completed i just want to say that without doubt this case is very complex with many patents many claims many issues subject shoes and so forth we have the extensive briefing of the parties and two of the key as well in the limited time allowed for argument i don't see how we can possibly cover more than one or two of the primary issues i just want to encourage you to be very selective and start with your most important contention please mr let me start  exhaustion we challenge the summary judgment of not infringe meant on a number of grounds but the most important of them is the district court's ruling that has two four patents the system claims the non method claims that l g s happens so i just can't so finding the district court did something for which there is i believe literally no precedent it found exhaustion despite what it should not be a way or around that implied license conclusion that negation is ian principly the intel letters that were sent to all the defendants and i'm under fortunately still under the confidentiality order we're taking steps to try to release some of that material but it's unfortunately still conscious when you elaborate on why what you're calling the negation langridge of the intel license precludes finding exhaustion i thought these may be misunderstood you that there would be no license conveyed by intil to its customers at all for any reason is that what you're saying for the use of the intel purchase products in combination with non intel products that was the specific language with other intel products and perhaps some other parts to come up with a complete computer yes that's that's career what does convey a license with a restriction perhaps but it sounds to me like it does convey a life it doesn't convey and more sustained more permanently it in the district court's words it disclaims the only license that could possibly be at issue here which is permission to practice these patterns with non intel components there being no evidence that intel currently sells any of the combination components and our point is this that  has always been and should remain subject to requirements each of which independently should lead to reversal of the district court the first is the one that was most elaborately explained in the  valid condition attached to the first sale defeats exhaustion by that first say that's what malik dr holds expressed terms reciting and discussing all of the supreme court decisions leading up to it and it was reaffirmed in the brown medical decision after principle appears in effect to have been recognized by the district court in the courts second ruling it seventy three to seventy four but then misapplied because the district court said i don't really see literally in a sentence or two i don't really see that the purchasers of the defendants here were under a restriction and i think that that's both wrong in itself and more importantly wrong in defining the inquiry what we're talking about here is the section one fifty four exclusivity right and the patent t's ability absent some other illegality to parcel out that exclusivity right in pieces when there is a explicit notice by the seller here by intel to the defense we are not giving you you do not have from l g e permission to do exactly what you're now accused of doing with our mind then they haven't done that right we make sure that i understand the scope of the patents and the technology and how it fits in with the license to intel i gather afterward works one's way through all of these that intel itself then is not practicing any of the patents it's not operating under any of the claims other than to the extent it might be contributing to or inducing practice of the claimed invention by intel's customers those who are know the defendants here is that rents true for these patents but this was a global license for a whole to the larger issue here that the license to intel with the not know it swish it field of use license no explicit withholding of any further use no explicit designation of what's to be done with the unpatented products that intel is making but for which a significant sum of money changed hands leads me to wonder as you try and understand just what the parties intended when they entered into this agreement did then it's inconceivable to me that the precise conflict that's now before us was not foreseen by those who negotiated those licenses and it seems to me to be highly logical that the idea was to leave that for the future let the courts figure it out so we're trying to figure out just what indeed the parties had in mind contractual purpose and this is where i'm stuck why does intel need a license to toll unless there was something they could pass on to their customers  out first of all i mean i do think that the extensive series of whereas clauses in the license which we quote in in the brief could together with the requirement under the master agreement to send this letter out really puts beyond dispute that the parties these two parties in tallinn l g understood that entailed was paid a sum of money and i think it's fair to assume a much smaller sum of money than it otherwise would have been paid would have been  because it was buying something less than the normal otherwise unconditional right to sell the product for any use its customers i want to make it so what is going on here is that entailed eight for the right to avoid in direct infringement allegations as to these patents direct infringement allegations no mention of indirect infringement though is there i didn't couldn't find anything about contributory infringement what intel was not intel is not is not here of course so the general disclaimer just looking at the contract i guess is something that the license agreement i think that the license agreement says you have a license to make sale anything sort of that's covered by our patents subject to and then there's the section three point they were doing was not covered by the patents that's what their customers was doing that was covered by the thread i think i'm  from us to go ahead and make your intel products it doesn't say whether they would be infringing on it to seventy one a p c f or otherwise it just says you have a license and that would be quite broad and cover agender convey a general license to intel to make and sell a lot of toll because on your position that they were in fact not infringing uses they wouldn't need any less odd and indirect infringement theory we  mean indirect infringement i think they are saying they cannot direct infringers but nonetheless they took hits that you regret i think i think the question of indirectly for interment had intel in the absence of a license sold a particular component that had no nonsense then no substantial behavior tell you what i'm trying to get asked is what in fact was the intention of the parties in this contract now we know what the district court thought was the intention and seems to be extremely logical but you're saying that it was wrong yes i think that we find it really quite impossible to say that the intention of intel and l g is anything other than reflected in the extensive whereas clauses plus the notice letter that went to the defendants which said l g here is doing everything we can to reserve our right to enforce our patents against your customers that i think could hardly be clearer and that's why the district court we think correctly said no implied license because you couldn't possibly conclude that l g was was doing anything accept withholding permission to the downstream users of whatever intel was was selling and our fundamental point is that the district court having correctly interpreted that intent of intel and it was g e even correctly said there was nevertheless and exhaustion basis for stripping l g e of its patent rights against the downstream users and that i think has never happened before and as mallinckrodt says based on mitchell against holly is an improper extension of an exhaustion doctrine that always has been and want to continue to be really a integrated with the implied license structure so that a valid condition on how much of the one fifty four exclusivity rights the patent he is giving away means that no more than that is being given away and when that's at least one that's communicated in the first sale to the purchaser the purchaser can't say you don't have any more patronize that's our principal point and that of course does not depend on our second reason for saying that the district court was wrong to invoke exhaustion the second reason is that exhaustion doesn't apply unless the article sold is itself patented that the first point valid condition applies whether or not we right about universe ultimately being on the point principally in dispute a license case rather than an exhaustion case but we also think that that was a second error in the district court but regardless  agree with respect to the rights of the ultimate user and decided to leave it for the courts to figure out if louis try to say where i think that that's not right the district court did not i should say rely on that savings clause the last sentence of section three point eight of the license and there's a good reason i think why the district court did for one thing at most that saving squaws saves restriction says says exhaustion with pride without regard to restrictions in the license but the fact is the notice letter that condition the first sale wasn't part of the license at all so even in the most technical literal reading of that savings clause it does not eliminate the condition stated in the notice letter which was provided for in the master agreement which was not incorporated into the license the broader point is this all the savings clause says is exhaustion principles apply as they otherwise would apply it doesn't say that exhaustion principals suddenly are going to eat nor the conditions that the parties went to such elaborate lengths just to put into their own home agreement intel and l g agreement and that i think is why the district court didn't point to this saving supplies as somehow taking back with one hand exactly what they had given with with the other the giving of force being all of these whereas clauses plus the notice letter that said the one thing that the l g is not selling to you in town is the right to let your customers from buying your intel components with other components to practice our patents that you can do but only if those downstream customers come to us and get a license mr tronto you're down to a minute twenty seconds of rebuttal you are save the restaurant i think i  sir mr anthony on section one clause that goes in the universe case the supreme court looked particularly for that force in the constitution and said there's a bundle of rights given to patent tease and that bundle of includes making using and bending and the suggestion is that the full extent of the patent rights and there are so once there's a venting under operation of the constitution the rights are sawston so we we know that it's not that broad we know that there is freedom of contract there were you know that you know this was an added trust resale price control it's primarily not a matter of saying that there is an absolute right for everyone to use for every purpose anything that they acquire on the market so we know that that's not the case real question isn't it what fundamentally did the parties agree to what was the intent of these contracts and then if they argue it is that despite a contractual intent at restraint there is some fundamental right under the constitution or then across laws not to enforce such an agreement again melancholy was a kind of field of use restriction agreed to between buyer and seller for as well as i recall from for reasons of safety and health whatever the issues are what is your interpretation of the intent of the parties in entering into these contracts as well as the letter from intel to you as the customers which looks very much like a warning of watch out for this patent they want something from you except your own and i agree with the what you' your wind up to this question but let me answer this question but your question and this what the in parties did was intended to restrict the implied license doctrine for combinations with intil components but to preserve the exhaustion doctrine a doctrine which both parties to be very sophisticated were well aware of the course intil being one of the parties out of material role in many of the exhausting cases in this country and so the purpose of this was to say when the sale is unconditional which is a touchstone of exhaustion we have exhausted the silicon condition then we're going to have a pplied license intil won the right to sell their products unconditionally they have an obligation however to provide a warning letter and that is a warning letter saying if you combine our products with anyone else's products you perceive at your own risk you could be sued by l g because our license this is not the extent to combination with nonito products so what they did is set up the dichotomy you see in the if you refill these cartridges you made void the warranty on the printer we've sold those are warning us proceed at your own risk mallinckrodt however was a condition on sale that said you can use this aerosol spray  intel would want to do it they could put a condition on sale this letter the warning letter could have been a condition on sale i have to say is by future purchases of products from us you agree that you will install these products only the with not only with intel components if that letter said that and therefore it was a conditional contract accepted upon purchase a for future into a product that would be a condition on the sa implied license would come into play and there would be no implied license so intel has its option to either sell these things unconditionally which they did to every defendant and there's no dispute here all these defendants receive the intel products and conditionally but just with a warning so you have to go that far or is your position to adequately supported if in fact the use to which you put the intel components is the only known use i know th briefs as well and i agree that export is not a factor it is is that an answer to these flexibilities that were built into the contract if it isn't the answer  see exhaustion it requires three things one is that cell must be on condition secondly the part sold if it's less than the full plane combination such as  it's the part sole must have essential features of the invention and that's on the end of this and third it must have no substantial line for uses and when you meet those three conditions and intil of forces those three conditions on you then it is exhausted there is no way to use the until parts for example without memory and some other things so there is no non infringing used as soon as you combine it with memory not within the scope of the solution of implied license because we met the three conditions for exhaustion mainly all hasn't caught up with commerce and the sophistication of actors like intel maybe these tests are too crude too wooden too simplistic off i think your honor i don't think so i think these are sophisticated parties they have a very simple way to deal with the exhaustion circumstance they can always get rid of exhaustion by following this court's instruction mount broad chest put the dish on sale it's not difficult to do it could appear in the sales contract itself or in a package label that says well you know knows how to avoid first fill exhaustion when they want to or have it when they i want to hear intil got the right after paying a significant sum of money got the right to sell it conditionally they don't the intent of the parties but beyond that what about the expectations of the customers of intel who build computers it seems like any set of tests any legal regime should leave all the actors knowing where they stand now you seem to be emphasizing that l g and intel knew where they stood because they were very sophisticated they did in the very deliberate way and so on if you argue but what about all these original equipment manufacturers did they are sophisticated too and when they see this warning letter it says procedural risk it's not you're not off it's perceived at your own risk and they know what that means and so the customers of the computer it and indeed i think i should be allowed to think that was argued by mr tronto so i'm not sure that it's in order for you to be missed by adding orally to an argument not made orally of course in the brief makes all the arguments and you made all your responses and we have that that's that's fine but it seems like for the purpose of the argument here you should be limited to responding to the arguments he chose to orally present on more mature reflection your hon so let me address one more exhaustion issue that's presented by this case and that is once you have a first sale exhaustion of an article if the seller of that are also has a patent on the method for use in the article in the only method for use arkell so that the article has no use without using the patented method by the seller of that article we believe that should be exhausted as well that's easy but in this case just the opposite situation you have a disclaimer of any right to pass on to the purchaser of the unpatented it's hard to say that that same inference is required i would think that should be the contrary inference well your honor it is in the string of what we understand to be exhaustion which brings  the constitution which has to be distinguished from clyde license clearly implied license is an equitable concept it's grants from the circumstances surrounding the sale but what intel is selling is not patented either it's can intel in selling it on patented device give an implied license under someone else's patent i think it is that there is a right to use under exhaustion which we would respect if there's no map to be exhausted constitution because of the limited bundle of rights if and to an inventor of the constitution now in the method case we have an exhaustive process and what happens what happens now is that exhausted product has both in one use the use patented by the same owner of the exhausted and that would make that product or the combination of the intel microprocessor memory no more than a paper if it wouldn't couldn't be operating you couldn't operate them the microprocessor so exhaustion not for every method but only where they are are necessary for the operation of an exhausted apparatus actually by both parties on the brief mr tronto you have about a minute and thirteen seconds of rebuttal on the issues on the appeal only thank you to points on exhaustion a sufficient ground for reversing the district court's finding of the district court said as to implied license which only one of the defendants even presses only quanta the other expressly abandon this because in the face of the letter you cannot find anything other than a disclaimer of permission and even as to a component that has no knowledge fringing use implied license is defeated if there is a disclaimer of permission the discount quote of the relevant part of the no notice letter that the district court quoted in the public opinion intel said to the defendants while this patent license the one from l g that restricts certain kinds of uses granted to intel covers intel's products it does not extend expressly or by implication to any product that you may make by combining an intel product with any non intel product that even if you accept try to overcome the absence of a sale of a patent an article even if you went to a valid condition that would be enough because the one fifty four exclusiv right is being said by l g e through intel to say we give you this much we don't give you that and there's nothing in patent law that takes away the patent he's choice to say we give you only this much and not this much it doesn't have to be although it is and enforceable contractual restriction that i think is the fundamental mistake that district court me time is expired making we thank both counsel the cases taken under submission