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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`—————————————
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`—————————————
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`LIBERTY MUTUAL INSURANCE CO.
`Petitioner
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`v.
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`PROGRESSIVE CASUALTY INSURANCE CO.
`Patent Owner
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`—————————————
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`Case CBM2013-00009
`Patent 8,140,358
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`—————————————
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`PATENT OWNER’S REPLY IN SUPPORT OF ITS MOTION TO
`EXCLUDE EVIDENCE PURSUANT TO 37 C.F.R. § 42.64(c)
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`CLI-2148602v3
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`Patent Owner Progressive Casualty Ins. Co. (“Progressive”) hereby submits
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`Case CBM2013-00009
`Patent 8,140,358
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`this Reply in support of its Motion to Exclude.
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`I.
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`LEGAL STANDARD
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`37 C.F.R. § 42.304 requires that Liberty’s Petition “specify where each element
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`of the claim is found in the prior art” and that Liberty “identify[] specific portions of
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`the evidence that support the challenge.” See 37 C.F.R. § 42.304(b)(4),(5). Progressive
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`quotes this language on page 2 of its Motion, yet nowhere in Liberty’s Opposition
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`brief does it ever mention this rule.
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`Instead, Liberty discusses an NLRB case from 1942, a Tax Court decision from
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`Nebraska, and an FTC case from 1945, in addressing the admissibility of evidence as a
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`general proposition. (Opp. at 1.) Then, Liberty cites 37 C.F.R. § 42.5 as “permit[ting]
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`administrative patent judges wide latitude in administering the proceedings[.]” (Opp. at
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`1, emphasis added.) And, based on this “wide latitude” under 37 C.F.R. § 42.5,
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`Liberty concludes that its “evidence is entirely proper, while Progressive’s objections
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`are baseless.” (Id. at 1-2.)
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`However, 37 C.F.R. § 42.5 is inapplicable. It only applies to “situation[s] not
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`specifically covered by this part[.]” 37 C.F.R. 42.5(a). The situation at issue is plainly
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`“covered” in Part 42 under 37 C.F.R. § 42.304. Liberty’s refusal to address section
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`42.304 in its brief (and its resort to the inapplicable section 42.5) does not alter the
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`mandatory requirement that its Petition must specifically identify where each claim
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`CLI-2148602v3
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`element allegedly appears in each prior art reference.
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`Case CBM2013-00009
`Patent 8,140,358
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`On page 2 of its motion, Progressive quoted the requirement under 37 C.F.R. §
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`42.23(b) that a “reply may only respond to arguments raised in the…patent owner
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`response.” In addition, Progressive quoted the treatment of this rule in the Office
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`Patent Trial Practice Guide, which confirms that new evidence in a Reply is
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`prohibited if it is necessary to make out a prima facie case or could have been presented
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`in the Petition. (Motion at 2-3; see 77 Fed. Reg. 48,756, 48,767 (Aug. 14, 2012).)
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`Once again, nowhere in Liberty’s Opposition does it even mention this mandatory
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`rule or the recitation in the Trial Practice Guide as to how it operates.
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`Rather, Liberty simply claims that its “prima facie case was complete when [it]
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`filed its Petition commencing this proceeding” and that to view it any other way
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`“contradicts both common sense and the Board’s Institution Decision[.]” (Opp. at 2,
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`4-5.) Not so. The Trial Practice Guide addresses this exact situation of Petitioner
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`introducing new evidence after a proceeding has commended. It makes clear a reply
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`that “include[s] new evidence necessary to make out a prima facie case…and
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`new evidence that could have been presented in a prior filing” indicates that an
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`improper new issue has been raised. 77 Fed. Reg. at 48,767 (emphasis added).
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`Indeed, this language would be meaningless if deficiencies in Petitioner’s prima facie
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`case could not be identified after the Board institutes a proceeding.
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`CLI-2148602v3
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`II. ARGUMENT
`A.
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`Liberty’s Reply Introduced New Fuzzy Logic Evidence
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`Case CBM2013-00009
`Patent 8,140,358
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`Liberty’s Petition did not allege – or offer any evidence to show – that a
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`POSITA would understand fuzzy logic. (Motion at 4-5.) Indeed, it argues that there
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`was “no need” for it to do so, and it was “proper[]” for it to raise for the first time in its
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`Reply that a POSITA understands fuzzy logic. (See Opp. at 3, 3 n.2.) However, this is
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`not a deficiency Liberty can cure with its Reply. (See supra at 1-2.) Liberty relied on
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`Kosaka’s “fuzzy logic” disclosure as the basis for invalidating every element in claim
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`1. (Motion at 4-5.) It is a damning admission that Liberty is forced to cite only
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`Rebuttal Declarations to support its claim that a POSITA “would in fact understand
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`Kosaka’s approach and know how to use it.” (Opp. at 3.) The knowledge and
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`experience of a POSITA is an element of Liberty’s prima facie obviousness case, yet
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`there is not a single shred of evidence in Liberty’s Petition as support for the claim
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`that a POSITA would understand and know how to apply Kosaka.
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`Instead, Liberty introduces seven new references. (Motion at 5-7.) To defend
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`this blatantly improper reliance on new art in a Reply, Liberty attempts to transform
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`the substantive law as to a POSITA’s knowledge of prior art, into a new evidentiary
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`rule, one which would allow Liberty to introduce any prior art at any time, simply by
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`claiming that it “would have been known to a POSITA[.]” (Opp. at 4.) This is plainly
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`not the law, and Liberty’s argument is a smokescreen to cover its improper
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`CLI-2148602v3
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`introduction of new evidence with its Reply.
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`Case CBM2013-00009
`Patent 8,140,358
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`Indeed, Liberty further claims that it is not “combin[ing] these seven references
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`with Kosaka” because its “prima facie case was complete” when this proceeding was
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`commenced, and it is doing “nothing more than rebut[ting.]” (Opp. at 4-5.)
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`However, as demonstrated above, Liberty misapprehends the effect of instituting this
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`proceeding. (See supra at 1-2.) And, Liberty’s repeated recitation of the word
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`“rebuttal” does not somehow transform its tardy evidence into a timely submission.
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`Liberty next offers a straw man argument, claiming that it “defies common
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`sense” that its Andrews cannot rely on Kosaka’s Figures 10 and 11 in his Reply
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`Declaration, simply because they “were not specifically called out in the Petition or his
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`previous declaration.” (Opp. at 6.) What Progressive actually argued was that
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`Andrews “relied on Figures 10 and 11” to improperly raise a new argument as to “how
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`fuzzy logic would be used to classify [] input values in a way that could be used by an
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`insurance expert[.]” (Motion at 8, emphasis added.) This is a new argument based on a
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`new opinion as to how an “insurance expert” would benefit from “fuzzy logic,” and it
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`needed to be raised in its Petition if Liberty wanted to rely on it in arguing invalidity.
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`Liberty raises another straw man argument, claiming that Progressive seeks to
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`exclude ¶¶ 6 and 8 from the Andrews Reply Declaration because of his “opinions on
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`‘insurance aspects.’” (Opp. at 8.) However, what Progressive actually argued, as set
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`forth on the first paragraph on page 9 of its Motion, was that ¶¶ 6 and 8 are improper
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`CLI-2148602v3
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`4
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`because Andrews used references dated after 1996 for what was allegedly known in
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`Case CBM2013-00009
`Patent 8,140,358
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`1996. If Liberty wanted to show what was known in 1996, a reference dated 1997 and
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`1999 would not cut it, even if they had properly been specified in the Petition.
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`B.
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`Liberty’s Reply Raised New Fuzzy And Non-Fuzzy Embodiments
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`Liberty admits that it did not “refer to ‘crisp’ values or ‘defuzzification’ as a
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`basis for invalidity in the Petition” and that it “relies upon previously-uncited words in
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`Kosaka” as to the non-fuzzy aspects of Kosaka. (See Opp. at 10 and 12; Motion at
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`10-14.) Yet, Liberty claims that “there was no reason” for it to raise these arguments
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`and identify these embodiments until its Reply. (Opp. at 10, emphasis omitted.) The
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`reason for Liberty to do so is set forth in 37 C.F.R. § 42.304, and the consequence for
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`it not doing so is set forth in 37 C.F.R. § 42.23, which requires exclusion.
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`III. CONCLUSION
`Liberty invites error by raising new issues in its Reply. Progressive has not
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`been afforded any opportunity to offer its own expert declarations to challenge
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`Liberty’s seven new references, Liberty’s use of the purported defuzzification/crisp
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`and non-fuzzy disclosures in Kosaka, or the myriad of other new issues identified by
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`Progressive in its Motion. The AIA did not create a Due Process loop hole, such that
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`a patentee could be denied an opportunity to substantively respond to an
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`unpatentability argument with its own evidence. Yet that is exactly what Liberty urges
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`by arguing that the ‘358 patent should be invalidated based on new issues in its Reply.
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`CLI-2148602v3
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`Case CBM2013-00009
`Patent 8,140,358
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`October 8, 2013
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`By:
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`Respectfully submitted,
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`JONES DAY
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`/s/Calvin P. Griffith
`Calvin P. Griffith
`Registration No. 34,831
`JONES DAY
`North Point
`901 Lakeside Avenue
`Cleveland, Ohio 44114-1190
`(216) 586-3939
`(216) 579-0212 (Fax)
`Attorney For Patent Owner
`Progressive Casualty Insurance Co.
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`CLI-2148602v3
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`6
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`CERTIFICATE OF SERVICE
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`I certify that a copy of the foregoing PATENT OWNER’S REPLY IN
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`SUPPORT OF ITS MOTION TO EXCLUDE EVIDENCE PURSUANT TO 37
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`C.F.R. § 42.64(c) was served on October 8, 2013 by causing them to be sent by email
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`to counsel for Petitioner at the following email addresses:
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`Steven.baughman@ropesgray.com
`Nicole.jantzi@ropesgray.com
`James.myers@ropesgray.com
`LibertyMutualPTABService@ropesgray.com
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`/s/ John V. Biernacki
`John V. Biernacki
`Registration No. 40,511
`JONES DAY
`North Point
`901 Lakeside Avenue
`Cleveland, Ohio 44114-1190
`Attorney For Patent Owner
`Progressive Casualty Insurance Co.
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