cisco systems first i'd like to focus on the claim construction issues of the terms domain name and security i mean occasionally for the five zero four and to eleven second i would like to focus on the requirement of the weinstein and you let me start with the jury instruction itself there are two parts to support your instruction is the smallest salable you need a separate requirement or is you apply the exception and the smallest salable unit has been used as a way to apply the exceptions but i think the most important part is to start with first principles and first principles are that the reason the entire market is an exception is that the first principle is the goal is to try to figure out what is the value of the pensive feature that jeff is pancit invention to the product the economic aspect to it as a matter of economics it doesn't define demand it doesn't tell you what demand is for that small a saleable product at the legal matter uniloc or lose it would have come out no further and in fact when the court considers the jury instruction there are two portions to it there is first what i would call the traditional exceptions you can use the entire market value rule if you demonstrate teacher is the driver of consumer demand but as it's just a court said it thought there was an alternative that allows you to stop at the smallest saleable unit now do you think this jury could get it that it's really still just applying kind of the the first part of that and the floor proposition when it looks is this small assailable you know if you're i think both decide something three different ways and one is in the air it is a legal air that requires a new trial that's what i would call the analytical response the practical response here your honor is that with this jury instructions mr weinstein used the seventy billion dollars as the revenue base and he actually that number came in that says revenue base the frenetic counsel close specifically on the jury instruction to the smallest sale that should not come in it certainly doesn't represent the portion of revenues you have a closing this closing specifically to the second part of the jury instruction so even if it wasn't legal where requiring a new trial just as strict as a strict appellate matter it would be error in this case for sure because of the manner in which it was looking good and i think what we urge the court on this issue the basic principle of the entire market is correct it's an exception if you can demonstrate that this is the driver for demand for the product but in multi component products which have been for this court a number of occasions products such as these which have cameras microprocessors operating software and then even if i step down a level even for v p n on demand and face time there are aspects of read the word domain out of the claim it just makes it a name it doesn't add anything to say it's corresponding to an ip address because the planes themselves say it corresponds with network address i actually gave you just reported definition a definition from a dictionary that was precisely this definition and then every single example of every single example specification is a hierarchical syntax yahoo dot com target dot com website dot com these are important because face time to choose products doesn't use domain  opinion was our claim it's not limited to the internet therefore don't give a name that had been a typical mean we don't disagree the claims on the first proposition that the claims are not limited to the internet but we do disagree that in any network in a network covered by the claim that a domain name cannot doesn't have a hierarchical structure it half so it should go to the heart of what is real opinion ones which is we can have other networks the answer is that's true but even with those within those networks it still has to be a logistical question if we were to agree with you and claim construction on either the domain or the when you haven't court reversed ahead a new trial in any issue it's all going to have to be retried because even setting aside the first part of the argument on the entire market value growing instruction there what happens to a new trial because of the un differentiated single unsecured communication like and i can address both of the remaining issues i want to address quickly because i think they're governed by relatively simple propositions on security secure communication like here's a real dispute the district court interpreted to require data security but rejected our proposal that also require the density security or an entity anonymity being the sender or the receiver being anonymous it's important because for face time there is an outer layer or inner layer protecting the content of the transmission but the identity is not anonymous  and that becomes important and the only issue is whether the density security should have been included and what we can say and have said and are brave is the background of the invention says it's required the summary invention legal matter and that are the views of the three propositions the claims require a determination of whether a target site is secure enough to require that there be a determination and a specific type of determination whether the secure target web site to secure so that it's just on the face of the language and we both trials said it was plainly we both said it was plainly here are the two undisputed the inventions only worth twenty nine cents and yet he also finds that it's worth six dollars and forty nine cents when it's put in a night from now why does the same invention get more than six dollars of enhanced me just because it's put in a mobile device there was there was evidence in the record your honor that the security features were important to the phones in particular much more so than the mac computers the mac computers the i have the upgraded software is that's where do you think i dollars that's where six dollars more how down sure how do i before the jury i would disagree with that because this is a curator feature it is a way to have secure communication now what specific application of that is video conferencing so i actually think video conference conferencing is a narrower application of the invention it's not something that's broader that then uses security i think you're looking at that to be flipped around without security really how there's a big distinction between the invention which is protecting security within a video conference and you seem to be claiming the entire value of the video conference under the entire market value rule how can you do that not all your limited to the claimed invention which is security not all video conferencing which you didn't invent that's true but video conferencing is a specific application of this method of creating a circular communication i think that's actually a broader concept and video conferencing as well as email and the other applications that are described are new or concepts within that within that brand your argument is that because you put it in a mobile device that security is worth six dollars rather than twenty nine cents that's the way the data shook out and that's where expert testified and there's evidence to support that well that's that's looking at the royalty baseless look at the royalty as perhaps half that twelve percent point one two percent and yet you argue for two percent that's more than ten times twenty times what record shows was actually used as the royalty rate actor x rental value our expert actually testified to one percent as that rate and which would still be ten times the amount not ten times but there was a difference with the microsoft agreement and that was fully explained to the jury it was entered into it at a time where phonetics was in some financial distress it was also the first place and they entered into it was the one life it was the one instance we have an actual rental of this technology there are there are other license agreements as well of your own are there it's not the only one and so to simply focus on that one and say that rate had to be used across the board i don't think is really accurate and what the experts testified to now tell me about the jury instruction which seems to say the smallest saleable unit is a freestanding divorced doctrine from the entire market value role which is aggrandized as a rule instead of the exception which we've made it very clear it is only when you can show that the demand driver and how did you show that so you have to do two things here for my question show me how you do this is the demand driver for the entire video conferencing app and how the smallest saleable unit gets divorced from the entire market value but look let's start with what our expert did on his first theory he did not rely on the entire market value that number was not given to the jury there was no taking over the entire revenue was never given to the jury so he started their what our expert did was try to determine what the smallest saleable unit was by looking at the lowest price the product had ever sold for getting rid of all the features like extra memory that he could to get it down to that smallest unit now what what is he looking at for that's what's what's this the unit that he's selling there the small sales in and of what of whatever the product is in some cases what is the product in some cases it was a software court recognizes says that the entire market value as a way to calculate damages is the exception it's the exception to the general rule that the royalty is based on the smallest small claims feature for some products yes show me that evidence just give me a quick cite to and i'll check it later but let me explain this is the a good the experts third damages theory for face time there was evidence that in the form of a survey that certain people purchased i pod touch the i pod touch because they wanted face time and that was a certain number of customers that said arguably somehow more it's been to something that looks very much like the entire market value exception and then there's another theory where the expert for the face time patents tried to do some kind of apportionment that's right but then ultimately used something called a national bargain a solution that finished off its theory right and that's an arguable additional defect at least for that particular theory and there was a third theory as well that was based on the i pod touch survey where the expert used that to come up with a per unit one l t that was based on the demand for that particular product and using those calculation downright instead of allocating all the incremental profit to the patent owner he split and he did it in a way that was consistent with the national guard and nash bargaining yes is it ever anything other than fifty fifty it in this case you know discounted it generously right by ten percent right isn't that a rule of thumb didn't we just smack that down uniloc when you start using fifty fifty rules of thumb even if you start discounting them which is was often done with the cold shoulder all well there are two differences with uniloc your one is that and you know a lot that rule of thumb was applied academic background it comes from a well researched well published theory that people have accepted as a general theory of economics that when you have the incremental profit due to whatever it is you're going to  the fifty all things being equal but there are things you can consider other factors all of the math what are landed at this elegant solution of the fifty perfectly well that's where that's the starting point yes t people behaving rationally if they were the say look we can enter into this agreement or not if we enter into it you will get this additional incremental profit you start with a fifty fifty split and it's just bad based on various factors where there are alternatives let's say the the infringer could have made half that incremental profit using anonymous original terminals well then you don't split that part this it really is a well developed theory that is accepted and i don't really think the criticism here is with the math methodology it's with the experts conclusions he came to a conclusion that was given to the jury and the jury actually cut it back substantially so there is substantial evidence to support the verdict there are also these three theories now if if one of them happens to fall out on their cases like i for i or the energy transportation case i believe in that case the expert used the twenty five percent rule but there was an alternative theory to support it and that was  antial evidence to support the verdict and each of these theories came out to a very similar path which then the jury awarded a percentage or so even if there may be some defect and any of them another theory can support it lights yes you are the license agreements were used as part of the what i would say the experts first theory where he came up with a real or reasonable royalty rate of one percent that was based on not the entire value of the product he did not use that it was substantially pad that i could find that's right without all the memory with all the features that could be stripped away i don't think the case law whether it's loosened or any other cases says so you have to go below that you have to somehow come up with a hypothetical smaller unit that has never been sold in fact if you look at cases like laser dynamics it was the one that had the laptops and of course the describe that this drive performs other features beyond oversupply of what's claimed in the patent it was sold separately and so that could be used as a basis for the wealthy as opposed to the overall computer i don't think we've gotten to the point where you have to come up with a hypothetical unit that was never sold name transfers name into something that's hierarchical is not correct if you look at the claim language it suggests what the correct meaning of the domain name is it corresponds to an ip address because that's the function it performs in this eventually and the patents teacher that there are secure communications connections to private networks private computers it's not about connections to the world wide web so the kind of have to get rid of our own notions of what a domain name you can't just  be and i really try to get them some ritually nothing or very little from year to that point or the other direction well let's start with the basic premise that secure communication link and virtual private network that a virtual private network is a type of secure communication like not necessarily vice versa so when you say interchangeable you have to look at the way that that's being used yes it circumvents you can say the secure communication link in this particular  nt is a virtual private network when i first looked at the term secure communication just by itself in the abstract it did it can be pretty broad right it could secure to mean a lot of different things in different ways yes but you're not perhaps other forms of physical security are outside the scope of secure communication link that the courts construction is that it had to be at had to provide data security through encryption so i guess my point my getting my point is we can't just go with some abstract ordinary meaning we have did we have to do a little more work here to try to figure out what does it mean and we have to start looking around the specification that's right given that it doesn't cover things like  it's not specifically directed to fire walls i don't think those are scooted and that's why apple proposed modified on the construction and its proposed construction was a communication link that provides data security through encryption and that's what the court gave us and that's why we say there's a waiver that was their proposal but what about what is what is the two layer encryption format what what are the two layers that are being described in the first sentence of your summary of the invention  two layers of one as to the content and one as to the address at identities yes anonymity yes that's right and then the background of your invention cocking about how the two big security issues are data security and then and anonymity that's true and that's why your summary the invention talked about this great new protocol that provides a two layer encryption format for data security and anonymity and those are two aspects of security now the question is paragraphs down it talks about this invention your invention is a creates a virtual private network and so therefore it doesn't suffer from this identity concern  communication like because the concern i have is whenever i try to find the buzz word secure communication link in this back i see it getting it's connected to virtual reason one is broader than the other hand if you look at the the embodiment of a virtual private network of course that has both types of security but for just the broader term secure communication links the judge was right when he started it as a direct communication link that provides data security ok so i guess when it comes to dividing something from this back to get the best understanding and secure communication link you're the best then you have to point me to with thirty nine i think that's our best point in the spec but i think it also goes to the words secure communication link doesn't mean secure in every possible aspect and that's really what is of the i phone how does he claim any right to start there in his equation when the claimed invention is only a security application for two of the hundreds of applications that it can appear on that i phone it's it's the smallest available unit it's the way apple sells hands to require him then to go in and say i have to segregate out whatever has to be attributed to this particular invention is not something that is required in this particular case he did not if he can show that consumers all buy i phone just so they can have security on their v p n and face time which is the reason they have the phone in the first place but i think they have the phone for some other reasons don't they need you or your honor and that's why for the  base models in order for the price of the macsoftware upgrade which was twenty nine dollars so he had something he could have used to use the base model entirely that five a the entire market value will because so what happened is they started with their user base which is much more than just video conferencing it's entire product with a phone camera e mail everything they didn't even use its face time v p n which might have been the software upgrade and they should have used something actually smaller than that because he's only contribute a portion face time and again a one for one one for three years where they can it's just a numerical error in this competition but more importantly the theory depends both on the national bargaining solution which we say it's an arbitrary fifty fifty split not tied to the realities of this hypothetical involved you had three and they weren't related and one of those checks that's enough for a new trial when you're in this circumstance let me just briefly address the question of security for medication like there was no waiver what happen