ERICSSON INC. v. TCL COMMUNICATION TECHNOLOGY
Oral Argument · Case 2018-2003 · 36:00
0:49
Appellant Attorney (Lionel M. Lavenue)
Good morning, Your Honors. Lionel Lavinu from Finnegan for the TCL Appellants.
0:53
We have three issues this morning in our appeal that are most important.
0:57
One is the 101 issue on eligibility.
1:00
Two is the issue of damages and its proper computation.
1:03
And three is willfulness.
1:05
If the first issue is resolved, then there's no need to go to the two other issues,
1:09
so I'll take the first issue first.
1:11
Judge Chen
Can you speak first about the waiver of the 101 issue?
1:15
Appellant Attorney (Lionel M. Lavenue)
Yes, Your Honor.
1:16
We believe that the waiver issue has now been resolved by the SRI decision.
1:21
In SRI, the court found that if there is a—
1:24
Judge Chen
Well, which circuit law applies here, Federal Circuit Law or Fifth Circuit Law?
1:29
Appellant Attorney (Lionel M. Lavenue)
We believe that it's the Federal Circuit Law that applies
1:31
and that that was the law that was applied in SRI.
1:34
From our reading of footnote number five in SRI,
1:37
the court cited to three circuits for the review of a Third Circuit case,
1:42
and they cited first to the Federal Circuit case law.
1:45
In U.S.A.,
1:46
second to the Seventh Circuit case law and third to the Tenth Circuit case law.
1:51
There was no citation to the Third Circuit in that ruling,
1:54
which was a ruling on a case from the Third Circuit.
1:57
So it appears to us that—
1:58
Judge Chen
Do you think it was a contested issue in SRI as to which circuit law applies
2:05
on this kind of procedural question of, you know,
2:09
what does it take to preserve an argument in a denial of a summary judgment?
2:15
Appellant Attorney (Lionel M. Lavenue)
It certainly does not appear that—
2:16
It was the direct issue that it is in this case,
2:19
where it is disputed as to which circuit law applies,
2:22
the appellee claiming that it's the Fifth Circuit.
2:24
But we believe that because we're talking about the issue of a review of summary judgment on 101,
2:30
that that is an issue particular to Federal Circuit law.
2:34
That's not an issue that the Fifth Circuit would ever consider because it's Section 101.
2:38
Whether or not you have to file a J-MOL on Section 101
2:42
when you had a previous motion for summary judgment on 101
2:45
that had a final judgment on 101,
2:46
we believe that that would bring it within the Federal Circuit case law
2:50
of Aero Products and Accenture,
2:53
both of which say that it is an issue that is particular to the Federal Circuit
2:57
that Federal Circuit law would apply.
2:59
However, even if we are wrong and we're misreading SRI,
3:03
we believe that we would still win even applying Fifth Circuit law.
3:07
Fifth Circuit law, there is, of course, the failed decision,
3:10
which was brought to light during the briefing,
3:12
but the failed decision did not overrule Hudson and Winn,
3:16
and both of those—
3:16
those Fifth Circuit cases support our position
3:19
that if you have a ruling on a motion for summary judgment
3:22
and that there's a final ruling on that,
3:25
that you do not have to bring that up again on J-MOL
3:29
in order to have a decision reviewed by the appellate proceeding.
3:33
So either under the Federal Circuit case law
3:35
or under the Fifth Circuit case law,
3:37
we would submit that we are fine under the waiver issue,
3:40
but specifically under SRI that we are—
3:43
Judge Chen
Those other Fifth Circuit cases,
3:45
the ones that are—
3:46
the ones that are not failed,
3:49
the issue that got denied summary judgment,
3:54
was that an issue that was different
3:57
than the issue that went to jury—the jury?
3:59
For example, in Feld,
4:01
I think it was a contract question
4:04
that was resolved—
4:06
that was addressed at summary judgment
4:08
and then continued on and went to the jury.
4:11
Here, we have a 101 issue,
4:14
but then we have all these other issues
4:16
that actually—
4:17
went to the jury that are not 101,
4:19
completely separate and distinct from 101—
4:22
infringement, willfulness, damages, et cetera.
4:25
So what I'm trying to figure out
4:27
about these Fifth Circuit cases
4:28
that you're pointing to that are not failed,
4:30
were they more like our fact pattern here,
4:34
where it was a separate and distinct issue
4:36
that was addressed at summary judgment,
4:38
apart from all the issues that were addressed
4:42
and resolved at the jury trial?
4:44
Appellant Attorney (Lionel M. Lavenue)
We do read at least Hudson that way, Your Honor.
4:48
But also the other key part is that in Hudson,
4:50
since it wasn't a patent issue,
4:52
then that also makes it completely different
4:54
from anything that we would find in the Fifth Circuit
4:56
because they simply have not addressed 101.
4:59
So we would find that Hudson completely supports this.
5:03
Wynne is not directly on point,
5:05
but it does show that there was no waiver applied,
5:08
but it doesn't go into the substance that Hudson does.
5:10
So we believe that Hudson does provide that outlet to Feld
5:14
that we're looking for if the Fifth Circuit law does apply.
5:17
But if—
5:18
If we do survive the waiver issue, Your Honor, then we would get to the substance of 101,
5:22
and we believe that there's basically three reasons why we would find these patent claims to be eligible.
5:28
There's only two claims at issue, and the two claims first is that there was a nose-of-wax issue,
5:34
and basically in the 101 argument that was made by Erickson to the court
5:40
in trying to overcome the 101 ruling on motion for summary judgment,
5:44
there was an argument that these claims were to be construed narrowly,
5:47
that there was a middleware, there was a layered architecture,
5:51
and other specific items that came from the IPR proceedings,
5:55
and they were saying, so you should, you know, Your Honor, Judge Payne,
5:58
you should consider these very narrowly.
6:00
However, when the claims were taken to the jury, the nose-of-wax was completely changed
6:05
in that the same arguments were widened out, and the jury was told,
6:10
well, no, you don't have to necessarily find middleware.
6:13
It's in the title of the patent. It's not in the claims.
6:15
Judge Prost
Do you understand the difficulty that we have?
6:17
Do you understand the difficulty that we have on appellate review or something like that?
6:19
I mean, the district court decided the 101 issue as a threshold issue properly,
6:25
and no one's challenging that, and he relied, rightly or wrongly,
6:30
but even let's assume it's right, on the IPR.
6:34
There's not much analysis in his 101 opinion, but one of the things he seems to have relied on heavily
6:40
is the PTO's, what he calls the PTAB's, highly technical characterization of the claims,
6:48
so is it your view that he was just wrong to rely on that?
6:53
It's kind of harder for me to absorb, well, he may have been right,
6:56
but then it turned out at trial that the issues kind of changed,
7:01
and that's just really hard for me to sort of absorb.
7:05
But that seems to be your argument, right?
7:07
That he may have been, are you conceding that he may have been right if they stopped there,
7:13
but he's not right because during the trial here,
7:17
and what they presented to the jury, they changed their theory from what it had been before the PTAB?
7:22
Appellant Attorney (Lionel M. Lavenue)
We're not saying that the judge was right,
7:24
we're just pointing out the inconsistency of the arguments by Erickson.
7:27
As far as the judge's ruling, the judge, we believe, got it wrong in two ways.
7:31
One, the judge kept repeating the fact that the patent office, the PTO,
7:37
had already reviewed the claims and found them to be patentable,
7:41
but of course 101 was not subject to review at the patent office,
7:45
so that's one of the things that we're not sure,
7:47
that the court fully understood.
7:48
Secondly, the court also talked about the technical words that were in the claim,
7:53
and he said, well there's so many technical words, it must be eligible.
7:57
Well, that goes against smart systems and all the case law of this court,
8:01
which is technical jargon, technical words alone cannot make the claim eligible.
8:06
You have to go beyond what the technical words are.
8:09
And then when we look at the inconsistency in how the claims were interpreted by Erickson
8:13
between the 101 motion and the jury,
8:17
that confirms what we're explaining, which is these technical words,
8:21
when you look at them all, they fall together into one thing, and that is access.
8:26
There's a picture in our brief of having a doorway, you come up to the doorway,
8:29
you let the door open, you have the door closed.
8:32
There are basically four main elements in the claims.
8:35
There's an access controller, an interception module,
8:38
a decision entity, and a security access manager.
8:41
The claims themselves say that two of these four elements are the same,
8:45
that is, the security manager.
8:47
The security access manager and the decision entity.
8:49
And this is explained in Appendix 134, which was before the jury.
8:53
However, also interestingly, the expert, when explaining the claims to the jury,
8:58
said that the interception module and the decision entity
9:01
could also be combined and be the same, and that's Appendix 1231.
9:06
So when we take all of these elements and collapse them together,
9:09
really we have nothing more than an access controller allowing access to information,
9:15
the door opening or closing.
9:17
And this court in Smart Systems, Accenture, SmartFish, and Prism,
9:21
all of these cases have explained that merely having access to data,
9:25
the door opening or closing, that is not enough.
9:28
We have to have something more.
9:30
Now, my friends from Ericsson, they point to Enfish, Atrix, Data Engine,
9:35
and the new case, Ancora.
9:37
All of these cases do say that you can have claims that are patent eligible,
9:41
but they have to have something more than just this access control.
9:44
They have to have this concept.
9:45
They have to have, for example, a data structure of Enfish, something tangible.
9:49
And that's why under either ALICE 1 or ALICE 2, these claims would not be eligible.
9:55
Judge Prost
Can I just turn you, because the clock is running to the damages question.
9:59
So the play here was that the district court originally thought there was a problem,
10:05
and then he reconsidered it and went back.
10:08
And I looked briefly at the briefing with respect to those different scenarios.
10:14
And it wasn't clear to me from the briefing why he changed his position.
10:19
So do you have anything that's in the record that would enlighten that?
10:22
Appellant Attorney (Lionel M. Lavenue)
The two things that the judge did that we believe led to the reversal of the decision to reconsider are twofold.
10:32
And frankly, we believe that they're based upon a misreading of power integrations and laser dynamics.
10:36
Because in power integrations and laser dynamics, as the court knows,
10:40
it makes clear that you have to have an apportionment.
10:43
And that was one of the main arguments that was in the briefing on the motion for a new trial,
10:48
which the judge originally granted.
10:50
He then reconsidered and decided against that for two reasons.
10:54
One reason is he said that TCL had not focused on what other patented features there were of record to show apportionment.
11:03
Well, TCL didn't need to show that there were other patented features.
11:07
We only needed to show that there were other features to the phone.
11:10
So we have a phone, which even Erickson's expert admits,
11:13
has thousands of features.
11:15
And Erickson's expert also admitted that there are certain must-have features.
11:19
For example, a microphone, camera, and other things that he noted, Bluetooth, so forth.
11:24
So of these thousands of features, there was no apportionment.
11:27
So Judge Payne, he incorrectly understood that it was not other features but other patented features.
11:34
And he said, well, because TCL had not shown there were other patented features, then he changed his mind.
11:39
The second thing that he pointed to was royalty stacking.
11:42
And again, we believe it was a confusion on the part of the court in the Eastern District of Texas,
11:47
where he said, well, because you could have more than one patented feature to be licensed,
11:53
then you could have royalty stacking, and there's not enough evidence on that.
11:56
That wasn't our argument.
11:57
Our argument, there was a failure of apportionment, not that there was an issue with royalty stacking.
12:02
So those were the two errors that he, the two erroneous approaches that he used in reversing his decision to have a new trial.
12:10
But we believe
12:11
that there are basically two main reasons why the damages are incorrect.
12:16
I can't recall.
12:17
Judge Chen
Did Judge Payne at all point to the price sensitivity and willingness to pay theories that were represented in that one chart?
12:29
Not at all, Your Honor.
12:31
Appellant Attorney (Lionel M. Lavenue)
No?
12:32
No, Your Honor.
12:33
The first time that the alternative two theories were brought up was in the motion for reconsideration on the new trial loan damages.
12:41
Okay.
12:42
And under the Progema case written by Your Honor.
12:46
If you don't bring an argument in the jury trial, and they didn't even bring it until after the reconsideration,
12:54
you cannot bring it late.
12:55
And so basically what we believe happened is we brought our J-MAL on the damages issue.
13:00
They saw they had an issue, which was on their primary theory, which is willingness to buy,
13:04
and then they tried to bootstrap these additional arguments, price sensitivity and willingness to buy, which were never presented.
13:11
Now, my friend from Erickson may get up here and say, well, the jury did see our survey.
13:16
And on our survey, the words, these words, price sensitivity and willingness to buy, were on the survey.
13:22
Problem is, is under the Whitserv case, this court has made clear that the jury has to have guideposts.
13:29
It has to have something to say, aha, there's the alternative theory.
13:32
Well, there was no argument, no presentation, nothing that was presented to the judge or the jury until the motion for reconsideration
13:39
on these alternative theories.
13:41
Judge Newman
Now I'm confused.
13:42
You say the jury has to have guideposts, but it's not your responsibility to bring forward a guidepost
13:50
that would affect the findings in your favor?
13:55
Appellant Attorney (Lionel M. Lavenue)
Well, since we only had one argument that was presented, it was the willingness to buy theory,
14:01
then we only responded to that theory.
14:03
The other two theories were never argued, asserted.
14:06
They could have solved the problem by saying, ladies and gentlemen,
14:08
or they could have asked,
14:09
Judge Newman
You're saying it's their responsibility to raise an argument that favors you?
14:15
Appellant Attorney (Lionel M. Lavenue)
It's their responsibility to raise their argument.
14:17
These were their three alleged arguments.
14:20
They picked one, and they did not use the other two.
14:23
So it's only our responsibility, because they have the burden of proof, to respond to their arguments.
14:28
Judge Newman
So you remain silent, and what's the jury supposed to think?
14:32
Appellant Attorney (Lionel M. Lavenue)
Well, the jury only had one argument presented, and that's the argument that we responded to.
14:36
They did not argue the other two.
14:38
Judge Newman
Yes, what's the jury supposed to think?
14:40
Therefore, they decide, they take a position that you're now telling us we need to rethink and reconsider?
14:49
Appellant Attorney (Lionel M. Lavenue)
Well, we don't think that the jury would have anything to think,
14:53
because the jury would not have even considered these alternative theories,
14:56
because they were never presented.
14:57
So we don't think the jury would have had that.
14:59
They're going to argue it was on a piece of paper, but that piece of paper was never presented in any way.
15:04
In fact, when the jury saw the highlighted survey,
15:07
which is a one-page survey,
15:09
they focused in on only one portion of the survey,
15:12
and that's the willingness to buy.
15:13
There's a chart in Erickson's brief...
15:15
Judge Newman
This is an adversary system.
15:17
Appellant Attorney (Lionel M. Lavenue)
I'm sorry?
15:17
Judge Newman
This is an adversary system.
15:20
There are, perhaps, arguments on your side,
15:25
but if they weren't presented to the jury,
15:29
it's not in keeping with the jury system
15:33
to ask us to rethink
15:36
what should have been before the jury.
15:38
Appellant Attorney (Lionel M. Lavenue)
Well, I'm certainly not asking that you rethink what was before the jury.
15:41
I'm only asking you to consider only what was before the jury.
15:44
And the only thing before the jury was one theory,
15:47
and that's the willingness to buy theory.
15:49
And under Projima and Witzer,
15:51
that would not be something that the jury had considered,
15:53
because they were not told about it.
15:55
They can't consider it if they haven't been told.
15:57
Judge Newman
But that theory supports the verdict.
16:00
Appellant Attorney (Lionel M. Lavenue)
That theory still does not support the verdict.
16:02
Thank you, Your Honor, for asking about that,
16:04
because that theory,
16:04
the alternative two theories,
16:06
are still based upon the erroneous survey,
16:08
which did not have appropriate apportionment.
16:10
That's a very important fact.
16:12
The survey is erroneous under all three theories,
16:15
not just the first theory.
16:17
So all the arguments in our brief
16:18
as to why the survey is incorrect for failing to apportion,
16:21
those arguments are applicable to all three.
16:24
So the same defect infects the entire survey.
16:27
Judge Prost
Thank you.
16:28
Appellee Attorney (Theodore Stevenson Iii)
Good morning, and may it please the Court.
16:39
Turning first to damages.
16:43
Erickson presented as the crux of its damages model,
16:46
its damages theory,
16:47
a hypothetical negotiation.
16:50
An economist testified that in the hypothetical negotiation
16:53
between Erickson and TCL,
16:55
there would be a bargaining range,
16:57
the top of which would be $3.42,
17:00
and the bottom of which would be something above zero.
17:03
Judge Prost
Yeah, but the whole basis for this is this 28%.
17:05
So, right?
17:07
I mean, the 28% is pivotal?
17:09
Judge Chen
No.
17:10
Judge Prost
No?
17:11
Appellee Attorney (Theodore Stevenson Iii)
No, it's not.
17:12
Judge Prost
Okay.
17:12
Judge Chen
That's the only testimony I saw during trial, though.
17:16
Appellee Attorney (Theodore Stevenson Iii)
The...
17:16
Is that fair to say?
17:18
That was the only testimony during trial, yes, but...
17:21
Judge Chen
Did anybody ever say $3.52 of trial?
17:25
Appellee Attorney (Theodore Stevenson Iii)
No.
17:27
But there was a document that was admitted into evidence
17:30
by agreement with the parties,
17:31
pre-admitted before the trial.
17:33
It is in the evidentiary record,
17:35
PX 109, page 4.
17:38
It's at page 52, 61 of the appendix.
17:42
That document was relied upon by Erickson's expert,
17:46
which is in the prior page of the appendix, 52, 56.
17:51
The expert calculated the top end of the bargaining range
17:55
in the hypothetical negotiation
17:57
based on both willingness to pay
17:59
and willingness to buy survey inputs.
18:02
He used both of those.
18:04
And the document that provides the predicate for that
18:07
was a pre-admitted document.
18:09
It is entitled to equal dignity as testimony
18:12
when a reviewing court is looking at sufficiency of the evidence.
18:15
We can't ignore an admitted trial exhibit
18:18
that was shown to the jury.
18:21
Judge Chen
If I was to accept the idea
18:23
that willingness to buy, price sensitivity,
18:27
and willingness to pay
18:28
are three separate theories,
18:30
three separate models for the damages,
18:34
then I don't see how you get to now utilize
18:40
those two other theories
18:42
that were never actually presented to the jury
18:45
as a justification for what may well be
18:49
a flawed single theory that was presented to the jury.
18:53
Appellee Attorney (Theodore Stevenson Iii)
They aren't alternative theories.
18:55
They're factual inputs.
18:56
The damages model that was used
18:59
was the hypothetical negotiation.
19:01
What would TCL have been willing to pay?
19:04
Because what is the value of this feature to TCL?
19:07
Judge Chen
Why is it that the actual profits
19:10
that TCL made
19:13
are used as the inputs
19:14
for what the hypothetical negotiation
19:17
would have been ex ante?
19:19
That confused me
19:21
because I thought in cases like AquaShield,
19:25
we explained pretty clearly
19:27
that you're not supposed to work
19:30
ex post in that way,
19:32
and just immediately assume
19:35
that ex ante the defendants
19:38
would have made the very profits
19:40
that they actually made.
19:42
Appellee Attorney (Theodore Stevenson Iii)
You don't know that in the first instance.
19:44
Right.
19:45
Because this is the real world
19:46
of the hypothetical negotiation.
19:48
In the hypothetical negotiation,
19:50
TCL shows up to get a license to this patent.
19:53
It was uncontroverted in that circumstance,
19:56
number one,
19:56
that all its major competitors
19:59
in the United States,
20:00
Apple, Samsung, LG, and HTC,
20:02
have licensed this patent from Ericsson,
20:04
and they have this feature in their product.
20:06
So that TCL doesn't have the feature,
20:08
it's the outlier.
20:10
Number two,
20:11
TCL had no ability,
20:12
and this is also in the record,
20:14
to modify the Android code.
20:17
It didn't have that capability.
20:19
And so third,
20:20
TCL has to get a license,
20:22
and the reality is of the survey
20:25
that if they don't get a license,
20:27
and they have to not use this feature,
20:30
which allows individual
20:32
feature by feature permissions
20:34
to be granted or denied to apps,
20:37
they don't have the same feature
20:38
everyone else has,
20:39
they're going to lose 28% of their service.
20:41
So when TCL goes to the hypothetical negotiation,
20:47
that's what they're trying to bargain to avoid.
20:50
There's an alternative ground, too, though,
20:53
and that's the willingness to pay.
20:55
Under the willingness to pay,
20:56
which is $3.52,
20:58
a dime more,
20:59
TCL realizes that their consumers
21:01
will value this feature in their phones
21:04
at $3.52.
21:06
So any outcome in the bargain
21:09
less than that
21:10
is an optimal,
21:14
utility-improving solution for TCL.
21:17
And so we're going back
21:18
to the hypothetical negotiation.
21:22
And in the context of that,
21:23
we've got to look at the real-world situation
21:26
that TCL was in
21:27
and why it needed a license.
21:30
Judge Prost
Why don't we turn to the one-on-one issue?
21:32
Appellee Attorney (Theodore Stevenson Iii)
Yes, Your Honor.
21:37
Judge Prost
Leaving aside for a moment
21:38
the waiver question,
21:39
if this issue is properly preserved,
21:43
why doesn't this alive exist?
21:45
Because this is a patent
21:59
Appellee Attorney (Theodore Stevenson Iii)
that creates an architecture
22:01
or a structure within a computer
22:02
to provide a better result,
22:05
to improve the functionality of that computer.
22:07
So in other words,
22:09
this allows a user
22:11
to tell a social media app,
22:14
I will give access to my camera,
22:17
and I will give access to my phone.
22:17
Unknown
I will give access to my computer
22:17
Appellee Attorney (Theodore Stevenson Iii)
but not to my location or my contacts
22:20
on an app-by-app, function-by-function basis,
22:23
which did not previously exist.
22:26
To accomplish that,
22:29
the patent sets up a tiered
22:32
or a layered architecture.
22:34
And there's three...
22:36
Judge Prost
Let me ask you about that
22:37
because I'd just like to talk about
22:39
what is actually claimed.
22:41
And it seems to me you relied in your brief
22:44
on a great deal of stuff
22:45
that wasn't actually claimed.
22:47
Because the claim, as I understand it,
22:49
doesn't include a discussion
22:51
of vertical or horizontal stacks
22:53
or transport protocols
22:55
or all of the stuff
22:57
that you're relying on
22:59
to justify the 101 analysis.
23:02
Appellee Attorney (Theodore Stevenson Iii)
Well, turning to claim one,
23:04
the first element of the claim
23:06
sets up an application domain
23:09
that is separate
23:10
from the software services component.
23:11
And, Your Honor, in answering your question,
23:14
I'm going to first look at the claim language
23:16
and then I'm going to turn
23:16
to the specification for context.
23:18
Sticking just to the claim language for now,
23:20
we have an application domain
23:23
that is separate
23:24
from the software services component.
23:26
So you have an application...
23:27
The three layers are the application domain,
23:30
the interception module,
23:32
or, excuse me, the interface module,
23:35
and then, finally, the software services.
23:37
The application or the apps,
23:39
we can think of it that way.
23:40
The software services are the things
23:43
like the camera, the Wi-Fi functionality,
23:45
the other things on your phone
23:46
that the app would like to access.
23:48
The first element provides
23:50
that the interface component, quote,
23:52
is controlling access by apps
23:56
to the software services domain.
23:58
In other words, it sits in between.
23:59
That's how it controls access.
24:01
Then, going further down,
24:03
the interception module in the third element,
24:05
that is claimed that it intercepts requests
24:09
for access from the apps,
24:11
then checks the security module,
24:12
which holds permissions the user is granted.
24:15
And then the final element,
24:17
it says only if the request is granted
24:20
is the app granted access to the software services,
24:24
and that confirms that there is this intervening layer.
24:27
Now, turning to the specification for context,
24:30
I'd like to point your honors
24:32
to five or six portions of the specification
24:36
that I think make clear the layering
24:39
and also the separation of these different functions.
24:43
Column four...
24:44
Judge Chen
I mean, to me, I'm sorry.
24:45
I mean, it sounds a little bit like a...
24:47
security guard in the lobby of an office building, right?
24:52
And then a person comes in and wants access
24:54
to a certain floor or business or person that works there,
24:58
and then the security guard's gonna check the list.
25:02
Has this person been approved to come upstairs?
25:07
Yes or no?
25:08
If yes, okay.
25:09
You can walk through and head to the elevator.
25:11
If not, then you don't get to go in,
25:14
and so you don't get access.
25:16
And I know that's a very simple, crude analogy,
25:21
but to me, that feels akin to what you just described
25:25
in terms of certain applications
25:27
wanting to access certain native software
25:32
on a cell phone or...
25:34
not even a cell phone, just any system.
25:37
Appellee Attorney (Theodore Stevenson Iii)
But it's more than that,
25:38
because to be able to accomplish the functionality,
25:41
and this is an apparatus claim,
25:43
you have to have the architecture in place,
25:45
which is the separation of the components.
25:47
That didn't exist.
25:49
It's when you have the separation
25:50
and then you create the interface pathway
25:54
between the apps and the software services
25:57
that you have created an architecture
26:00
that then allows you to put in place
26:02
these rules and these procedures.
26:04
Judge Chen
I mean, you're not talking about
26:07
some kind of physical barrier, are you?
26:10
Appellee Attorney (Theodore Stevenson Iii)
It is a barrier.
26:11
It is a barrier that exists in the code,
26:14
and the specification confirms that.
26:18
Column four, lines 37 to 38,
26:21
states the apps are isolated
26:22
from the rest of the components
26:23
and must access those by the interface.
26:27
The specification discloses figure three
26:30
as showing the actual layering,
26:33
and it says in addition to a plurality
26:36
of horizontally portioned functional software units,
26:40
there are also vertically partitioned software units as well.
26:46
So it has a vertical partition,
26:48
which is the software services,
26:51
the various functions of the phone,
26:52
can't talk to each other,
26:54
but there's also a horizontal partitioning,
26:57
which means that a higher level layer,
26:59
like the apps,
27:00
cannot communicate or use the software services
27:04
unless they're granted permission through the interface.
27:06
So that can happen,
27:07
not just apps to software services,
27:10
but also individual services can be singled out.
27:13
That's the architecture that was created.
27:15
This horizontal and vertical partitioning
27:19
that's described at column five,
27:21
lines 23 to 46,
27:23
and also in column five,
27:25
lines 58 to 65,
27:26
and in column seven,
27:27
lines one through 25,
27:29
that allows then the functionality to occur.
27:33
Judge Chen
And that's what I did not understand,
27:36
the discussion in column five,
27:37
you know, with the layers and stacks.
27:41
Yes.
27:42
Why does that make a difference to this claim?
27:44
Appellee Attorney (Theodore Stevenson Iii)
Because we've,
27:45
it's a computer architecture,
27:46
like the court has approved in Enfish
27:49
and the other cases that we've cited.
27:52
Judge Chen
Why does that make the accessing
27:56
of the native software easier
28:00
or more efficient or,
28:03
I don't know,
28:04
higher performing,
28:05
more accurate?
28:07
It didn't exactly pop when I read it.
28:10
Okay.
28:10
Appellee Attorney (Theodore Stevenson Iii)
And I apologize if we didn't communicate it well.
28:13
The,
28:15
if you had, for instance,
28:17
a situation where,
28:18
like in the prior art,
28:20
apps would run in a sandbox.
28:22
They couldn't use anything in the,
28:24
on the phone resources.
28:26
And then you were to say,
28:28
well, we'll get rid of the sandbox.
28:29
Then it gets to use everything.
28:30
The only way you can accomplish
28:33
app by app
28:35
and service by service access, right?
28:39
In other words,
28:40
the ability to allow a social media app
28:42
to access camera,
28:44
but not location or,
28:46
you know,
28:47
microphone or other things.
28:50
The only way you can do that
28:51
is to have this partitioning.
28:53
And the app can only access
28:57
a software services component
28:58
if it's allowed
28:59
and it's that specific
29:00
software services component.
29:02
That architecture,
29:03
that separation,
29:04
did not exist in the prior art.
29:06
And the rules for the separation
29:09
are contained in column five
29:10
and column six
29:11
for how that is accomplished.
29:14
Judge Chen
Where is that in the claim?
29:15
Which words should I look at
29:18
and see if this,
29:21
what I know in your briefing
29:23
you referred to as fine granularity.
29:25
Appellee Attorney (Theodore Stevenson Iii)
Right.
29:25
And keeping in mind,
29:27
the claims are read
29:28
in the context of the specification.
29:30
You can find it in the first element,
29:33
a software services component
29:34
and an interface component,
29:37
which are set out separately.
29:38
The last element says
29:40
wherein the requesting application
29:42
domain software is granted access
29:44
to the software services component
29:45
via at least one interface
29:48
if the request is granted.
29:51
That's the control part of it.
29:53
But it also has an access controller
29:55
for controlling access
29:56
to the software services component.
29:58
And I think controlling access
29:59
in the context of the specification
30:01
means apps don't get to access this
30:05
unless the request is granted.
30:06
That's the wall that is set up.
30:08
By requesting application domain software
30:10
via the at least one interface.
30:13
So the structure that's set up
30:14
is apps are separate from software services.
30:18
And software services are the functions
30:19
of the phone that an app wants to use.
30:21
They can't access them.
30:23
And they can only access them
30:26
through the interface
30:27
if permission is granted.
30:29
That's a software architectural structure
30:31
that is being set up in this patent.
30:33
And I think that is far more than abstract.
30:36
That takes it now to the level
30:38
of a new result.
30:41
The result being,
30:42
and the patent also talks about cost,
30:44
you know,
30:44
and other savings
30:45
and efficiency of programming in it.
30:47
But in addition to that,
30:48
it allows users to have a new function,
30:51
which is app by app,
30:54
service by service,
30:55
ability to grant and deny permissions
30:58
in real time
30:59
when the app is looking to invoke
31:05
the services of the mobile phone.
31:08
Judge Chen
So it's the phrase
31:09
for controlling access
31:10
to the software services component
31:12
that I should be looking at
31:14
and then when I look at that,
31:16
I should think about
31:18
that software architecture
31:19
that's being described in column five.
31:22
Appellee Attorney (Theodore Stevenson Iii)
Yes.
31:22
And the access controller is set up
31:24
for having an interception module.
31:26
So the concept of interception is there,
31:28
which means...
31:30
Judge Chen
It means receiving a request to access.
31:32
Appellee Attorney (Theodore Stevenson Iii)
Right.
31:33
Before,
31:34
interception means before
31:36
the software services can be invoked.
31:39
So it stands in the way,
31:40
interception.
31:42
And a decisioning entity,
31:44
for determining if the request should be granted.
31:47
And then the last element,
31:48
which is access is granted
31:50
if the request passes
31:53
or if the request is granted.
31:55
So I think that is what is set up.
31:58
It's both rules,
32:00
but it's more than that.
32:01
It's the actual partitioning
32:03
or the layering of the software.
32:05
And the layering is discussed in detail
32:08
through columns five, six, and seven
32:11
of the patent.
32:12
It's very clear that,
32:15
the layering and the partitioning
32:16
was extremely important
32:18
in how the software was set up.
32:20
Judge Chen
Okay, thank you.
32:22
Appellee Attorney (Theodore Stevenson Iii)
Thank you, Your Honors.
32:28
Judge Prost
We'll restore two minutes of your time.
32:31
Appellant Attorney (Lionel M. Lavenue)
Three quick points, Your Honor.
32:33
I think that,
32:34
as you saw,
32:35
my friend from Erickson
32:36
was struggling to explain
32:37
why the claims would be eligible.
32:39
Every time that the court asked
32:41
about particular elements of the claims,
32:43
what did my friend do?
32:44
He went to the specification.
32:46
There's simply nothing in the claims
32:48
that makes this eligible.
32:50
In fact, when he was referring
32:52
to the separate architecture,
32:54
he again had to go to the specification
32:56
to explain how they were different.
32:58
But as I noted,
32:59
at trial, before the jury,
33:01
the expert collapsed all of these elements
33:03
into nothing more than a gateway.
33:05
So that's the first point on eligibility.
33:07
On damages,
33:08
the point I would make is,
33:09
whether or not any of the three analyses
33:12
are considered,
33:13
we submit only the first to be considered,
33:15
but whether or not all of them are,
33:17
how can a survey
33:19
that results in 28% of the value
33:22
of a mobile phone
33:23
be a correct apportionment?
33:25
What we had here is we had,
33:27
TCL makes mobile phones,
33:29
but we don't have the operating system.
33:30
We get the operating system from Google.
33:32
And that Google operating system
33:34
has one feature on it
33:35
that is the feature of limited accessibility
33:37
for applications.
33:39
That's the claim feature.
33:40
How can, of the thousands of things on the phone,
33:43
including the ability to make a call
33:45
and having a photo and everything else,
33:47
28% of the value
33:49
of that be appropriately apportioned?
33:50
That would be impossible.
33:52
And the record shows that.
33:54
Third point, Your Honors,
33:55
is on willfulness.
33:56
On willfulness, there is...
33:58
Judge Prost
Well, wait a minute.
33:58
You didn't argue willfulness
34:00
the first time around,
34:01
so your friend didn't have
34:02
an opportunity to respond.
34:03
Fair point, Your Honor.
34:04
Appellant Attorney (Lionel M. Lavenue)
Thank you.
34:05
I have nothing further
34:06
unless there's any questions.
34:07
Judge Chen
What do you want to say
34:08
about the other side's position
34:12
that the claimed invention
34:14
is talking about
34:15
a very specific software architecture,
34:18
and through that specific software architecture,
34:22
you can now have,
34:26
in a granular way,
34:30
approvals or disapprovals
34:31
of access to individual software units
34:36
inside the native code?
34:40
Appellant Attorney (Lionel M. Lavenue)
So none of that is supported in the claim.
34:43
Your Honor, I ask whether or not
34:44
that's in the claim,
34:45
and I believe my friend from Ericsson conceded it's not.
34:48
Secondly...
34:48
Judge Chen
Well, I think,
34:49
he didn't concede that.
34:51
I think he's making the argument that,
34:53
yes, when you understand this claim
34:56
in light of the specification,
34:57
now all of a sudden you look at
34:59
a rather intricate software architecture
35:04
as described in column five.
35:06
So what I'm trying to figure out is,
35:09
does that make a difference or not?
35:11
Appellant Attorney (Lionel M. Lavenue)
It does not make a difference
35:13
that helps Ericsson.
35:14
The one case that he cited before you
35:16
was the Enfish case,
35:17
and in the Enfish case,
35:18
there was a specific self-referential table,
35:21
a specific type of data structure
35:24
that was claimed.
35:25
That type of specific specificity
35:29
is simply not in these claims.
35:31
And even if,
35:32
I think what my friend from Ericsson was trying to do
35:34
is he was trying to say,
35:35
well, even if I fail step one,
35:37
and it is an abstract idea,
35:39
somehow I may get step two,
35:40
but he also can point to nothing
35:42
that's a tangible or physical result
35:45
that's claimed,
35:46
that comes from his claim,
35:47
that would bring it into step two as well.
35:49
So there's really nothing of record
35:51
that supports the eligibility
35:54
on either one of those,
35:55
Alice one or Alice two.
35:57
Judge Prost
Thank you.
35:57
We thank both science and the case
35:59
for sitting here.