InterDigital Inc (IDCC)

[postyle]

CAFC sticky info: NukeJohn's reports/analysis, infinite_q's reports, oral recording download, & more

To All, per JimLur's request, here are the compiled reports and other information from today's (1-13-11) oral arguments at the CAFC:

United States Court of Appeals for the Federal Circuit
InterDigital Communications LLC v. ITC, case number 2010-1093
Panel J: Thursday, January 13, 2011, 2:00 P.M., Courtroom 201
Judges: Pauline Newman, Haldane Robert Mayer and William C. Bryson

Prior to the proceedings, NukeJohn's post #301937: Analyzing IDCC's Case at the CAFC

After the hearing, this news summary from Law360 was released: Nokia, InterDigital Spar Over Code In 3G Patents

Oral Argmuents Recording (mp3 format / 31.6 MB) for case no. 2010-1093 INTERDIGITAL COMMUNICATIONS V. ITC

Reports from members who attended the hearing:
_______________________________________________________________________________________________________

NukeJohn:

Today at the CAFC

First, I should tell you that I just got to my hotel about 30 minutes ago and just wrote this post without reading any posts on the board or without listenting to the oral arguments again. Everything here is from my first impression, and I reserve the right to listen to the orals a couple of times and make additions/corrections.

Nokia decided to gamble and go through with oral arguments, and IMHO, if they had it to do over again, they would change their mind. They rolled the dice and lost. In most oral arguments, you can see the judges trying to be tough with both parties. In this case, I think they almost felt sorry for Megan Valentine, the ITC attorney, and Patrick Flynn, the Nokia attorney. They didn't hammer them near as hard as I have seen Rader hammer the attornies when he sees a weakness.

First, let me tell you how impressed I am with Judge Newman. The woman has to be 85 or 86 years old (she got her BA in 1947), and yet she is sharp as a tack. She challenged the ITC attorney and the Nokia attorney on short codes on several occasions (recognizing that short codes don't spread the bandwidth). The body landuage of all three judges was very telling. As usual, Mayer didn't say a single word. Bryson asked most of the questions, and there is no doubt in my mind that he gets everything related to "spreading codes" vs "codes", and he knows the ITC ALJ got it wrong. All codes don't have to spread the bandwidth, as Judge Luckern required in his claims construction.

Mr. Dunner opened the arguments and he did okay, but quite frankly, I don't think he fully understood some of the questions from Judge Bryson, but he did a good job of deflecting the questions by pointing the panel back to the errors of ALJ. Mr. Dunner had the facts on his side, and he hammered home the key issues...and he killed Mr. Flynn when he was able to respond at the end.

The ITC attorney backed away from their own ALJ's claims construction which is a first for me. It's almost as if she knew the ALJ erred. She tried to use some smoke and mirrors when she tried to distinguish say the ALJ's spreading code definition had both " a function and a structure"....but the CAFC wasn't buying any of that. When Mr Flynn first started his arguments, he started out strong, but about a minute or two in, he had to disagree with Ms Valentine's position. It's the first time I have ever heard an ITC case when the party the ITC sided with disagreed the ITC's position. That should tell you how weak the Nokia case is.

Mr. Flynn started off strong and authoritative, as if he was going to educate the court on CDMA and how spreading codes work. However, he faltered after a few minutes and actually wound up misstating scrambling codes for spreading codes....but Judge Bryson understands this very well, so well...he immediately called him on it.

The most interesting thing was the body language of the Judges. I have now seen Judge Meyer in action in about 6-7 cases. When he disagrees with what is being said, he has a habit of crossing his hands and interlocking his fingers at the top of his chest and leaning back in his chair with a frown on his face. When he is interested and agrees with what is being said, instead of leaning back, he sits straight up and typically, places his forefinger and thumb on his chin. As you can imagine, when Mr. Dunner was talking, he was sitting straight up and touching his chin. When Ms. Valentine or Mr. Flynn were talking, he was leaning back and frowning (and sometimes playing with his tongue in his cheek). Judge Newman cocks her head about 20 degrees and has a quizzical look on her face when she disagrees with what is being said. You could often see that look when Mr. Flynn and Ms. Valentine were talking. Judge Bryson had some positive body language (leaning forward and listening attentively) when Mr. Dunner was talking, and was mostly just sitting back when the Nokia side was talking. Bryson just did an excellent job of asking questions that shows he "gets it". He covered all the things I wrote up in my analysis of the case over a month ago, and I can tell he agrees with IDCC.

At the very end, Judge Newman made some comment about writing up the ruling, and she would like for the parties to review the comments they have requested to be kept "business confidential". She said that the court would like to use some of the confidential information in their ruling. The only way I could interpret what she was saying is that they have already looked very closely at the case and have (at a minimum) very strong leanings in one direction of the other. Actually, it seems to me from her comments, that they have already made their mind up, or they wouldn't be asking the parties to remove some of the business confidential designations. Based on the way the arguments went, I can't imagine they would be leaning toward Nokia.

One other interesting comment ....which is open to interpretation, is that when Judge Newman requested the parties review the business confidential material (and allow it in), Mr. Flynn jumped up and started going through some elaborate explanation that you could tell Judge Newman wanted no part of....but Mr. Dunner saved the day when he said "Don't worry your honor, Mr. Flynn and I are on very good speaking terms". The way that went down, it sounded to me as if he was saying (we may be able to get this settled without worrying about business confidential redactions).

You can see from how the market responded at about 2:40 to 2:45 how the attendees believed the case went. I saw a couple of hedge fund guys that I see at a lot of the CAFC cases, and I saw Michael Cohen of MDC Financial (who asked questions on the last IDCC Conference call). He runs MDC Financial, a firm that advises Hedge Funds on legal events (mostly patent cases). I have seen him a couple of times at these CAFC cases (mostly Rambus and TiVo), unfortunately I had to run after the arguments were over and didn't get a chance to ask him what he thought.

IDCC is now in the driver's seat....they can hold out until the ruling comes out and go for maximum royalties....but frankly, that doesn't seem to be IDCC's style (and I'm glad because it hasn't worked for Rambus).

JMHO,

NJ
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infinite_q:

Live from the CAFC...

Just got back. I'm pretty pleased that I went. It was very interesting to watch.

Bottom line - IDCC's attorney Dunner clearly made the best arguments in the courtroom, and left with a big grin on his face.

NOK's attorney was not so happy.

The ITC attorney completely fumbled the ball and wasted half of the time allotted to NOK and the ITC.

More detail from CAFC...

I got there early and grabbed a good seat near the front (second row, far right, in the comfy leather chairs - those benches were very uncomfortable).

Patrick Flynn (NOK's attorney) and Ms. Ballantine (not sure of her name) were already seated with 2 other attorneys up front. Several other attorneys were hanging around, some from other cases to be argued later. Eventually there were probably 60 people in the courtroom, most of which were there for the IDCC/NOK battle.

When the IDCC attorneys filed in it looked like a precision team marching in to do battle. The IDCC side was much older and appeared more seasoned than the NOK side. Dunner (IDCC's attorney) was the oldest attorney in the room. Once he started speaking it was clear he had been around the block once or twice before.

I don't know about the protocol, but if it is anything like a wedding where guests sit on either the groom side or the bride's side of the church then I would say there were more IDCC supporters in attendance. Can't be sure.

Two of the judges (Bryson and Newman) were very attentive and asked lots of good questions that got right to the point. The third judge (Mayer) acted fairly disinterested and never spoke a word and didn't really take any notes.

Based on my perception of the body language, the judges seemed to understand and accept most of Dunner's arguments. He got right to the point and made it clear what the crux of IDCC's position was. It comes down to whether the ALJ erred in limiting the claims construction of "code" to a sequence of chips that was intended to spread the bandwidth, and in limiting the power ramp-up to continuous increases in power during transmission (IDCC says the broader construction that allows stepwise transmission with successively higher levels is covered by the patent, which is what NOK's handsets do per the standard.

Dunner also made good points about the doctrine of claims differentiation and the fact that the ALJ's construction excluded the embodiments in the specification. The judges asked good questions about the claims differentiation, both to Dunner and to the ITC attorney. They seem to agree with Dunner on this point, which is good because that would lead to them tossing out the ALJ's claim limitations and siding with IDCC.

The judges asked about the CDMA standards and the specification in the patent, and asked if it is required in either that the "spreading codes" used in the PRACH preamble are used to increase bandwidth. So I take that to mean they are leaning toward IDCC's position that even if you call the short codes spreading codes those codes don't have to be used to increase bandwidth and hence there is infringement.

(more to follow)

CAFC part II...

NOK's attorney and the ITC attorney split their allotted time, which was probably not good for their side. Ms. Ballantine (sp?) spoke first. She went into some sort of argument about why the ALJ's claim construction regarding the limitation that the short code has to be "intended to increase bandwidth" was so disjointed and unintelligible that I doubt anyone in the courtroom understood what she was really saying. She basically did more harm than good, in my opinion. The judges were trying to understand what she was saying, and had puzzled looks on their faces. Eventually they interrupted her and started asking pointed questions to try to get her to make her point.

Judge Bryson asked her what the ALJ meant by "a code intended to be used to spread the bandwidth". He asked how a code could have an intention, as it is just a code. He asked her what he should specifically look for in a code in order to identify it as a spreading code. She did not answer the question. She tried to say that it had to be an orthogonal code, but the judges didn't seem to understand what she meant by that, or how you could tell by looking at a short code if it was orthogonal or not.

At one point she got so twisted up in her statements that she actually made IDCC's case for them, it seems. Judge Newman specifically asked her, "Isn't that their (IDCC's) point?"

Then Judge Bryson asked her about the claims differentiation issue, and whether claims 1 and 5 were redundant. She said yes, and that this sometimes happens when you are writing patents - that you can end up with 2 claims that really say the same thing. That goes against the doctrine of claims differentiation in my understanding.

More to follow...

CAFC part III...

So Ms. Valentine (thanks for the correction on the spelling) overran her time, which didn't make Patrick Flynn too happy. He jumped up and started talking fast to make up for that. He quickly went into damage control mode, as he, too, knew that she had pretty much botched her arguments.

Flynn started out by saying he disagreed with Ms. Valentine as to whether claims 1 and 5 were redundant. His position was that they were different, but not because claim 5 added the limitation "spreading" to the word code, but because one claim referred to codes and the other one referred to signals. Dunner later blew that argument out of the water in his rebuttal.

Judge Bryson directed the same question to Flynn, about what features he should look for in a code in order to identify it as a spreading code. Flynn talked fast and tried to make his point that a short code is still a spreading code even if it is a portion of a longer spreading code, and a true spreading code has to be one of a limited set of codes known to the base station and the handset. He said that in IDCC's patent spec the code has to be known to both so it would have to be a spreading code based on that alone, or something like that. I'll have to listen again to this portion, as my notes got sketchy here. I became more attentive to the body language of the judges rather than the essence of the arguments.

Bryson and Newman were leaning forward, listening intently, trying to understand what NOK's position is on the claim construction for the word code. Bryson came back with the same question to Flynn, about what the meaning of "intended to be used" was in the ALJ's construction. Obviously they don't agree with ALJ Luckern's construction and this strange definition he used.

Flynn seemed to have very good technical understanding of the technology at issue, but I don't think he really got his points across effectively to the panel. He eventually ran out of time and had to sit down.

Then Dunner got back up and tried to refute several points made by Flynn and Valentine. He was very clear, made good points, and I think the judges followed his logic.

When the time was up, Judge Newman asked the parties to take another look at the sections of the briefs they declared as confidential, because they will have to refer to those sections when they make their ruling. They want the ruling to be non- confidential and need to refer to the arguments in the briefs to capture the decision for posterity, I guess.

CAFC part IV (redacted version)...

So the hearing wrapped up and everyone filed out of the room. I went to retrieve my coat and took my time so I could observe the attornies and see what the overall impressions were.

Dunner was walking around with a big cheshire grin on his face. He knew he had done well, IMO. He was shaking hands with his colleagues, and the IDCC team withdrew to a room in the back, I think, to do a debrief.

On the other hand, the NOK and ITC attorneys went their separate ways.
(Redacted) But it didn't seem that they were pleased with the way things went, in my opinion. This is probably the best thing I got out of attending, in my opinion.

So in summary I think IDCC is in a much better negotiating position after the oral arguments. I say they give NOK one more chance to take their settlement offer, and if they decline then IDCC should wait for the decision. I am very comfortable that at least some portions of the ALJ's claims construction will be reversed now.

JMO

hock1, re: point of clarity...

I agree, this is definitely going to add some clarity to the parties' positions and chances of winning. I think NOK has been very arrogant all along, and with their record of pulling legal victories out of the hat they probably figured they could keep dragging this out indefinitely. I believe their attorneys have been telling them to stay the course, that they still have a good case and may well pull out another win at the CAFC.

But today may have been a turning point. Dunner did a good job of focusing on the 3 or 4 key issues that could lead to a complete reversal or remanding of the case back to the ITC. The judges were clearly asking questions that show where their focus is at this stage, and there are several angles they could take that would put NOK in a precarious position. So now NOK has to decide if they want to let this play out and give up even more leverage in the negotiations. I don't think the NOK attorneys can continue blowing smoke at this point. I think they have to tell NOK that this may go against them. Perhaps that will be enough to force NOK to make the right business decision and settle.

Personally, I think NOK and IDCC have agreed that NOK is infringing on certain patents, but they disagree on a couple of important ones like this short code/power ramp-up patent family. They may have agreed to a couple of royalty rates depending on how this comes out. But if NOK takes this to a decision IDCC may throw out those agreed rates and demand a higher rate. Just my opinion, but I think with today's performance NOK will either settle or they will end up with a much higher rate in the end than they would get by settling now.
_______________________________________________________________________________________________________

other reports in chronological order:

JimLur
Thursday, January 13, 2011 3:03:30 PM

First Report,

Jim:

Hearing = 35 minutes.

Judges:
Newman - active
Bryson - active
Mayer - silent

Attorneys:
Dunner (idcc) seemingly very effective.
Valentine (itc) relatively weak - questioned with some skepticism.
Flynn (nok) forceful and specific.
Dunner in rebuttal - concise, incredulous, effective.

Scuttlebutt outside the courtroom - "Very good for these guys." (idcc)

Recordings should be interesting. Beating traffic - more latter.

WayHaw
Thursday, January 13, 2011 3:15:42 PM

Second Report:

Just got a call from IQ who happened to be in DC on business and had time to attend the hearing.

Very positve report on the argument from IDCC's attorney. Said Nokia tried to present a rebuttal but didn't seem impressive. IQ said he will give a more detailed response when he gets back to his hotel room. Total time in court ~ 20 minutes.

WayHaw

JimLur
Thursday, January 13, 2011 3:19:55 PM

3rd report, Got a email from NukeJohn and he said IDCC kicked but and he will report later.

JIM

RMBSrider
Thursday, January 13, 2011 3:20:56 PM

Report from NukeJohn via BlackBerry

IDCC won hands down. Ruling should come very quick.

I will leave the details to Nuke.

Monterey2000
Thursday, January 13, 2011 5:43:08 PM

IQ...Thanks for attending and sharing all your notes from the hearing. I was present at the hearing. I concur with your summation of the judges' demeanor, the respective IDCC, ITC, and NOK presentations. the IDCC rebuttal, and the proceedings overall.

IMO, Dunner did a very good job of presenting the facts in IDDC's case and in his final rebuttal. On several occasions, Dunner gave specific references to pages in the IDCC brief to substantiate his tehnical point or his point in law to the panel of judges.

IMO, Ms. Valentine had difficulty in making a clear case in support of the ITC ruling by the ALJ.

IMO, NOK had to spend time recovering from the ITC's disjointed and confusing presentation of the ITC's case.

IMO, Bryson was the most engaged by asking questions followed by Newman. I assume that since Newman sat in the center chair, she is the chief judge for this panel. Mayer was quiet almost to the point of seeming disinterest. Mayer certainly did not engage himself in the proceeeding like the other two judges.

As IQ reported, Dunner definitely had a broad chesire grin on his face as he left the courtroom.

While Dunner was waiting for the elevator, Dunner turned to those around him (I assume his collegues) and said with that same smile; We will see you back here next week. That comment was followed by some light-hearted laughter. IMO...I took his comment to mean that he expects to be back at CAFC next week to hear the judges ruling in favor of IDCC.

quilix
Thursday, January 13, 2011 8:46:55 PM

Thanks to everyone else who shared their thoughts - especially infinite_q. I was also at the hearing (was nice to meet you in person Monterey2000). I don't have much to add to what was already said but I can concur that I saw the same. I definitely noticed how much younger the lawyers on the Nokia side were vs. on the Interdigital side.

On body language Ill add that Bryson and Newman in addition to being engaged in asking questions were always focused on the speaker as they were presenting their case. Mayer was not even looking at the speaker some of the time.

I was interested to notice how little time was spent on the "continuously increasing power level" issue by the ITC and Nokia. It seems like that is a very simple point of argument and I thought Dunner gave some good arguments. Perhaps Nokia/ITC felt that handled that well in their briefs but that is another place they can lose aside from the spreading code issue.