good morning everyone the first is that a two part test for pam exhaustion and the quantum was not met the second is that j b c should have been allowed the opportunity to take discovery with respect to use of the accused nero with respect to the release and why is it not protected under the exhaustion doctor i said i think you are you have to break it down into different patterns and we can group for patterns together if you will wait for nine one before zero four and eight one patents with these patents taken together have a collection of claims directed to first message of recording video data or your data and cards mind control data optical disk like a piece of paper so to speak and therefore were not the product not sold under a license under those patents so you're saying that they were not with any other tools no i'm not saying that i'm not arguing that because the optical disk itself complies with the standards that's part of your theory or infringement but what i'm saying your honor is the optical disk makes may comply with certain standards but not necessarily with the standards with respect  essential to those industry standards and therefore the implementation of those standards by the end user the customer in this case necessarily result in infringement of your pants that you're doing no it's not  physical format that is correct it doesn't have a certain logical format which is what most of these claims are directed to what do you mean physical or well i'll give you an example date there may be a two layer disk the dual layer disks maybe a certain reflective coating requires a disk was that the year of software writes it in a certain way to comply with the stand if you know i think he went beyond that and the risk talking about the manufacturer of the disk so the could be used in connection with the industry standard have particular functions that that you claim are essential to the industry standard say the what i'm trying to say on is that that's the way the nero software right to give you a perfect example if i may or to pass dealings with editing intended to be used for this is what he does say he does say that with respect to the quanta test which requires a substantial body with an invention that all the key characteristics all the key have met the features of in the software and not in the desk that that the that the disk complies with all of those standards for the entire universe correct that's so but but the problem here is not the problem but it's your theory that is limited the universe of the standards that we're looking at asserted pens and those pens have specific methods and to them so you're the one that's limited the we see the universe that we're considering compliance with the standards reflected in the p i mean you seem to be saying that these some of these disks are manufactured in a way that has nothing to do with the standards nothing to do with some of these patents i'm saying it's interesting that you're saying that but you're a lawyer and where's the declaration that i mean it seems to me that these disks are cleared in accordance with the standard and so that they can perform together with the software the functions that are described in the ad and  but the quanta standard which require that the disk substantially embody that invention is clearly not met because all the essential features of the claims are not in a blank after this that it's like a piece of paper like a memory device if you had it if you ha patents on all memory devices and things that could be written to a memory device it wouldn't cover necessarily so off a software problem that you wrote to the memory device even though it was in a broad sense intended to receive software and just was offered a certain way but that specific software programs would not be licensed same things the same thing here you have this blank blank object that's intended to be used for writing upon it but what you write upon it is determined completely by products that are defined as essential for the for whatever it is including selling and using the products are infringing when they acquire the software that enables the patent process to occur from a prevail rather than a participant in the pool and therefore their license the user still have to go out and the user would have to use a licensed a licensed software in order to practice those those claims just like they would if it was a third party who wasn't part of the pool who had a fuse is not going to know they never know record playback in accordance with the standards correct it their products is essential to the standard and therefore they are included in the pool and the idea is to remove restraints in the question we quit struggling with is is everything removed including two separate inventions which we're told we have here well here from the other side and we can pursue this through that  whether the end user of a d v d or blu ray disc who is using a desk and all of these gusts are licensed as the court knows from our briefing j v c did not produce even a single example of an unlicensed is in use in the doctrine there's no question that all of the sales that took place in this case in this case to end users are authorized sales they're authorized sales of licensed products because it is not of your software of the desk and that th will be discussed fundamental to these patents i mean it's it's a license of the desk but more than that it's a license to use these patents in the day for the not to use the general the patent to infringe someone else's brand uses to the standards which is what it would have to argue i think to take it out of the standard i think what they're arguing is that the end user can do anything it wants with the desk except use the patented features that they license for use in the also have a series of some twenty three individual licenses literally covering everyone who makes content sharing d v d and blu ray disc and also what mr single is calling blank d v d or blue rights but i think as the panel pointed out earlier these blank discs aren't really blank and if you look at the patents that have been articulated it's the sense that we cover the formatting of desks that are used for recording well i think we have no longer in the sense we believe that kwanzaa and footnotes talks about the fact that the reasonable and intended non infringing use have to be the use you have to be an alternative to practicing the patterns what we have pointed out is that a b c s position up to the summary judgment motion and as reflected in its complaint is conferring jamin contention and it's freezing is that all of the patents that issue incorporate certain hard disk standards and for example the owing patent that mr finkel was mentioning incorporates the d v d read only format standards and the blu ray read only one magazine really responded the right question which is you don't you haven't it seems to me entirely made the record of the method you do not have a separation from somebody so that in the real world nobody would use these disks for anything than to be used in connection with the standard well because we're looking at it a different way we're looking at it from the legal point is from a legal point of view that there has to be an alternative i think what the court is talking about is reasonable use that isn't practicing the standard but is something totally apart from it for example of the patents that cover the disks that have regional and parental control you could not use reasonable and parental controls and you could do something else with that but you don't have an alternative that's nonsense and i believe under quanta under lifescan that this court recently decided and i believe  can well i think that that our position on that would be that it wouldn't be relevant in the sense that someone who buys an optical disk that if you buy a desk that is authorized to be sold to you you can use it for whatever functions you can you can use it for but you also have a right to use the patent of teachers in the desk the j p c license and i think where do we know that the pendant features were actually used when you combine the newer d or blu ray disc can do everything with the disk except use the patented feature they license is fundamentally the opposite of patent exhaustion law in the real world a consumer who buys a movie  able to go home and use to describe that purpose well we made the record that they broadly licensed these disks for any application with no restrictions so what i'm saying is we're coming from the other side that you're trying to expand on the standard even if that combination crosby and user to practice the standard i don't believe there would be a direct infringer under quanta lifescan or curse i believe they would be using the disk for it's reasonable it's on the fact that it claims nero software complies with the standard and that's why i began by emphasizing that there is no direct infringement claim here nero software can't do any of the things that are describe well they require yes they certainly do and that's that's kind of where i'm going here is that they require very specific ordering and vetting of formats and regions and traps and things that are specifically depending on the patent they can be storage areas that are intended to enable fast forward or fast reverse they can be storage areas and tracks and groupings that can enable parental controls or other things and i think that you don't even have an affidavit to that effect i mean that's very relevant it's interesting well but you're happy ending up here is a lawyer and saying that in asking us to read the patterns and agree with you whereas what you should have is an expert who comes in and says under these patents that you know you've got to prepare the disks in a particular way  the evidence is the contention the j v c is made in the briefing that we have submitted there is a mission that ought that these patents all cover disks vast in these standards and where i think want to comes in and but they cherry picked a lot of nothing planned to try to say that the software is somehow performing a method apart from the novelty that is the well the novelty runs throughout the patent and there's overlap in these claims but all of these all of these claims require the use of blu ray and d v d and d v d s that are compatible with the very standards of the day the sites and that are specifically licensed by j v c these c's submissions their whole theory of the case and infringement contention and the licenses themselves and we submitted of course disks you know which themselves have the tracking and all of the  features we didn't want to reduce it to a battle of experts and the court basically rejected the as a deacon declaration because coming as it did after a claim construction after a motion on j v c's infringement contention and taking you know to say we don't think a b c s contentions infringement contentions against nero are adequate because j b c is simply saying nero complies with the standard without pointing out and they're all software we're in the software what product standard that anyone who makes a d v d or blu ray disc has to use and that's the very standards that neurons are using and they went on to say i mean contrary to the arguments that you're hearing now and that they made them sound summary judgment they went on to say that all of these patents in this case were essential to practicing the standard and that the user who played that or recorded to a d v d or blu ray disc necessarily infringed well it's j b c who is saying we're client we're knitting or claiming or stating that our that every one of these patents substantially embodies the standard that every one of our patents is substantially embodied or embody in these products that are that the end user is using with nero software and therefore that's why nero's infringing and we took them i mean we took their commissions which i think were  titles to do in summary judgment we took the record the same way by insisting over and over again that their patents were essential to the standard that that end users and they said this repeatedly and  of the standard they did say that ran over him of not every element of the standard in the sense that the standard is a very long object who should we still have a clean very clear review it wouldn't be necessary because the part of the stay anderson that's in these disks is what they say the end users this is the standard that when the it's the standard that applied to the playback or the recording of d v d and blu ray disc that's part of the standard j he says is necessarily in french every time an end user every time an end user plays or records to a d v d or optical disk and that is mission is throughout their papers in the court below it's in their infringement contention if that's true then patent exhaustion certainly applies here because they licensed all of these optical d v d and blu ray discs and the end users to purchase them certainly had a right to use them to playback and record to them without having to d impossible which is to wonder whether the software they are using is light from the hardware they're using is life since by j v c that's not something that occurs in the real world i see that my time and questions were question discovery we're not talking about the other cases where we didn't answer discovery on the exhaustion question that you we asked for discovery on unlicensed disks for example yes you did ask for discovery on that but not an exhaustion question right no contrary evidence as you just back pointed out that they didn't produce any evidence with respect to this and so it was really the whole issue of summary judgment was very very premature in this case  to that product with the with the manufacture of the optical disk goes to the to that industry core and says i want i want to implement the pants to to rewrite and goes down the list and make such selection and get licensed as it is that when for example jamie c get to royalty the the  software loaded onto the the desk once the disk is manufactured to comply with these standards and you come along and you're you have essential standards in the industry people for rewriting in these other functions and those programs are some of those products are selected that incorporate your patent you get a royalty at that time but if we get a piece of the world at the pool gets  to make the desk and make it in such a way so that it complies with the with the standard essential patents that are that are applicable to rewriting and we're recording and patents what we're talking about and therefore i am free to assert or put put it this way why would you be getting a license fee if the were included in the pool have nothing to do with i'm not saying the in the pool as a whole have nothing to do with it if i'm saying the specific pact and the problem that i'm having here on with all due respect is well i mean everything together here's my package they're all sexual and we're almost acting as if they're all essential for this one product they're not that's why you choose product the some of the patents the discs must be licensed under there but otherwise there wouldn't be a royalty being paid i mean if they were just you know producing ten eric discs nobody would be paying a royalty under your patents on they're paying  question that i asked the very first question i said aren't you the one that defined by a certain specific passage you're the one that's limiting the pool down to certain pens and so the question is do you get a royalty whenever a product comes along that uses the industry standard that you have it in your in your different claims for for example that the overweight in the four ninety one the jump reproduction  functions or the reproduction controls whenever any any product comes along and uses those those are those standard you get a reality if the product is a standard which is this and you're claiming nero when you combine nero and optical disk they're using my standards that's why they infringe that's correct well you've already been paid for that haven't