my name is guy burns from tampa florida representing the plaintiffs in the case blown appellate here in global communications we refer to as global com i'm here with my co counsel of them tallahassee wiley hor this case comes a quarter after the grant by the district court of a summary judgment that was based upon we believe a misinterpretation of this   i don't know that we have specifically discussed that issue as to what we would be virtually arguing to the court but my understanding the that we would be free to argue everything in the briefs including but that would be permissible now after quanta you've got to be pretty careful if you want to collect some of your royalty rents sounds stream from your settlement agreement right but you have to make that very x listen that you are reserving the right to continue to collect rent downstream even though i've settled with you the distributor i have that that may be a fair statement in a high altitude level and we think this agreement has done exactly then you're going to have to show me how because i'm i'm i'm trying to see where it obligates where is there an obligation for someone to even accept that rate there is there is a an obligation to get a license and there's a cap placed on the rate that can be charged is the to take the line that they can choose to not manufacture have manufactured and to not use a single wire quitman they can choose to do that but if they want to use single wire equipment they're obligated to we're going to give you a fully paid up license for the nine thirty patent with the equipment and they also went on to say as a relates to the single wire equipment we're going to treat that differently and what and to the contract in two thousand and four got together and they made an agreement as to a fully paid up license for the nine thirty patents and they made a separate agreement in the stink agreement as relates to the single wire pat directly supporting parties but of the direct t v supporting parties wanted to and they include manufacture distribute up and down the chain they would be required to come back to global time and get a license and global com agrees that will put a cap on that of three percent so what was parking for was the ability to get a license at a not to exceed price you agree don't you that under no circumstances and global basis of of the transport cage and the quantitative say is that for the past exhaustion to come into place the initial sale has to be authorized the initial sale in this case are the say one cannot prove a widget that which one does not have so directv goes to a manufacturer that's unlicensed purchases equipment and then direct v hasn't owns unlicensed equipment then directv sells the unlicensed equipment to a distributor that we serve in section eight a authorizes that sale you know it does not we will never ever to do for infringement for making them and what we're what we're suing is we are suing for distributors who had unlicensed equipment that was never licensed that passed through the hands of direct t v so can direct t v launder unlicensed equipment by buying it from someone who who has been described in a b two as a manufacturer and needs a license and doesn't have one and so what to a distributor that's a directv supporting part of it needs a license and doesn't have one when these two parties could not do that directly between themselves can they buy laundering that equipment through direct t v create to directv and said listen you're you're you're practicing a single wire patent by having some things manufactured and in two thousand and seven with directv did we that agreements in what directv did was said well under under section eight d we're the third party beneficiary of the three percent license cap agreement with the directv supporting parties for that arrangement that was described and we're going to go ahead and take a paid up license for equipment manufactured up through december thirty first of two thousand and seven so the directv acknowledged by their actions in two thousand and seven exactly the way they set in time did exactly what the two thousand and four dream and contemplates and that is they went out and and paid money for a for a license for the direct t supporting parties to practices patent and they did that because there were third party beneficiaries under under that under the section a to b and so and so we get back to the to the have made rights it excludes those in fact in the two thousand and seven agreement it specifically says we acknowledge that you have have made rights for the things manufactured before december thirty first two thousand and seven because we're giving you that right but as for things manufactured after that date specifically in the two thousand and seven of raymond it states that that that continue under the continued future restructured and that is that they what they bargained for and what they received was the ability for their directv supporting parties to receive the ability to make and distribute this equipment with a cap on any negotiat you're really begging i think begs the question directv wanted to go out itself and set up a plant and manufacturers equipment would have the right to do so and that's never been what they do that's never been a factor in this case but the o four agreements specifically said because the parties knew that directv was not in that business directv was in the business of having others manufactured and women who wear them that they defined these direct t v supporting cards and they said of these direct in the way you're doing business will answer to the question of mine and yours the that direct t v may have in i'm going to think about it further but they may have the ability to go out and find piece of ground and build a there was when there was no sale of equipment between global communications director cell of a pen that i have to the extent that the single wire patented items were at one point licensed the only ones they licensed were those were manufactured before december thirty first two thousand and seven and after that they persist specifically said we're not selling you have made rights for anything after that date and work reverting back to the eighty eight to be provision that says  need to have a license for your directly supporting part of let's let's hear from m royalties at the bottom and twenty five and twenty five twenty five a time which i think there are ways to structure and of religion which you limit the u k good but that's not what we have here and now if i have spread my rentals throughout various levels of the chain and i settle with you at the top how do i preserve my right to continue to collect my royalties from those who are still infringing and using down below well one of the things you would not do is give me an unqualified right to self and that's what a day did here and judge toronto had it exactly right i mean had i'm not sure i fully understood what i think i'm hearing from the other side this morning which is that there is an inquiry that's necessary about how particular pieces of equipment got into direct s that directly the is maybe authorized to sell stuff of its own but that exhaustion doesn't cover a situation where that sell been authorized to acquire what it in turn sells are there cases that talk about the upstream of the supposedly authorized the only cases i'm aware of judge toronto in that area are the have made cases which presume that a grant of the right to make also is is implied to include a have made right unless there is clear evidence to the contrary that's this court's decision incorporates but what i think my friends have a do any do any of those cases say that having a ham need right is necessary in order to keep the sauce you know because itis from plenty for what you then know that in fact that's really where we're where my friend on the other side here is mixing apples and oranges whether or not directv had the right to have those products made for it's that some that some make right that's a different set of the bundled up in front of all of these exhaustion cases many of which come from the late nineteenth century in the supreme court and things die out for a while do any isn't talk about upstream of the seller of the original seller none that i can think of off the top of my head your honor what what the case was focus on what  focused on what universe focused on and what transport focused on is the right of the licensee or the covered in t v in the case of direct t v in this case to sell it's that one right to sell that's unequivocal as you licensing requirements downstream that's required if i point you to the court's decisions in the supreme court's decision in quanta where a very similar argument was made that the because of third parties whether or entails that what intel was selling when it was selling its chips somehow that there was no argument that intel was getting those from somebody else that it was not authorized to sell them i don't think that argued i don't think that argument was made in that case and i don't think it would have worked in that case even if it had been the facts of the case because it all turns on the licensees right to sell and whether or not directv had the right to have these products made and i need to point out to you that there is another case pending that my friends here have brought against directv and certain jondo upstream manufacturers claiming of a violation of these patents for making those so this is this whole know your brief talks a little bit some of the cases talk i'm not entirely sure why but they do about this notion that exhaustion is supposed to guarantee that the patent owner gets no more those dollar amounts really give one full payment for this seemingly x ordinarily important aspect of directv is business well that i think the answer is that if this case were to go farther down the road you would find that they patent claim in this case that is before this for right now we're here at the threshold issue of exhaustion and i can tell you a little bit about the background of that agreement and that is that the value that was given in that license agreement was not going to be available to by friends on the other side simply for that ninety three you know i think it was patent the single wiretap is we're a very important part of getting the value that they got out of that and it with regard to a couple of the other mr dishonest we we were starting down a line that you didn't want to go down let's go back to it when we have the energy standing that i can spread my royalty rentals throughout various levels of the of the chain in this instance you know you don't want to deal with a hypothetical deal with this one if sometimes are sold directly by directv or sometimes are purchased directly from the manufacturer and so the two thousand and seven agreement is a good example of that of that of that so called spread it because what i'm saying what did the parties agree and they couldn't have missed this i mean this has to be the fundamental thing on their mind when they're writing this agreement what happens when one of these people downstream don't take a license well if we're if we're dealing with again the the going through direct t v and then the products are sold by directv then there is no requirement for anybody at the at the distributor level to purchase a license that's exactly the point my why did they talk about all that in in the in the to this so if i could again refer the court back to that schematic of page six of our brief there are two paths through which products make gets to the distributors one is through direct t v those are exhausted sales under a pay sick with my my point ok and you cannot have failed to consider what is going to happen if one of the people down change do not take the license right what did you decide to do in that case well then directv decided that it would purchase a license undesigned you give those things away and start in the cited under your theory to give those things away because they didn't there's nothing in the in your mind that dresses that subject  addressed to the place to the situation where there is no license and no exhaustion that's what the two thousand and seven agreement did it paid a year saying they didn't consider and there was no agreement whatsoever on what happens if some one down chain from directv refuses to take a life now they didn't consider that but that's that's the that's what the two thousand and seven agreement in fact ended up being that was directv buying up license for the distributors for products that was not exhausted that was that they paid additional amounts of money i guess i won't disclose that in open court product but those  since directv presumably can yes i'm satisfied are you saying then once that actually says there's no way once you've entered into a settlement settlement agreement at the top level there's no way for me to spread royalties licensing community as a continually valid way to spread your royalties while reaching an agreement at the top levels i think that is if they are out and i can't speak a did in this case gave an unqualified right to sell an unambiguous unqualified for ever refrain from any lawsuit any kind of character in whole or in part right to sell that there is some way to then go after the purchasers of those sold products that's exactly what quanta said was irrelevant and that's the term the supreme court used to relevant that's exactly what this court said when in transport transport tried to rely on  says if the people to whom in this fax situation directv sells have a license with directv and that license will be covered if they don't they will not be covered if they refuse a license and some license then they're going to have to reach a separate agreement with the known and i think i cannot i cannot believe ch judge rater that if the if directv in that hypothetical has an unqualified right to sell as directv does here in a day but that would not exhaust the downstream sales that's exactly what the score can transform there doesn't have to be it and there may be a way to do it but i wasn't before by the way trying to resist your hypothetical i was trying to point out that when there is an unqualified granting of a right to sell that's the end of the game again i think seven agreements at six actually as i've explained it the term laundering that's been used here that's of that's a very useful pejorative term but it's only reflects exactly what directv was entitled to do here which is to burns in addressing the question of what did direct t v and in the directv supporting parties have a right to do one of them decided they did not want to take a license  the answer is a directv could purchase a license for them because directv did not have an unrestricted essentially license to this couple not to sue because you have to read a and a need together so the direct t v supporting parties in any form or the mass the court gig and you have to read that together with a b to see what don't you have to make it a lot more clear  than you have if you hadn't given me the qualcomm language and in the event they have a sub license we will honor that sub license otherwise they have to get one from us you can say that see that that was not said in the agreement because qualcomm came about several years later and they may have actually traced that language had they had the benefit of having the qualcomm decision so these are parties before qualcomm trying to architect something that is is clearly carve out and this is the language they came up with to try to affect that result thanks and i would like to quote there's nothing in the record that would suggest of the equipment