?? ????? Official???Subject?to?Final?Review 1 ?IN?THE?SUPREME?COURT?OF?THE?UNITED?STATES 2 x 3 OCTANE?FITNESS,?LLC,? : 4 ?Petitioner,? :? No.?12?1184 5 ?v.? : 6 ICON?HEALTH?&?FITNESS,?INC.? : 7 x 8 ?Washington,?D.C. 9 ?Wednesday,?February?26,?2014 10 11 ?The?above?entitled?matter?came?on?for?oral 12 argument?before?the?Supreme?Court?of?the?United?States 13 at?10:17?a.m. 14 APPEARANCES: 15 RUDOLPH?A.?TELSCHER,?JR.,?ESQ.,?St.?Louis,?Missouri;?on 16 ?behalf?of?Petitioner. 17 ROMAN?MARTINEZ,?ESQ.,?Assistant?to?the?Solicitor 18 ?General,?Department?of?Justice,?Washington,?D.C.;?for 19 ?United?States,?as?amicus?curiae,?supporting 20 ?Petitioner. 21 CARTER?G.?PHILLIPS,?ESQ.,?Washington,?D.C.;?on?behalf 22 ?of?Respondent. 23 24 25 1 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?C?O?N?T?E?N?T?S 2 ORAL?ARGUMENT?OF? PAGE 3 RUDOLPH?A.?TELSCHER,?JR.,?ESQ. 4 ?On?behalf?of?the?Petitioner? 3 5 ORAL?ARGUMENT?OF 6 ROMAN?MARTINEZ,?ESQ. 7 ?For?United?States,?as?amicus?curiae, 8 ?supporting?the?Petitioner? 18 9 ORAL?ARGUMENT?OF 10 CARTER?G.?PHILLIPS,?ESQ. 11 ?On?behalf?of?the?Respondent? 29 12 REBUTTAL?ARGUMENT?OF 13 RUDOLPH?A.?TELSCHER,?JR.,?ESQ. 14 ?On?behalf?of?the?Petitioner? 50 15 16 17 18 19 20 21 22 23 24 25 2 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?P?R?O?C?E?E?D?I?N?G?S 2 ?(10:17?a.m.) 3 ?CHIEF?JUSTICE?ROBERTS:? We?will?hear 4 argument?first?this?morning?in?Case?12?1184,?Octane 5 Fitness?v.?ICON?Health?and?Fitness,?Incorporated. 6 ?Mr.?Telscher. 7 ?ORAL?ARGUMENT?OF?RUDOLPH?A.?TELSCHER 8 ?ON?BEHALF?OF?THE?PETITIONER 9 ?MR.?TELSCHER:? Mr.?Chief?Justice,?and?may?it 10 please?the?Court: 11 ?An?exceptional?case?under?Section?285 12 requires?a?court?to?assess?the?full?range?of?traditional 13 equitable?considerations,?including?the?degree?of 14 reasonableness?of?the?merits?by?the?plaintiff's?action, 15 procedural?aspects?of?the?case,?and?evidence?of?economic 16 coercion.? Frivolous?and?bad?faith?cases?are?not 17 prerequisites?to?an?award?of?fees?under?Section?285. 18 ?The?Federal?Circuit's?test?conflicts?with 19 the?statutory?language,?it?violates?established?canons 20 of?statutory?construction,?and?it?deprives?district 21 courts?of?the?discretion?they?need?to?effectively?combat 22 abusive?patent?litigation?practices. 23 ?Below,?the?Federal?Circuit?found?that?ICON's 24 claims?require?a?C?channel?structure?and?that?ICON's 25 claim?construction?to?the?contrary?was?without?merit; 3 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 appendix?at?A10.? The?Federal?Circuit?also?affirmed?the 2 district?court's?grant?of?summary?judgment?that?no 3 reasonable?juror?could?find,?as?a?matter?of?law,?that 4 Octane's?structure?had?an?equivalent?to?the?C?channel; 5 appendix?A13. 6 ?This?means?that?ICON's?infringement 7 allegations?against?Octane?were?meritless.? This?fact, 8 in?combination?with?other?undisputed?evidence?of 9 record????namely?the?worthless?nature?of?the?patent, 10 evidence?of?economic?coercion,?and?the?fact?that?two 11 other?elements?of?the?claimed????the?core?elements?of 12 the?claim?were?missing?as?well????make?this?case 13 exceptional.? And?it's?such?that?this?Court?should 14 reverse?the?district?court?and?award?fees?on?its?own. 15 ?JUSTICE?KENNEDY:? You?are?talking?about 16 economic?coercion.? Suppose?it?were?reversed.? Suppose 17 that?Octane?had?the?patent?and?sued?ICON.? Would?the 18 analysis?be?precisely?the?same? 19 ?MR.?TELSCHER:? The?analysis?would?be 20 primarily?the?same.? The?evidence?of?economic?coercion 21 may?be?less.? So,?for?example,?if?you're?a?smaller 22 competitor?and?you're?suing?a?larger?competitor,?there 23 would?be?less?opportunity?for?abuse.? Knowing,?if?ICON 24 was?the?competitor?with?the?weak?patent,?they?would?know 25 that?their?larger?competitor?would?stand?up?to?them.? So 4 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 the?opportunity?for?economic?abuse?would?be?less. 2 ?JUSTICE?KENNEDY:? I've?been?listening?to 3 your?adjectives????this?is?a?search?for?adjectives,?in 4 part.? I?think?you?used?the?word?meritless.? What????is 5 there?a?difference?between?merit????meritlessness?and 6 objectively?baseless? 7 ?MR.?TELSCHER:? I?don't?know?that?the?case 8 law?is?perfectly?clear.? In?Christiansburg,?this?Court 9 did?define?meritless?to?the?tune?of?it's?unjustified?and 10 without?foundation. 11 ?JUSTICE?KENNEDY:? Because?if?we?remand?to 12 the?district?court,?the?district?court's?already?said 13 it's?not?objectively?baseless,?it's?not?brought?in?bad 14 faith.? I'm?not?quite?sure?what?words?we're?going?to 15 give?to?the?district?court?if?you're?to?prevail. 16 ?MR.?TELSCHER:? Well??? 17 ?JUSTICE?GINSBURG:? You????you?had?just?said 18 that?we?should?return?it?to?the?district?court?with 19 orders?to?require?fee?shifting.? And?how?could?that?be 20 if?the?discretion?is?to?be?exercised?by?the?district 21 court? 22 ?I?can?understand?your?asking?for?a?remand, 23 but?I?can't?understand?your?asking?for?a?reversal?and?an 24 order?that?the?fees?be?reimbursed. 25 ?MR.?TELSCHER:? We?understand?the?tension 5 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 between?a?discretionary?standard?and?asking?for?a?remand 2 with?a?finding.? However,?there?are?cases?that?are 3 rare????not?that?rare,?but?they?are?rare?enough????where 4 appellate?courts?look?at?a?record?and?have?a?firm?and 5 definite?conviction?that?an?award?should?be?made?such 6 that?it?would?be?an?abuse?of?discretion??? 7 ?JUSTICE?GINSBURG:? And?you?think?this?Court 8 is?the?proper?court?to?look?at?the?record?and?make?that 9 determination,?that?the?district?court?got?it?wrong?when 10 the?district?court?didn't?think?this?was?an?exceptional 11 case. 12 ?MR.?TELSCHER:? On?this?record,?yes,?Your 13 Honor.? The????the?Federal?Circuit's?finding?is?such 14 that?the????the?infringement?claim?is?meritless.? As?a 15 matter?of?law,?the?claim?construction?position?had?no 16 possibility?of?success?under?35?U.S.C.?Section?112, 17 paragraph?(f). 18 ?JUSTICE?SCALIA:? Well,?what?do?you????what 19 do?you?want?to?add?to?meritless?? Don't?you?have?to?add 20 something?to?meritless?? I?mean,?every?time?you?win?the 21 summary?judgment?motion,?that's?a?determination?that?the 22 claim?is?without?merit,?isn't?it? 23 ?MR.?TELSCHER:? It?is?not,?Your?Honor. 24 ?JUSTICE?SCALIA:? Doesn't?meritless?just?mean 25 without?merit? 6 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?MR.?TELSCHER:? No,?it????for?example,?in 2 most?patent?cases,?there?is?the?Markman?phase.? So?a 3 district?court?judge,?as?a?matter?of?law,?is?required?to 4 find?on?the?claim?construction.? So?there?could?be?a 5 reasonable?dispute?about?the?meaning?of?a?term?that's 6 resolved?against?the?plaintiff,?so?it????just?because 7 they?lose?a?claim?construction?doesn't?mean?their 8 position?was?meritless. 9 ?JUSTICE?SCALIA:? Okay.? I?understand.? Well, 10 all?right.? What????what?must?be?added?to?the?word 11 meritless? 12 ?MR.?TELSCHER:? In?our?strong?view??? 13 ?JUSTICE?SCALIA:? That?no????no?reasonable 14 judge?could?have?found?it?to?be?with?merit? 15 ?MR.?TELSCHER:? If?someone?brings?a?claim 16 construction?position?that's?unreasonably?weak,?in?our 17 view?that?qualifies?under?Section?285?and?is?consistent 18 with?the?words?that?other?cases?have?used. 19 ?JUSTICE?SCALIA:? That????that's?not?a 20 standard?I?would????I?would?want?to,?you?know????you 21 realize?how????how?differently?various?district?courts 22 would?operate?if????if?you?just?say????what?was?your 23 phrase?? Unreasonably?weak? 24 ?MR.?TELSCHER:? And?yet,?that's?the??? 25 ?JUSTICE?SCALIA:? You've?got?to?give?me 7 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 something?tighter?than?that. 2 ?MR.?TELSCHER:? That?is?the?standard, 3 however,?that?this?Court?used?in?Martin?and?in?Pierce. 4 ?And?if?we're?looking?at????if????if?we?want 5 to?make????so????so?in????for?example,?in?most?of?these 6 cases?what?we're?talking?about?is?going?to?typically 7 involve?the?merits.? And?so?if?we?say?that?the?only?way 8 you?can?get?a?fee?award?is?to?have?a?zero?merit, 9 frivolous?case,?it's?impossible?to?show.? It's 10 inconsistent?with?the?statutory?language. 11 ?So?when?we're?looking?at?this?from?a 12 statutory?context,?on?the?merits,?what?should?qualify? 13 And?there?comes?a?point?at?which?a?case?goes?from?strong 14 to?medium?and?it?crosses?into?the?territory?of?weak.? It 15 gets?weaker?and?weaker,?and?then?it?becomes?frivolous. 16 ?This?Court,?even?in?Pierce,?recognized?that 17 the?reasonableness?standard?was?something?more?than 18 frivolous.? And?we?think?if?Section?285?is?to?have?any 19 teeth?in?deterring?the?abusive?practices?currently?in 20 the?system,?something?more?than?frivolousness?is 21 required,?and?it?is?consistent?with?this?Court's?prior 22 precedent. 23 ?CHIEF?JUSTICE?ROBERTS:? We're?deal????we're 24 dealing?with?a?term?that?could?be?read?in?many?different 25 ways:? exceptional.? Right?? Maybe?that?means?1?out?of 8 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 100;?maybe?it?means?10?out?of?100.? And?why?shouldn't?we 2 give?some?deference?to?the?decision?of?the?court?that 3 was?set?up?to?develop?patent?law?in?a?uniform?way?? They 4 have?a?much?better?idea?than?we?do?about?the 5 consequences?of?these?fee?awards?in?particular?cases. 6 And?since?we're?just????as?Justice?Kennedy?pointed 7 out????dealing?with?adjectives????you?know,?meritless, 8 frivolous,?exceptional????why?don't?give?some?deference 9 to?their?judgment? 10 ?MR.?TELSCHER:? Well,?I?think?we?need?to?look 11 at?the?basis?of?the?judgment,?which?is?grounded?in?the 12 fact?that?they've????they've?found?constitutionally?that 13 the????the?PRE?standard?was?required.? And?I?think?this 14 Court's?precedent?in?BE&K?just?two?years?earlier?says 15 that?the?validity?of?fee?shifting?statutes?is?not 16 governed?by?the?PRE?standard. 17 ?And?if????if?the?Court?were?to?so?hold,?that 18 would?throw?into?question?all?of?the?fee?statutes?of 19 this?country?because,?accordingly,?they?presumptively 20 would?have?to?have?the?sham?litigation?test?to?be 21 constitutional. 22 ?JUSTICE?SOTOMAYOR:? What?is?the?difference 23 between?the?Federal?Circuit's?use?of?objective 24 reasonable????objectively?meritless?and?your?standard? 25 ?MR.?TELSCHER:? To?my?way??? 9 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?JUSTICE?SOTOMAYOR:? I?know?that?you've?been 2 arguing?that?they?shouldn't?be?using?subjective?intent, 3 so?I'm?putting?that?aside.? And?you?can?tell?me?why 4 Kilopass?doesn't?answer?that?now. 5 ?But?what's?the?difference?you?see? 6 ?MR.?TELSCHER:? To?my?way?of?thinking,?when 7 you?say?meritless?or?baseless,?it?means?there's 8 absolutely?no?foundation?of?zero?merit.? When?we?talk 9 about?objectively?unreasonable????and,?again,?as?this 10 Court?found?in?Pierce????it?suggests?something?lesser 11 than?frivolousness.? And?the?reality?of????I?think?of 12 district?court?litigation?is?it's?near?impossible?to 13 show?that?something?is?frivolous,?that?somebody?had?no 14 argument??? 15 ?JUSTICE?SCALIA:? I?don't?understand?your 16 answer?to?the?question.? How?does?the?first?part?of?the 17 Federal?Circuit's?test?differ?from?your?perception?of 18 what?meritless?means? 19 ?MR.?TELSCHER:? We?understand?the?first?part 20 of?the?Federal?Circuit's?test?to?require?zero?merit?or 21 frivolousness,?which?is?what?the?district?court????she 22 used?interchangeably?"objectively?baseless"?and 23 "frivolousness."? So?we?think?frivolousness?is?too?low 24 of?a?standard?under?285. 25 ?JUSTICE?KENNEDY:? So?would?you?say?without 10 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 substantial?merit?? I?mean,?we're?playing?around?with 2 words?again. 3 ?MR.?TELSCHER:? Without?substantial?merit, 4 unreasonably?weak,?or?low?likelihood?of?success,?I?think 5 those?are?all?ways?of?getting?to?the?same?point,?which 6 is?something?less?than?zero?merit?will?satisfy?under 7 285. 8 ?JUSTICE?ALITO:? You?have?several?objections, 9 I?take?it,?to?what?the?Federal?Circuit?has?said.? One?is 10 that?you?think?objectively?baseless?is?too?low,?correct? 11 ?MR.?TELSCHER:? Yes. 12 ?JUSTICE?ALITO:? You?also?don't?think?bad 13 faith?is?necessary. 14 ?MR.?TELSCHER:? Agreed. 15 ?JUSTICE?ALITO:? And?do?you?also?believe?that 16 litigation?misconduct?taken?in?conjunction?with?a?case 17 that?is,?let's?say,?of?little?merit,?but?perhaps?not?as 18 low?as?the?standard?that?you?have,?that?you're 19 suggesting,?would?justify?an?award?of?fees? 20 ?MR.?TELSCHER:? Yes.? We?believe?litigation 21 misconduct,?especially?in?consideration?with?a?weak?case 22 on?the?merits,?makes?for?a?strong?candidate?for 23 exceptional. 24 ?JUSTICE?ALITO:? Well,?now?I'm?a????say?I'm?a 25 district?judge?someplace?and?I?rarely?get?a?patent?case. 11 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 How?am?I?supposed?to?determine?whether?the?case?is 2 exceptional?if?the?standard?is?take?everything?into 3 account,?litigation?misconduct,?the?strength?of?the 4 case,?any?indication?of?bad?faith,?and?decide?whether 5 it's?exceptional?? Exceptional?compared?to?what?? I?have 6 very?little?basis?for?comparison.? How?do?I?do?that? 7 ?MR.?TELSCHER:? So,?I?do?not?think?it's?a 8 numerical?comparison.? I?think?when?we're?talking?about 9 an?uncommon?case,?it's?what?would?we?expect?of?a 10 reasonable?litigant.? So?in?the?normal?course,?a 11 plaintiff?develops?a?product,?they?bring?it?to?market, 12 they?get?a?patent,?they're?successful.? A?defendant 13 recognizes?the?success.? They?look?at?the?patent,?and 14 they?try?to?design?around?and?a?reasonable?dispute 15 ensues.? So?that's?a?normal?case. 16 ?What?we're?saying?to?a?district?court?judge, 17 the?guidance?we?would?give?them?is?that?this?litigant, 18 this?plaintiff?acted?in?reasonable?ways,?and?district 19 court?judges?are?called?on?every?single?day?to?make 20 those?determinations. 21 ?JUSTICE?ALITO:? Compared?to?what?? Compared 22 to?the?types?of?cases?that?the?district?court?hears?on?a 23 more?regular?basis? 24 ?MR.?TELSCHER:? District?courts?handle??? 25 ?JUSTICE?ALITO:? Or?compared?to?patent?cases? 12 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?MR.?TELSCHER:? I?think?all?cases.? Complex 2 litigation?requires?litigants?to?act?reasonably?in 3 procedural?aspects?and?on?the?merits.? I?think??? 4 ?JUSTICE?ALITO:? See,?this?is?what?I?find 5 somewhat?troubling?about?your?"take?everything?into 6 account"?standard.? Most?district?court?judges?do?not 7 see?a?lot?of?patent?cases,?and?when?they?see?one,?it's 8 very?unusual.? So?you've?got?these?patent?attorneys 9 showing?up?in?court.? They?are?different?from?other 10 attorneys. 11 ?(Laughter.) 12 ?JUSTICE?ALITO:? Sometimes?they??? 13 particularly?if?it's?a?very?technical?case,?they?speak?a 14 different?language.? They?do?things?differently.? The 15 district?judge?is?struggling?to?figure?out?how?to?handle 16 the?case.? And?then?the????one????one?party?wins,?the 17 other?party?loses,?and?the?party?that?wins?says,?this 18 was?an?exceptional?case?and?you?should?award?fees?in?my 19 favor?under?285. 20 ?And?the?district?judge?says:? How?can?I?tell 21 whether?this?is?exceptional?? If?I?had?had????if?I?had 22 25?patent?cases,?I?could?make?some?comparisons.? But?I 23 don't?have?a?basis?for?doing?that. 24 ?Now,?the?Federal?Circuit?has?a?basis?for 25 doing?it. 13 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?MR.?TELSCHER:? Well,?first?of?all, 2 Congress????Congress?has?spoken?and?said?that?in 3 exceptional?cases,?the?district?court?should?do?this. 4 And?I?also????I?think?if?you?went?back?10?to?15?years 5 ago,?perhaps?the?notion?that?district?court?judges 6 haven't?seen?a?lot?of?patent?cases?might?be?true. 7 ?District?court?judges?see?lots?and?lots?of 8 patent?cases.? Many?of?those?cases?may?not?be?decided?on 9 the?merits.? The?only?thing?that?the?Federal?Circuit 10 sees?are?the?ones?that?went?to?final?conclusion.? So?I 11 do?think?district?court?judges?see?a?lot?of?patent 12 litigation. 13 ?I?also?think??? 14 ?JUSTICE?ALITO:? Is?that?really?true? 15 There's?nearly?700?district?judges?in?the?country. 16 If????if?we?had?a?statistic?about?the?average?number?of 17 patent?cases?that?a?district?judge?hears?and?receives 18 on,?let's?say,?a?5?year?period,?what?would?it?be? 19 ?MR.?TELSCHER:? I?don't?know?what?that?number 20 is,?Your?Honor.? But?I?know?that?district?court?judges 21 carry?a?widely?varying?docket?of?different?areas?of?law 22 and?are?called?upon?to?learn?the?law?and?assess?the 23 reasonableness?of?those?positions. 24 ?JUSTICE?SCALIA:? Mr.?Telscher,?it?occurs?to 25 me?that?you?really?cannot?answer?the?question?of?what 14 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 adjectives?should?be?attached?to?meritless.? And?the 2 reason?you?can't?is,?since?it?is?a?totality?of?the 3 circumstances?test,?that?is?only?one?factor?and?it 4 doesn't?have?to?be?an?absolute?degree?of?meritlessness. 5 Even?in?a????I?assume?you?would?say?that?even?in?a?very 6 close?case,?if?there?has?been?outrageous?litigation 7 abuse?by?the?other?side,?the?court?would?be?able?to?say: 8 My?goodness,?I've?never?seen?lawyers?behave?like?this. 9 You're?going?to?pay?the?attorneys'?fees?for?the?other 10 side.? Couldn't?the????couldn't?the?court?do?that? 11 ?MR.?TELSCHER:? That's?absolutely?correct, 12 Your?Honor. 13 ?JUSTICE?SCALIA:? So?then?how?can?we?possibly 14 define?meritless?? We?can't,?because?it?goes?up?and 15 down,?even?in?a?case?where?it's????it's?a?close?case,?it 16 could?still?be?exceptional. 17 ?MR.?TELSCHER:? It's?the?degree?of?the 18 unreasonable?nature?of?the?case?as?one?factor. 19 ?CHIEF?JUSTICE?ROBERTS:? Do?you?agree?with 20 the?Solicitor?General's?test?that?fees?are?authorized 21 when?they?are????I'm?quoting????"necessary?to?prevent 22 gross?injustice"? 23 ?MR.?TELSCHER:? Yes,?we?do,?Your?Honor. 24 ?CHIEF?JUSTICE?ROBERTS:? Well,?now,?I?was 25 surprised?at?that?because?I?would?have?thought?your 15 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 friend?on?the?other?side?would?say?that.? I?mean,?gross 2 injustice?sounds?like?a?very?tiny?portion?of?cases; 3 lower?than?meritless.? I?mean?it's????injustice?is?bad 4 too.? It's?doesn't?mean?you?just?loss,?but?there's 5 something?very?unjust?about?it.? Gross?injustice,?well, 6 it's?just?some?more?adjectives,?and?it's?the?test????I 7 gather?that's?the?test?you?adopt. 8 ?MR.?TELSCHER:? Well,?it's?certainly?what 9 the????what's????what?Congress?said?in?the?legislative 10 history?and?what?was?adopted?by?the?courts. 11 ?CHIEF?JUSTICE?ROBERTS:? Well,?but?you've 12 been?up?here?for?several?minutes?and?you?haven't?even 13 used?those?particular????or?that?adjective,?which?is 14 your?test. 15 ?MR.?TELSCHER:? Section?285?is?remedial,?so 16 certainly?in?order?to?remedy?something?there?must?be 17 some?level?of?injustice.? I?think?consistent?with?the 18 notion?that?a?case?is?exceptional?and?uncommon?is?the 19 notion?that?it's?gross?injustice,?not?justice.? And?to 20 my?way?of?thinking,?when?somebody?brings?a?very?weak 21 case,?which?we?believe?this?one?was,?and?it?costs 22 someone?$2?million?to?defend?it,?and?they?go?through 23 that?and?they?pay?that?price?tag,?a?district?court 24 should?be?able?to?find?that?that?is?gross?injustice. 25 And?I?think?it?is,?especially?for?many?of?the?small 16 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 businesses?in?this?country?when?they?face?these?types?of 2 suits. 3 ?JUSTICE?KAGAN:? Mr.?Telscher,?could?I?just 4 ask?very?quickly?the?factors?that?you?would?think?a 5 court?should?consider.? One?is?the?degree?to?which?the 6 case?is?meritless.? Another,?I?presume,?is?bad?faith. 7 Another?is?litigation?misconduct.? Is?there?anything 8 else?or?are?those?the?three? 9 ?MR.?TELSCHER:? No,?there????there's?more.? I 10 think?it's????there's?no?exhaustive?list?and,?for 11 example,?even?in?this?case????and?in?Park?in?Theatres 12 where?the?court?said?other?equitable?consideration.? We 13 believe?it?is?a?totality?of?the?circumstances.? Anything 14 that?bears?on?the?gross?injustice?and?the?uncommon 15 nature?of?the?case. 16 ?So,?for?example,?in?this?case,?the?fact?that 17 Icon?brought?a?patent?that?it,?with?all?of?its 18 resources,?couldn't?commercialize,?was?indisputably 19 worthless.? To?this?day?they've?never?made?a?product 20 under?this?patent.? That's?a?factor?that?bears?on?the 21 equities?of?this?case?and?the?uncommon?nature?and?is?one 22 that?doesn't?fall?neatly?within?those?categories. 23 ?The?fact?that?our?client?licensed?under?a 24 different?patent?that?shows?its?linkage?is?another 25 factor?that?shows?that?what?they?are?asserting?isn't 17 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 reasonable.? So?I?don't?think?there?is?a?laundry?list, 2 but?the?categories?that?you?identified?are?the?big?ones. 3 ?JUSTICE?GINSBURG:? I?think?you????you?did 4 say?if?it's?an?exceptional?case,?the?district?court?must 5 award?fees,?but?the?statute?says?may.? So?even?in?the 6 exceptional?case,?according?to?the?statute,?the?district 7 court?is?not?required?to?award?fees.? Or?do?you?read?may 8 to?mean?something?else? 9 ?MR.?TELSCHER:? Certainly,?there????there?has 10 been?the?issue?of?whether?this?determination?is?a 11 one??or?two?step?finding.? My?belief?is?that?district 12 courts?will?look?at?all?of?the?factors?and?make?up?their 13 mind?whether?it's?exceptional?and?in?that?same?step 14 award?fees.? There?has?been?the?notion?that?first?we 15 determine?a?case?is?exceptional?and?then?we?make?the 16 determination?of?whether?fees?should?be?granted.? I'm 17 not?sure?once?a?court?determines?that?a?case?is 18 exceptional,?what?other?factor?would?bear?on?that????on 19 that?determination. 20 ?If?there?are?no?other?questions,?I'd?like?to 21 reserve?the?rest?of?my?time?for?rebuttal. 22 ?CHIEF?JUSTICE?ROBERTS:? Thank?you,?counsel. 23 ?Mr.?Martinez. 24 ?ORAL?ARGUMENT?OF?ROMAN?MARTINEZ 25 ?FOR?THE?UNITED?STATES,?AS?AMICUS?CURIAE, 18 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?SUPPORTING?THE?PETITIONER 2 ?MR.?MARTINEZ:? Mr.?Chief?Justice,?and?may?it 3 please?the?Court: 4 ?Section?285?grants?district?courts 5 discretionary?authority?to?look?at?the?totality?of?the 6 circumstances?and?award?fees?when?necessary?to?prevent 7 gross?injustice.? Such?awards?can?be?proper?in?unusual 8 cases?where?the?losing?party?has?committed?bad?faith?or 9 harassing?conduct?during?the?litigation,?or?has?advanced 10 objectively?unreasonable?legal?arguments,?just?as?courts 11 had?held?under?the?1946?statute.? The?Court?should 12 restore?this?understanding?of?Section?285?and?make?four 13 additional?points?that?we?think?will?clarify?the?inquiry 14 for?the?district?courts: 15 ?First?and?most?importantly,?the?Court?should 16 say?that?baselessness?and?bad?faith?do?not?both?have?to 17 be?present?in?a?case?in?order?to?justify?a?fee?award; 18 ?Second,?the?Court?should????the?Court?should 19 say?that?district?courts?can?grant?fees?based?on?a 20 combination?of?different?factors?even?if?no?single 21 factor?would?necessarily?support?the?award?on?its?own; 22 ?Third,?the?Court?should?say?that?an 23 objectively?unreasonable?argument?can?trigger?a?fee 24 award,?even?if?that?argument?is?not?so?unreasonable?that 25 it's?actually?considered?frivolous; 19 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?And?fourth,?the?Court?should?say?that?clear 2 and?convincing?evidence?is?not?required. 3 ?I'd?like?to?turn?to?Justice?Scalia's 4 question?and?the?discussion?that?occurred?earlier?about 5 the?battle?of?the?adjectives,?so?to?speak.? We?think 6 that,?as?I?said?earlier,?that?the????a?fee?award?should 7 be?appropriate?or?can?be?appropriate?in?a?case?in?which 8 there's?an?objectively?unreasonable?litigating?position 9 or?objectively?unreasonable?arguments?that?are?made?in?a 10 case.? We?appreciate?that?that's?not?a????a?100?percent 11 precise,?bright?line?test,?but?we?think?it's?similar 12 to????it's,?in?fact,?the?same?as?what?the?Court?has?said 13 in?other?contexts,?such?as?EAJA?in?the?Pierce?case??? 14 ?JUSTICE?SCALIA:? Now?matter?what?other 15 factors?exist,?it?has?to?be?objectively?unreasonable. 16 ?MR.?MARTINEZ:? I??? 17 ?JUSTICE?SCALIA:? I?mean,?even?if?it?is?clear 18 from?other?factors?that?this?is?a?shakedown,?a?big 19 country????a?big?company?trying?to?suppress?a?little 20 company,?even?if?it's?clear?that?there?has?been 21 outrageous?litigation?abuse,?misconduct?by?attorneys? 22 ?MR.?MARTINEZ:? It?is?an?important?point, 23 Justice?Scalia??? 24 ?JUSTICE?SCALIA:? All?of?those?things?cannot 25 justify?shifting?the?award?unless?it?is?objectively 20 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 unreasonable. 2 ?MR.?MARTINEZ:? No,?Justice?Scalia,?that's 3 not?our?position. 4 ?JUSTICE?SCALIA:? Oh,?okay. 5 ?MR.?MARTINEZ:? Our?position?is?if?the?only 6 factor?is?an?objectively?unreasonable?argument,?that?in 7 appropriate?circumstances,?that?can?be?sufficient.? We 8 believe?very,?very?strongly?that?if?there?are?other 9 factors?present,?that?would?only?strengthen?the?case?for 10 appeal. 11 ?JUSTICE?BREYER:? I?see?that.? But,?look, 12 what?you?listed?in?your?brief?on?page?17,?which?I?think 13 was?nonexclusive:? Willful?infringement,?litigation 14 misconduct,?inequitable?conduct?by?the?patentee?in 15 securing?the?patent,?vexatious?or?unjustified 16 litigation,?bad?faith,?the?assertion?of?frivolous?claims 17 and?defenses.? And?then?you?cite?cases?which?say?all?of 18 those?in?different?instances?have?been?sufficient, 19 either?alone?or?together.? Well,?why?don't?we?just?copy 20 that?? Isn't?that?your?view? 21 ?MR.?MARTINEZ:? I?think?our?view?is?that 22 those?are?the?kinds?of?circumstances??? 23 ?JUSTICE?BREYER:? All?right.? Do?you?want?to 24 add?to?that?list,?or?to?subtract? 25 ?MR.?MARTINEZ:? I?think?as?long?as?the?Court 21 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 makes?clear?that?that?is?an?illustrative?list?that?I 2 think?captures?the?kind?of?bad?faith??? 3 ?JUSTICE?SCALIA:? You?want?to?add?et?cetera, 4 right? 5 ?MR.?MARTINEZ:? And?add?"or?similar," 6 "similar?equitable"????"similar?inequitable?conduct," 7 which?is?what?the?Ninth?Circuit?said?in?the 8 Park?in?Theatres?case,?which?I?think?all?the?parties 9 agree?is?a????fairly?captures?what?Congress?intended?to 10 incorporate?from?the?cases?decided?in?the?late?'40s. 11 ?CHIEF?JUSTICE?ROBERTS:? So?where?does?gross 12 injustice?come?from?? I?understood?that?to?be?your?test. 13 You?say,?Fees?are?authorized?when?necessary?to?prevent 14 gross?injustice?to?the?defendant. 15 ?MR.?MARTINEZ:? I?think??? 16 ?CHIEF?JUSTICE?ROBERTS:? Again,?you?have?your 17 long?laundry?list?that?doesn't?say?anything?about?gross 18 injustice. 19 ?MR.?MARTINEZ:? Well,?I?think?the?long 20 laundry?list?reflects?the?kinds?of?circumstances?in 21 which?courts?operating?between?1946?and?1952 22 interpreting?the?prior?statute,?those?are?the 23 circumstances?in?which?those?courts?had?concluded?that 24 there?was?a?gross?injustice.? So?in?other?words,?we 25 think?gross?injustice?is?maybe?the?umbrella?term?and??? 22 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?JUSTICE?BREYER:? You?don't?think?it.? Where 2 it?comes?from,?which?maybe?you?don't?want?to?say,?is?the 3 Senate?report?on?the?bill,?that?is?similar?to?this?one 4 enacted?in?1946.? Still,?there?are?some?of?us?who?think 5 that's?a?highly?relevant?consideration. 6 ?MR.?MARTINEZ:? We?are?comfortable?saying 7 that?and?we????and?we?do?say?that?and?we?think?it's 8 especially?salient?and?worth?relying?on?here,?not?just 9 because?it's?the?legislative?history,?but?also?because 10 that?same?legislative?history?and?that?same?gross 11 injustice?language?was?repeatedly?cited?and?talked?about 12 in?the?1946?to?'52?cases. 13 ?JUSTICE?KAGAN:? But?I?think,?Mr.?Martinez, 14 what?the?Chief?Justice?is?driving?at?is?there's?a?bit?of 15 a?disconnect?between?your?list?of?factors?and?those?two 16 words.? Gross?injustice,?I?mean?that's?kind????that's 17 really,?really?exceptional.? That?sounds?like,?shocks 18 the?conscience.? That?sounds?like?something?you've?never 19 seen?happen?in?the?litigation?system?ever. 20 ?But?then?you're?saying?essentially?ratchet 21 it?down?when?you?list?all?of?these?various?factors.? And 22 maybe?that's????that's?right,?we?shouldn't?be?obsessed 23 with?this?word,?gross?injustice.? It?just?seems?a 24 disconnect?between?the?two?words?and?all?the?factors. 25 ?MR.?MARTINEZ:? Let?me????let?me?explain?by 23 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 stepping?back. 2 ?JUSTICE?SCALIA:? But?it's?in?the?Senate 3 report,?so??? 4 ?(Laughter.) 5 ?MR.?MARTINEZ:? Justice?Kagan,?we?think?that 6 the?way?to?look?at?the?statute?is?to?try?to?figure?out 7 what?Congress?understood?the?statute?to?mean?in?1952. 8 And?it's?very?clear?and?I?think?both?sides?agree?that 9 Congress?intended?to?essentially?incorporate?the????the 10 thrust?of?the?judicial?opinions?that?had?been?issued 11 under?the?1946?statute.? Those?opinions?repeatedly 12 talked?about?gross?injustice,?drawing?from?the?prior 13 legislative?history,?and?when?they?awarded?fees?and?then 14 when????and?when?they?discussed?when?fees?would?be 15 appropriate,?the????the?circumstances?that?we?list?in 16 our?brief?are?what?they?said?would?equate?to?gross 17 injustice. 18 ?So?I?think?in?the?abstract?you?may?be?right, 19 that?gross?injustice?is?a?broader?standard?or?maybe?it's 20 a?little?bit????it's?a,?you?know,?only?the?most 21 exceptional?of?exceptional?cases?would?be?covered.? But 22 in?practice?what?Congress?was?looking?at?and?what?they 23 were?responding?to?and?what?they?were?intending?to?put 24 in?this?statute?was?an?idea?of?gross?injustice?that 25 reflected?those?bad?faith,?harassing,?and?unreasonable 24 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 situations?that?were?presented?earlier. 2 ?JUSTICE?SCALIA:? So?if?that's?what?you?mean, 3 why?don't?you?say?exceptional?injustice?instead?of?gross 4 injustice? 5 ?MR.?MARTINEZ:? We're?trying?to?tie?the 6 interpretation?of?the?statute?to?the?language??? 7 ?JUSTICE?SCALIA:? To?the?Senate????to?the 8 Senate?report. 9 ?MR.?MARTINEZ:? Not?just?to?the?Senate 10 report,?Justice?Scalia,?but?to?the?judicial?decisions. 11 And?this?Court?has?often?looked?to?judicial?decisions??? 12 judicial?decisions?as?a?backdrop?against????against 13 which?Congress?legislates. 14 ?JUSTICE?KENNEDY:? It's?a?different?statute. 15 Could?we?borrow?from????you?mentioned?EAJA.? I?take?it 16 that's?substantially?justified? 17 ?MR.?MARTINEZ:? Yes,?Your?Honor.? We?think 18 that????that??? 19 ?JUSTICE?KENNEDY:? It's?a?different?statute, 20 It?was?passed?later,?all?of????all?those?problems. 21 ?MR.?MARTINEZ:? We?think?that?when????when 22 the?situation?involves,?say,?just?an?objectively 23 unreasonable?argument,?we?think?that?essentially?the 24 same?test?would?apply?from?the?EAJA?context. 25 ?JUSTICE?SOTOMAYOR:? So?is?there?anything 25 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 other?than?the?objectively?baseless?and?bad?faith?of?the 2 Brooks?Furniture?test?that?you?would?change?? Doesn't 3 all?of?the?other?factors?that?the?Court?uses??? 4 litigation?misconduct,?all?of?that?other?stuff??? 5 encompass?all?the?factors?you're?talking?about? 6 ?MR.?MARTINEZ:? I?think?it?does,?but?I?think 7 it's????it's?very?important?if?the?Court?were?to?go?in 8 that?direction,?as?long?as?it?elaborates?a?couple?of?the 9 additional?points?that?I?mentioned?earlier. 10 ?JUSTICE?SOTOMAYOR:? That?it?has?to?be?a 11 combination,?a?combination?of?factors,?and??? 12 ?MR.?MARTINEZ:? Both,?yes,?right,?that?both 13 are?not?required,?that?it?can?be?a?combination?of 14 factors,?that?when?the?Brooks?Furniture?test?says 15 unjustified,?that?is?a????that?embraces?the?concept?of 16 objective?unreasonableness. 17 ?JUSTICE?SOTOMAYOR:? By?the?way,?I?thought??? 18 I?thought?the?Federal?Circuit?said?that?you?only?use?the 19 objective?unreasonable?if?there?isn't?one?of?the?other 20 things.? So?it?seems?to?be?saying?that??? 21 ?MR.?MARTINEZ:? I?think?they?do,?but?I?think 22 that?catch?all?category?in?which?they?apply?the 23 two?pronged?Brooks?Furniture?test?covers?potentially?a 24 very?wide?array?of?cases,?because?it?covers?any?case?in 25 which?perhaps?there's?bad?faith?conduct?in?bringing?the 26 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 litigation,?and?also?it?covers?the?range?of 2 circumstances?in?which?frivolous?or?unreasonable 3 arguments?are?made. 4 ?JUSTICE?SOTOMAYOR:? And?could?you?spend?a 5 moment?on?clear?and?convincing,?and????because?there's 6 not?a?whole?lot?in?your?briefs?on?that?part?of?it, 7 although?you?do?mention?it?in?passing. 8 ?MR.?MARTINEZ:? Right.? Yes,?Justice 9 Sotomayor.? As?the?Court?well?knows,?the?standard?rule 10 in?civil?litigation?is?that????that?facts?need?to?be 11 established?by?a?preponderance?of?the?evidence?unless 12 Congress?says?otherwise.? The?i4i?case,?decided?a?few 13 terms?ago,?I?think?confirmed?that?general?view. 14 ?Here,?Congress?did?not?say?otherwise. 15 Congress?did?not?embrace?a?clear?and?convincing 16 standard.? There's?nothing?in?the?text?or?the?history?of 17 Section?285?that?suggests?that?it?did.? Appreciate?we 18 didn't?have?enough????I?wish?we?had?had?more?time?in?our 19 brief?to?get?into?this?issue,?but?I?would?just?suggest 20 that?if?the?Court?wants?to?look?more?deeply,?it?can?look 21 at?Judge?O'Malley's?opinion?in?the?Kilopass?case,?which 22 I?think?has?a?very?thorough?and?very?convincing 23 discussion?of?the?clear?and?convincing?evidence?issue. 24 ?JUSTICE?ALITO:? What?is?the?difference 25 between????you?say?the?correct?phrase?is?objectively 27 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 unreasonable? 2 ?MR.?MARTINEZ:? When?we're?dealing?with?just 3 that,?a????a?case?that?raises?a?weak?legal?argument. 4 ?JUSTICE?ALITO:? That's?different?from 5 objectively?baseless.? That's?a?little?higher?than 6 objectively?baseless? 7 ?MR.?MARTINEZ:? It's?not?clear,?Justice 8 Alito,?how?the?Federal?Circuit?conceives?of?it,?And?let 9 me?just?explain?why.? I?think?they?use?the?term 10 objectively?baseless.? In?some?of?their?opinions?when 11 they?are?talking?about?that?term,?they?seem?to?use 12 frivolous?as?a?synonym.? In?other?cases?when?they're 13 talking?about?that?term,?they?seem?to?use?objectively 14 unreasonable.? And?so?we?think?there's?a?little?bit?of 15 confusion. 16 ?We?think?the?Pierce?case?makes?very?clear 17 that?justified?and?reasonableness?are?the?same?thing, 18 and?to????that?a?reasonable?argument?is?not?the?same?as 19 merely?a?non?frivolous?argument. 20 ?JUSTICE?ALITO:? And?that's?higher?than?the 21 Rule?11?standard? 22 ?MR.?MARTINEZ:? The?Rule?11?standard,?when?it 23 comes?to?unreasonable?arguments,?is?frivolous.? And?so 24 we?think?that?it?should?be?a?little?bit?lower?than?that 25 standard?and?it?should?be?closer?to?something?like?in 28 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 EAJA. 2 ?The????I?would?like?to?get?to?the?Chief 3 Justice's?question?earlier?about?why?not?defer?to?the 4 Federal?Circuit's?view?on?this?statute,?and?I?think?two 5 principal?reasons.? First?of?all,?I?don't?think?the 6 Federal?Circuit's?view?really?has?any?basis?in?either 7 the?text?or?the?history?of????of?the????of?Section?285. 8 So?that's?reason?number?one. 9 ?Reason?number?two?is?I?think?if?the?Federal 10 Circuit?had?had?a?consistent?view?over?its?history?or?if 11 the?Federal?Circuit?were?not?internally?divided?on?this 12 issue,?that?may?be?a?consideration.? Deference?might?be 13 more?appropriate.? But?here?there?is?no?consistent 14 history?and?the?Federal?Circuit,?as?we've?seen?in 15 Kilopass,?is?divided. 16 ?CHIEF?JUSTICE?ROBERTS:? Thank?you,?counsel. 17 ?Mr.?Phillips. 18 ?ORAL?ARGUMENT?OF?CARTER?G.?PHILLIPS 19 ?ON?BEHALF?OF?THE?RESPONDENT 20 ?CHIEF?JUSTICE?ROBERTS:? Mr.?Phillips. 21 ?MR.?PHILLIPS:? Thank?you,?Mr.?Chief?Justice, 22 and?may?it?please?the?Court: 23 ?I'd?like?to?start?with?the?objective 24 baseless?issue?in?this?particular?case,?because?it?seems 25 to?me?the?district?court?has?done?a?very?thorough?job?of 29 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 analyzing?every?element?of?this?case.? The?district 2 judge?obviously?presided?over?the?entirety?of?this 3 litigation,?analyzed?the?case?for?purposes?of?summary 4 judgment,?and?then?reanalyzed?the?case?for?purposes?of 5 analyzing?the?merits?of????of?the?claim?and?to????and 6 whether?or?not?this?would?be?an?exceptional?case. 7 ?To?be?sure,?it?applied?the?Brooks?standard, 8 but?basically?what?it?analyzed?was?just?simply?whether 9 there?was?an?objectively?legitimate?basis?for?the 10 decision.? It's?not?that?it?has?zero?merit.? Counsel 11 keeps?saying?zero?merit?is?objectively?baseless.? That's 12 not?the?standard.? This?Court?held?in?PRE?that 13 objectively?baseless?means?that?there?has?to?be?probable 14 cause????that?it?lacks?probable?cause?to?go?forward, 15 that?it?has?to?be?reasonably?possible. 16 ?CHIEF?JUSTICE?ROBERTS:? Well,?in?PRE,?of 17 course,?we?were?concerned?about?infringing?on?First 18 Amendment?rights,?and?that's?not?the?case?here. 19 ?MR.?PHILLIPS:? Well,?I?think?you?could?argue 20 that?there?is?at?least?a?First?Amendment?concern?that's 21 in?here.? But????but?in?any?event,?what?it?seems?to?me 22 you?really??? 23 ?CHIEF?JUSTICE?ROBERTS:? First?Amendment 24 concern,?what,?to?bring?a?patent?case? 25 ?MR.?PHILLIPS:? Well,?access?to?the?courts, 30 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 access?to?the?courts.? Any?time?you?talk?about?imposing 2 multimillion?dollar?fee?awards?at?the?end?of?the 3 litigation,?particularly?if?you?do?it?on?a?fairly 4 arbitrary?basis??? 5 ?JUSTICE?SCALIA:? Do?you?think?Congress?could 6 not?require?the?loser?to?pay????in?all?cases? 7 ?MR.?PHILLIPS:? Oh,?I?have?no?doubt?that 8 Congress?could??? 9 ?JUSTICE?SCALIA:? ???in?all?cases? 10 ?MR.?PHILLIPS:? Well,?I'm?not?sure?about?in 11 all?cases. 12 ?JUSTICE?SCALIA:? I?mean,?if?it?can?do?that, 13 there's?certainly?no?First?Amendment?problem. 14 ?MR.?PHILLIPS:? Well,?I'm?not?sure?I?concede 15 that?in?all?cases.? I?do?think?in?the?run?of?the?mill 16 cases,?but?when?you're?talking?about?a?situation?where 17 you're?talk????where?the?assertion?is?that?the?conduct 18 of?the?litigation,?the?bringing?of?the?litigation?itself 19 is?inappropriate??? 20 ?JUSTICE?SCALIA:? That's?an?English?rule.? It 21 used?to?be?our?rule.? I?don't?see?how?you?can?possibly 22 say?that?it's?unconstitutional?to?make?the?loser?pay. 23 ?JUSTICE?KENNEDY:? This?is?not?your?best 24 argument. 25 ?MR.?PHILLIPS:? It?is?not?my?best?argument,?I 31 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 appreciate?that. 2 ?(Laughter.) 3 ?MR.?PHILLIPS:? On?the?other?hand,?if?you??? 4 if?you?go?back?and?look?at?Christiansburg, 5 Christiansburg,?in?that?case?the?court?also?didn't?treat 6 it?as?a?First?Amendment?issue,?but?it?still?recognizes 7 an?important?policy?of????of?trying?not?to?have?too?much 8 interference?with?access?to?the?courts. 9 ?In?any?event,?objectively?baseless?is?a 10 standard?that?every?court?knows?how?to?use?and?it?goes 11 directly?to?the?ultimate??? 12 ?JUSTICE?SOTOMAYOR:? How?different?is?this 13 from?sanctionable?misconduct?? It?seems?to?me?that?under 14 the?way?you're?articulating?things,?the?conduct?has?to 15 be?sanctionable?before?you?can?give?attorneys'?fees 16 under?this?provision.? So?why?bother?having?the 17 provision? 18 ?MR.?PHILLIPS:? Well,?because?the?provision 19 was?enacted?in?1952,?Justice?Sotomayor,?long?before?this 20 kind?of?litigation????these?kind?of?rules?that?would 21 have?rendered?the?litigation?sanctionable?existed,?and 22 so?as?a?consequence?of?that????and?I?think?it's 23 important?to?put?it?in?context.? Because,?you?know,?when 24 Congress?did?this?initially?in?1946,?to?be?sure,?it's 25 the?Senate?report?that?talks?about?gross?injustice,?but 32 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 it?is?the?decisions?of?the?courts?that?adopted?that 2 approach?of?gross?injustice.? And?then?when?Congress,?in 3 1952,?incorporates?the?exceptional?case?standard,?the 4 revisor's?notes?say?it's?designed?to?go?back?to?the 5 legislative?history?and?the?decisions?that?have?been 6 interpreting?that. 7 ?JUSTICE?BREYER:? Why?does?it?always?have?to 8 be?objectively?baseless?? I?mean,?I've?read?enough?cases 9 in?this?area?to?be?able?to?approach?it?as?a?district 10 court?judge?who's?not?expert. 11 ?I?patent?the?following:? For?a?computer, 12 enter?somebody's?name;?ask?phone?number,?and?they'll 13 give?you?the?phone?number?if?you?put?in?the?right?city. 14 That?puts?some?lists?in?the?computer.? They?can?patent 15 that?? Well,?you?add?a?couple?of?things,?and?then, 16 apparently,?you?can?have?an?argument?that?they?can 17 patent?it.? Okay?? Because?it'll?be?very?abstract 18 language.? It?will?be?able?to?patent?almost?anything. 19 No,?you?can't?finally,?but?objectively?baseless?? Patent 20 attorneys?are?very?brilliant?at?figuring?out?just?how?to 21 do?this.? So?we're?never?going?to?have?attorneys'?fees 22 in?a?suit?if?that's?your?standard. 23 ?MR.?PHILLIPS:? Well??? 24 ?JUSTICE?BREYER:? But?you?could?couple?that 25 with?just?barely?over?the?line.? What?line?? This?vague 33 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 line,?no?one?knows?what?it?is.? In?addition,?all?they 2 did?was?say,?We?don't?want?to?go?to?court?and?cost?you 3 $2?million.? Please?send?us?a?check?for?1,000,?we'll 4 license?it?for?you.? They?do?that?to?40,000?people,?and 5 when?somebody?challenges?it?and?goes?to?court,?it?costs 6 them?about?2?million?because?every?discovery?in?sight. 7 Okay?? You?see?where?I'm?going? 8 ?MR.?PHILLIPS:? Yes. 9 ?JUSTICE?BREYER:? And?so?I?do?not?see?why?you 10 couldn't?have?an?exceptional?case?where?attorneys'?fees 11 should?be?shifted.? But?if?I'm?honest?about?it,?I?cannot 12 say?it's?objectively?baseless.? I?can?just?say?it's 13 pretty?close?to?whatever?that?line?is,?which?I?can't 14 describe?and?look?at?all?this?other?stuff.? Are?you 15 going?to?say?that?I?can't?shift? 16 ?MR.?PHILLIPS:? I?think?the?problem?with?the 17 approach?you?propose?there,?Justice?Breyer,?is?you're 18 trying?to?deal?with?a?very?small?slice?of?the?problem?of 19 litigation.? You?know,?what?you've?described??? 20 ?JUSTICE?BREYER:? I?know,?but?I????of?course, 21 it?may?be?a?small?slice?of?litigation,?but?it?is?a?slice 22 that?costs?a?lot?of?people?a?lot?of?money. 23 ?MR.?PHILLIPS:? But?the?problem??? 24 ?JUSTICE?BREYER:? And?so?I?would?like?to?know 25 if?I?do?run?across?that?small?slice?why?cannot?I,?the 34 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 district?judge,?say,?I've?see?all?these?things,?taken 2 together?they?spell?serious?injustice,?and?therefore, 3 I'm?shifting?the?fees.? Okay? 4 ?Why?can?I?not?do?that?even?though,?as?I've 5 just?said?and?repeat,?I?cannot?in?honesty?say?it's 6 frivolous?given?the?standards?for?patenting?that?seem?to 7 be?administered? 8 ?MR.?PHILLIPS:? Because?when?Congress?enacted 9 the?statute,?adopted?the?exceptional?case?standard,?it 10 meant,?essentially,?to?require?that?the?litigation?be 11 unjustified?and?vexatious.? Unjustified?means?that?it?is 12 baseless.? That's?the?understanding?that?existed?all 13 along.? It?has?to?have????it's?not?that?it?has?zero 14 merit,?but?it?has?to?have?enough?merit?to?be????to 15 satisfy?the?standards?of?probable?cause. 16 ?JUSTICE?KENNEDY:? Well,?baseless?is?at?the 17 end?of?the?day????I?mean,?you?have?a?case?that?involves 18 a?straight?stroke?rail?that?at?one?end?goes?in?an 19 elliptical?arc,?and?the?district?judge?had?to?figure 20 this?out?with?all?the?experts.? After?he?goes?through 21 all?the?underbrush,?he?finds?there's?nothing?there.? And 22 it's?hard?to?say?that?that's?objectively?baseless?to?a 23 district?judge?who's?spent?weeks?studying?this?thing. 24 But?at?the?end?of?the?day,?suppose?he?finds?there's 25 nothing?there? 35 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?MR.?PHILLIPS:? Well,?if?at?the?end?of?the 2 day?there's?nothing?there,?then?I?think?it?is 3 objectively?baseless,?even?though?they've?gone?through 4 the?litigation.? But?what?the?district?judge??? 5 ?JUSTICE?BREYER:? Not?nothing?there.? It's 6 highly?abstract?language.? I?gather?you,?like?I,?have 7 read?some?of?these?claims.? They?are?very?hard?to 8 understand?and?when?you?get?to?the?bottom?of?them,?the 9 abstract?nature?of?the?language,?plus?the?fact?that?it 10 has?something?to?do?with?computer?input,?plus?the?fact 11 that,?you?know,?you?suspect?very?strongly?it's?baseless, 12 but?you?really?don't?like?to?say?something?that?isn't 13 true?and?you?can?say,?well,?I?could?see?how?somebody 14 might?think?there?was?something?to?this?claim,?just?in 15 that?tone?of?voice,?which?you?can't?write?down?that?tone 16 of?voice.? You?see? 17 ?(Laughter.) 18 ?MR.?PHILLIPS:? It?usually?comes?through?in 19 the?opinions,?actually. 20 ?JUSTICE?BREYER:? Yes. 21 ?You?see?the?problem.? I?don't?see?why?it 22 shouldn't?be??? 23 ?MR.?PHILLIPS:? But,?Justice?Breyer,?you 24 know,?the?case?you?have?in?front?of?you?though?is?not?a 25 case?like?that. 36 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?JUSTICE?BREYER:? Well,?let's?send?it?back 2 and?tell?them?that?they?were?imposing?a?standard?that 3 was?too?narrow,?that?was????didn't?take?count?of?all?the 4 circumstances?where?something?could?be?unusually??? 5 ?MR.?PHILLIPS:? But?see??? 6 ?JUSTICE?BREYER:? ???unjust,?and?then?let 7 them,?no?clear?and?convincing,?but?it's?up?to?you, 8 district?judge.? You're?the?expert?on?litigation.? You 9 decide. 10 ?MR.?PHILLIPS:? Can?I?say?two?things?about 11 that?? First?of?all,?the?clear?and?convincing?evidence 12 issue?is?not?in?the?case.? It?wasn't????they?didn't?seek 13 certiorari?on?that?issue.? You?know,?if?the?Court??? 14 ?JUSTICE?GINSBURG:? If?the?Court?is?dealing 15 with?the?Federal?Circuit's?test?and?it's?got?these?two 16 things,?baseless?and??? 17 ?MR.?PHILLIPS:? Subjective??? 18 ?JUSTICE?GINSBURG:? ???subjectively,?and 19 clear?and?convincing?evidence,?I?think?to?leave?out?that 20 piece?of?it?when?it?all?comes?out?of?that?one?paragraph 21 in?the?Brooks?Furniture?case,?so?I?think?once?the?case 22 is?before?us,?if?we?leave?out?that?one?piece??? 23 ?MR.?PHILLIPS:? I?don't????well,?Justice 24 Ginsburg,?I?do?not?believe?that?the?clear?and?convincing 25 evidence?standard?is?fairly?subsumed?within?the?question 37 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 of?whether?or?not?the?objective?baselessness?standard 2 ought?to?be?applied,?any?more?than?the?second?case 3 you're?going?to?hear?today?is?subsumed?by?this?case. 4 Those?are????I?mean,?they?all?come?out?of?the?Federal 5 Circuit,?but?it?seems?to?me?you?ought?to?hear????you 6 ought?to?grant?separately?on?the?question?of?the 7 standard?of?review?or?the?standard?of?proof?at?the 8 appropriate?time. 9 ?JUSTICE?GINSBURG:? Well,?why?don't?why?don't 10 we?just?take????there's?another?statute,?as?you?know, 11 that?has?identical?wording,?the?Lanham?Act,?and?that 12 says?exceptional?means?not?run?of?the?mine,?uncommon. 13 And?then?there's?a?nice?illustration,?a?case?from?the 14 D.C.?Circuit. 15 ?MR.?PHILLIPS:? I?read?that?opinion. 16 ?JUSTICE?GINSBURG:? Why?don't?we?say,?Well, 17 we?have?it?there?in?the?Lanham?Act,?the?same?words. 18 ?MR.?PHILLIPS:? Right.? But?there?are?a 19 couple?of?reasons?for?that.? One?is?obviously?this 20 statute?was?passed?long?before?the?Lanham?Act?was 21 enacted?and?against?a?very?different?backdrop,?and 22 Congress?clearly,?in?literally?sticking?its?toe?in?the 23 water?of?allowing?prevailing?defendants?to?get?fees?from 24 plaintiffs?in?a?situation?was?pretty?unprecedented?at 25 that?point?in?time,?set?the?standard?very?high?and 38 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 intended?for?it?to?prevent?gross?injustice. 2 ?The?legislative?history?of?the?Lanham?Act, 3 which?this?Court?apparently?was?willing?to?read?for 4 those?purposes?at?that?time,?doesn't????doesn't?remotely 5 suggest?that.? And?the?Court?didn't?take?into?account?in 6 that?opinion?the????the?standards?under?the?Patent?Act 7 in?interpreting?the?Lanham?Act.? So?it?seems?to?me?you 8 could?make?the?argument?the?opposite?way??? 9 ?JUSTICE?GINSBURG:? But?you?just?look?to??? 10 ?MR.?PHILLIPS:? ???which?is?that?the?Lanham 11 Act?ought?to?be?interpreted??? 12 ?JUSTICE?GINSBURG:? You?look?to?the?text??? 13 ?MR.?PHILLIPS:? ???the?way?I?propose. 14 ?JUSTICE?GINSBURG:????and?the?text?is 15 identical?in?both.? The?legislative?history,?some?people 16 like?it,?some?people?don't.? But?the?text?is?identical. 17 So?I?think?it?would?be?odd?to?construe?the?very?same 18 words?in?the?context?of?the?Lanham?Act?one?way?and?a 19 different?way?in?the?context?of?the?Patent?Act. 20 ?MR.?PHILLIPS:? Well,?I????I????two?answers 21 to?that.? One?is,?you?know,?if?you????if?you?want?to??? 22 if?you?want?to?interpret?them?in?tandem,?I?would?say?you 23 should?interpret?the?Patent?Act?in?the?strict?way?that 24 Congress?intended?it?to?be?interpreted?in?1952,?and?the 25 Lanham?Act?should?follow?that. 39 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?The?alternative?is?there?is?a?different 2 history.? Patent?litigation?and?trademark?litigation?are 3 very,?very?different?in?the?impact?that?they?have.? And 4 as?a?consequence,?you?could?in?fact?say?that?Congress 5 didn't?intend?that. 6 ?But????but,?you?know,?I????that?seems?to?me, 7 in?some?ways,?the?tail?wagging?the?dog,?and?that????and 8 that's?a?mistake. 9 ?JUSTICE?SOTOMAYOR:? Mr.?Phillips??? 10 ?MR.?PHILLIPS:? Justice?Breyer??? 11 ?JUSTICE?SOTOMAYOR:? Please??? 12 ?MR.?PHILLIPS:? The?one?thing?I?do?want?to 13 say,?Justice?Breyer,?in????in?response?to????to?your 14 argument?about?why?don't?you?leave?it?for?the?district 15 court?in?that????in?that?circumstance.? The?problem?is, 16 is?what?you're?saying?to?plaintiffs?who?bring?patent 17 litigation?with????with,?in?this?case,?counsel's?advice 18 and?experts'?advice.? They?got?the?machines.? They?did 19 everything?you'd?want?a?litigant?to?do?before?bringing?a 20 litigation.? They?handled?the?case.? They?spend?more 21 money?on?legal?fees?as?the?plaintiff?than?the?defendants 22 did?in?this?case.? They?have?to?hire?an?expert.? They 23 put?in????in?play?the?validity?of?their?patent. 24 ?There?are?lots?of?disincentives?for 25 plaintiffs?to?bring?in?this?case.? And?at?the?end?of?the 40 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 process,?based?on?a?completely?indeterminate?standard, 2 the?district?court?would?then?retain?authority?to?say,?I 3 conclude?that?what?you?did?here?is?unreasonable. 4 ?JUSTICE?BREYER:? That's?true,?but?you?could 5 then?appeal.? I?mean,?you're?making?an?argument?on?the 6 merits?there.? And?really?the?question?is,?is?who's 7 better?suited?to?figure?out?whether?this?is?a????whether 8 this?is?a?really?special?case. 9 ?And?if,?you?know,?of?course,?you're?right. 10 Plaintiffs?are?often?right?in?these?things,?and 11 sometimes?they?are?wrong.? So????and?they?costs 12 everybody?a?lot?of?money.? So?you?go?to?the?Federal 13 Circuit?and?ask?them?to?review?it?for?an?abuse?of 14 discretion. 15 ?JUSTICE?SCALIA:? Mr.?Phillips,?their?lawyers 16 might?well?have?given?them?different?advice?if?they 17 didn't?know?that,?Hey,?nothing?to?lose,?given?the?test 18 that?the?Federal?Circuit?has,?you?know. 19 ?MR.?PHILLIPS:? Well,?I?mean,?the?idea?that 20 there's?nothing?to?lose??? 21 ?JUSTICE?SCALIA:? Hey,?I?would?give????I 22 would?give?the?same?advice.? Bring?the?suit. 23 ?MR.?PHILLIPS:? Justice?Scalia??? 24 ?JUSTICE?SCALIA:? This?guy?is?a?possible 25 competitor,?sue?him.? Hey,?there's?nothing?to?lose. 41 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?MR.?PHILLIPS:? But?there?is?something?to 2 lose.? First?of?all,?as?I?say,?the?plaintiff????this??? 3 you?know,?there's?a?reason?why?you?don't?see 4 advertisements?on?television?when?Saiontz?&?Kirk?says, 5 If?you?think?your?patent?has?been?infringed,?call?us. 6 ?Why?? Because?there's?not?a?long?line?of 7 people?who?can?bring?plaintiffs'?patent?cases.? They?are 8 expensive?to?litigate,?and?the?ultimate?effect????and 9 you?have?to?get?an?expert,?and????and?at?the?end,?you 10 put?your?patent?into?validity. 11 ?JUSTICE?SCALIA:? If?it?goes?to?litigation, 12 yes.? But?if????if?the?alternative?for?the?defendant?is 13 either,?you?know,?spend?$2?million?defending?or?pay?off 14 the?$10,000?that????that?the?plaintiff?demands?to?go 15 away,?hey,?that's?an?easy?call. 16 ?MR.?PHILLIPS:? Well,?I?mean,?I?don't?know 17 whether?that's?an?easy?call?for?the?defendant.? Doesn't 18 make?the????it?doesn't?make?the?decision?for?the 19 plaintiff?all?that?easy?to????at?the?beginning?of?the 20 process?because,?as?I?say,?it's?both?expensive?and?it 21 puts?the?validity?of?the?patent?at?issue. 22 ?And?in?most?cases,?you?know,?the?Federal 23 Circuit,?long?time?ago????or?not?that?long?ago?said?that 24 the?inequitable?conduct,?that?is?challenging?what?the 25 plaintiff?did?before?the?PTO?had?become?a?plague?of 42 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 patent?litigation.? So?plaintiffs?who?walk?into?court 2 under?those?circumstances?are?not?doing?it?without?risk. 3 ?JUSTICE?BREYER:? Yeah,?but?the????the 4 difficulty?here,?I?not????see?it?from?my?point?of?view 5 for?a?second.? Of?course?I?think?that????that?there's?no 6 plaintiff/defendant?necessary?difference?of?who?can?act 7 badly. 8 ?MR.?PHILLIPS:? Of?course. 9 ?JUSTICE?BREYER:? All?right.? And????and?so 10 the?question?is?really?who?is?likely?most?to?know.? And 11 I?think?probably?the?district?court.? But?then?if?you 12 give?the?power?to?the?district?court,?there's?a?problem, 13 of?course,?that?you'll?abuse?it. 14 ?So?I?say,?Well,?then?go?to?the?Federal 15 Circuit,?and?say?they?have.? You?see,?well,?there's 16 another?way?of?approaching?it,?and?that?is?have?definite 17 standards,?which?is?what?you?want.? And?then?the 18 difficulty?with?definite?standards?is?I?can't?think?of?a 19 set?of?definite?standards?that?doesn't?do?what?you?don't 20 want?to?have?happen,?that?it?leans?one?way?or?the?other. 21 ?I?mean,?it?looks?as?if,?you?see,?the?Federal 22 Circuit's?current?standards?leaned?pretty?much?against 23 the?person?who?was?sued.? And?it?looks?like?the??? 24 the????and?so?the?government?comes?up,?well,?we?can't?do 25 better?than?this.? It's?a?long?list. 43 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?And????and?nobody's?been?able?to?think?of 2 some,?so?then?I?say,?Okay,?let's?try?the?first?approach, 3 which?is?what?we?do?with?the?Lanham?Act.? That's?the 4 whole?long?story. 5 ?And?what?you?would?like?to?say,?I'd?like?to 6 listen. 7 ?MR.?PHILLIPS:? Right.? And?the?answer?to 8 that?is?that?the?standards?for?inequitable?conduct?are 9 reasonably?well?set.? They?get?applied?pretty?routinely, 10 and?they?create?exceptional?case?determinations. 11 ?Litigation?misconduct,?the?standards?are 12 pretty?well?set,?pretty?well?understood,?and?they?give 13 rise?to?the?exceptional?case?determinations?and?award?of 14 attorneys'?fees. 15 ?This?case?is?unusual?in?the?sense?that?all 16 it?deals?with?is?that?bucket?that?talks?about?whether?or 17 not?you?had?a?substantial?basis?for?putting?before?the 18 Court?this?litigation?in?the?first?instance.? And??? 19 ?JUSTICE?KAGAN:? Mr.?Phillips,?I?realize?that 20 you?have?this?argument?that?this?statute?was?before 21 Rule?11,?so?the?superfluity?argument?doesn't?work. 22 ?But?just?as?a?matter?of?fact,?would?your 23 standard?give?the?court?authority?to?order?fees?in?any 24 case?in?which?it?does?not?have?authority?by?virtue?of 25 either?Rule?11?or?its?inherent?authority? 44 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?MR.?PHILLIPS:? Are????are?you????are?you 2 asking?me?that?just?about?the?baseless?litigation?or?all 3 of?285?? Because?clearly,?inequitable?conduct,?willful 4 infringement,?and????and?certain?forms?of?litigation 5 misconduct,?which?might????might?create?a?basis?for?fees 6 against?the?lawyer,?might?not?actually?operate?against 7 the????against?the?party?where?that?obviously?285 8 operates?against?the?party.? So?there's?a?whole?range 9 of????of?behavior?that?is?controlled?by?285?that?has 10 nothing?to?do?with?Rule?11,?et?cetera. 11 ?So,?yeah,?I?mean,?there????there's?clearly 12 some?overlap?between?them,?but?that????that?overlap 13 shouldn't?be?shocking?because,?again,?285?was?enacted?in 14 1952,?and?Rule?11?didn't?come?into?being?a?serious?force 15 until?1983. 16 ?JUSTICE?KAGAN:? But?let?me?make?sure?I 17 understand?you.? Give?me?an?example?of?a?case?in?which 18 under?your?standard,?285?could?be?used?to?order?a 19 payment?of?fees,?but?Rule?11?and?inherent?authority 20 would?not?allow. 21 ?MR.?PHILLIPS:? Again,?I?mean,?the????the 22 clear?one????again,?if?you're?only?talking?about?the 23 baselessness?component,?I?don't?know?that?there?is?one 24 like?that. 25 ?If?you're?talking?about?inequitable?conduct, 45 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 they?would?all?be?because?Rule?11?will?never?reach 2 inequitable?conduct?involving?the?Patent?and?Trademark 3 Office?because?it's?completely?irrelevant?to?that.? So 4 the????the?statutes?do?have?some?overlap,?but?they?don't 5 have?complete?correspondence. 6 ?But?that????but?to?me,?that's?the?key. 7 ?JUSTICE?KAGAN:? Inequitable?conduct?to?the 8 Trademark?Office,?but?not?with?respect?to?the?suit 9 itself? 10 ?MR.?PHILLIPS:? Right.? Right.? There?is 11 patent?misconduct. 12 ?JUSTICE?KAGAN:? So?there's?nothing??? 13 ?MR.?PHILLIPS:? There?is??? 14 ?JUSTICE?KAGAN:? There's?nothing?with?respect 15 to?the?suit?itself?that?Rule?11?and?inherent?authority 16 wouldn't?get?you?anyway. 17 ?MR.?PHILLIPS:? Well,?litigation?misconduct 18 is?something?that?may?or?may?not?go?against?the?party, 19 depending?on?which?rule?it?is?and?how?it?plays?out.? So 20 there????and?the?courts?have?long?recognized?that 21 certain?forms?of?vexatious?behavior?by?litigants?may 22 lead?you?to?a?particular????to????to?determine?that 23 something's?an?exceptional?case.? So?there????there?seem 24 to?me?clearly?there?might?be. 25 ?What?I'm????what?I?am?conceding?is?that?I??? 46 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 I?can't?envision?a?situation?where?you?have?brought?what 2 a?court?has?said?is?objectively?baseless?litigation?in 3 the?first?instance?that?might?not?have?been?actionable 4 under?Rule?11.? The?question?would?be????it?would?be??? 5 at?this????at?this?stage?it?would?go?immediately?against 6 the?party?as?opposed?to?potentially?against?the?lawyer. 7 And????and?to?that?extent,?it?obviously?provides?broader 8 relief,?depending?on?which?of?the?two?parties?might 9 actually?have?more?resources. 10 ?JUSTICE?GINSBURG:? What?about?the?inherent 11 authority????Justice?Kagan?brought?this?up????not?just 12 Rule?11,?but?inherent?authority?when?the?court?finds 13 that?the?litigation?is?baseless?and?brought?in?bad 14 faith?? It?seems?to?me?that?your?standard?is?the?same?as 15 what?the?Court?could?do?without?any?statute.? Are?there 16 other?pieces??? 17 ?MR.?PHILLIPS:? Well,?today????today 18 that's????I?think?that?may?be?true.? I?don't?think?that 19 was?true?in?1946?and?then?again?in?1952.? The????the 20 whole?notion?of?shifting?fees?to?a????to?a?losing 21 plaintiff?was????was?all?but?unprecedented?at?the?time. 22 And?the?best?evidence?we?have?of????of?the?circumstances 23 in?which?Congress?wanted?to?have?those?fees?imposed 24 is????is?to?prevent?a?gross?injustice.? And?it?seems?to 25 me?nothing?better?suits?that?test?than?something?that?is 47 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 objectively?baseless,?as????as?just?that?one?bucket 2 within?which?285?operates.? The?other?buckets, 3 obviously,?equally?involve?situations?of?gross 4 injustice. 5 ?JUSTICE?SOTOMAYOR:? So?where?does?the?bad 6 faith?come?in? 7 ?MR.?PHILLIPS:? I'm?sorry? 8 ?JUSTICE?SOTOMAYOR:? Where?does?the?bad?faith 9 come?in?? Rule?11?doesn't?include?bad?faith.? It?just??? 10 ?MR.?PHILLIPS:? I?mean,?we????we?obviously 11 have,?because?it's?in?the?Federal?Circuit's?standard, 12 we????we?embrace?it,?but?the?reality?is?we????I?don't 13 need?to?win?the?bad?faith?argument?if?this?Court 14 concluded?that?bad?faith?is????it?shouldn't?be?an 15 independent?factor.? That?would????that?would?not?bother 16 me?because?the?district?judge?already?found?that?this?is 17 objectively?not?baseless,?so?there?ought?to?be?a?basis 18 for?affirmance?on?that?ground?alone. 19 ?Alternatively,?the?Court?obviously?could 20 wait?for?another?case?in?which?to?take?up?that?issue. 21 I????I????but?we?don't?need?to?win?that?in?order?to 22 prevail?on?this?particular?case,?and?it?certainly 23 wouldn't?cause?me?any?heartburn?if?the?Court?were?to??? 24 to?jettison?that?part?of?it. 25 ?JUSTICE?SOTOMAYOR:? Would?you?address?the 48 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 clear?and?convincing? 2 ?MR.?PHILLIPS:? Yeah,?I????well. 3 ?JUSTICE?SOTOMAYOR:? I?know?your?argument 4 that?it's?not??? 5 ?MR.?PHILLIPS:? It's?not?in?the????that?it's 6 not?before?us.? I?mean,?the?rationale?of?clear?and 7 convincing?obviously?is?that????is?whether?you?assume 8 that?patent?is?being?implemented?in?good?faith?or?being 9 ???being?brought?in?good?faith?and?therefore?creates 10 sort?of?a?presumption?in?favor?of?the????of?infringement 11 and?legitimacy;?and?then?clear?and?convincing?evidence 12 is?obviously?designed?to?make?it?harder?to?get?over?that 13 hurdle. 14 ?Again,?I????I'm?not?here?to?defend?the?clear 15 and?convincing?evidence?standard.? I????I?read?the 16 concurring?opinion?in?the?Federal?Circuit?as?well?and??? 17 but?it?seems?to?me?clearly?not?in?this?case.? It's?not 18 subsumed?by?the?question?presented?and?that's????that's 19 an?issue?that?the?Court?ought?to?wait?for?another?day. 20 Hopefully?I?won't?have?to?defend?it?at?that?time. 21 ?(Laughter.) 22 ?MR.?PHILLIPS:? If?there?are?no?further 23 questions,?Your?Honors,?I'd?urge?you?to?affirm.? Thank 24 you. 25 ?CHIEF?JUSTICE?ROBERTS:? Thank?you,?counsel. 49 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 ?Mr.?Telscher,?you?have?3?minutes?remaining. 2 ?JUSTICE?KENNEDY:? Take????take?your?time, 3 take?your?time. 4 ?REBUTTAL?ARGUMENT?OF?RUDOLPH?A.?TELSCHER 5 ?ON?BEHALF?OF?THE?PETITIONER 6 ?MR.?TELSCHER:? Thank?you.? What?we're?all 7 really?talking?about?here?is?how?extreme?should?the?test 8 be?for?an?exceptional?case.? I?mean,?that's?what?this 9 boils?down?to.? Should?it?be?at?the?extreme?of 10 frivolousness,?or?what?we?believe?objectively?baseless 11 means?the?same?thing????that's?how?the?district?court 12 used?it????or?should?it?be?something?lesser?that's 13 practical. 14 ?The?plain?meaning?of?exceptional?doesn't 15 mean?extreme.? As?the?D.C.?Circuit?found?in?Noxell,?it's 16 not?a?hardly?ever?rule.? So?when?we?look?at?the?plain 17 meaning?it?doesn't?signal?extreme.? When?we?consider?the 18 larger?objectives?of?the?Patent?Act?which?this?Court?has 19 discussed?in?numerous?cases.? You?look?at?Pope?and?Lear, 20 where?this?Court?said?there's?an?important?public 21 interest?in?making?sure,?quote,?worthless?patents?are 22 not?used?to?restrain?trade. 23 ?Four?weeks?ago?in?Medtronic?this?Court?found 24 that?we?should?have?a?paramount?interest?in?making?sure 25 the?bounds?of?patents?are?not?unreasonably?stretched?to 50 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 get?royalties.? And?so?when?we?consider?the?larger 2 objective,?what?we're?looking?for?is?a?balance,?and?if 3 you?look?to?this?Court's?precedent?in?Martin,?where 4 there?was?no?standard,?what?this?Court?found?is?when?you 5 look?to?the?larger?objectives?and?you?want?to?encourage 6 good?conduct?and?you?want?to?discourage?bad?conduct,?you 7 set?it?at?reasonable.? You?don't?set?it?at?the?extreme 8 of?frivolousness,?which?smart?lawyers?know?how?not?to?do 9 that,?how?not?to?get?sanctioned?under?Rule?11. 10 ?And?in?the?complex?world?of?patent?cases 11 it's?not?hard?to?avoid?frivolous?cases.? So?setting?an 12 extreme?standard?would?defeat?the?whole?purpose?of?the 13 Act?and?it's?inconsistent?with?the?language. 14 ?On?the?topic?of?injustice?versus?gross 15 injustice,?I?found?that?very?interesting,?because 16 certainly?exceptional,?there's?nothing?about?it?that 17 signals?gross?injustice?versus?injustice.? And?to?the 18 extent????because?I?think?the?question?was?asked?by?one 19 of?the?Justices,?well,?doesn't?that????that?signal 20 extreme?conduct?? I?don't?know?that?it?does?or?doesn't, 21 but?certainly?the?plain?meaning?of?the?statute?doesn't. 22 ?And?so?to?the?extent?that?gross?injustice, 23 as?used?in?this?Court's?opinion,?it?has?to?signal 24 something?other?than?the?extreme?conduct.? We?can?debate 25 whether?winning?a?hard?fought?case?and?spending 51 Alderson?Reporting?Company Official???Subject?to?Final?Review 1 2?million?is?injustice.? Certainly,?in?my?view,?if?you 2 defend?a?case?and?spend?$2?million,?especially?one?like 3 this?where?every?core?element?was?missing,?that's?gross 4 injustice. 5 ?But?I?don't?know?what?the?standard?is, 6 justice?or?injustice????or?gross?injustice.? It's?just 7 not?extreme,?and?that's?how?this?Court's?opinion?need?to 8 be?written?if?we're?going?to?discourage?the?maintenance 9 of?unreasonable?cases. 10 ?And?there's?not?15?amici?briefs?and?some?of 11 the?largest?technologies?companies?in?this?country 12 before?this?Court?if?it?weren't?the?case?that?there's?a 13 problem.? These?are?companies?with?a?self?interest?in?a 14 strong?patent?system.? They?have?patents;?they?sue.? And 15 yet?they?are?here?telling?this?Court?to?not?pick?an 16 extreme?standard. 17 ?CHIEF?JUSTICE?ROBERTS:? Thank?you,?counsel. 18 ?The?case?is?submitted. 19 ?(Whereupon?at?11:09?a.m.,?the?case?in?the 20 above?entitled?matter?was?submitted.) 21 22 23 24 25 52 Alderson?Reporting?Company 53 Official???Subject?to?Final?Review Official???Subject?to?Final?Review 33:1 35:9 appendix 4:1,5 31:17 41:1 A advanced 19:9 applied 30:7 assess 3:12 baseless 5:6,13 a10 4:1 advertisements 38:2 44:9 14:22 10:7,22 11:10 a13 4:5 42:4 apply 25:24 assistant 1:17 26:1 28:5,6,10 able 15:7 16:24 advice 40:17,18 26:22 assume 15:5 29:24 30:11,13 33:9,18 44:1 41:16,22 appreciate 49:7 32:9 33:8,19 aboveentitled affirm 49:23 20:10 27:17 attached 15:1 34:12 35:12,16 1:11 52:20 affirmance 32:1 attorneys 13:8 35:22 36:3,11 absolute 15:4 48:18 approach 33:2,9 13:10 15:9 37:16 45:2 absolutely 10:8 affirmed 4:1 34:17 44:2 20:21 32:15 47:2,13 48:1 15:11 ago 14:5 27:13 approaching 33:20,21 34:10 48:17 50:10 abstract 24:18 42:23,23 50:23 43:16 44:14 baselessness 33:17 36:6,9 agree 15:19 22:9 appropriate authority 19:5 19:16 38:1 abuse 4:23 5:1 24:8 20:7,7 21:7 41:2 44:23,24 45:23 6:6 15:7 20:21 agreed 11:14 24:15 29:13 44:25 45:19 basically 30:8 41:13 43:13 alito 11:8,12,15 38:8 46:15 47:11,12 basis 9:11 12:6 abusive 3:22 11:24 12:21,25 arbitrary 31:4 authorized 12:23 13:23,24 8:19 13:4,12 14:14 arc 35:19 15:20 22:13 29:6 30:9 31:4 access 30:25 27:24 28:4,8 area 33:9 average 14:16 44:17 45:5 31:1 32:8 28:20 areas 14:21 avoid 51:11 48:17 account 12:3 allegations 4:7 argue 30:19 award 3:17 4:14 battle 20:5 13:6 39:5 allow 45:20 arguing 10:2 6:5 8:8 11:19 bear 18:18 act 13:2 38:11 allowing 38:23 argument 1:12 13:18 18:5,7 bears 17:14,20 38:17,20 39:2 alternative 40:1 2:2,5,9,12 3:4 18:14 19:6,17 beginning 42:19 39:6,7,11,18 42:12 3:7 10:14 19:21,24 20:6 behalf 1:16,21 39:19,23,25 alternatively 18:24 19:23,24 20:25 44:13 2:4,11,14 3:8 43:6 44:3 48:19 21:6 25:23 awarded 24:13 29:19 50:5 50:18 51:13 amendment 28:3,18,19 awards 9:5 19:7 behave 15:8 acted 12:18 30:18,20,23 29:18 31:24,25 31:2 behavior 45:9 action 3:14 31:13 32:6 33:16 39:8 46:21 actionable 47:3 B amici 52:10 40:14 41:5 belief 18:11 add 6:19,19 back 14:4 24:1 amicus 1:19 2:7 44:20,21 48:13 believe 11:15,20 21:24 22:3,5 32:4 33:4 37:1 18:25 49:3 50:4 16:21 17:13 33:15 backdrop 25:12 analysis 4:18,19 arguments 21:8 37:24 added 7:10 38:21 analyzed 30:3,8 19:10 20:9 50:10 addition 34:1 bad 5:13 11:12 analyzing 30:1,5 27:3 28:23 best 31:23,25 additional 19:13 12:4 16:3 17:6 answer 10:4,16 array 26:24 47:22 26:9 19:8,16 21:16 14:25 44:7 articulating better 9:4 41:7 address 48:25 22:2 24:25 answers 39:20 32:14 43:25 47:25 adjective 16:13 26:1,25 47:13 anyway 46:16 aside 10:3 big 18:2 20:18 adjectives 5:3,3 48:5,8,9,13,14 apparently asked 51:18 20:19 9:7 15:1 16:6 51:6 33:16 39:3 asking 5:22,23 bill 23:3 20:5 badfaith 3:16 appeal 21:10 6:1 45:2 bit 23:14 24:20 administered badly 43:7 41:5 aspects 3:15 28:14,24 35:7 balance 51:2 appearances 13:3 boils 50:9 adopt 16:7 barely 33:25 1:14 asserting 17:25 borrow 25:15 adopted 16:10 based 19:19 appellate 6:4 assertion 21:16 bother 32:16 Alderson?Reporting?Company Alderson?Reporting?Company Official???Subject?to?Final?Review 54 48:15 34:13,15 36:15 categories 17:22 15:3 17:13 companies bottom 36:8 43:18,24 47:1 18:2 19:6 21:7,22 52:11,13 bounds 50:25 captures 22:2,9 category 26:22 22:20,23 24:15 company 20:19 breyer 21:11,23 carry 14:21 cause 30:14,14 27:2 37:4 43:2 20:20 23:1 33:7,24 carter 1:21 2:10 35:15 48:23 47:22 compared 12:5 34:9,17,20,24 29:18 cchannel 3:24 cite 21:17 12:21,21,25 36:5,20,23 case 3:4,11,15 4:4 cited 23:11 comparison 37:1,6 40:10 4:12 5:7 6:11 certain 45:4 city 33:13 12:6,8 40:13 41:4 8:9,13 11:16 46:21 civil 27:10 comparisons 43:3,9 11:21,25 12:1 certainly 16:8 claim 3:25 4:12 13:22 brief 21:12 12:4,9,15 16:16 18:9 6:14,15,22 7:4 competitor 4:22 24:16 27:19 13:13,16,18 31:13 48:22 7:7,15 30:5 4:22,24,25 briefs 27:6 15:6,15,15,18 51:16,21 52:1 36:14 41:25 52:10 16:18,21 17:6 certiorari 37:13 claimed 4:11 complete 46:5 brightline 20:11 17:11,15,16,21 cetera 22:3 claims 3:24 completely 41:1 brilliant 33:20 18:4,6,15,17 45:10 21:16 36:7 46:3 bring 12:11 19:17 20:7,10 challenges 34:5 clarify 19:13 complex 13:1 30:24 40:16,25 20:13 21:9 challenging clear 5:8 20:1,17 51:10 41:22 42:7 22:8 26:24 42:24 20:20 22:1 component bringing 26:25 27:12,21 28:3 change 26:2 24:8 27:5,15 45:23 31:18 40:19 28:16 29:24 check 34:3 27:23 28:7,16 computer 33:11 brings 7:15 30:1,3,4,6,18 chief 3:3,9 8:23 37:7,11,19,24 33:14 36:10 16:20 30:24 32:5 15:19,24 16:11 45:22 49:1,6 concede 31:14 broader 24:19 33:3 34:10 18:22 19:2 49:11,14 conceding 46:25 47:7 35:17 36:24,25 22:11,16 23:14 clearly 38:22 conceives 28:8 brooks 26:2,14 37:12,21,21 29:2,16,20,21 45:3,11 46:24 concept 26:15 26:23 30:7 38:2,3,13 30:16,23 49:25 49:17 concern 30:20 37:21 40:17,20,22,25 52:17 client 17:23 30:24 brought 5:13 41:8 44:15,24 christiansburg close 15:6,15 concerned 30:17 17:17 47:1,11 45:17 46:23 5:8 32:4,5 34:13 conclude 41:3 47:13 49:9 48:20,22 49:17 circuit 3:23 4:1 closer 28:25 concluded 22:23 bucket 44:16 50:8 51:25 11:9 13:24 coercion 3:16 48:14 48:1 52:2,12,18,19 14:9 22:7 4:10,16,20 conclusion buckets 48:2 cases 3:16 6:2 26:18 28:8 combat 3:21 14:10 businesses 17:1 7:2,18 8:6 9:5 29:10,11,14 combination 4:8 concurring 12:22,25 13:1 38:5,14 41:13 19:20 26:11,11 49:16 C 13:7,22 14:3,6 41:18 42:23 26:13 conduct 19:9 c 1:8,18,21 2:1 14:8,8,17 16:2 43:15 49:16 come 22:12 38:4 21:14 22:6 3:1 6:16 38:14 19:8 21:17 50:15 45:14 48:6,9 26:25 31:17 50:15 22:10 23:12 circuits 3:18 comes 8:13 23:2 32:14 42:24 call 42:5,15,17 24:21 26:24 6:13 9:23 28:23 36:18 44:8 45:3,25 called 12:19 28:12 31:6,9 10:17,20 29:4 37:20 43:24 46:2,7 51:6,6 14:22 31:11,15,16 29:6 37:15 comfortable 51:20,24 candidate 11:22 33:8 42:7,22 43:22 48:11 23:6 confirmed 27:13 canons 3:19 50:19 51:10,11 circumstance commercialize conflicts 3:18 cant 5:23 15:2 52:9 40:15 17:18 confusion 28:15 15:14 33:19 catchall 26:22 circumstances committed 19:8 congress 14:2,2 Alderson?Reporting?Company 55 Official???Subject?to?Final?Review 16:9 22:9 24:7 core 4:11 52:3 44:18,23 47:2 defeat 51:12 9:22 10:5 24:9,22 25:13 correct 11:10 47:12,15 48:13 defend 16:22 27:24 43:6 27:12,14,15 15:11 27:25 48:19,23 49:19 49:14,20 52:2 different 8:24 31:5,8 32:24 correspondence 50:11,18,20,23 defendant 12:12 13:9,14 14:21 33:2 35:8 46:5 51:4 52:12,15 22:14 42:12,17 17:24 19:20 38:22 39:24 cost 34:2 courts 3:21 4:2 43:6 21:18 25:14,19 40:4 47:23 costs 16:21 34:5 5:12 6:4 7:21 defendants 28:4 32:12 conjunction 34:22 41:11 8:21 9:14 38:23 40:21 38:21 39:19 11:16 couldnt 15:10 12:24 16:10 defending 42:13 40:1,3 41:16 conscience 15:10 17:18 18:12 19:4,10 defenses 21:17 differently 7:21 23:18 34:10 19:14,19 22:21 defer 29:3 13:14 consequence counsel 18:22 22:23 30:25 deference 9:2,8 difficulty 43:4 32:22 40:4 29:16 30:10 31:1 32:8 33:1 29:12 43:18 consequences 49:25 52:17 46:20 51:3,23 define 5:9 15:14 direction 26:8 9:5 counsels 40:17 52:7 definite 6:5 directly 32:11 consider 17:5 count 37:3 covered 24:21 43:16,18,19 disconnect 50:17 51:1 country 9:19 covers 26:23,24 degree 3:13 15:4 23:15,24 consideration 14:15 17:1 27:1 15:17 17:5 discourage 51:6 11:21 17:12 20:19 52:11 create 44:10 demands 42:14 52:8 23:5 29:12 couple 26:8 45:5 department discovery 34:6 considerations 33:15,24 38:19 creates 49:9 1:18 discretion 3:21 3:13 course 12:10 crosses 8:14 depending 5:20 6:6 41:14 considered 30:17 34:20 curiae 1:19 2:7 46:19 47:8 discretionary 19:25 41:9 43:5,8,13 18:25 deprives 3:20 6:1 19:5 consistent 7:17 court 1:1,12 current 43:22 describe 34:14 discussed 24:14 8:21 16:17 3:10,12 4:13 currently 8:19 described 34:19 50:19 29:10,13 4:14 5:8,12,15 design 12:14 discussion 20:4 constitutional 5:18,21 6:7,8,9 D designed 33:4 27:23 9:21 6:10 7:3 8:3,16 d 1:8,18,21 3:1 49:12 disincentives constitutionally 9:2,17 10:10 38:14 50:15 determination 40:24 9:12 10:12,21 12:16 day 12:19 17:19 6:9,21 18:10 dispute 7:5 construction 12:19,22 13:6 35:17,24 36:2 18:16,19 12:14 3:20,25 6:15 13:9 14:3,5,7 49:19 determinations district 3:20 4:2 7:4,7,16 14:11,20 15:7 deal 8:23 34:18 12:20 44:10,13 4:14 5:12,12 construe 39:17 15:10 16:23 dealing 8:24 9:7 determine 12:1 5:15,18,20 6:9 context 8:12 17:5,12 18:4,7 28:2 37:14 18:15 46:22 6:10 7:3,21 25:24 32:23 18:17 19:3,11 deals 44:16 determines 10:12,21 11:25 39:18,19 19:15,18,18,22 debate 51:24 18:17 12:16,18,22,24 contexts 20:13 20:1,12 21:25 decide 12:4 37:9 deterring 8:19 13:6,15,20 contrary 3:25 25:11 26:3,7 decided 14:8 develop 9:3 14:3,5,7,11,15 controlled 45:9 27:9,20 29:22 22:10 27:12 develops 12:11 14:17,20 16:23 conviction 6:5 29:25 30:12 decision 9:2 didnt 6:10 27:18 18:4,6,11 19:4 convincing 20:2 32:5,10 33:10 30:10 42:18 32:5 37:3,12 19:14,19 29:25 27:5,15,22,23 34:2,5 37:13 decisions 25:10 39:5 40:5 30:1 33:9 35:1 37:7,11,19,24 37:14 39:3,5 25:11,12 33:1 41:17 45:14 35:19,23 36:4 49:1,7,11,15 40:15 41:2 33:5 differ 10:17 37:8 40:14 copy 21:19 43:1,11,12 deeply 27:20 difference 5:5 41:2 43:11,12 Alderson?Reporting?Company Official???Subject?to?Final?Review 56 48:16 50:11 44:25 4:13 6:10 8:25 48:15 41:7 divided 29:11,15 elaborates 26:8 9:8 11:23 12:2 factors 17:4 figuring 33:20 docket 14:21 element 30:1 12:5,5 13:18 18:12 19:20 final 14:10 doesnt 6:24 7:7 52:3 13:21 14:3 20:15,18 21:9 finally 33:19 10:4 15:4 16:4 elements 4:11,11 15:16 16:18 23:15,21,24 find 4:3 7:4 13:4 17:22 22:17 elliptical 35:19 18:4,6,13,15 26:3,5,11,14 16:24 26:2 39:4,4 embrace 27:15 18:18 23:17 facts 27:10 finding 6:2,13 42:17,18 43:19 48:12 24:21,21 25:3 fairly 22:9 31:3 18:11 44:21 48:9 embraces 26:15 30:6 33:3 37:25 finds 35:21,24 50:14,17 51:19 enacted 23:4 34:10 38:12 faith 5:14 11:13 47:12 51:20,21 32:19 35:8 46:23 50:8,14 12:4 17:6 19:8 firm 6:4 dog 40:7 38:21 45:13 51:16 19:16 21:16 first 3:4 10:16 doing 13:23,25 encompass 26:5 exceptionalcase 22:2 24:25 10:19 14:1 43:2 encourage 51:5 35:9 44:10,13 26:1,25 47:14 18:14 19:15 dollar 31:2 english 31:20 exercised 5:20 48:6,8,9,13,14 29:5 30:17,20 dont 5:7 6:19 ensues 12:15 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