Argument Recap

Earlier this week the Federal Circuit heard oral argument in Conversant Wireless Licensing v. Apple Inc., a case we have been following because it attracted amicus briefs. In this case, the court addressed a district court’s holding that Conversant’s ’151 patent is unenforceable because Nokia, the original patentee, made an untimely disclosure of the patent to the ETSI standards setting body. On appeal, Conversant argues that implied waiver of enforceability requires proof of but-for causation that Conversant inequitably benefited from the untimely disclosure. Judges Reyna and Bryson heard the oral argument, and a third unnamed judge will join the panel later for deliberation and final judgment. This is our argument recap.

Marc A. Fenster argued for Conversant. He began with a summary of Conversant’s main argument: “The district court’s finding of unenforceability should be reversed because the district court failed to require and the record does not support a finding by clear and convincing evidence that Nokia or Conversant obtained any benefits as a result of Nokia’s late disclosure.” He argued that the district court erred in finding that Apple was not required to connect the inequitable benefit with Nokia’s nondisclosure.

At the use of the phrase “but-for” in Fenster’s argument, Judge Reyna interrupted to address the case’s connection to Therasense. Judge Reyna asked why the materiality standard from Therasense should apply in this case. He also asked whether there is a meaningful difference in unenforceability in Theransense and unenforceability in implied waiver (this case).

Responding to the question, Fenster argued that a prior Federal Circuit panel that remanded the case to the district court to determine enforceability found that Therasense controlled. He contended that there is no meaningful difference between unenforceability in Therasense in the context of inequitable conduct and unenforceability in this case related to implied waiver. Although the doctrines vary as to remedy, both are equitable doctrines, he explained, and “Therasense specifically held that equitable considerations require ‘but-for’ materiality and clear and convincing evidence.”

Fenster continued his argument with the point that, not only did the district court fail to use the “but-for” standard, but it also failed to make its findings based on “clear and convincing evidence.” Instead, he argued, it made findings based on testimony that suggested only a possibility that Nokia and Conversant inequitably benefitted from the late disclosure. Once again, he drew the requirement of clear and convincing evidence from Therasense.

William F. Lee argued for Apple. Before he could move beyond his introduction, however, Judge Reyna interrupted to ask how the world would have been different had Nokia disclosed the application to the ’151 patent in 1998. Lee responded that if there had been disclosure, then there would have been no ’151 patent that was essential and no basis to license it.

Judge Bryson asked what standard should apply to the case if not a “but-for” standard. Lee contended that a causation requirement was applicable, and that the district court did in fact apply a causation standard for the benefit and nondisclosure. He asserted that the sections of the district court’s opinion (where Conversant argues the court rejected a “but-for” standard) only dismissed a specific argument by Conversant that Apple was required to prove specifically that ETSI would have adopted a different standard. He argued that the causation standard was whether benefit “resulted from” the inequitable conduct.

Judge Bryson supposed a hypothetical. He asked Lee to assume that the patentee, Nokia, did not disclose and ETSI knew about it but still went ahead with the standard that it ultimately adopted. He asked whether there would still be a remedy available in this case. Lee conceded that if these were the facts of the case, then it would be very difficult to argue that the benefit “resulted from” the nondisclosure.

Judge Bryson also asked if use of the ’151 patent was optional or mandatory for mobile stations. Lee said that in its litigation Conversant suggested it was mandatory.

In rebuttal, Fenster argued that the expert testimony from the case indicated that use of the ’151 invention was optional to mobile stations. He asserted that this was why the case was originally tried as a “source code case.” He contends that Apple had a choice in this regard, and that Conversant had to go to the source code to figure out which option was used in order to bring suit in the first case.

We will keep track of this case and report on its disposition.