Vringo Reply Appeal Brief Google

Nos. 2013-1307, -1313

IN THE United States Court of Appeals

FOR THE FEDERAL CIRCUIT

I/P ENGINE, INC.,

Plaintiff-Cross Appellant,

v.

AOL INC., GOOGLE INC., IAC SEARCH & MEDIA, INC., GANNETT COMPANY, INC., and TARGET CORPORATION,

Defendant-Appellants.

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN

DISTRICT OF VIRGINIA IN CASE NO. 11-CV-512, JUDGE RAYMOND A. JACKSON.

REPLY BRIEF OF PLAINTIFF-CROSS APPELLANT I/P ENGINE, INC.

JEFFREY K. SHERWOOD FRANK C. CIMINO, JR. KENNETH W. BROTHERS DAWN RUDENKO ALBERT CHARLES J. MONTERIO, JR. JONATHAN L. FALKLER DICKSTEIN SHAPIRO LLP 1825 Eye Street NW Washington, DC 20006 (202) 420-2200

JOSEPH R. RE Counsel of Record STEPHEN W. LARSON KNOBBE, MARTENS, OLSON & BEAR, LLP2040 Main Street, 14th Floor Irvine, CA 92614 (949) 760-0404 Attorneys for Plaintiff-Cross Appellant

January 2, 2014

Case: 13-1307 CASE PARTICIPANTS ONLY Document: 75 Page: 1 Filed: 01/02/2014Case: 13-1307 Document: 78 Page: 1 Filed: 01/02/2014

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CERTIFICATE OF INTEREST

Counsel for Plaintiff-Cross Appellant I/P Engine, Inc. certifies the

following:

1. The full name of every party being represented by me is:

I/P Engine, Inc.

2. The real party in interest represented by me is:

Vringo, Inc.

3. All parent corporations and any publicly held companies that own 10 percent

or more of the stock of the parties represented by me are as follows:

Innovate/Protect, Inc., which is a wholly owned subsidiary of Vringo, Inc.

4. The names of all law firms and the partners or associates that appeared for

the party now represented by me in the trial court or agency or are expected to

appear in this Court are:

Joseph R. Re, Stephen W. Larson, KNOBBE, MARTENS, OLSON & BEAR, LLP; Donald C. Schultz, W. Ryan Snow, CRENSHAW, WARE & MARTIN PLC; Jeffrey K. Sherwood, Frank C. Cimino, Jr., Kenneth W. Brothers, Dawn Rudenko Albert, Charles J. Monterio, Jr., James Ryerson, Jonathan Falkler, Katie Scott, Krista Carter, Leslie Jacobs, Jr., DICKSTEIN SHAPIRO LLP; Richard H. Ottinger, Dustin M. Paul, VANDEVENTER BLACK LLP.

Dated: January 2, 2014 By: /s/ Joseph R. Re Joseph R. Re Attorney for Plaintiff-Cross Appellant

I/P ENGINE, INC.


TABLE OF CONTENTS

Page No.

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I. INTRODUCTION ........................................................................................... 1

II. ARGUMENT ................................................................................................... 3

A. The District Courts Laches Ruling Was Unsupported And Legally Erroneous ......................................................................... 3

1. Defendants Cite No Evidence That The Blog Post Was Pervasive, Open, And Notorious ........................................ 3

2. Comparisons Between The Content Of The Blog Post And I/P Engines Infringement Allegations Do Not Establish Constructive Knowledge ................................ 7

3. The District Court Erred In Implementing The Laches Presumption .................................................................. 11

4. Even Without The Opportunity To Present Rebuttal Evidence, I/P Engine Burst The Bubble Of Any Laches Presumption ..................................................... 14

B. The District Court Erred In Denying I/P Engines Motion For A New Trial On Past Damages ..................................................... 17

III. CONCLUSION .............................................................................................. 19


TABLE OF AUTHORITIES

Page No(s).

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A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc) ..................................................... 14

Allen Archery, Inc. v. Browning Mfg. Co., 898 F.2d 787 (Fed. Cir. 1990) ....................................................................... 19

Hall v. Aqua Queen Mfg., 93 F.3d 1548 (Fed. Cir. 1996) ................................................................. 4, 5, 6

Intirtool, Ltd. v. Texar Corp., 369 F.3d 1289 (Fed. Cir. 2004) ....................................................................... 3

Mitutoyo Corp. v. Cent. Purchasing, LLC, 499 F.3d 1284 (Fed. Cir. 2007) ..................................................................... 19

Potter Instr. Co. v. Storage Tech. Corp., No. 79-579, 1980 WL 30330 (E.D. Va. Mar. 25, 1980) ............................... 15

Pullman-Standard v. Swint, 456 U.S. 273 (1982) ...................................................................................... 17

Ultimax Cement Mfg. Corp. v. CTS Cement Mfg. Corp., 587 F.3d 1339 (Fed. Cir. 2009) ....................................................................... 6

Wanlass v. Fedders Corp., 145 F.3d 1461 (Fed. Cir. 1998) (Wanlass II) .......................................... 4, 5

Wanlass v. General Elec. Co., 148 F.3d 1334 (Fed. Cir. 1998) (Wanlass I) ............................................ 4, 5

OTHER AUTHORITIES

Fed. R. Civ. P. 11 ....................................................................................................... 8

Fed. R. Civ. P. 50 ............................................................................................... 12, 17

Fed. R. Civ. P. 52 ..................................................................................................................... 12


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I. INTRODUCTION

Defendants Opposition Brief confirms that the district courts laches ruling

is unsupported by the evidence and legally erroneous. Like the district court,

Defendants identify no record evidence that the laches-triggering blog post was

pervasive, open, and notorious. Indeed, like the district court, Defendants identify

no record evidence that anyone ever viewed the 2005 blog post. Moreover, the

blog post itself records zero comments.

Lacking evidence, Defendants draw comparisons between the substantive

content of the blog post and I/P Engines infringement arguments. But the blog-

post content is irrelevant absent evidence that Lycos (the owner of the Patents-in-

Suit in 2005) knew or should have known of the blog post in 2005.

Undaunted, Defendants and the amici curiae urge this Court to adopt an

untenable rule: If a party relies on public information to assert allegations of patent

infringement in its complaint or to argue infringement at trial, that party should be

charged with constructive knowledge of the information, effective the date it was

first made public. For good reason, that is not the law. That information or

evidence, once known, supports a charge of infringement does not mean that such

evidence or information was pervasive, open, and notorious the instant it became

public. This Court should reverse the district courts unsupported and legally

erroneous decision finding a presumption of laches.


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At a minimum, I/P Engine burst the presumption of laches, and Defendants

identify no support for the district courts contrary holding. Indeed, Defendants

agree that the district courts statement of the laches presumption was erroneous.

Defendants nonetheless ask this Court to take the extraordinary step of weighing

the evidence for the first time on appeal. But where, as here, facts remain to be

found and evidence remains to be weighed, a remand is the proper course.

Regarding damages, Defendants first argue that JMOL of zero damages is

appropriate because I/P Engine purportedly put forward no evidence of post-

Complaint damages. Defendants then admit that I/P Engine did introduce evidence

regarding damages for the entire period, including the post-Complaint period. In

reality, Defendants argument is that I/P Engine did not introduce a specific

damages number for the post-Complaint period. But I/P Engines expert testified

using a chart showing damages by quarter, including data for the post-Complaint

period. In view of this evidence and presentation, the jury could have reached a

supportable damages award. That it did not do so requires a remand to correct the

award, not a free pass in the form of JMOL of zero damages for Defendants

adjudged infringement.


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II. ARGUMENT

A. The District Courts Laches Ruling Was Unsupported And Legally Erroneous

1. Defendants Cite No Evidence That The Blog Post Was Pervasive, Open, And Notorious

Like the district court, Defendants fail to identify any evidence that the blog

post was pervasive, open, and notorious. That is because Defendants failed to

create such a record before the district court. The entirety of Defendants evidence

is the blog post itself, and the fact that the name of the blog contains the word

official. Defendants Cross-Appeal Opposition Brief, D.I. 64 (Opp. Br. ) at

50. But Defendants cite no evidence to show that the blogs self-proclaimed

official status establishes any audience for the blog in 2005.

Lacking evidence, Defendants accuse I/P Engine of indulging in a semantic

exercise, because I/P Engine contends that each of the three words set forth in this

Courts precedentpervasive, open, and notorioushas meaning. Id. at 50.

Unable to meet each of the three criteria, Defendants conflate the pervasive, open,

and notorious requirement into a single amorphous test of published, and then

equate published with public, concluding that the blog post was published

simply because it was publicly available on the Internet. Id. at 50-51. But that is

not the law. See, e.g., Intirtool, Ltd. v. Texar Corp., 369 F.3d 1289, 1297 (Fed.

Cir. 2004) (constructive knowledge not established even though product was


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public); Hall v. Aqua Queen Mfg., 93 F.3d 1548, 1555-56 (Fed. Cir. 1996) (same

as to eighth defendant, U.S. Watermattress).

In an attempt to argue otherwise, Defendants cite Wanlass v. General Elec.

Co., 148 F.3d 1334 (Fed. Cir. 1998) (Wanlass I), but that case does not hold that

constructive knowledge is established by the mere existence of publicly accessible

information. To the contrary, Wanlass I quotes Hall and confirms that advertising

or other relevant activities must be pervasive, open and notorious. Wanlass I,

148 F.3d at 1338 (quoting Hall, 93 F.3d at 1553).

In Wanlass I, in addition to the advertising activities, the plaintiff had

offered the defendant a license and the defendant had refused, responding that the

patent was invalid and that it would continue to use the products. 148 F.3d at

1340. There was also direct evidence of actual knowledge of infringement. Id.

at 1339 n.***. No such evidence exists in this case.

Moreover, in Wanlass v. Fedders Corp., 145 F.3d 1461, 1467 (Fed. Cir.

1998) (Wanlass II), the same panel that decided Wanlass I rejected a holding of

constructive knowledge where, as here, there was little evidence to support such a

conclusion. The Wanlass II Court contrasted the vacant evidentiary record in

Wanlass II with the record established in Wanlass I:

Compare the record in this case, in which there was a lack of evidence that Wanlass should have known of Fedders's allegedly infringing activity and virtually no evidence of communications between them, with that in


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the copending appeal, Wanlass v. General Electric Co., 148 F.3d 1334 [Wanlass I], in which GE had considered Wanlasss suggestion of taking a license under the Wanlass patent but told Wanlass that it thought the patent was invalid as old art and despite rejecting the proffered license intended to continue to use the technology.

145 F.3d at 1465, n.3 (emphasis added); see also id. at 1468 (Rader, J., concurring)

(I join this opinion to the extent that it explains that the duty created in [Wanlass

I] is not as sweeping as the language of that opinion suggests.)

The record in this case is nothing like the record in Wanlass I. Instead, it is

much closer to the vacant record in Wanlass II. Here, similar to Wanlass II, there

is no evidence of communications between Lycos and Google in 2005, no evidence

of any meetings or attendance by either at any trade shows, and no evidence that

Lycos knew or should have known of any advertising at the time describing the

infringing technology.

Defendants quote Hall and contend that Hall found constructive notice

because defendants advertised heavily in trade magazines. Opp. Br. at 51

(quoting Hall, 93 F.3d at 1553). That case, in Defendants view, thus strongly

supports [their] laches position . . . . Id. But Defendants mischaracterize Hall.

As the complete quotation reveals, Hall did not base constructive knowledge solely

on magazine advertisements:

[Atlanta Vinyl] advertised heavily in trade magazines from the outset of its activities and attended numerous


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trade shows attended by Hall. Mr. DeHan, Atlanta Vinyls president, indicated that he met with Hall many times at these shows.

93 F.3d at 1553 (emphasis added). Here, there is no evidence to suggest that

Lycos and Google met at trade shows, that Google discussed the accused products

at any trade shows, or that Google advertised heavily in trade magazines. Id.

Defendants hypothesize that a blog post could be considered a digital

analogue to the trade-magazine advertisements in Hall. Opp. Br. at 51. Perhaps;

but that question is academic in view of Defendants failure to create a record in

the district court that could support such a comparison. For example, Defendants

cite no evidence that the AdWords Blog had any subscribers or regular visitors in

2005, much less that Lycos was (or should have been) such a visitor. Defendants

also cite no evidence that the blog post appeared more than once, much less so

regularly and prominently that it could be equivalent to heavy advertising in a

trade magazine, as in Hall, 93 F.3d at 1553.

Defendants also theorize that Lycos would have been an ideal audience for

the blog post because Lycos was a competitor and a customer of Google.

Opp. Br. at 46. That Lycos was a competitor of Google, however, is not a

sufficient basis to establish constructive knowledge. See, e.g., Ultimax Cement

Mfg. Corp. v. CTS Cement Mfg. Corp., 587 F.3d 1339, 1350 (Fed. Cir. 2009)

(constructive knowledge not established even though plaintiff was competitor of


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defendant). Moreover, in 2005, Lycos was not a customer placing ads on

AdWords. See A5817 at 6. At that time, Lycos was a publisher using a non-

accused Google service called AdSense for Content to place ads on Lycos

website based on the content of the website, rather than on a users Internet

searches. See A9254:9-12; A9256:6-8; see also A5828:4-14. The July 2005 blog

post was not directed to publishers, like Lycos, but rather to advertisers that

created the advertisements to be displayed. A2936:25-A2937:3. Because Lycos

was not the intended audience, it had no reason to be aware of the blog post.

Contending otherwise, Defendants cite two Lycos deposition excerpts, but both

excerpts confirm that Lycos was a publisher, not an advertiser, the intended

audience of the blog post. See A4206:12-4207:2; A9255:24-A9256:8.

2. Comparisons Between The Content Of The Blog Post And I/P Engines Infringement Allegations Do Not Establish Constructive Knowledge

Attempting to sidestep the lack of evidence that the blog post was pervasive,

open, and notorious, Defendants point to similarities between the substantive

content of the blog post and I/P Engines Complaint and infringement arguments.

Opp. Br. at 52. But Defendants must first show that Lycos knew or should have

known of the blog post. Only then would the content of that blog post be relevant.

Defendants, as well as the amici curiae, urge this Court to adopt a new and

peculiar rule: Where a party relies on public information to bring a complaint or


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argue infringement, that party will be charged with knowing of that information as

of the date it first appeared publicly. See Opp. Br. at 53; Brief of Amici Curiae

Newegg, Cisco Systems, and Dell In Support of Defendants, D.I. 70 at 1. But such

a rule would directly contravene this Courts precedent requiring that the evidence

be pervasive, open, and notorious. Indeed, it would eliminate that test.

Moreover, Defendants and amicis proposed rule defies logic. Simply

because evidence, once known, supports an allegation of infringement does not

prove that that the evidence should have been discovered the instant it first

appeared in public. Thus, Defendants and amicis references to I/P Engines basis

for bringing suit are entirely beside the point. A Rule 11 inquiry considers whether

a pre-filing investigation of known facts, whether acquired by reverse engineering

or otherwise, supports a reasonable belief of infringement. But the inquiry says

nothing about when those facts were or should have been known, which is the

relevant question for a laches defense. Mere knowledge of facts at the time a

complaint is lodged does not establish that the facts were pervasive, open, and

notorious the moment the facts first entered the public domain.

Defendants and amicis rule would place an unprecedented and impossible

burden on patentees. With the incredible scope and content of the Internet, if

Defendants and amicis rule were adopted, even the most prudent of unknowing

patentees could easily fall victim to the rule. A defendants later search of the


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Internet, with the benefit of 20-20 hindsight, could often locate a webpage that

would, if known, support an allegation of infringement or, together with attorney

scrutiny and investigation, provide a basis to file suit. That a motivated defendant

could identify such information among millions upon millions of search results

does not mean that a particular webpage was so obvious that an unknowing

patentee should be charged with constructive knowledge of its existence when it

was first made public.

Defendants seize on I/P Engines statement at trial that its infringement case

was based, in part, on [y]ear after year of the same public statements by Google as

to how the system works. Opp. Br. at 54 (quoting A3854:13-14). But the district

court did not establish constructive knowledge on that basis. The district court

based constructive knowledge on a single blog post in 2005. A48. That I/P Engine

should have immediately known of Googles infringement based on this single

blog post flies in the face of Defendants own arguments to this Court that such

public descriptions are not probative of how the accused systems actually

work . . . . Defendants Appeal Principal Brief, D.I. 53 at 13.

In the same vein, Defendants argue that Plaintiff here could and did bring

suit based on Googles public disclosures about ad rank, Quality Score, and the

components of Quality Score and those public disclosures began at least as early

as July 2005 . . . . Opp. Br. at 54 (emphasis added). Defendants again miss the


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point. The district court did not base its laches ruling on Googles public

disclosures about ad rank, Quality Score, and the components of Quality Score

beginning in 2005. The district court based constructive knowledge on two

sentences in a single 2005 blog post to establish constructive knowledge the instant

the blog post appeared, narrowly establishing a six-year presumption of laches.

A51.

Tellingly, Defendants never squarely address why their infringement should

be considered open, given that, as the district court found, Google considered

its technology a trade secret and did not disclose its technical details . . . . A54.

Defendants do not dispute that Google kept its technology secret and argue that

Googles public documents are not probative of infringement because they only

describe Googles technology at a high level. See Opp. Br. at 47-55; Defendants

Appeal Principal Brief at 13; see also A2936:23-A2937:3. Yet, Defendants seek to

impose on I/P Engine constructive knowledge the instant a single not probative

and high level Google document appeared on the Internet, with no evidence the

document was pervasive, open and notorious. That is not the law. This Court

should reverse the district courts laches ruling that constructive knowledge was

established.


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3. The District Court Erred In Implementing The Laches Presumption

Even if constructive knowledge were established, this Court should at least

vacate the district courts laches ruling because the district court erred in holding

that I/P Engine failed to rebut any laches presumption. The district court

erroneously held that I/P Engine had to respond to the presumption by rebutting

both elements of laches (by a preponderance of the evidence) . . . . A45

(emphasis added). Defendants acknowledge this was erroneous, but argue that it

was harmless error because it was only a single erroneous phrase regarding the

presumption . . . . Opp. Br. at 59. But that single phrase was the district courts

statement regarding the standard for rebutting the presumption. Such a critical

error should be dispositive in I/P Engines favor, not casually dismissed.

Moreover, Defendants do not dispute that the district court precluded

I/P Engine from submitting rebuttal evidence at trial. Opp. Br. at 56. First,

Defendants claim I/P Engine expressly told the district court that it would not call

any rebuttal witnesses other than its validity expert. Id. at 55. What I/P Engines

counsel said was, at this point I dont think we anticipate calling any other

witnesses on rebuttal. A3228:23-24. That was five days before Defendants

finished presenting their case-in-chief, see A3624:5-6, and five days before

Defendants proffered eighty pages of deposition testimony in an attempt to show

evidentiary prejudice with regard to laches. See A3625:22-24; A5717-A5719.


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I/P Engine did not forfeit its right to rebut Defendants case by providing its

expectations regarding witnesses before the close of Defendants case and before

I/P Engine even knew if or how Defendants intended to present their laches case.

Second, Defendants suggest that no rebuttal was necessary because laches

was heavily litigated throughout the case. Opp. Br. at 41. But even if that were

true, I/P Engine would still be entitled to respond to Defendants laches evidence

in its rebuttal case. Moreover, Defendants identify only two pieces of evidence at

trial relating to laches: Kosaks testimony regarding the sale of Lycos in 2000 and

2004, and the blog post itself. Id. at 42. That is hardly evidence that the laches

issue was heavily litigated by the parties prior to the district courts ruling.

Third, Defendants contend that the district courts ruling was justified

because their own Rule 52(c) motion was pending by the morning of October 31,

2013. Id. at 43. But even the district court recognized that Defendants motion,

which Defendants filed after the parties oral argument on October 30, was not

before the district court on the morning of October 31. A41. Nor is the district

courts ruling justified by the fact that, in response to I/P Engines Rule 50(a)

motion and oral argument regarding laches, Defendants argued that laches should

apply. Opp. Br. at 43 (emphasis in original). Defendants had not filed their own

motion, but were arguing that their laches defense was viable in response to


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I/P Engines Motion. A41. This, again, was acknowledged by the district court.

Id.

Fourth, Defendants argue that any error was harmless because the district

court considered I/P Engines laches proffer in its written laches ruling. Opp. Br.

at 56. But the district courts only substantive reference to this proffer was in the

portion of its opinion regarding constructive knowledgenot its discussion of the

laches presumption. A51. In its constructive knowledge discussion, the district

court used the proffer against I/P Engine, faulting Lycos for not undertak[ing]

any steps to investigate whether Google was infringing its patents after the 2005

blog post. Id. In its discussion of the rebuttal of the presumption, however, the

district court did not cite any of I/P Engines evidence. A53. This silence is

striking, particularly because the district court specifically discussed and relied on

Defendants laches proffer. Id.

Defendants also argue that any error was harmless because I/P Engines

evidence was simply not persuasive. Opp. Br. at 56. Defendants state that I/P

Engine only sought to introduce [l]ive testimony from Mr. Blais (whom Plaintiff

had not even brought to Norfolk) and a declaration from Mr. Blais (which Plaintiff

did not even create until after the laches ruling issued). Id. In reality,

I/P Engines laches proffer was over two-thousand pages long and was not limited

to live testimony and a declaration by Blais. A5804-A7863. Moreover, the fact


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that Blais was not in Norfolk and not immediately prepared to testify in view of

Defendants proffer is legally irrelevant. Nor is it relevant, or surprising, that Blais

prepared a declaration rebutting Defendants proffer after Defendants submitted

their proffer.

4. Even Without The Opportunity To Present Rebuttal Evidence, I/P Engine Burst The Bubble Of Any Laches Presumption

The district court also erred in failing to recognize that, even without

I/P Engine having been given the opportunity to present rebuttal evidence, the

record contained evidence to overcome a laches presumption. Defendants argue

that I/P Engine had to put forward inventor testimony stating that their memories

are just as fresh and their documents just as voluminous as they would have been

without the 6-year plus delay. Opp. Br. at 56-57. Defendants similarly repeat the

district courts argument faulting I/P Engine for not providing evidence (expert or

otherwise) to show that the memories of Mr. Lang, Mr. Kosak, or Lycos

(institutionally) would be unimproved by being questioned earlier in relation to

this suit. Id. at 59-60 (quoting A53) (emphasis added). But the scope of relevant

evidence on the issue of evidentiary prejudice is not so narrow.

For example, as this Court explained in A.C. Aukerman Co. v. R.L. Chaides

Constr. Co., 960 F.2d 1020, 1038 (Fed. Cir. 1992) (en banc), a party may eliminate

the presumption of laches by showing that evidence respecting an alleged

infringers defenses remains available substantially as before the delay . . . . Here,


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both inventors provided extensive testimony about their patented inventions and

numerous other issues, and Defendants cross-examined them at length. See

A2059:19-A2106:12; A2108:3-A2161:25; A2162:17-A2185:24; A2186:10-

A2206:7. At a minimum, such evidence created a dispute regarding whether

Defendants defenses were available substantially as before the delay.

Defendants argue they were prejudiced because the inventors no longer

possess all of their inventor notebooks from their time at Lycos. Opp. Br. at 57.

But Kosak testified that he no longer had the notebooks because he left all of [his]

notebooks with his former employer, Lycos. A9194:11-18. Evidence in the

custody of a third party is not lost or destroyed evidence, much less evidence lost

or destroyed due to the passage of time. Similarly, Langs testimony does not

establish that any inventor notebooks or indeed any categories of documents were

lost or destroyed, much less lost or destroyed because of the passage of time. See

A9162:21-A9165:17. Accordingly, this case is nothing like Potter Instr. Co. v.

Storage Tech. Corp., No. 79-579, 1980 WL 30330, at *7 (E.D. Va. Mar. 25, 1980),

cited by Defendants, where many crucial documents were lost or destroyed

because of the passage of time, and several crucial witnesses, including the

inventors of the patents in suit, had died.

Defendants next point to the fact that Lang and Kosak failed to recall some

of their involvement with the prosecution of the patents. Opp. Br. at 57-58.


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Defendants suggest they may have lost an inequitable conduct defense, but provide

no support, by citation to the file wrapper or otherwise, that any such legitimate

defense was lost. Id. Thus, Defendants arguments amount to little more than rank

speculation that the inventors verbal testimony may have identified some such

defense. Such speculation, however, does not establish evidentiary prejudice as a

matter of law.

Defendants then allege that the Blais deposition shows that Lycos

institutional memory had faded regarding important damages-related issues.

Id. at 58. That is incorrect. Blais fully answered each of Defendants cited

questions regarding the events that took place after he began working at Lycos in

2005. See, e.g., A4224:1-8, A4224:14-A4225:2; see also A4181:10-13.

Regarding events that were before his employment and outside the scope of

Defendants 30(b)(6) Notice, Blais accurately stated that he simply did not know

the answers to the questions. A4203:10-A4204:21; A4223:14-17; A4224:9-13;

A4225:3-6; see A4464-66; A4528-40.

Finally, Defendants suggest that, even if the presumption were burst, this

Court should affirm the overall laches ruling. Opp. Br. at 59. But the district court

never decided, in view of the evidence as a whole, the factual question of

evidentiary prejudice. See A47; A53. When a district court has failed to make a

finding because of an erroneous view of the law, the usual rule is that there should


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be a remand for further proceedings . . . . Pullman-Standard v. Swint, 456 U.S.

273, 291 (1982). Defendants provide no reason for this Court to depart from the

usual rule in this case.

B. The District Court Erred In Denying I/P Engines Motion For A New Trial On Past Damages

Defendants argue that this Court should grant JMOL of zero damages,

incorporating by reference their arguments on reply in support of their Appeal.

Opp. Br. at 60. Defendants acknowledge I/P Engines evidence, but argue that

I/P Engine merely needed to present its damages evidence on a yearly or quarterly

basis . . . . Id. at 30 (emphasis in original). But I/P Engines expert, Dr. Becker,

testified using a chart showing the reasonable-royalty damages by quarter

throughout the full damages period, including the post-Complaint period. A9040;

A2702:14-21. Based on Dr. Beckers testimony and presentation, the jury could

have determined a royalty-damages award for the post-Complaint period supported

by the evidence. See A9040; A2702:14-21; A5562; A3863:19-24. That the jury

did not do so requires remand for correction, not a damages award of zero.

Defendants argue that I/P Engine knew that laches would be decided before

the case went to the jury, because I/P Engine brought its Rule 50(a) motion at the

close of Defendants case. Opp. Br. at 30. But I/P Engines motion was

appropriate in view of Defendants scant laches evidence at trial, and in view of

Defendants laches proffer offered prior to the close of Defendants case.


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A3623:21-A3624:2. Even though the district court had previously left open the

possibility of post-trial submissions of evidence on laches, I/P Engine acted

reasonably in concluding that Defendants had no further evidence to offer in

support of this affirmative defense on which they bore the burden of proof. See

A4544-A4557.

But even if I/P Engine should have anticipated that the district court would

decide the laches issue during trial, it does not follow that I/P Engine should have

expected that the district court would task the jury with implementing the laches

decision by adjusting the damages award based on its memory of the evidence. As

I/P Engine has explained, where laches is at issue, the common practice is for the

jury to decide the damages due for the full damages period. I/P Engines Cross-

Appeal Principal Brief, D.I. 57 (Br.) at 60-61. Indeed, Defendants do not

provide a single example of a case in which a district court implemented a laches

ruling in a manner similar to this case.

Finally, Defendants argue that, if this Court were to grant a new trial, the

Seventh Amendment would require that the new trial be on all damages issues,

including the royalty rate. But the Seventh Amendment only precludes two juries

from deciding the same essential issues. Br. at 67. The royalty base of an

infringing product is a discrete and separate issue from a determination of the

royalty rate. Underscoring the separate nature of these issues, this Court has


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affirmed a district courts determination of a royalty rate and reversed and

remanded for a determination of the royalty base. See Mitutoyo Corp. v. Cent.

Purchasing, LLC, 499 F.3d 1284, 1292 (Fed. Cir. 2007). Similarly, this Court has

affirmed a royalty base and remanded for a determination of a royalty rate. See

also, e.g., Allen Archery, Inc. v. Browning Mfg. Co., 898 F.2d 787, 790 (Fed. Cir.

1990). These are not the same essential issues.

Moreover, the jurys verdict as to the royalty rate is distinct and free from

error, and the jurys use of a special verdict form permits this Court to isolate and

correct the royalty-base error. In contrast, a retrial on all of the damages issues

would be grossly inefficient and unnecessary. Accordingly, this Court should

remand for an application of the determined royalty rate to a royalty base

supported by the evidence.

III. CONCLUSION

This Court should reverse the district courts laches ruling and remand for an

application of the adjudged royalty rate to the entire damages period. At a

minimum, if laches applies, this Court should order a remand limited to applying

the 3.5% royalty rate to a supportable royalty base for the post-Complaint period.


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Respectfully submitted,

KNOBBE, MARTENS, OLSON & BEAR, LLP

Dated: January 2, 2014 By: /s/ Joseph R. Re Joseph R. Re

Attorney for Plaintiff-Cross Appellant I/P ENGINE, INC.


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CERTIFICATE OF COMPLIANCE

1. This brief complies with the type-volume limitation of Federal Rule of

Appellate Procedure 28.1(e)(2)(C). This brief contains 4,461 words,

excluding the parts of the brief exempted by Federal Rule of Appellate

Procedure 32(a)(7)(B)(i).

2. This brief complies with the typeface requirements of Federal Rule of

Appellate Procedure 32(a)(5) and the type style requirements of Federal

Rule of Appellate Procedure 32(a)(6). This Brief has been prepared in a

proportionally spaced typeface using Microsoft Word 2003 in 14 point font

Times New Roman.

Respectfully submitted,

KNOBBE, MARTENS, OLSON & BEAR, LLP

Dated: January 2, 2014 By: /s/ Joseph R. Re Joseph R. Re

Attorney for Plaintiff-Cross Appellant I/P ENGINE, INC.


-1-

CERTIFICATE OF SERVICE I certify that on January 2, 2014, this REPLY BRIEF OF PLAINTIFF-

CROSS APPELLANT I/P ENGINE, INC. was filed electronically using the CM/ECF system, which will send notification of such filing to counsel of record for Defendants-Appellants, AOL Inc., Google Inc., IAC Search & Media, Inc., Gannett Company, Inc., and Target Corporation, as follows:

David A. Perlson David L. Bilsker

Margaret P. Kammerud Antonio R. Sistos Kevin A. Smith

Emily C. OBrien QUINN EMANUEL URQUHART & SULLIVAN, LLP

50 California Street, 22nd Floor San Francisco, CA 94111

[email protected] [email protected]

[email protected] [email protected] [email protected] [email protected]

David A. Nelson

QUINN EMANUEL URQUHART & SULLIVAN, LLP 500 W. Madison Street, Suite 2450

Chicago, IL 60661 [email protected]

Robert B. Wilson

QUINN EMANUEL URQUHART & SULLIVAN, LLP 51 Madison Ave., 22nd Floor

New York, NY 10010 [email protected]

/s/ Joseph R. Re Joseph R. Re


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