of the wonderful law clerks to work his work for me miss jennifer knock who is a member in good standing of the bar virginia and she has served me in the court with great distinction thank you then we'll proceed with our first case this morning after this case then take a recess for the cases that follow but our first case this morning is  good morning to may please the court sep has appealed several issues in this case so i'd like to start by talking about the infringement based on hierarchical access and if time permits talk about lost profits and the injunction in this case to make as a piece off where perform the functions of the rate that were cited in the claims for saddam had to do several things they had there create an access sequence they had to create a condition type and they had to modify an existing pricing procedure so then the infringement question really reduces to are these computer instructions because the claims require computer instructions either to implement are capable of performing these functions w nettles did make conclusory statements that the functions were present in s a p software so you have to go one level deeper than that and you have to look at what these things were that he actually did the access sequence the pricing procedure the condition time and the record on those is undisputed and clear as to what they actually do and for example the access sequence it tells the computer where to retrieve the information and what order to do it that's in the documentation that he relied on and that's in the testimony of dr nebel said that the record of it and actually sequence is the thing that actually does a hierarchical access so the fact that he said these things are data that's really a conclusion if you look at what they actually do well he's a c c s a p user interface he didn't modify source code or writing code he just used the user interface and sat there and entered in in response to queries exactly what the user interface required him to do so how is it that he wrote code as you suggested and we're not saying you wrote source code and actually i think that's where the district court went wrong the district court in its opinion on the four hundred pound so there was no infringement using the s a p user interface and entering in data i don't i don't understand the argument real ip i think that that assumes the conclusion that he was entering data was entering instructions that's our position you can use any type of interface to enter instructions instructions or what the tell the computer what to do as a p c i think struction is like individuals or are you no retailer or something like that or what are the nature of the instructions because here's here's your problem  touched on so many issues that in such a cursory fashion i spend enormous amount of time dependency and i can't get the details of your argument and so when you're up against a substantial evidence jury verdict sure that leaves at a loss so i need to know exactly what he procedure here enter in response to queries on the f a p user interface what particular procedure ought to apply rightly modify the pricing procedure i mean if it wasn't sitting there modifying the program he was responding to the program entering in the data call for correct the yes you're right your honor the the program does give the user many many many options but that doesn't mean that the computer instructions aren't there to perform these functions but didn't your expert himself testified with every single modification performed by dr nettles was part of the capability no i don't think you did your honor i think if you look at his testimony he's talking about the sources he said yes the source code has that capability but he's talking broadly he's talking yes to use or could use it to do those things but as delivered by s it doesn't and so that's why you had to create these new but it's not unusual for customers to do that that's part of the testimony that also comes from your expert it was expected i think was the language that the customers can use the software in many many different ways but to say that it was expected that customers would perform these particular functions there isn't any evidence of that or we're talking about is using hierarchical access on both a customer and a product hierarchy to determine a single price the software comes with a number of pricing procedures it comes up with a number of condition types and it was capable of doing those things individually  just because it's a data entry screen doesn't mean that the numbers of things that are being entered in are data and i think that's really the heart of it if you look at what is what these things do and what they're described as as a doctor nettle said the access sequence it's the thing that actually does the access it tells you where to go and what where it doesn't it's not a number it's not like two hundred euros it's not fifteen percent it tells you how to get these numbers and how to assemble them if you look at the documentation for example and that he also relied on it's fairly specific for example a conditional type which is a condition at a fifty four sixty four it specifies information about how the system dealt with this purporting to apply the pan to its actors now we went through the pan do an analysis that the experts said we don't think that's correct because in doing that he switched between various markets and  because it doesn't work in this market this is an unusual situation where in order for saddest theory to make any sense that c p had to make the sales because there was nothing to bolt on to that the case is apply a pretty lenient standard in terms of speculation and it seems to me that just moving from one tier to another from one market to another with respect to the various had what that doesn't necessarily implicate a quest a problem a legal problem right well if you're honest as far as i know no pieces and doorstep type of methodology and really the pandal it is just one way to prove causation but if it doesn't work because your ex for example as a side is substitutes he had to go to the very specific bolt on market vs a few software that had that falls apart when you're trying to prove causation and that's really the issue here did s a p s inclusion of this capability assuming there was infringement we disagree on how did that somehow cause for sar not to lose sales and the overall economic evidence doesn't support you didn't dispute anonyma fringing substitute right one see if i understand your argument your argument as i understand it is that they focus for market purposes or and share one s e p customers only because that's the only market where there is no non infringe right ok and that's what you agreed to but then you said they came along later though their expert used a thirty five percent number which was improper because that's a number for all pitches in all circumstances that's from that if they had used the percent of people they realize only of s e p customers the market would be two point five percent that's if i got it but here's your problem i don't understand the two point five number which i don't it's a lot of handwaving let me explain why if the two point five number is the result of s and say well i can't really use that number for that week what would be a logical number to use and why wouldn't it be the thirty five percent number which is the realisation rate against all pitches there's my question of whether i think they're there to answer the first one to do with the timing the two point five percent comes before as a p included hierarchical access so you're saying that two point five percent is a legitimate number at a time where as if the customers didn't know that as a p had have this capability and there's no evidence that any customer of s a p s ever used this capability so you take that and say how how could that present for sata for making sales if no one was actually using it it really just falls apart on causation procedurally you don't challenge the non infringing substitutes the met but you purport to challenge the methodology and yet in the daubert motion context you kind of wave your challenge to methodology i'm trying to figure out if you've put yourself in a box you question the methodology am i correct on that your honor i think it really turns on what we mean by methodology we said he did it wrong and it shouldn't be admitted now i've used the term methodology because sometimes when you look at p district judge having looked at that record i would have thought you were contesting the methodology it's difficult to argue that pandora is not a proper way to do a lost property analysis and he purported to do that now when you look at the evidence of what he actually put in the switching between markets that should have been excluded but it wasn't but we still have to look at that record and is that substantial evidence to support the causation the as to s a p tier one customers they only had a realization of two point five percent at a time when you were offering infringing product s but then their expert and everyone agrees it's also a matter of fact that of all the pitches they won on generally they had a realisation or a win rate of thirty five percent most of these numbers were put before the jury can i really say the jury didn't have substantial evidence to accept the city five percent number i mean it look if it w one bolt on software and then to turn around and use thirty five percent of the overall market when there is more precise economic evidence that it was only two point five percent i think it would be unreasonable for a jury to make that mistake they ma'am they may have made mistake but it would be wrong unreasonable so i don't think that can satisfy is substantial him and if i could just briefly touch on the injunction injunction issue it should be vacated i customer base that they could have done on a person basis but they chose to do it on a per customer basis and having chosen that you can't turn around and say well now you couldn't expand the number of seats they could limit it that way they didn't and on the maintenance of maintenance or simply akin to repairing the situation for those users who would already have been compensated by the damages were and to prevent maintenance in this situation it's prohibiting against the experts demonstration but in this case which involves the sufficiency of the evidence what it does affect rational want to bring to the court's attention because it's per se primary proof of infringement and that illuminating because instead of conclusory opinions that the source code performs of the claimed operations it was based on unsupported by comments that were written p s programmers and interlined with the source code written in prose that describe the function of every line of source code now f a p says that the key to the infringement issue is whether the software performs hierarchical access on customer and product hierarchies you heard that this morning that source code itself calls page twenty six seven thirteen of the appendix is a page from the source code it says and i'm quoting for implementation of hierarchical access each record is checked record of highest priority is returned that is the inventive leap in the patents to scoop up all of the potentially relevant records rather than to process each table one at that time and to return i do think mr jakes is right i couldn't find another case that seems to apply and do it in the methodology as this is can you tell us what the substantial evidence is for  gentle opinion he started with the fact that the market showed extreme demand for personas pricer that is the patents for hurting body count there could be no better evidence of demand amazingly for multi million dollar software sold enterprises it sold over sixty units in less than three years already five of those sales were to blue chip tier one companies like i demand for the product we put it in our brief the big question is whether you can use evidence outside the damages period to show demand well it starts there and i think we need to show that it goes suite unless there is broad demand for the feature and second that they had a two thousand and eight study which they did of their customer's needs and they rated those by categories hierarchy based pricing maintenance was rated an absolute must that at page thirty seven twelve and thirteen of your appendix s and p touted the benefits of this feature the same  page eighty four thirty and had it on their website during the entire damages period in addition there was evidence that the need for the invention during the damages period increased during the damages to report to reasons the rise of the internet which made it easy for every customer now to call in at all times of day in africa price so the computational fis into the suite they had no reason to pay many millions of dollars to respond which they were doing prior to the bundling and that's why the prior incidents is important because the influence of strong they've shown sixt units in three years it gets bundled markets destroyed and in addition the refusal of s e p to remove the feature after the two thousand and ten infringement finding the court found to be persuasive evidence of of demand and a general matter versus champion made that point so can i move you on for the discussion that i had with mr jakes about the market in particular you agree that the market as you establish for pin two purposes is tier one s a p that's correct are ok so but the thirty five percent number is an overall number that is not out that this thirty five percent number was so there he pointed out it was some evidence there were four hundred thirty five infringing sales he concluded that bush thought it would win ninety three of the us that's a twenty one percent win rate he didn't use that he didn't apply the thirty five percent would have been one hundred fifty two sales if he applied the thirty five percent he said that in the context of two thousand so he didn't apply thirty five percent to his opinion well i thought the analysis was maybe i get this from the general discussion by the district court that he did apply the thirty five percent but then he discounted it to reflect for is evidence of some evidence and and and it's persuasive evidence so that with maybe i'm unclear on something he used the thirty five percent and then he backed out certain numbers it's torkel numbers from ninety six ninety seven and  wrong about that well exactly i mean i think he said that thirty five percent is relevant to this analysis but what i'm saying is he didn't use it he backed down based on real world factors he looked at the to the damages period and he didn't he used to use ninety three sales which is at twenty one percent win rate so the second thing i want to talk about is the two and a half percent which a judge moore asked about earlier now the two and a half percent win rate was not a price or win rate for overall for its sales and i urge the court to look at it fifty two seventy to fifty two to fifty two seventy seven in the appendix it is a study done by bara they had traditionally done their marketing to the business units to the c o and they had been very successful they have luck with goodyear going to the i t departments they thought let's give that a try they went to forty companies and they couldn't sell their two things about this number one simultaneously their efforts of going to the business units was extremely successful in the same year that this came episode twenty five units right before a s a p came out with the with the functionality  says we've got to go back to our traditional way of selling these i t people are to sold on s a p s they work with them every day we've got to talk to the c f o and when they did they were successful and the track record of the so that the the two percent number is not an overall number that it could be used for obs sales a price or so and if i might turn to the  injunction before i run out of time for that one the jury's royalty award did not license future use the expert wagner who gave testimony said and i'm quoting from forty to t wenty seven that is a royalty calculation quote stops at the day of trial the jury instruction was quote you should award damages until today that on page forty three twenty four the paragraph that essay p relies on is appendix page forty three twenty eight it refers to prior users and says your damages award will compensate for sought out for that infringement that prior infringement p s quote on page forty two of it's yellow brief makes it read very differently because they put the lipsy in place of the single word that stupid remove the reference to prior users the application of maintenance and support the definition is qualified by the phrase at page four of your appendix quote to the extent they embody the in joint capability and that's define and limited on page five to the patented functionality there is no injunction against s h p providing maintenance and support to its customers and i'll make one final point about the but can  perform maintenance on the customers who are using the functionality that is been found to infringe i'm sorry or are missed and they perform no they would agree there's no prohibition on them providing maintenance to their customers and their product generally can they provide maintenance to their customers who are utilizing the infringing now found with infringed functionality continue to use those individuals so i think he needs to maintain that software that functionality for those individuals why can't it be because the the implied license stopped at the day of trial and there is no implied license for those users anymore they have to turn a maybe i misunderstood they have to what difficult turn it off take it back what is that they have to do with the people who already have the software for whom they've already paid you a royalty in the form of the sandwich maintenance pat you know any claims to maintenance why can't they keep maintaining it that you just admitted they have a royalty for those seats for continued use of those seats so why can't they maintain it for those customers in those no your honor we don't agree that royalty i'm sorry a license for continued use on those speech the court's instructions said that the royalty of ward stops at the day of trials and the implied license can only go so far as the real to and so they can keep using it we can't stop them from keep using it because the cork there was a suggestion that the court did make them take it out and in fact the court had evidence that they can require it to be taken out the patch in two thousand and ten said it was required i don't understand this court did not require their customers to stop using it for once for whom they're paying three hundred million dollars in damages they don't have to stop using it right now they don't have to take it out and they don't have to stop using it that's right why can't if they don't have to stop using it if you're they're not required by any rights that you have to stop using it why aren't they allowed to maintain it was the trial court pointed out this is revenue associated with future infringing no activity but they were barred from doing that in the future so it's not  infringing activity it's infringing activities or even compensated for your own admission they're not prohibited from having those continue to use that software so why can't they maintain it you don't have a patent on the phone from your honor the way this business works is that the everybody buys maintenance along with the software it's part and parcel with the deal the evidence was that everybody needs it and everybody uses this isn't printing software the court t never said that this is not future infringing activity the trial court just said the f a p came in and said your honor don't make us take it out and he said ok i'm not going to make you take it out but until you take it out and he considered it to be printing activity but in balancing the harm he said i'm not going to make you take it out but you can't provide maintenance on that activity because it's part and parcel of your and regional infringing sale and that was the evidence at trial thank you your honor if i could first address the source code issue side of counsel referred to the testimony of their expert where he went into the source code if you look at that testimony all that shows is that f a p had hierarch access generally it had the ability to do hierarchical access but that's not what the claims call for and in fact it was the expert admitted that there was an f a p access sequences that ran hierarchical access on customer hierarchy that didn't exist the software came with one hundred pricing procedures and hundred fifty condition types this access sequence on customer hierarchies was not one of them and he admitted that so simply going to the source code was not enough as for the market switching issue and the objections of the methodology judge rader we did object the trial that's at eight thirty seven zero six zero seven that he was switching markets that that was not in his report so i think that that aspect of the objection was was preserved now oversight of counsel also talked about the overall demand for this feature you're talking about hierarchical access generally it's not the specific limitations in the claims which require hierarchical access to both customer and product hierarchies to determine a single price those are the procedures that were not supplied by s a p and that there's no s there is no evidence that any s c p customer ever used to spy on the notion that s a p somehow destroyed the market in one thousand ninety eight their chart is the most telling evidence if that were true the market for oracle would have continued because s a p s for providing this functionality would not change anything for oracle and as you can see the sales dropped off for everybody and simply because it happened hundred six to nine hundred ninety eight there were eight of those sales never approached anything like twelve and that's over a three year period for them to extrapolate five years later that they would have made the sales at this rate up to ninety three some sales it's just not supported by the evidence and finally on one of the injunction it seems prohibit me on g r p for those customers that have it and as to the software generally not to the specific function of the specific feature the injunction doesn't say you can't maintain that feature as if you can't maintain the tens of thousands of features in the c p software being used by the ca it's not infringing activity and should be enjoy