Ceglia v. Zuckerberg et al

Filing 199

MEMORANDUM IN SUPPORT re 198 MOTION for Sanctions NOTICE OF MOTION FOR SANCTIONS FOR SPOLIATION OF EMAIL BY DEFENDANT ZUCKERBERG byPaul D. Ceglia. (Attachments: # 1 Exhibit A - LITIGATION HOLD LETTER, # 2 Exhibit B - TRANSCRIPT OF TESTIMONY OF MARK ZUCKERBERG, JUNE 22, 2006, # 3 Exhibit C - DEPOSITION OF ALAN GREENSPAN, # 4 Exhibit D - FTC COMPLAINT OF UNFAIR BUSINESS PRACTICES AGAINST DEFENDANT FACEBOOK, # 5 Exhibit E - BRIEF DETAILING PATENT INFRINGEMENT FINDING AGAINST FACEBOOK)(Boland, Dean)

2011-1366

UNITED STATES COURT OF ApPEALS FOR THE FEDERAL CIRCUIT
LEADER TECHNOLOGIES, INC.,

Plaintiff-Appellant,
v.
FACEBOOK, INC.,

Defendant-Appellee.

Appeal from the United States District Court for the District of Delaware in
Case no. 08-CV -0862, Judge Leonard P. Stark
OPENING BRIEF OF
PLAINTIFF -APPELLANT LEADER TECHNOLOGIES, INC.

Paul Andre
Lisa Kobialka
KING & SPALDING LLP
333 Twin Dolphin Drive
Suite 400
Redwood Shores, CA 94065
[phone]

Daryl Joseffer
Adam Conrad
KING & SPALDING LLP
1700 Pennsylvania Avenue, N.W.
Washington, DC 20006
[phone]

Attorneys for Plaintiff-Appellant Leader Technologies, Inc.

CERTIFICATE OF INTEREST

Counsel for Appellant Leader Technologies, Inc. certifies the following:
1.
The full name of every party or amicus represented by me is Leader
Technologies, Inc.
2.
The name of the real party
Technologies, Inc.

III

interest represented by me

IS

Leader

3.
No parent corporations or publicly held companies own 10 percent or more
of the stock of Leader Technologies, Inc.
4.
The names of all law firms and the partners or associates that appeared for
the party or amicus now represented by me in the trial court or agency or are
expected to appear in this Court are:
Law Firms: King & Spalding LLP; Potter Anderson & Corroon LLP
Attorneys:

Philip A. Rovner; Jonathan A. Choa; Paul J. Andre; Lisa Kobialka;
Daryl L. Joseffer; Adam Conrad

July 25, 2011
Date

Paul Andre

TABLE OF CONTENTS
TABLE OF AUTHORITIES ................................................................................... iii
STATEMENT OF RELATED CASES .................................................................... 1
JURISDICTIONAL STATEMENT .......................................................................... 2
STATEMENT OF THE ISSUES .............................................................................. 3
STATEMENT OF THE CASE ................................................................................. 3
STATEMENT OF FACTS ........................................................................................ 4
A.

Leader's Patented Technology ............................................................. 4

B.

The Leader2Leader Product Suite ........................................................ 7

C.

Facebook's Infringing Website ............................................................ 8

D.

Procedural Background ........................................................................ 9
1.

Pre-TriaL ..................................................................................... 9

2.

Trial .......................................................................................... 10

3.

The jury's verdict and the district court's JMOL decision ...... 12

STANDARD OF REVIEW .................................................................................... 13
SUMMARY OF ARGUMENT .............................................................................. 15
ARGUMENT .......................................................................................................... 18

1.

THE DISTRICT COURT ERRED IN DENYING JUDGMENT AS A
MATTER OF LAW BECAUSE FACEBOOK DID NOT PROVE AN
INVALIDATING PUBLIC USE OR OFFER FOR SALE BY
CLEAR AND CONVINCING EVIDENCE ................................................ 18
A.

The Only Evidence Showed That Leader Did Not Offer For
Sale Or Publicly Use The Patented Invention More Than One
Year Before Filing The Patent Application ........................................ 18

1

B.

The District Court Erred By Treating A Witness's Lack Of
Credibility As Evidence That The Opposite Of His Testimony
Is True ................................................................................................. 23

C.

No Evidence, Let Alone Clear And Convincing Evidence,
Supports The Jury Verdict. ................................................................. 29
1.

A witness's lack of credibility does not become
affirmative evidence for the opposite conclusion merely
because a party produces other evidence ................................. 30

2.

Facebook produced no other evidence of when Leader
incorporated the patented technology into its
Leader2Leader product suite .................................................... 31

D.

The Clear-And-Convincing-Evidence Standard Removes Any
Doubt That Leader Is Entitled To JMOL ........................................... 37

E.

In The Altelnative, A New Trial Is Appropriate ................................ 38

CONCLUSION ....................................................................................................... 40
ADDENDUM
PROOF OF SERVICE
CERTIFICATE OF COMPLIANCE

11

TABLE OF AUTHORITIES
CASES

Addington v. Texas,
441 U.S. 418 (1979) ........................................................................................... 38
Allen Eng' g Corp. v. Bartell Indus., Inc.,
299 F.3d 1336 (Fed. Cir. 2002) .......................................................................... 18
Allied Chem. Corp. v. Daiflon, Inc.,
,
449 U.S. 33 (1980) ............................................................................................. 15
Am. Bearing Co. v. Litton Indus., Inc.,
729 F.2d 943 (3d Cir. 1984) ............................................................................... 39
Amgen Inc. v. Hoechst Marion Roussel, Inc.,
314 F.3d 1313 (Fed. Cir. 2003) .......................................................................... 28
Anderson v. Liberty Lobby, Inc.,
477 U.S. 242 (1986) ..................................................................................... 14,26
Bankers Life & Cas. Co. v. Guarantee Reserve Life Ins. Co. of Hammond,
365 F.2d 28 (7th Cir. 1966) ................................................................................ 25
Barnett v. Roper,
541 F.3d 804 (8th Cir. 2008) .............................................................................. 38
Bose Corp. v. Consumers Union of U.S., Inc.,
466 U.S. 485 (1984) ............................................................................... 17, 24, 26
Bunt v. Sierra Butte Gold Mining Co.,
138 U.S. 483 (1891) ..................................................................................... 25,26
Colorado v. New Mexico,
467 U.S. 310 (1984) ..................................................................................... 14,28
Combined Sys., Inc. v. Def Tech. Corp. of Am.,
230 F. Supp. 2d 544 (S.D.N.Y. 2002) ................................................................ 34
Cooper Distrib. Co. v. Amana Refrigeration, Inc.,
63 F.3d 262 (3d Cir. 1995) (Alito, J.) ................................................................ 39

III

Cortez-Acosta v. INS,
234 F.3d 476 (9th Cir. 2000) (per curiam) ......................................................... 35
Crowe v. Smith,
261 F.3d 558 (5th Cir. 2001) .............................................................................. 38
Cummings v. Adidas USA,
716 F. Supp. 2d 323 (S.D.N.Y. 2010) ................................................................ 36
Dana Corp. v. Am. Axle & Mfg., Inc.,
279 F.3d 1372 (Fed. Cir. 2002) .......................................................................... 18
Dyer v. MacDougall,
201 F.2d 265 (2d Cir. 1952) (Hand, J.) .................................................. 25, 26, 27
Eastwood v. Nat'l Enquirer, Inc.,
123 F.3d 1249 (9th Cir. 1997) ............................................................................ 29
Eckenrode v. Penn. R. Co.,
164 F.2d 996 (3d Cir. 1947) ............................................................................... 24
EDO Corp. v. Beech Aircraft Corp.,
911 F.2d 1447 (lOth Cir. 1990) .......................................................................... 35
Electromotive Div. of Gen. Motors Corp. v. Trans. Sys. Div. of Gen. Elec.
Co.,
417 F.3d 1203 (Fed. Cir. 2005) .......................................................................... 14
Eli Lilly & Co. v. Aradigm Corp.,
376 F.3d 1352 (Fed. Cir. 2004) .................................................................... 14,28
Fineman v. Armstrong World Indus., Inc.,
980 F.2d 171 (3d Cir. 1992) ............................................................................... 39
Gemmy Indus. Corp. v. Chrisha Creations Ltd.,
452 F.3d 1353 (Fed. Cir. 2006) .......................................................................... 18
Georgia-Pacific Corp. v. United States,
264 F.2d 161 (5th Cir. 1959) .............................................................................. 40
Golan v. Pingel Enter., Inc.,
310 F.3d 1360 (Fed. Cir. 2002) .......................................................................... 28

IV

Goldhirsh Group, Inc. v. Alpert,
107 F.3d 105 (2d Cir. 1997) ................................................................... 25,27,31
Greenleaf v. Garlock, Inc.,
174 F.3d 352 (3d Cir. 1999) ......................................................................... 15,39
Helifix Ltd. v. Blok-Lok, Ltd.,
208 F.3d 1339 (Fed. Cir. 2000) .................................................................... 18,35
Helvering v. Leonard,
310 U.S. 80 (1940) ............................................................................................. 28
Hoffman v. Capital Cities/ABC, Inc.,
255 F.3d 1180 (9th Cir. 2001) ............................................................................ 35
Honeywell Int'l Inc. v. Hamilton Sundstrand Corp.,
370 F.3d 1131 (Fed. Cir. 2004) .......................................................................... 14
Huerta-Guevara v. Ashcroft,
321 F.3d 883 (9th Cir. 2003) .............................................................................. 38
In re Bose Corp.,
580 F.3d 1240 (Fed. Cir. 2009) .......................................................................... 28
Innovation Techs., Inc. v. Splash! Med. Devices, LLC,
528 F.3d 1348 (Fed. Cir. 2008) .......................................................................... 28
Intel Corp. v. lTC,
946 F.2d 821 (Fed. Cir. 1991) ............................................................................ 28
Invitrogen Corp. v. Biocrest Mfg., L.P.,
424 F.3d 1374 (Fed. Cir. 2005) .......................................................................... 14
Janigan v. Taylor,
344 F.2d 781 (lst Cir. 1965) .............................................................................. 25
Jennings v. Jones,
587 F.3d 430 (lst Cir. 2009) .............................................................................. 39
Johnson v. Bell,
605 F.3d 333 (6th Cir. 2010) .............................................................................. 38

v

Lightning Lube, Inc. v. Witco Corp.,
4 F.3d 1153 (3d Cir. 1993) ................................................................................. 14
Microsoft Corp. v. i4i Ltd. P'ship,
131 S. Ct. 2238 (2011) ....................................................................................... 27
Minn. Mining & Mfg. Co. v. Chemque, Inc.,
303 F.3d 1294 (Fed. Cir. 2002) .......................................................................... 28
Moore v. Chesapeake & Ohio Ry. Co.,
·340 U.S. 573 (1951) ..................................................................................... 25,27
Nishikawa v. Dulles,
356 U.S. 129 (1958) ......................................................................... 26, 27, 29,31
Peters v. Active Mfg. Co.,
129 U.S. 530 (1889) ........................................................................................... 36
Pfizer, Inc. v. Apotex, Inc.,
480 F.3d 1348 (Fed. Cir. 2007) .......................................................................... 21
Pharmastem Therapeutics, Inc. v. Viacell, Inc.,
491 F.3d 1342 (Fed. Cir. 2007) .......................................................................... 13
Price v. Symsek,
988 F.2d 1187 (Fed. Cir. 1993) ......................................................... 14, 27-28, 38
Rajala v. Allied Corp.,
919 F.2d 610 (10th Cir. 1990) ............................................................................ 38
RCA Corp. v. Data Gen. Corp.,
887 F.2d 1056 (Fed. Cir. 1989) .......................................................................... 19
Revolution Eyewear, Inc. v. Aspex Eyewear, Inc.,
563 F.3d 1358 (Fed. Cir. 2009) .......................................................................... 39
Roebuck v. Drexel Univ.,
852 F.2d 715 (3d Cir. 1988) ......................................................................... 15,39
Roper Corp. v. NLRB,
712 F.2d 306 (7th Cir. 1983) ................................................... :......... 24-25, 26, 27

VI

Scaltech Inc. v. ReteclTetra, L.L. c.,
178 F.3d 1378 (Fed. Cir. 1999) .......................................................................... 18
Seidenstein v. Nat'l Med. Enters., Inc.,
769 F.2d 1100 (5th Cir. 1985) ...................................................................... 24,26
Sonoscan, Inc. v. Sonotek, Inc.,
936 F.2d 1261 (Fed. Cir. 1991) .................................................................... 19,36
Tec Air, Inc. v. Denso Mfg. Mich. Inc.,
192 F.3d 1353 (Fed. Cir. 1999) .......................................................................... 34
Travelhost, Inc. v. Blandford,
68 F.3d 958 (5th Cir. 1995) ................................................................................ 25
Tucker v. Fischbein,
237 F.3d 275 (3d Cir. 2001) ......................................................................... 35, 38
United States v. Pechenik,
236 F.2d 844 (3d Cir. 1956) ................................................................... 24, 26, 31
United States v. Silveus,
542 F.3d 993 (3d Cir. 2008) ............................................................................... 39
United States v. Tyler,
758 F.2d 66 (2d Cir. 1985) ........................................................................... 30,31
United States v. Weaver,
267 F.3d 231 (3d Cir. 2001) ............................................................................... 32
United States v. Zeigler,
994 F.2d 845 (D.C. Cir. 1993) ................................................................ 25-26, 30
United States v. Zimmitti,
850 F.2d 869 (2d Cir. 1988) ............................................................................... 25
Urti v. Transport Commercial Corp.,
479 F.2d 766 (5th Cir. 1973) .............................................................................. 39
Vanderbilt Univ. v. ICaS Corp.,
601 F.3d 1297 (Fed. Cir. 2010) .......................................................................... 35

Vll

Vanmoor v. Wal-Mart Stores, Inc.,
201 F.3d 1363 (Fed. Cir. 2000) .......................................................................... 36
Walton v. Halter,
243 F.3d 703 (3d Cir. 2001) ............................................................................... 32
STATUTES

35 U.S.C. § 102(b) ............................................................................................... 3, 18
35 U.S.C. § 282 ....................................................................................................... 14
OTHER AUTHORITIES

Fed. R. Civ. P. 54 ...................................................................................................... 4
Fed. R. Civ. P. 59(a)(1)(A) ...................................................................................... 15
9A Wright & Miller, Federal Practice and Procedure Civil2d § 2527
(3d ed. 2011) ...................................................................................................... 25

Vl11

STATEMENT OF RELATED CASES
Pursuant to Federal Circuit Rule 47.5, counsel for Plaintiff-Appellant Leader
Technologies, Inc. ("Leader") states that no appeal in this action was previously
before this or any other appellate court.

,JURISDICTIONAL STATEMENT
The district court had jurisdiction under 28 U.S.C. §§ 1331 and 1338. On
July 28, 2010, a jury rendered a verdict that Defendant Facebook, Inc.
("Facebook") infringed the patent-in-suit but that the patent is invalid. The district
court denied Leader's motion for judgment as a matter of law or a new trial on
March 14, 2011, and entered a certification of final judgment as to fewer than all
claims pursuant to Fed. R. Civ. P. 54(b) on March 28,2011. Leader filed a timely
notice of appeal on April 21, 2011. This Court has jurisdiction under 28 U.S.C.
§ 1295.

2

STATEMENT OF THE ISSUES
A patent is invalid under 35 U.S.C. § 102(b) if the patentee publicly used or
offered for sale a product that embodied the patented invention more than one year
before filing the patent application. Facebook attempted to prove invalidating uses
and offers without presenting any evidence that Leader's prior product included all
of the limitations of all of the patent claims, and thus embodied the patented
invention. Instead, Facebook called Leader's chairman as a witness and hoped the
jury would disbelieve him. The jury apparently did just that and found the patentin-suit invalid. The issues are:
1.

Whether the district court ened as a matter of law by treating a

presumed finding that a witness lacks credibility as being affirmative evidence that
the opposite of his testimony is true.
2.

Whether the district court ened in concluding that Facebook

introduced sufficient clear and convincing evidence of invalidity to sustain the jury
verdict.

STATEMENT OF THE CASE
On November 19, 2008, Leader filed this patent infringement suit against
Facebook alleging infringement of United States Patent No. 7,139,761 (the '''761
patent").

JA259-62.

The jury rendered a verdict that Facebook directly and

literally infringed all of the asserted patent claims and that the claims were neither

3

anticipated nor obvious in light of the prior art. JA72, 75-76. But the jury found
the patent invalid on the theory that Leader had publicly used the patented
invention and offered it for sale more than one year before filing the patent
application.

JA74.

The jury also rejected Leader's alternative infringement

theory, which was that Facebook was liable for joint infringement of the asserted
method claims. JA73.
On August 25,2010, Leader renewed its motion for judgment as a matter of
law or a new trial on the prior-use and on-sale bars, as well as on joint
infringement. See J A20649. Facebook filed four motions for judgment as a matter
of law, contending that it did not directly infringe the method claims, that it did not
literally infringe any claims, that it did not indirectly infringe any claims, and that
certain prior art references anticipated the '761 patent or rendered it obvious. See
JA21108; JA21111; JA21114; JA21116.

The district court denied all of the

motions except Facebook's motion on indirect infringement. See JA4. On March
28, 2011, pursuant to Fed. R. Civ. P. 54, the district court entered final judgment as
to fewer than all claims in favor of Facebook. JAl-2.
STATEMENT OF FACTS

A.

Leader's Patented Technology

Plaintiff Leader Technologies is an innovative software company based in
Columbus, Ohio. JA24750. Chairman and founder Michael McKibben created

4

Leader in 1997 with the goal of using "the internet as a platform for doing largescale communications and collaboration." JA24756-57. At that time, the internet
was in its infancy, with the number of users measured in the mere millions.
JA24754.

Leader recognized the untapped potential of the internet-"an

unclaimed market space"-and moved to enter that marketplace. JA24761.
The technology embodied by the '761 patent represents one part of that goal.
The patented invention relates to a "data management tool" for online
collaboration.

JA228 (Abstract).

The invention allows, for example, a large

number of users to share information-files, pictures, documents, messages,
videos, data, or other digital content-with each other.
Prior art systems for digital communications data management had left it to
the recipient of communications "to sort, categorize, and organize these items of
communication in ways most meaningful to that person." JA247 Col. 1:42-44.
The chore of organization placed a tedious burden on the recipient, especially
considering that communications frequently apply to more than "one topic of
interest," compounding the work for any recipient to "manually store[ items] in
multiple locations .... " [d. Col. 1:44-56, 60-64.

In addition, prior art systems were tailored to "smaller one-to-many and
many-to-one relationships," such as "an e-mail message to ten recipients" or "ten
customers sending orders to a single vendor." [d. Col. 2:35-40. Prior art systems

5

"attempt [ed] to optimize" these paradigms by permitting "multiple users to access
the same file for collaboration purposes." Id. Col. 2:45-49.
The '761 patent escapes these paradigms altogether.

In 1999, inventors

Michael McKibben and Jeff Lamb had an "ah-hah moment" in which they
"recognized that [they] could create a software system that would watch what the
people are doing" and allow data to be easily available to users in any environment
in which they are working. JA24773-75; see also JA24771. That insight led to the
invention embodied in the '761 patent, which includes "a relational database
engine that facilitates many-to-many relationships among data elements, in
addition to, one-to-many and many-to-many relationships." JA248 Col. 3:22-24.
The '761 patent "provides a structure for defining relationships between
complex collections of data." Id. Col. 4:32-33. As a user creates data in a context
and moves from one context to another, the data created by the user is available in
the next context. Id. Col. 4:1-4. The invention therefore "take[s] some of the
burden of organizing ... data off of the user" and "put[s] it on the computer and
make[s] the computer do that work for the user." JA24826-27. That gives the user
"flexibility in determining dynamic associations" between individual files and
groups of data. JA248 Col. 4:5-7.
Leader invested 145,000 man-hours and over $10 million to develop the
initial concept and build a working embodiment of the technology. JA24776-77.

6

Within a day or two of implementing the technology in software code, Leader filed
a provisional patent application on December 11, 2002. See JA26736; JA24836;
JA25745. Leader "wait[ed] to finish the implementation because we thought we
had to to file a provisional." JA24836.
Just under a year after filing the provisional, on December 10, 2003, Leader
filed the application that eventually resulted in the issuance of the '761 patent on
November 21, 2006. See JA228. The asserted system and method claims of the
'761 patent relate to the technical back-end components of the data management
tool. Claim 1 is a representative system claim:
1.
A computer-implemented network-based system that facilitates
management of data, comprising:
a computer-implemented context component of the network-based
system for capturing context information associated with user-defined
data created by user interaction of a user in a first context of the
network-based system, the context component dynamically storing the
context information in metadata associated with the user-defined data,
the user-defined data and metadata stored on a storage component of
the network-based system; and
a computer-implemented tracking component of the network-based
system for tracking a change of the user from the first context to a
second context of the network-based system and dynamically
updating the stored metadata based on the change, wherein the user
accesses the data from the second context.
JA256-57 Col. 20:64-21: 12.

B.

The Leader2Leader Product Suite

Leader developed and marketed a group of software products known as
Leader2Leader, which is "a brand name" for "a suite of products." JA25582;
7

JA25696; see also JA25637-38; JA25700-01. Over time, Leader developed a host
of unique applications under the Leader2Leader brand umbrella, including
LeaderPhone, Smart Camera, Leader Alert, Leader Meeting, Leader Voicemail,
LeaderFile, LeaderNews, LeaderChat, and LeaderContact.

JA24854; JA25638;

JA25702-03. Those different applications include, among other things, "an email
tool, a task tool, a project management tool, calendaring, file upload," and
"[c]onference calling." JA24853, JA25707.
As with many software products, the Leader2Leader product suite changed
over time.

JA257IO-Il.

Eventually, Leader incorporated the '761 patent's

technology in that suite "as a plug in for any of thEe] technologies" listed above.
JA25705. Mr. McKibben testified repeatedly that Leader2Leader did not embody
and could not have embodied the '761 technology at any time before Leader filed
the provisional application on December 11, 2002, "because, it didn't exist" before
then.

JA25758; see also JA25765.

He explained that Leader reduced that

technology to practice only a day or two before filing the provisional application
on December 11,2002. See JA25708-09; JA257 I 1.

C. Facebook's Infringing Website
Defendant Facebook owns and operates a popular website available at
www.facebook.com.

Created in 2004, the website began as a "directory for

American college students" with few features. JA25230; see also JA25222-23.

8

Over time, it has grown to become a medium that "people use to communicate
with each other" and "to share their photos," among other things. JA25230; see
also JA25222-23. Facebook users can now take a number of actions to "connect

with their family and friends," including "[j]oining a group, or uploading a photo."
JA25231; JA25312.

At the time of trial, Facebook boasted 500,000,000 users

worldwide. JA25306-08.

D.

Procedural Background
1.

Pre-Trial

Leader filed this suit in November 2008. JA259-62. From March through
November 2009, Facebook served multiple intelTogatory responses regarding its
invalidity contentions; not once did it mention the on-sale or public-use bars.
Instead, Facebook filed a false-marking counterclaim in December 2009 alleging
that Leader had falsely marked Leader2Leader as embodying the patented
invention because, in Facebook's view, "Leader2Leader does not practice the
invention disclosed by the claims of the '761 patent." JA4355 (emphasis added).
Consistent with that position, Facebook's expert repOlt on invalidity, submitted in
April 2010 after the close of fact discovery, did not assert invalidity under the
public-use and on-sale bars.
Just three months before trial and after the close of discovery, however,
Facebook made an about-face.

In its third supplement to an intelTogatory

9

response, Facebook asserted that Leader2Leader did embody the patented
invention after all, that it had done so since some unspecified time before
December 11, 2002, and that public demonstrations and offers for sale of
Leader2Leader before that date rendered the patent invalid. The district court
denied Leader's motion in limine to exclude that eleventh-hour defense.

See

JA225 (DI 683); see also JA13142.

2.

Trial

Beginning on July 19, 2010, the parties tried this case to a jury over the
course of seven days. Leader accused Facebook of infringing claims 1,4,7,9, 11,
16, 21, 23, 25, 31, and 32 of the '761 patent. Leader presented two days of expert
testimony that Facebook's website met each and every element of the asserted
claims. See, e.g., JAI0; lA25042-51. Leader's expert supported his testimony
with Facebook's website source code, Facebook's internal technical documents,
Facebook's own statements, the Facebook help files, a demonstration of the
Facebook website, the Facebook developer wiki, and Facebook's internal wiki.
See, e.g., lA26759-60; lA26761-64; lA26765; lA26766-67.

Facebook argued that three main prior art references anticipated the '761
patent or, in combination, rendered it obvious.

Facebook presented expert

testimony on those references in which it attempted to show, among other things,
that the references included all of the elements of the asserted claims. See, e.g.,

10

JA22-27, JA29-30; JA25787-88. That question ultimately boiled down to a "battle
of the experts," covering the better part of two trial days and nearly 500 pages of
transcript. JA25.
With respect to the on-sale and public-use bars, however, Facebook did not
present such proof. Instead, the only testimony came from the two inventors-Mr.
McKibben and Mr. Lamb-who testified, as discussed above, that Leader2Leader
did not include the patented technology before the critical date.

See, e.g.,

JA24836; JA24852; JA25758; JA25765. Facebook presented no other witnesses,
expert or otherwise.
Instead, Facebook attacked Mr. McKibben's credibility, in part by
questioning him about interrogatory responses in which Leader stated, in the
present tense in 2009, that "Leader2Leader® powered by the Digital
Leaderboard® engine is the only product or service provided by Leader which
embodies, either literally or under the doctrine of equivalents, any of the asserted
claims of the '761 patent." JA34946 (emphases added); see also JA34952. Mr.
McKibben, who verified the interrogatory responses, testified that Leader's
responses were accurate because they referred to the 2009 version of the product,
which-unlike the 2002 version-included the patented technology. JA25624-26;
JA25715-16.

11

Facebook's counsel made clear from the outset that it believed the statutory
bar defense turned, not on any affirmative evidence, but on Mr. McKibben's
credibility. During opening statements, Facebook's counsel told the jury that "I
want you to listen to [Mr. McKibben's] testimony very carefully when you
consider his credibility in this case."

JA24654; see also JA24656 ("You will

decide whether that's credible."). Counsel repeated these points in closing. See,
e.g., JA26396 ("That touches on a pretty important point of credibility."). Instead
of pointing to any evidence that analyzed the alleged uses and offers on an
element-by-element basis, he simply characterized the question as "a classical jury
issue because you have to believe somebody on this one." JA26422. And he
directed the jury to "the instruction you have to look at to assess credibility."
JA26446.

3.

The jury's verdict and the district court's JMOL decision

On July 28, 2010, the jury rendered its verdict. It found that Facebook
directly and literally infringed each and every asserted claim of the '761 patent.
JA72. The jury also rejected Facebook's prior art anticipation and obviousness
defenses. JA75-76. But it found the '761 patent invalid under the on-sale and
public-use bars of35 U.S.C. § 102(b). JA74.
Leader moved for judgment as a matter of law or for a new trial on that
issue. See JA20649. Facebook responded that "[t]he sole question for the jury"

12

was when Leader2Leader first embodied the patented technology, and "[t]he
answer to that question turned on the credibility of Mr. McKibben's trial
testimony." JA23545, JA23552. Citing extensive portions of the trial record, the
district court agreed that Facebook's counsel "plac[ed] the jury's focus in
connection with the on sale bar squarely on Mr. McKibben's credibility," and it
concluded that the jury had made an "evident finding that Mr. McKibben was not
testifying credibly." JA57, 54.
The court treated that credibility finding as "affirmative evidence" that
Leader2Leader had embodied the patented technology before the critical date.
JA54. It further held that Leader's interrogatory responses could "reasonably be
interpreted as an admission that the invention was ready for patenting prior to the
critical date." JA55. The court then concluded that the "combination" of Mr.
McKibben's lack of credibility and the interrogatory responses was sufficient to
support the verdict under the clear-and-convincing standard. JA54.
STANDARD OF REVIEW

This Court reviews the denial of a motion for judgment as a matter of law
("JMOL") de novo by reapplying the JMOL standard, which is a question of
regional circuit law.

Pharmastem Therapeutics, Inc. v. Via ce ll, Inc., 491 F.3d

1342, 1360 (Fed. Cir. 2007). The Third Circuit has held that "[t]he question is not
whether there is literally no evidence supporting the patty against whom the

13

motion is directed but whether there is evidence upon which the jury could
properly find a verdict for that party." Lightning Lube, Inc. v. Witco Corp., 4 F.3d
1153, 1166 (3d Cir. 1993) (quotation marks and citations omitted); see also
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986); Eli Lilly & Co. v.
Aradigm Corp., 376 F.3d 1352, 1363 (Fed. Cir. 2004).

Because patents issued by the Patent and Trademark Office are presumed
valid, 35 U.S.C. § 282, the jury could have reasonably found the patent invalid
only if Facebook had carried its "heavy burden" of proving invalidity by "clear and
convincing evidence." Honeywell Int'l Inc. v. Hamilton Sundstrand Corp., 370
F.3d 1131, 1145 (Fed. Cir. 2004); see also Invitrogen Corp. v. Biocrest Mfg., L.P.,
424 F.3d 1374, 1378 (Fed. Cir. 2005). That means that Facebook had to produce
sufficient "hard facts," Colorado v. New Mexico, 467 U.S. 310, 320-21 (1984), to
demonstrate that it is "highly probable" that the patent is invalid. Price v. Symsek,
988 F.2d 1187, 1191 (Fed. Cir. 1993) (quotation marks and citation omitted).
"Whether an invention was on sale within the meaning of § 102(b) is a
question of law that [this Court] review[s] de novo based upon underlying facts,
which [this Court] review[s] for clear error." Electromotive Div. of Gen. Motors
Corp. v. Trans. Sys. Div. of Gen. Elec. Co., 417 F.3d 1203, 1209 (Fed. Cir. 2005);
see also Invitrogen, 424 F.3d at 1378 (public use).

14

Under Third Circuit law, this Court must "review a District Court's decision
whether to grant a new trial on the basis that the verdict is against the weight of the
evidence for abuse of discretion." Greenleaf v. Garlock, Inc., 174 F.3d 352, 365
(3d Cir. 1999) (citations omitted). For that purpose, this Court need not view the
evidence in the light most favorable to the verdict. See Allied Chem. Corp. v.
Daiflon, Inc., 449 U.S. 33, 36 (1980); Fed. R. Civ. P. 59(a)(1)(A). A new trial
should be granted when "the verdict is contrary to the great weight of the evidence,
thus making a new trial necessary to prevent a miscarriage of justice." Roebuck v.
Drexel Univ., 852 F.2d 715, 736 (3d Cir. 1988).

District courts have broad

discretion in deciding motions for a new trial, but that "discretion, of course, is not
unbounded." Id. at 735 n.35.
SUMMARY OF ARGUMENT

Facebook bore the heavy burden of proving a prior use or offer for sale by
clear and convincing evidence. But Facebook presented no affirmative evidence
on the crucial question-whether Leader publicly demonstrated, or offered for
sale, the patented invention before the critical date of December 11, 2002.
Facebook may have shown that Leader used the Leader2Leader brand and sold
other products in the suite that used that brand. But there is no evidence that
Leader included the patented technology in that evolving product suite before the
critical date.

Instead, the evidence shows that Leader completed the patented

15

technology immediately before filing its provisional patent application on
December 11, 2002, and added it to Leader2Leader after that date.
Facebook's inability to prove an invalidating use or offer was not for lack of
opportunity.

Facebook had extensive discovery into Leader2Leader, including

every version of the source code.

Nonetheless, Facebook presented no expert

testimony, no lay testimony, no source code, and no other technical evidence on
this point.
Instead, lacking any actual evidence that supp011s its position, Facebook
called Leader's chairman Michael McKibben as a witness, elicited testimony from
him that Leader2Leader did not include the patented invention before the critical
date, and asked the jury to disbelieve that testimony.

As the district court

recognized, Facebook thereby "plac[ed] the jurY's focus in connection with the onsale bar squarely on Mr. McKibben's credibility." lAS7. That may have been
effective theater before a jury-obscuring Facebook's lack of an actual case with
an attack on the credibility of Leader's chairman-but it could not carry
Facebook's burden of proof.
Even assuming the jury found Mr. McKibben not to be credible, his
testimony does not constitute evidence that Leader2Leader did include the patented
invention before the critical date. Under settled law and the jury instluction in this
case, the jury was free to disregard Mr. McKibben's testimony.

16

But as the

Supreme Court has held, "[n]ormally the discredited testimony is not considered a
sufficient basis for drawing a contrary conclusion." Bose Corp. v. Consumers
Union of

u.s.,

Inc., 466 U.S. 485, 512 (1984) (emphasis added).

Instead,

Facebook had to discharge its burden of proof with actual, affirmative evidence. If
the law were otherwise, a party could always create a jury issue, and defeat judicial
review of the jury verdict, simply by calling an adversary to the stand and asking
the jury not to believe him. That is clearly insufficient in a typical case, and it is
especially insufficient here, where Facebook bears the heightened burden of
proving invalidity by clear and convincing evidence and the subject matter is
highly technicaL
Facebook also relied on two intelTogatory responses in which Leader stated,
III

2009, that "Leader2Leader® powered by the Digital Leaderboard® ...

embodies" (present tense) the patented technology. But that says nothing about
whether Leader2Leader also embodied the technology in 2002. Indeed, the 2002
version of Leader2Leader was not even an issue in the case at the time that Leader
responded to the intelTogatories because Facebook had not yet asserted its
eleventh-hour on-sale and public-use defenses.

And even if the interrogatory

responses were somehow ambiguous, ambiguous evidence is not clear and
convincing as a matter of law.

If the clear and convincing standard means

anything, it means that Leader is entitled to JMOL on the record of this case.

17

ARGUMENT
I.

THE DISTRICT COURT ERRED IN DENYING JUDGMENT AS A
MATTER OF LAW BECAUSE FACEBOOK DID NOT PROVE AN
INVALIDATING PUBLIC USE OR OFFER FOR SALE BY CLEAR
AND CONVINCING EVIDENCE.
A.

The Only Evidence Showed That Leader Did Not Offer For Sale
Or Publicly Use The Patented Invention More Than One Year
Before Filing The Patent Application.

Under the Patent Act, "[a] person shall be entitled to a patent unless ... the
invention was ... in public use or on sale in this country, more than one year prior
to the date of the application for patent in the United States." 35 U.S.C. § 102(b).
That provision applies only to embodiments of the claimed invention. Using or
selling a different product or invention does not affect the patentability of the
claimed one.

"Hence, the first determination in the § 102(b) analysis must be

whether the subject of the barring activity met each of the limitations of the claim,
and thus was an embodiment of the claimed invention."

Scaltech Inc. v.

ReteclTetra, L.L.c., 178 F.3d 1378, 1383 (Fed. Cir. 1999) (emphasis added); see
also Gemmy Indus. Corp. v. Chrisha Creations Ltd., 452 F.3d 1353, 1359-60 (Fed.

Cir. 2006); Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1355 (Fed.
Cir. 2002); Dana Corp. v. Am. Axle & Mfg., Inc., 279 F.3d 1372, 1375 (Fed. Cir.
2002); Helifix Ltd. v. Blok-Lok, Ltd., 208 F.3d 1339, 1350 (Fed. Cir. 2000);

JA26323 Uury instruction that Facebook had to prove that Leader publicly used or
offered for sale "a product that met all the limitations of the asserted claims").

18

Because a party must prove invalidity by clear and convincing evidence, an
accused infringer must prove that a prior use or offer for sale met each and every
claim limitation through clear evidence '''such as memoranda, drawings,
correspondence, and testimony of witnesses.'" Sonoscan, Inc. v. Sonotek, Inc., 936
F.2d 1261, 1263 (Fed. Cir. 1991) (quoting RCA Corp. v. Data Gen. Corp., 887
F.2d 1056, 1060 (Fed. Cir. 1989». But Facebook offered no testimony, expert or
otherwise; no source code; no technical documents; and no memoranda or
correspondence from the time period in question that supported its position that the
Leader2Leader product suite satisfied all of the claim limitations for all of the
asserted claims before December 11, 2002.
In sharp contrast, Facebook did at least attempt to prove on an element-byelement basis, through expert testimony, that certain other prior art references,
consisting of 261 pages of evidence, anticipated the '761 patent.

See, e.g.,

JA25847-75; JA27239-55; JA34698-728; JA34729-38; JA34955-5159. The jury
correctly rejected that anticipation defense. Having done so for the other prior art,
the jury could not have reasonably found a prior use or offer for sale on even less
evidence.
Facebook's inability to prove its case on the statutory bars was not for lack
of trying. Facebook had every version of the Leader source code in its possession
because the district court ordered Leader to produce them.

19

JA7074.

If

Leader2Leader had actually embodied the '761 invention in 2002, which it did not,
Facebook could and presumably would have paraded that code down Main Street
and elicited expert testimony on an element-by-element basis. The only logical
inference to draw from Facebook's lack of Leader source code or other technical
evidence at trial is that it knew that the source code confirmed that Mr.
McKibben's and Mr. Lamb's testimony was correct and Facebook was wrong.
Technical proof was especially important in this case because the asserted
claims relate to highly technical back-end components of a software system. See p.
7, supra. Only source code and related technical documents would reveal the inner

workings of Leader2Leader and whether it handled and stored data in the manner
claimed using the necessary back-end components, including, for example, claim
l's context and tracking components.

See JA256-57.

Likewise, for claim 9,

Facebook was required to prove that the 2002 version of Leader2Leader was
capable of dynamically updating metadata. See JA257. Without the source code,
Facebook could not do so.

As a final example, dependent claim 32 requires

storage of metadata in a storage component that facilitates many-to-many
functionality.

See JA258.

Without reviewing the source code, it would be

impossible to know whether the metadata or something else facilitated that
functionality.

When the subject matter includes structural components of a

computer program, the source code is arguably the only way to ascertain these

20

technical details.

Nonetheless, Facebook did not rely on it, or on any other

element-by-element proof.
Instead, Facebook's counsel suggested during closing argument that it was
Leader's burden to introduce the source code and prove the absence of the '761

technology: "Mr. McKibben was on the stand twice, and twice he did not put
before you the versions of the product. He never showed you the product, did he?"
JA26430.

That improper attempt to shift the burden of proof to Leader only

confirms Facebook's fundamental failure to carry its own burden.

Facebook

"bears the burden of proving the factual elements of invalidity by clear and
convincing evidence. That burden of proof never shifts to the patentee to prove
validity." Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1359 (Fed. Cir. 2007).
Facebook's effort to fault Leader for Facebook's lack of evidence rings
especially hollow in light of Facebook's flip-flop on this issue. After the close of
written discovery, Facebook filed a false-marking counterclaim on the ground that
"Leader2Leader does not practice the invention disclosed by the claims of the '761
patent." JA4355 (emphasis added). Facebook's current position is diametrically
opposed to that one because its on-sale and prior-use defenses rest on the assertion
that Leader2Leader embodies the patented technology and did so before the critical
date. Facebook's decision to change positions after the close of discovery and

21

after the patties' exchange of expert reports prejudiced Leader by depriving it of

fact and expert discovery on the issue.
Even so, Leader did introduce evidence-the only evidence in the record on
this point-and it shows that the 2002 version of Leader2Leader did not include
the patented invention. The only witnesses that testified regarding Leader2Leader
were the two inventors, Michael McKibben and Jeff Lamb. According to their
testimony, Leader2Leader was a brand name for a suite of products with multiple
valuable components,

such as

LeaderPhone,

Smart Camera,

and other

technologies. See pp. 7-8, supra. The composition of the Leader2Leader suite
changed over time as Leader added new technologies, including, eventually, the
'761 patented technology. See p. 8, supra. But Mr. McKibben and Mr. Lamb
consistently testified that the Leader2Leader suite did not incorporate the patented
technology before they filed the provisional patent application on December 11,
2002. JA24829; JA24852; JA25708-09.
Indeed, the Leader2Leader platform could not have embodied the '761
technology before December 11, 2002, because it "did not exist at that time."
JA25716; accord JA25758; JA25727.

Mr. Lamb confirmed that he and Mr.

McKibben waited until December 11, 2002, to file the provisional application
precisely because they did not complete "the code that was the embodiment of that
invention/concept" until then. JA24836-37; see also pp. 7, 11, supra.

22

B.

The District Court Erred By Treating A Witness's Lack Of
Credibility As Evidence That The Opposite Of His Testimony Is
True.

In the absence of any actual evidence that Leader2Leader embodied the '761
technology in 2002, the district court relied on "the jury's evident finding that Mr.
McKibben was not testifying credibly .... " JAS4. That was legal error. Under
settled principles of law, a finding that a witness is not credible permits the jury
only to disregard the witness's testimony; it is not affirmative evidence of the
contrary.
The district court correctly recognized that the legal relevance of a witness's
credibility is the key issue in this case. As the court explained, Facebook "plac[ed]
the jury's focus in connection with the on sale bar squarely on Mr. McKibben's
credibility." JAS7. Facebook emphasized Mr. McKibben's credibility from its
opening statement through its closing argument, in which Facebook's counsel
specifically highlighted the jury instruction regarding credibility. See pp. 11-12,
supra; JA26446.

But Facebook never pointed to any documentary or other

evidence that analyzed the alleged uses and offers on an element-by-element basis.
Attacking Mr. McKibben's credibility may have been effective theater
before a jury, but it did not remedy Facebook's failure to present clear and
convincing evidence of its own. The parties stipulated to a jury instnlction that the
jury could "disregard any testimony that [in] your judgment is not believable."

23

JA26293 (emphasis added). That instruction was correct-"[w]hen the testimony
of a witness is not believed, the trier of fact may simply disregard it." Bose, 466
U.S. at 512.
But the district court erred by holding that, instead of disregarding Mr.
McKibben's testimony, the jury could treat his testimony as "affirmative
evidence" of the opposite of what he said. JA54 (emphasis added). The Supreme

Court has made clear that "[n]ormally the discredited testimony is not considered a
sufficient basis for drawing a contrary conclusion." Bose, 466 U.S. at 512 (citing
Moore v. Chesapeake & Ohio Ry. Co., 340 U.S. 573, 575 (1951)). The district

court's JMOL ruling therefore ran afoul of both settled precedent and its own jury
instruction in this case.
The district court asserted that "the legal proposition stated in Bose is not a
hard and fast rule," and it drew factual distinctions between this case and that one.
JA54. That was legal error. Because the legal principle does not turn on the facts
of the case, the Third Circuit and other courts of appeals have repeatedly and
broadly held, without regard to the specific facts of a case, that "a belief that ...
testimony is false will not support an affirmative finding that the reverse of that
testimony is true." Eckenrode v. Penn. R. Co., 164 F.2d 996, 999 n.8 (3d Cir.
1947); accord, e.g., United States v. Pechenik, 236 F.2d 844, 847 (3d Cir. 1956);
Seidenstein v. Nat'l Med. Enters., Inc., 769 F.2d 1100, 1105 (5th Cir. 1985); Roper

24

Corp. v. NLRB, 712 F.2d 306, 310 (7th Cir. 1983); Bankers Life & Cas. Co. v.
Guarantee Reserve Life Ins. Co. of Hammond, 365 F.2d 28,33-34 (7th Cir. 1966).
Thus, Facebook could not prove its case "by putting [Mr. McKibben] on the
stand, allowing him to indicate that [he did not offer the technology for sale], and
asking the jury to disbelieve that testimony." United States v. Zimmitti, 850 F.2d
869, 876 (2d Cir. 1988).

"[E]ven if the jury thoroughly disbelieved [Mr.

McKibben], that disbelief is insufficient to support a verdict for [Facebook] in the
absence of affirmative evidence." Goldhirsh Group, Inc. v. Alpert, 107 F.3d 105,
109 (2d Cir. 1997); accord, e.g., Moore, 340 U.S. at 577; Bunt v. Sierra Butte Gold

Mining Co., 138 U.S. 483, 485 (1891); Travelhost, Inc. v. Blandford, 68 F.3d 958,
965 (5th Cir. 1995); Dyer v. MacDougall, 201 F.2d 265,269 (2d Cir. 1952) (Hand,
J.); 9A Wright & Miller, Federal Practice and Procedure Civil 2d § 2527 (3d ed.

2011).
"[W]ere the rule otherwise a case could be made for any proposition in the
world by the simple process of calling one's adversary and arguing to the jury that
he was not to be believed." Roper, 712 F.2d at 310 (quoting Janigan v. Taylor,
344 F.2d 781, 784-85 (1st Cir. 1965)). In addition to vitiating the burden of proof,
that approach would also render judicial review of jury verdicts meaningless, as an
unreviewable credibility determination would be considered sufficient affirmative
evidence in and of itself. United States v. Zeigler, 994 F.2d 845, 849 (D.C. Cir.

25

1993); Roper, 712 F.2d at 310; Dyer, 201 F.2d at 269. That is clearly not the law.

Instead, parties must cany their burdens of proof with actual evidence, especially
in cases such as this where the social disutility of a less than robust examination of
the facts is very high.
The district court ened as a matter of law in asserting that the facts of this
case somehow wanant an exception from those well-settled legal principles. The
court stated that the composition of Leader2Leader was solely within the
knowledge of Mr. McKibben. JA54. Besides not being true (Mr. Lamb had such
knowledge, as did many of Leader's programmers, see JA25761), that distinction
is inelevant. The Supreme Court has squarely held that disbelief cannot support a
verdict "even where the evidence is likely to be within the possession of [one
party], as long as the [other party] has had a full opportunity to conduct discovery."
Anderson, 477 U.S. at 257; accord Bunt, 138 U.S. at 485. Thus, the courts have

long held that disbelief of a witness is not affirmative evidence of a variety of
matters known only to the witness, even the witness's knowledge or subjective
intent. See, e.g., Bose, 466 U.S. at 512; Nishikawa v. Dulles, 356 U.S. 129, 137
(1958); Pechenik, 236 F.2d at 847; Se idenste in , 769 F.2d at 1105. As discussed

above, Facebook had full discovery of Leader2Leader, including its source code,
technical documents, and engineers, and therefore had every opportunity to try to
prove its case.

26

The district court also noted that there were only two possibilities in this
case: either Leader2Leader embodied the patented technology before December
11,2002, or it did not. JA54. But a fact is either true or false in most cases. Thus,
that distinction is no distinction at all. Indeed, a long line of cases has applied the
settled rule that disbelief of a witness is not affirmative evidence to the contrary in
cases, like this one, where a fact was either true or false. See, e.g., Moore, 340
U.S. at 575-77 (decedent fell from train either before or after it stopped);
Nishikawa,

356 U.S.

at

136-38 (defendant acted either voluntarily or

involuntarily); Goldhirsh, 107 F.3d at 109 (defendant either did or did not make
certain statements to certain people); Dyer, 201 F.2d at 268-69 (same); Roper, 712
F.2d at 310 (defendant either did or did not provide notice to another).
The only significant difference between this case and a typical one is that
Facebook must prove invalidity by the heightened clear-and-convincing evidence
standard. See, e.g., Microsoft Corp. v. i4i Ltd. P'ship, 131 S. Ct. 2238 (2011).
That difference, of course, calls for stricter, not relaxed, standards of proof. If a
witness's lack of credibility is insufficient in a typical case, it is all the more
insufficient in a case governed by the clear-and-convincing standard.
As the district court instructed the jury, to be clear and convincing, evidence
must produce "a firm belief and conviction that it is highly probable that the matter
sought to be established is true." JA26297; accord Price v. Symsek, 988 F.2d

27

1187, 1191 (Fed. Cir. 1993). Because such evidence must be based on "hard
facts," Colorado, 467 U.S. at 320-21, this Court and the Supreme Court have
repeatedly cautioned that "[t]here is no room for speculation, inference or surmise"
where, as here, the clear and convincing standard applies. In re Bose Corp., 580
F.3d 1240, 1243 (Fed. Cir. 2009) (quotation omitted); accord Helvering v.
Leonard, 310 U.S. 80, 86 (1940); Innovation Techs., Inc. v. Splash! Med. Devices,
LLC, 528 F.3d 1348, 1350-51 (Fed. Cir. 2008); see also Golan v. Pingel Enter.,
Inc., 310 F.3d 1360, 1372 (Fed. Cir. 2002).

Thus, this Court has overturned jury verdicts where the verdict WInner
presented evidence at trial, but the evidence did not rise above inference to the
level of clear and convincing evidence.

See Eli Lilly, 376 F.3d at 1364.

In

particular, this Court has found no clear and convincing evidence of a prior public
use where "there is no direct evidence of [the invention's] use." Minn. Mining &
Mfg. Co. v. Chemque, Inc., 303 F.3d 1294, 1307 (Fed. Cir. 2002) (emphasis

added). This Comt also affirmed a grant of JMOL where the defendant had proved
invalidity by a preponderance of the evidence, but not by clear and convincing
evidence. Amgen Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313,1331,1334
(Fed. Cir. 2003); see also Intel Corp. v. lTC, 946 F.2d 821, 830 (Fed. Cir. 1991).
At a bare minimum, lack of credibility is not clear and convincing evidence
of anything other than the witness's credibility. It is not hard or direct evidence

28

showing a high probability that the opposite of the witness's testimony is true.
Instead, such a conclusion would rest on speculation, inference, or surmise. Just as
in all of the other cases cited above, therefore, this Court "must determine whether
the believed evidence establishes" a fact. Eastwood v. Nat'l Enquirer, Inc., 123
F.3d 1249, 1252 (9th Cir. 1997).

Discredited testimony is not clear and

convmcmg. Id. at 1255 n.12; accord, e.g., Nishikawa, 356 U.S. at 136-38.

C.

No Evidence, Let Alone Clear And Convincing Evidence,
Supports The Jury Verdict.

The district court emphasized that it was not treating Mr. McKibben's
testimony, or any other piece of evidence, as independently providing sufficient
evidence to support the verdict.

JA54.

Instead, the court stated that "the

combination of' Mr. McKibben's trial testimony, his deposition testimony, and
Leader's intelTogatory responses "together" suffice.

JA54-55.

Because all of

those bases were necessary to the district court's conclusion that the evidence was
sufficient, this Court must reverse if its reliance on any of them was elToneous.
And the court's reliance on each and everyone of them was elToneous because
none provides any affirmative evidence that Leader2Leader included the patented
technology before the critical date.

29

1.

A witness's lack of credibility does not become affirmative
evidence for the opposite conclusion merely because a party
produces other evidence.

As an initial matter, the district court erred by giving any weight to Mr.
McKibben's credibility.

Whether or not Facebook presented other probative

evidence (which it did not, as explained below), a witness's lack of credibility is
not itself affirmative evidence for the reasons explained above.
The district court cited a few cases stating that a witness's lack of credibility
may be considered along with other evidence. JA55. There is a circuit split on
that question, with some circuits holding that a witness's lack of credibility is
never affirmative proof, Zeigler, 994 F.2d at 849-50, and others holding that a jury
may consider its disbelief of a witness's testimony to the "limited" extent that such
disbelief "may ... help make the evidence in a borderline case sufficient." United
States v. Tyler, 758 F.2d 66, 70 & n.3 (2d Cir. 1985). But even under the latter

approach, in cases where "the jury's disbelief was relied on as a factor supporting
affirmance, the evidence apart from the incredibility of the [witness's] testimony
was sufficient or very close to sufficient." Id. at 69; see also Zeigler, 994 F.2d at
850 & n.4.
In contrast, where there was some affirmative evidence to support the
verdict, but it was not sufficient or almost sufficient by itself, the Supreme Court
and the courts of appeals have not allowed lack of credibility to "fill the

30

evidentiary gap."

Nishikawa, 356 U.S. at 137; see, e.g., id. (evidence that

defendant travelled to Japan while subject to conscription during wartime,
submitted to conscription without protest, and testified untruthfully was
insufficient to support finding, by clear and convincing evidence, that he served in
Japanese military voluntarily); Goldhirsh, 107 F.3d at 109-10 (other evidence,
"while perhaps not wholly irrelevant, ... cannot support" the verdict); Pechenik,
236 F.2d at 847 (other evidence that made defendant's testimony "incredible" not
sufficient). Considering credibility in anything other than a close, borderline case
would vitiate the generallule discussed above.

In this case, as explained below, Facebook has not proffered other evidence
that is "sufficient or very close to sufficient" to satisfy the clear-and-convincing
standard. Tyler, 758 F.2d at 69.

2.

Facebook produced no other evidence of when Leader
incorporated the patented technology into its
Leader2Leader product suite.

The district comt relied on Mr. McKibben's deposition testimony that he
could not, years later, remember the "specific point" at which Leader2Leader
incorporated the claimed invention. JA25761. Although Facebook would treat
that as an admission that Leader2Leader embodied the patented invention before
the critical date, it is clearly not. A lack of recollection provides no evidence of
whether the Leader2Leader product suite did or did not include the invention at

31

any particular point in time. See, e.g., United States v. Weaver, 267 F.3d 231,245
(3d Cir. 2001); Walton v. Halter, 243 F.3d 703,709-10 (3d Cir. 2001). At most,
the jury might have viewed Mr. McKibben's uncertainty during his deposition as a
reason to discredit and disregard his trial testimony. But again, a finding that Mr.
McKibben was not credible would leave Facebook with no evidence, expert or
otherwise, supporting its position.

Facebook's attack on Mr. McKibben's

credibility cannot mask its lack of actual evidentiary SUppOlt.
The district court also construed two of Leader's intelTogatory responses "as
an admission that the invention was ready for patenting prior to the critical date."
JA55. But the intelTogatory responses say nothing about whether Leader2Leader
included the patented technology before December 11,2002.
Facebook's intelTogatories stated: "For each claim of the '761 patent that
[Leader] contends is practiced by any product(s) and/or service(s) of [Leader],
identify all such product(s) and/or service(s) and provide a chart identifying
specifically where each limitation of each claim is found within such product(s)
and/or service(s)."

JA34951 (emphases added); see also JA34946.

Because

Facebook used the present tense and did not specify any other timeframe, Leader
responded in kind by naming the products that embodied the '761 patent claims as

o/the date o/the interrogatory (in 2009). JA2S713-15. In relevant part, Leader
answered, in the present tense, that "Leader2Leader® powered by the Digital

32

Leaderboard® engine is the only product or service provided by Leader which
embodies, either literally or under the doctrine of equivalents, any of the asserted

claims of the '761 patent." JA34952 (emphases added); see also JA34946.
Those responses say nothing about Leader products available at any point in
the past, let alone the products available before December 11, 2002.

Nor did

Leader have any reason to address earlier versions of Leader2Leader in those
responses. Facebook had not yet amended its invalidity contentions to flip-flop by
asserting, contrary to its prior position, that Leader2Leader embodied the patented
invention and therefore gave rise to the public-use and on-sale bars. See pp. 9-10,
supra. Leader had no duty to anticipate defenses that Facebook had not yet raised.

The

district

comt

nonetheless

faulted

Leader

"qualifications in its actual interrogatory responses."
qualifications were necessary:

for
JA48.

not

including
No fmther

Leader's responses stated in plain English that

Leader2Leader® powered by the Digital Leaderboard® "embodies" the patented
invention, paralleling the present tense in Facebook's interrogatory. See JA34952.!
Moreover, Leader did put qualification boundaries on the interrogatory responses
When it suited their purposes, Facebook and its witnesses emphasized the
importance of verb tense at trial. Indeed, just moments after questioning Mr.
McKibben about Leader's interrogatory responses, Facebook's counsel highlighted
"present tense" language in another exhibit and asked Mr. McKibben "that means
it's happening; right?" JA25634; see also JA25403 (testifying that "stored" is
"past tense" and not present or future tense); JA25689 ("that means the present
tense, as of December 8, 2002?").
I

33

in the form of registered trademark symbols. See id.; see also JA25623. The PTO
awarded trademarks for Leader2Leader® and Digital Leaderboard® on July 29,
2003, and Dec. 16, 2003, respectively. (Ser. Nos. 76267476 & 76271157). The

use of "Leader2Leader®" therefore cannot refer to any product prior to July 29,
2003-well after the critical date.
Leader's use of the Leader2Leader brand name in both 2002 and 2009 does
not permit an inference that the product suite included identical technological
features during that entire span. See Combined Sys., Inc. v. De! Tech. Corp. of
Am., 230 F. Supp. 2d 544, 550 (S.D.N.Y. 2002) (citing Tec Air, Inc. v. Denso Mfg.
Mich. Inc., 192 F.3d 1353, 1359 (Fed. Cir. 1999)). Just as a classic Corvette did

not contain an iPod dock, and the original version of Microsoft Office did not
include every feature in the CUlTent version, the undisputed testimony at trial was
that Leader2Leader evolved over time and did not include the '761 technology
before December 11, 2002.

See pp. 7-8, 11, supra.

Especially in the ever-

changing computer age, there is no basis for assuming that a product like
Leader2Leader, which combined a number of technologies into a suite, contained
the same features seven years earlier?

For example, nobody in their right mind would believe that Windows®, released
in 1985, had the same technology as Windows® Vista®, released in 2007. They
both share the brand name Windows, but the technology is very different. The
same is true for Leader2Leader and the product released years later under the brand
name Leader2Leader® powered by the Digital Leaderboard®. They share a

2

34

Even if Facebook's interrogatory questions and Leader's responses were
ambiguous, an ambiguous concession would hardly be clear and convincing
evidence. See Cortez-Acosta v. INS, 234 F.3d 476, 481-82 (9th Cir. 2000) (per
curiam).

"Evidence of vague, indefinite, or ambiguous statements will not

suffice." EDG Corp. v. Beech Aircraft Corp., 911 F.2d 1447, 1454 (lOth Cir.
1990) (affirming grant of summary judgment of no clear and convincing evidence).
Thus, a "single statement, whose meaning is ambiguous in the context of other"
evidence, is not clear and convincing. Hoffman v. Capital Cities/ABC, Inc., 255
F.3d 1180, 1189 (9th Cir. 2001); see also Tucker v. Fischbein, 237 F.3d 275,286
(3d Cir. 2001) (Alito, J.) (affirming summary judgment because "equivocation" is
not clear and convincing); Vanderbilt Univ. v. ICGS Corp., 601 F.3d 1297, 1306
(Fed. Cir. 2010) (where two interpretations of the evidence are "equally plausible,"
it is less than clear and convincing).
Moreover, the only testimony about the interrogatories confirmed that they
did not refer to 2002. Mr. McKibben-who verified the responses-testified at
trial that he understood the interrogatories to refer only to products and services
that "practice the '761 patent today"-that is, at the time of the interrogatories.
JA25713-15. This Comt has held that even "conflicting testimony as to what [a]
similar brand name, but all evidence at trial was that these products use different
technology. See Helifix, 208 F.3d at 1350 (mere mention of the "DryFix" brand
name in a trade show brochure and other letters failed to show a tool that met all
the limitations; "there were many tools that had been called 'DryFix tools''').
35

quotation actually included" prevents a finding of invalidity by clear and
convincing evidence. Sonoscan, 936 F.2d at 1263. Here, there is no conflict; the
interrogatory responses themselves and all of the testimony about them
consistently refute Facebook's position.
The cases cited by the district court regarding admissions are therefore
inapposite. Even setting to the side the absence of a relevant admission here, those
cases simply hold that a plaintiff may not allege infringement by products sold
before the critical date and then tum around and assert, for invalidity purposes, that
those very same products did not anticipate the patent by including the patented
technology. See Vanmoor v. Wal-Mart Stores, Inc., 201 F.3d 1363, 1366 (Fed. Cir.
2000); Cummings v. Adidas USA, 716 F. Supp. 2d 323, 332 (S.D.N.Y. 2010). That

is a straightforward application of the maxim that "[t]hat which infringes, if later,
would anticipate, if earlier." Peters v. Active Mfg. Co., 129 U.S. 530, 537 (1889).
Their point is that a plaintiff-which bears the burden of proof on infringementcannot set forth vague, broad infringement allegations and expect to escape the
consequences. In this case, however, Leader's infringement theories concern only
the '761 patent, and have nothing to do with Leader2Leader. So, Leader is not
taking inconsistent positions for purposes of infringement and validity. Instead,
the question is whether Facebook can create a jury issue by pointing to
interrogatory responses and testimony that do not support its position, especially

36

under the clear-and-convincing standard.

And the answer to that question

IS

clearly no.
Because the district court rested its judgment on the combination of Mr.
McKibben's trial testimony, his deposition testimony, and the interrogatory
responses, see JA54-55, and none of those factors supports the verdict for the
reasons discussed above, Leader is entitled to reversal of the district court's denial
of JMOL. 3

D.

The Clear-And-Convincing-Evidence Standard Removes Any
Doubt That Leader Is Entitled To JMOL.

Even if the Court concluded that Facebook had offered some evidence on
point, Leader would still be entitled to JMOL. If requiring clear and convincing
evidence of invalidity is to be "more than an empty semantic exercise," it must

The district comi cited some "additional evidence" in a footnote, most of which
simply indicates that the inventors conceived of the invention in 1999 and that
some version of Leader2Leader was "operational" before the critical date. See
JA58 n.16 (quotation marks omitted). As the district court appeared to recognize,
see id., none of that evidence addresses the dispositive question whether the
patented technology was reduced to practice and added to Leader2Leader before
the critical date. The district court's footnote speculates that Leader may have
"offered to sell the patented technology in the few days preceding December 11,
2002." Id. But Mr. McKibben's testimony that the patented technology "wasn't
done until days before" the December 11, 2002, filing, JA25709, provides no
evidence that Leader immediately added the technology to Leader2Leader and
publicly demonstrated it or offered it for sale within a few days' span before the
critical date. See also JA25675; JA25711-12; JA25716; JA25756-58. That is, at
most, unlikely speculation. And the only actual evidence is to the contrary.
3

37

mean that the jury's verdict here cannot stand. Addington v. Texas, 441 U.S. 418,
425 (l979) (quotations and citation omitted).
Courts have repeatedly held that some evidence is not clear and convincing
evidence. See, e.g., Johnson v. Bell, 605 F.3d 333, 339 (6th Cir. 2010); Barnett v.
Roper, 541 F.3d 804, 812 (8th Cir. 2008); Huerta-Guevara v. Ashcroft, 321 F.3d

883, 886 (9th Cir. 2003); Crowe v. Smith, 261 F.3d 558, 566 (5th Cir. 2001);
Tucker, 237 F.3d at 286; Rajala v. Allied Corp., 919 F.2d 610, 628 (lOth Cir.

1990); pp. 27-28, supra. Instead, as discussed above, Facebook had to proffer
evidence from which a jury could reasonably conclude that "it is highly probable
that" the patent is invalid. JA26297; accord Price, 988 F.2d at 1191.
Thus, this Court has overturned jury verdicts where the verdict-winner
proffered circumstantial, inferential, or ambiguous evidence that did not rise to the
level of clear and convincing evidence. See pp. 27-28, supra. That is the most that
could be said of Facebook's evidence here. Moreover, this Court affirmed a grant
of JMOL where the defendant proved invalidity by a preponderance of the
evidence, but not by clear and convincing evidence. See p. 28, supra. Facebook
has not even done that.

E.

In The Alternative, A New Trial Is Appropriate.

At a minimum, this Court should order a new triaL It is well settled that
courts need not view the evidence in the light most favorable to the verdict when

38

determining whether to grant a new trial. See, e.g., United States v. Silveus, 542
F.3d 993, 1004 (3d Cir. 2008); Revolution Eyewear, Inc. v. Aspex Eyewear, Inc.,
563 F.3d 1358, 1371 (Fed. Cir. 2009); Jennings v. Jones, 587 F.3d 430, 439 (lst
Cir. 2009). Instead, a new trial is appropriate "where there is insufficient evidence
to support the verdict or where the verdict was against the great weight of the
evidence." Greenleaf, 174 F.3d at 365 (citations omitted).
As discussed above, Facebook has at most inference on the key issue. That
makes this a classic case for a new trial because the Third Circuit has held that a
new trial is especially appropriate when the verdict is based on speculative
inferences, as opposed to hard evidence. Roebuck, 852 F.2d at 735-36; Fineman v.
Armstrong World Indus., Inc., 980 F.2d 171,211-12 (3d Cir. 1992); Am. Bearing
Co. v. Litton Indus., Inc., 729 F.2d 943, 952-53 (3d Cir. 1984).

Although the district court has broad discretion in considering whether to
grant or deny a motion for new trial, the Third Circuit has reversed denials of new
trial motions where the "verdict was against the great weight of the evidence." See
Cooper Distrib. Co. v. Amana Refrigeration, Inc., 63 F.3d 262, 277-78 (3d Cir.

1995) (Alito, J.); see also Greenleaf, 174 F.3d at 367. In this case, reversal is
particularly appropriate because, in the absence of any affirmative evidence, the
jury's verdict rests on "mere conjecture and speculation."

Urti v. Transport

Commercial Corp., 479 F.2d 766, 769-70 (5th Cir. 1973) (reversing denial of

39

motion for new trial); see also Georgia-Pacific Corp. v. United States, 264 F.2d
161, 166 (5th Cir. 1959) (same). At a bare minimum, therefore, this Court should
remand for a new trial on the public-use and on-sale bars.
CONCLUSION

This Com1 should reverse and remand for entry of judgment as a matter of
law or, at a minimum, a new trial.

40

Respectfully submitted on this 25th day of July 2011.

Paul Andre
Lisa Kobialka
KING & SPALDING LLP
333 Twin Dolphin Drive
Suite 400
Redwood Shores, CA
[phone]
Daryl Joseffer
Adam Conrad
KING & SPALDING LLP
1700 Pennsylvania Avenue, N.W.
Washington, DC 20006
[phone]
Counsel for Plaintiff-Appellant Leader
Technologies, Inc.

41

ADDENDUM

TABLE OF CONTENTS
Click on item to download

Order for Entry of Final Judgment,
Leader Techs., Inc. v. Facebook, Inc., No. 08-862
(D. Del. Mar. 28, 2011) ............................................................................ JA1
Memorandum Opinion (Stark, J.)
Leader Techs., Inc. v. Facebook, Inc., No. 08-862
(D. Del. Mar. 14, 2011) ............................................................................ JA3
U.S. Patent No. 7,139,761............................................................................... JA228

i

PROOF OF SERVICE
This is to certify that I have this day served the foregoing "Opening Brief of
Plaintiff-Appellant Leader Technologies, Inc." upon counsel for DefendantAppellee, by depositing two copies of the brief with UPS for delivery to the party's
counsel as follows:
Thomas G. Hungar
William G. Jenks
GIBSON, DUNN & CRUTCHER LLP
1050 Connecticut Avenue, NW
Washington, DC 20036-5306
[phone]
Heidi L. Keefe
Mark R. Weinstein
COOLEYLLP
3175 Hanover Street
Palo Alto, CA 94304-1130
[phone]

Michael Rhodes
COOLEYLLP
101 California Street, 5th Floor
San Francisco, CA 94111
[phone]

Counsel for Defendant-Appellee Facebook, Inc.

This 25th day of July 2011.

CERTIFICATE OF COMPLIANCE

Pursuant to Federal Rule of Appellate Procedure 32(a)(7)(C), the
undersigned certifies that the foregoing brief, exclusive of the exempted portions
as provided in Fed. R. App. P. 32(a)(7)(B)(iii) and Fed. Cir. R. 32(b), contains
8,946 words and therefore complies with the type-volume limitations of Fed. R.
App. P. 28. 1(e)(2)(A)(i).

July 25, 2011