler, as well as outside counsel with Mr. Sackwell's firm regarding the fees that were incurred and regarding mother and rathas are reasonable and necessary. This kind of testimony of attorneys is exactly what the Texas courts have required. Finally, with respect to our... Where are the attorneys that you just spoke about were they Texas lawyers? I don't believe that either of them are, no. When the court did, though, however, when this was presented, imposed trial briefing, in role 54 type briefing on the attorney fees, at that point Chrysler and Mercedes also included a declaration of Mr. Jones, who was a taxis attorney. Who provided additional information to the court on Texas legal fees and the reasonableness again. Finally, with respect to the cross appeal, who has been quite a long expired and which would include your response time on the cross appeal. So I might suggest, unless you vigorously want to raise something that we rest on the briefs, so that we can scrap it across the appeal. Okay, we will do that. Thank you

. Finally, Chrysler, cross the P.O.C. What is the authority that the district court relied on to consult semisircut law? Sure, that's just consistent with the eerie doctrine, which is when you're sitting in a federal district... I understand that that's in Texas and she first consulted and distinguished Texas law, and it's clear that under Texas law that expert opinion is necessary for attorney fees. It is, but she determined that that was not a substantive law, that that was just a law devoted to improving the accuracy of litigation. Therefore, it wasn't something that could override federal law with respect to evidence and what was necessary for that cause of action. The other thing that I would say, and she again went through this analysis, she went very thoroughly through Texas. She couldn't find an explicit statement as to why that was found, but what she did find that what was required was actually a very low threshold. And it's a threshold that Chrysler was prepared to meet at the jury trial. Chrysler was prepared to go forward with the testimony of both in-house counsel for Chrysler, as well as outside counsel with Mr. Sackwell's firm regarding the fees that were incurred and regarding mother and rathas are reasonable and necessary. This kind of testimony of attorneys is exactly what the Texas courts have required. Finally, with respect to our... Where are the attorneys that you just spoke about were they Texas lawyers? I don't believe that either of them are, no. When the court did, though, however, when this was presented, imposed trial briefing, in role 54 type briefing on the attorney fees, at that point Chrysler and Mercedes also included a declaration of Mr. Jones, who was a taxis attorney. Who provided additional information to the court on Texas legal fees and the reasonableness again. Finally, with respect to the cross appeal, who has been quite a long expired and which would include your response time on the cross appeal. So I might suggest, unless you vigorously want to raise something that we rest on the briefs, so that we can scrap it across the appeal. Okay, we will do that. Thank you. Nonetheless, we still ran over on the other side, so I think you gentlemen are entitled to a few more minutes. We preserved your three minutes. We'll add two to that, and it's up to you all to decide how to decide that because the issue is going to be going wrong. But we've got to reinforce this because we can't compensate on the other side. I understand. I appreciate that. I'm going to start on the breach of contract and then go to sanctions and then, if I'm still a nut, I'll have to write to discuss his point. Right, the Christal Council pulled us about the intent of Chrysler in negotiating the agreement and cited two spots in the record for that. That is parole evidence. That is not the proper way to interpret a contract. On the sanctions, from what we can tell, and we do not have, still today, I do not know exactly what was in that letter or the entirety of Mr. Anderson's testimony. But he was acting sort of as the agent, right? Is that your problem and not the other side? Do you have been able to get him to disclose the letter to you? Well, if the other side, of course, would scream if he had, it is our problem because we didn't have an opportunity to defend ourselves. Taking what we do know and its limited information is still today. What we do know at best is that Mr. Anderson was charged with witness intimidation and that charge was imputed to Mr. Sagan and Dr. Gouraim. Because he contacted a witness and insisted that the witness tell the truth. He had an obligation under the Michigan rules of professional conduct to do precisely what he did. And not a single case was cited by the District Court or by the other side, in which a party was sanctioned for contacting a witness by letter verbally, however, and insisting that that witness tell the truth. And I think this issue is best framed by the District Court itself and denying our motion for issues, what compelled Mr. Anderson to do that? Whatever compelled him, your honor, I admit that contacting a witness and saying, I want to be sure you tell the truth. Cannot be sanctioned, will come back. Yeah, but you are arguing mainly on a process violation and that is another issue. I mean, that is the separate issue from the process

. Nonetheless, we still ran over on the other side, so I think you gentlemen are entitled to a few more minutes. We preserved your three minutes. We'll add two to that, and it's up to you all to decide how to decide that because the issue is going to be going wrong. But we've got to reinforce this because we can't compensate on the other side. I understand. I appreciate that. I'm going to start on the breach of contract and then go to sanctions and then, if I'm still a nut, I'll have to write to discuss his point. Right, the Christal Council pulled us about the intent of Chrysler in negotiating the agreement and cited two spots in the record for that. That is parole evidence. That is not the proper way to interpret a contract. On the sanctions, from what we can tell, and we do not have, still today, I do not know exactly what was in that letter or the entirety of Mr. Anderson's testimony. But he was acting sort of as the agent, right? Is that your problem and not the other side? Do you have been able to get him to disclose the letter to you? Well, if the other side, of course, would scream if he had, it is our problem because we didn't have an opportunity to defend ourselves. Taking what we do know and its limited information is still today. What we do know at best is that Mr. Anderson was charged with witness intimidation and that charge was imputed to Mr. Sagan and Dr. Gouraim. Because he contacted a witness and insisted that the witness tell the truth. He had an obligation under the Michigan rules of professional conduct to do precisely what he did. And not a single case was cited by the District Court or by the other side, in which a party was sanctioned for contacting a witness by letter verbally, however, and insisting that that witness tell the truth. And I think this issue is best framed by the District Court itself and denying our motion for issues, what compelled Mr. Anderson to do that? Whatever compelled him, your honor, I admit that contacting a witness and saying, I want to be sure you tell the truth. Cannot be sanctioned, will come back. Yeah, but you are arguing mainly on a process violation and that is another issue. I mean, that is the separate issue from the process. Correct. Correct. And I believe that on both scores, the sanctions have to be reversed. We did not get our full opportunity to be heard. We didn't get a chance to fully cross the dam and Mr. Anderson or call Mr. Butler, the supposedly intimidated witness, or to call Mr. Saganberg to the stand before sanctions were imposed. You have to put yourself in the position of Orion and Saganberg's counsel. They are sitting at a desk like this in the District Court's courtroom, while in camera and chambers, testimony is going on, they are cooboos as to what's being said by Mr. Anderson. And immediately upon that in camera hearing being concluded, the District Court comes out and imposes sanctions. What do you say to your opponents argument that there was no objection to the in camera meeting? Well, it is not entirely accurate because on that same page Mr. Kameli went on and said, and we wanted to be sure that a transcript is made. And of course the assumption would be that they would get a chance to look at the transcript, to brief the issue, to have an opportunity to make that full presentation before sanctions were imposed. And they would deny that opportunity and under seven sort of precedent. Johnson, V. Cherry, Larson, V. City of Baleuite, that was an abuse of discretion. I'll start with questions. I'll see you next week. Thank you. Three very quick points. First, there was no finding in the Judge's opinion, Judge Grabs's opinion, A191-192 on the subjective call of the exceptional case Section 285 analysis. Second, Mr. Sangeberg's testimony with respect to the 658 patent being a service-side patent was entirely accurate

. It is a service-side claim. That's why the defendants were the car companies. The issue was whether an Internet user could meet two of those steps, steps three and four of the method claim. There's nothing in the claims or the District Court's claim construction, objectively, that precludes an Internet user from meeting those two steps of the method claims. And finally, the fact that Taurus ended up ultimately being wrong in the Judge Grabs's view on the infirmity contentiousness is not a sizable product. Thank you. We thank both Comple and the cases submitted