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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 January 2, 2014 JOSEPH R. RE Counsel of Record STEPHEN W. LARSON KNOBBE, MARTENS, OLSON & BEAR, LLP 2040 Main Street, 14th Floor Irvine, CA 92614 (949) 760-0404
Attorneys for Plaintiff-Cross Appellant

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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.

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TABLE OF CONTENTS Page No.

I. II.

INTRODUCTION ........................................................................................... 1 ARGUMENT ................................................................................................... 3 A. The District Court’s Laches Ruling Was Unsupported And Legally Erroneous ......................................................................... 3 1. 2. Defendants Cite No Evidence That The Blog Post Was Pervasive, Open, And Notorious ........................................ 3 Comparisons Between The Content Of The Blog Post And I/P Engine’s Infringement Allegations Do Not Establish Constructive Knowledge ................................ 7 The District Court Erred In Implementing The Laches Presumption .................................................................. 11 Even Without The Opportunity To Present Rebuttal Evidence, I/P Engine Burst The Bubble Of Any Laches Presumption ..................................................... 14

3. 4.

B. III.

The District Court Erred In Denying I/P Engine’s Motion For A New Trial On Past Damages ..................................................... 17

CONCLUSION.............................................................................................. 19

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TABLE OF AUTHORITIES Page No(s).

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 court’s 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 Engine’s infringement arguments. But the blogpost content is irrelevant absent evidence that Lycos (the owner of the Patents-inSuit 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 court’s 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 court’s contrary holding. Indeed, Defendants agree that the district court’s 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 postComplaint 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 Engine’s 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 Court’s 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 blog’s 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 Court’s precedent—“pervasive, open, and notorious”—has 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 -4-

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the copending appeal, Wanlass v. General Electric Co., 148 F.3d 1334 [Wanlass I], in which GE had considered Wanlass’s 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 -5-

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trade shows attended by Hall. Mr. DeHan, Atlanta Vinyl’s 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 nonaccused Google service called “AdSense for Content” to place ads on Lycos’ website based on the content of the website, rather than on a user’s 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 Engine’s 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 Engine’s 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 Court’s precedent requiring that the evidence be pervasive, open, and notorious. Indeed, it would eliminate that test. Moreover, Defendants’ and amici’s 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 amici’s references to I/P Engine’s 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 amici’s rule would place an unprecedented and impossible burden on patentees. With the incredible scope and content of the Internet, if Defendants’ and amici’s rule were adopted, even the most prudent of unknowing patentees could easily fall victim to the rule. A defendant’s 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 Engine’s 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 Google’s 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 . . . .” Defendant’s Appeal Principal Brief, D.I. 53 at 13. In the same vein, Defendants argue that “Plaintiff here could and did bring suit based on Google’s 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 Google’s 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 Google’s public documents are not probative of infringement because they only describe Google’s technology at a high level. See Opp. Br. at 47-55; Defendant’s 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 court’s 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 court’s 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 court’s statement regarding the standard for rebutting the presumption. Such a critical error should be dispositive in I/P Engine’s 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 Engine’s counsel said was, “at this point I don’t 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. -11-

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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: Kosak’s 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 court’s ruling. Third, Defendants contend that the district court’s 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 court’s ruling justified by the fact that, in response to I/P Engine’s 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 Engine’s 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 Engine’s laches proffer in its written laches ruling. Opp. Br. at 56. But the district court’s only substantive reference to this proffer was in the portion of its opinion regarding constructive knowledge—not 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 Engine’s 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 Engine’s 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 Engine’s 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 court’s 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 infringer’s defenses remains available substantially as before the delay . . . .” Here, -14-

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both inventors provided extensive testimony about their patented inventions and numerous other issues, and Defendants cross-examined them at length. A2059:19-A2106:12; A2108:3-A2161:25; A2162:17-A2185:24; See

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, Lang’s 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 Engine’s 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 Engine’s 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 Engine’s 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. Becker’s 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 Engine’s 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. -17-

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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 Engine’s CrossAppeal 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 court’s 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 jury’s verdict as to the royalty rate is distinct and free from error, and the jury’s 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 court’s 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.

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CERTIFICATE OF SERVICE I certify that on January 2, 2014, this REPLY BRIEF OF PLAINTIFFCROSS 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. O’Brien QUINN EMANUEL URQUHART & SULLIVAN, LLP 50 California Street, 22nd Floor San Francisco, CA 94111 davidperlson@quinnemanuel.com davidbilsker@quinnemanuel.com margaretkammerud@quinnemanuel.com antoniosistos@quinnemanuel.com kevinsmith@quinnemanuel.com emilyobrien@quinnemanuel.com David A. Nelson QUINN EMANUEL URQUHART & SULLIVAN, LLP 500 W. Madison Street, Suite 2450 Chicago, IL 60661 davenelson@quinnemanuel.com Robert B. Wilson QUINN EMANUEL URQUHART & SULLIVAN, LLP 51 Madison Ave., 22nd Floor New York, NY 10010 robertwilson@quinnemanuel.com /s/ Joseph R. Re Joseph R. Re

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