Filed on behalf of:
`
`Patent Owner SightSound Technologies, LLC
`
`Paper No. ___________
`
`By: David R. Marsh, Ph.D.
`Kristan L. Lansbery, Ph.D.
`ARNOLD & PORTER LLP
`555 12th Street, N.W.
`Washington, DC 20004
`Tel: (202) 942-5068
`Fax: (202) 942-5999
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`_______________
`
`APPLE INC.
`
`Petitioner
`
`v.
`
`SIGHTSOUND TECHNOLOGIES, LLC,
`
`Patent Owner
`
`_______________
`
`Case CBM2013-00020
`Patent 5,191,573
`
`_______________
`
`PATENT OWNER SIGHTSOUND TECHNOLOGIES LLC’S
`MOTION FOR ADDITIONAL DISCOVERY UNDER 37 C.F.R. §§42.224(a)
`
`
`
`Patent Owner SightSound Technologies, LLC
`
`Paper No. ___________
`
`By: David R. Marsh, Ph.D.
`Kristan L. Lansbery, Ph.D.
`ARNOLD & PORTER LLP
`555 12th Street, N.W.
`Washington, DC 20004
`Tel: (202) 942-5068
`Fax: (202) 942-5999
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`_______________
`
`APPLE INC.
`
`Petitioner
`
`v.
`
`SIGHTSOUND TECHNOLOGIES, LLC,
`
`Patent Owner
`
`_______________
`
`Case CBM2013-00020
`Patent 5,191,573
`
`_______________
`
`PATENT OWNER SIGHTSOUND TECHNOLOGIES LLC’S
`MOTION FOR ADDITIONAL DISCOVERY UNDER 37 C.F.R. §§42.224(a)
`
`
`
`Pursuant to 37 C.F.R. §§42.224(a), Patent Owner SightSound Technologies,
`
`LLC (“SightSound”) hereby moves for limited discovery of Petitioner Apple, Inc.
`
`(“Apple”) concerning secondary indicia of non-obviousness.
`
`I.
`
`INTRODUCTION
`
`In this proceeding, Apple contends that SightSound’s invention is obvious in
`
`light of a recording device created by CompuSonics Corp. To show non-
`
`obviousness, among other things, SightSound will present evidence regarding
`
`secondary indicia of non-obviousness, including that the patented invention was
`
`commercially successful and was copied by others. Consistent with this showing,
`
`SightSound should be permitted discovery into two discrete categories of non-
`
`public documents that are uniquely within Apple’s possession.
`
`First, SightSound seeks materials sufficient to show the sequence by which
`
`the iTunes Music Store (“the iTMS”) accesses and transfers digital content to the
`
`memory of consumers and consummates an electronic sale. Such information will
`
`establish that the iTMS practices the patent and in fact embodies the patented
`
`invention, a showing which is necessary for the commercial success of the iTMS to
`
`be properly and fully considered here and to show copying. This can be
`
`accomplished with Apple producing a single document and its exhibits—the April
`
`22, 2013 expert report and exhibits of J. Douglas Tygar concerning infringement,
`
`generated in the district court litigation before Apple initiated CBM review. This
`
`– 1 –
`
`
`
`report is targeted directly to the operation of the iTMS as mapped to the claims of
`
`the U.S. Patent No. 5,191,573 (“the ‘573 Patent”), and provides the most relevant
`
`and narrowly tailored information available. SightSound alternatively requests the
`
`production of non-public specifications or technical documentation sufficient to
`
`show the workings of the content transfer to the consumer’s memory and payment
`
`steps used by the iTMS. Dr. Tygar’s report and the alternative materials would
`
`presumably show that the iTMS practices the patent and is co-extensive with the
`
`patented invention and thus establish the presumption of a nexus, and also show
`
`copying. For example, SightSound requests information sufficient to show that
`
`iTMS practices “the steps of: transferring money electronically via a
`
`telecommunication line to the first party at a location remote from the second
`
`memory and controlling use of the first memory from the second party financially
`
`distinct from the first party, said second party controlling use and in possession of
`
`the second memory; . . . [and] transmitting the desired digital audio signal from
`
`the first memory . . . .” (claim 1).
`
`Second, SightSound seeks consumer surveys conducted by Apple around the
`
`time it launched the iTMS and shortly thereafter to show consumers’ preference to
`
`electronically purchase digital signals as described by the patent1 instead of
`
`1 For example, “transferring money electronically via a telecommunication line to
`the first party at a location remote from the second memory and controlling use of
`– 2 –
`
`
`
`purchasing content on CD’s, tapes, or phonograph records. SightSound expects
`
`that this type of consumer information, which SightSound believes Apple tracks in
`
`detail, will demonstrate that Apple cannot rebut the presumption of a nexus with a
`
`showing that non-patented features are responsible for the success of the iTMS.
`
`In sum, SightSound seeks narrow categories of non-public information so
`
`that it can fairly present its case on secondary considerations. SightSound does not
`
`object to a protective order to protect any Apple confidential information. Apple’s
`
`objections to providing the limited discovery requested have no merit, and are an
`
`effort to frustrate SightSound’s ability to demonstrate non-obviousness.
`
`II.
`
`LEGAL STANDARD
`
`In a CBM proceeding, discovery should be permitted upon a showing of
`
`“good cause” by the propounding party. See 37 C.F.R. § 42.224(a). In trial
`
`proceedings before the Board, “good cause” is established where the moving party
`
`shows that the requested relief promotes a fair, orderly, and efficient proceeding.2
`
`SightSound seeks to propound narrow requests for specific relevant information in
`
`the first memory from the second party financially distinct from the first party, said
`second party controlling use and in possession of the second memory” (claim 1).
`2 See, e.g., 37 C.F.R. § 42.10(c) (allowing counsel to appear pro hac vice upon a
`showing of “good cause”); 37 C.F.R. § 42.5(c) (providing that extensions of time
`may be allowed where “good cause” is shown); see also Gustafson v. Alloyd Co.,
`513 U.S. 561, 570 (1995) (applying the “normal rule of statutory construction” that
`“identical words used in different parts of the same act are intended to have the
`same meaning”) (citation omitted).
`
`– 3 –
`
`
`
`Apple’s possession, namely, SightSound seeks items 1 and 4 below, or
`
`alternatively, items 2, 3 and 4 below:
`
`1.
`
`2.
`
`The expert report and accompanying exhibits of J.
`Douglas Tygar concerning infringement, dated April 22,
`2013.
`Non-public specifications, schematics, or other
`documentation sufficient to show how Apple accessed
`digital audio or video signals from memory and
`transferred them over telecommunications lines for sale
`to consumers via the iTMS at the time of the launch of
`the iTMS.
`Non-public specifications, schematics, or other
`documentation sufficient to show how customers
`purchased digital audio or video signals and stored such
`signals in memory via the iTMS at the time of the launch
`of the iTMS.
`Surveys conducted by or for Apple from 2003 to 2007
`reflecting consumers’ desire to purchase digital audio or
`video signals via telecommunications lines, including
`through the iTMS.
`Ex. 2107. The Board has articulated a five-factor inquiry to weigh whether there is
`
`3.
`
`4.
`
`good cause to allow discovery. See Bloomberg Inc. v. Markets-Alert Pty Ltd.,
`
`CBM2013-00005, Paper 32, at 5-6 (P.T.A.B. May 29, 2013). Here, all of those
`
`factors weigh in favor of permitting the requested discovery.
`
`– 4 –
`
`
`
`III. THERE IS GOOD CAUSE TO PERMIT DISCOVERY.
`
`The discovery sought relates to objective evidence of non-obviousness,
`
`which the Federal Circuit has noted is often “the most probative and cogent
`
`evidence in the record.” Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538
`
`(Fed. Cir. 1983). Also called secondary considerations, such evidence must be
`
`considered before a conclusion on obviousness is reached. See In re
`
`Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig., 676 F.3d
`
`1063, 1075-76 (Fed. Cir. 2012). Here, SightSound will offer, inter alia, evidence
`
`of the commercial success of Apple’s electronic sales of digital content, and the
`
`fact that Apple copied SightSound’s patented invention.
`
`A.
`
`Discovery Will Show That The iTMS Practices The Transmitting
`And Sales Steps as Described in the Patent Claims.
`
`Whether Apple practices the method disclosed in SightSound’s invention is
`
`essential to the non-obviousness inquiry. See Brown & Williamson Tobacco Corp.
`
`v. Philip Morris Inc., 229 F.3d 1120, 1130 (Fed. Cir. 2000) (“Our case law
`
`provides that the success of an infringing product is considered to be evidence of
`
`the commercial success of the claimed invention.”) (emphasis added).3 The
`
`3 See also E.I. du Pont de Nemours & Co. v. Phillips Petroleum Co., 656 F. Supp.
`1343, 1369-71 (D. Del. 1987) (notwithstanding plaintiff’s inability to successfully
`sell
`the claimed invention, defendant’s success and ability to charge price
`premiums for infringing product supported showing of commercial success), aff’d
`in part and rev’d in part on other grounds, 849 F.2d 1430 (Fed. Cir. 1988);
`Krippelz v. Ford Motor Co., 750 F. Supp. 2d 938, 947-48 (N.D. Ill. 2010)
`– 5 –
`
`
`
`discovery sought will show that iTMS practices the patented invention and in fact
`
`embodies and is co-extensive with the patented invention, and as such, will both
`
`make the commercial success of the iTMS indisputably relevant and establish the
`
`presumption of a nexus between SightSound’s invention and the iTMS’s
`
`commercial success. “A prima facie case of nexus is generally made out when the
`
`patentee shows both that there is commercial success, and that the thing (product
`
`or method) that is commercially successful is the invention disclosed and claimed
`
`in the patent.” Demaco Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387,
`
`1392 (Fed. Cir. 1988). Where the commercially successful product is coextensive
`
`with the asserted claims, this “trigger[s] a presumption of a nexus between the
`
`[product’s] commercial success and the claimed invention.” Teva Pharm. USA,
`
`Inc. v. Sandoz, Inc., 723 F.3d 1363, 1372 (Fed. Cir. 2013) (citation omitted).
`
`While it is publicly known that Apple sells digital audio and video content
`
`through the iTMS, the requested discovery is necessary here as Apple does not
`
`publicly disclose the steps employed to access and transfer signals from itself (the
`
`first party) to a purchaser (the second party). Apple likewise does not publicly
`
`detail the steps it uses to charge purchasers for the electronic sale. The five-factor
`
`(defendant’s incorporation of infringing feature into millions of automobiles
`supported a finding of commercial success); Syntex (U.S.A.) Inc. v. Paragon
`Optical Inc., 7 U.S.P.Q.2d (BNA) 1001, 1005 (D. Ariz. 1987) (“Commercial
`success of an invention is measured by the sales of the infringers as well as the
`sales [by the patentee].”).
`
`– 6 –
`
`
`
`inquiry articulated in Bloomberg shows good cause to allow this discovery:
`
`1.
`
`More Than A Possibility And Mere Allegation. The materials already
`
`exist and were created or identified in the district court litigation. While the
`
`undersigned has not reviewed the expert report of Dr. Tygar regarding
`
`infringement, counsel understands that the report addresses the infringement of the
`
`‘573 Patent by the iTMS and thus would address the high-level operation of the
`
`transfer and sales steps of the iTMS directly against the claims of the patent.
`
`While the same materials were previously used by SightSound in the district
`
`court for this purpose, SightSound cannot simply access and offer those materials
`
`here due to limits imposed by the district court’s protective order. There is no such
`
`limitation on Apple producing the same documents here because these reflect only
`
`Apple’s confidential information, which is appropriately discoverable in this
`
`proceeding.4 As explained above, the information will be useful in establishing
`
`that the commercial success of the iTMS is a relevant secondary consideration and
`
`4 Nothing in the district court’s protective order controls or informs the
`appropriate scope of discovery in this proceeding—it only prevents SightSound
`from generally using information obtained in the district court action for other
`purposes. See Ex. 2108 (Protective Order in SightSound Technologies, LLC v.
`Apple, Inc., Civil Action No. 2:11-cv-01292-DWA) ¶ 6 (“Information designated
`as Confidential . . . may only be used for purposes of preparation, trial and appeal
`of this action.”). Similarly, the Patent Prosecution Bar in the Protective Order (id.
`¶ 33) speaks to which litigation counsel may be precluded from participating in
`actions before the PTO and has already been enforced to the extent applicable by
`Apple with respect to this proceeding—but again, this provision has no bearing on
`the appropriate scope of discovery here.
`– 7 –
`
`
`
`showing copying. See Bloomberg Inc., CBM2013-00005, Paper 32, at 5 (“‘Useful’
`
`means favorable in substantive value to a contention of the party moving for
`
`discovery.”). Alternatively, Apple’s non-public specifications or similar
`
`documentation will provide information showing control of the respective first and
`
`second memories, as well as the payment steps, albeit less directly than the report.
`
`2.
`
`Litigation Positions And Underlying Basis. SightSound is not seeking
`
`discovery of Apple’s litigation positions or their underlying bases.
`
`3.
`
`Ability To Generate Equivalent Information By Other Means. The
`
`materials sought are confidential, cannot be obtained by other means and are
`
`“uniquely in the possession” or control of Apple, weighing in favor of allowing
`
`discovery.5 77 Fed. Reg. 48,756, 48,761 (Aug. 14, 2012).
`
`4.
`
`Easily Understandable Instructions. SightSound’s requests are brief,
`
`targeted, and easily understandable, weighing in favor of allowing discovery.
`
`5.
`
`Requests Not Overly Burdensome. The requests seek a small subset of
`
`materials readily available to Apple. It would impose no burden upon Apple to
`
`produce Dr. Tygar’s infringement report. Alternatively, if technical documentation
`
`is produced, it need only be materials “sufficient to show” how Apple carried out
`
`the electronic transfer and sales processes at the time it launched the iTMS.
`
`5 In the event that SightSound is limited to publicly available information to prove
`that the iTMS practices the patents, SightSound offers that Apple should be
`similarly constrained to the use of public information in any response.
`– 8 –
`
`
`
`B.
`
`Discovery Will Show That iTMS’s Commercial Success Is Not
`Attributable to Non-Patented Features.
`
`The iTMS is the most successful download music store of all time and is
`
`currently the largest music retailer in the world.6 As explained above, while a
`
`prima facie nexus will be established, evidence of consumer preferences for digital
`
`signals will rebut any argument by Apple that non-patented features of the iTMS
`
`are responsible for its commercial success. See Demaco, 851 F.2d at 1393 (“When
`
`the patentee has presented a prima facie case of nexus, the burden of coming
`
`forward with evidence in rebuttal shifts to the challenger . . . .”).
`
`1.
`
`More Than A Possibility And Mere Allegation. The survey documents
`
`address consumers’ preferences to purchase content directly in the form of digital
`
`signals for download over physical media such as tapes and CDs, and address the
`
`value consumers place on non-patented features of the iTMS. Apple conducts
`
`detailed surveys and tracks consumer behavior precisely to understand consumers’
`
`preferences and purchasing behavior, analyzes that information in detail, and keeps
`
`such information confidential.7 While counsel has not reviewed such documents,
`
`surveys conducted by or on Apple’s behalf regarding iTMS will likely reveal
`
`6 Apple Press Release, dated February 25, 2010.
`7 Apple has publicly acknowledged in another proceeding that on a quarterly basis,
`it gathers detailed consumer information and extensively tracks “what is driving
`our consumers’ decisions to purchase” its products. See Exhibit 2109 ¶¶ 4-6.
`– 9 –
`
`
`
`consumers’ preference for purchasing digital signals directly for download and
`
`shed light on the driving force behind the commercial success of the iTMS.
`
`2.
`
`Litigation Positions And Underlying Basis. Again, SightSound is not
`
`seeking discovery of Apple’s litigation positions or their underlying bases.
`
`3.
`
`Ability To Generate Equivalent Information By Other Means. Apple’s
`
`survey information regarding consumer preferences and reasons for purchasing is
`
`non-public and Apple has acknowledged that “[n]o other entity could replicate this
`
`research,” weighing in favor of allowing discovery. Exhibit 2109 ¶¶ 4-5.
`
`4.
`
`Easily Understandable Instructions. SightSound’s single request on
`
`this topic is simple and unambiguous, weighing in favor of allowing discovery.
`
`5.
`
`Requests Not Overly Burdensome To Answer. SightSound’s request
`
`covers a limited time range and a readily identifiable subset of documents. Given
`
`that Apple purports to conduct such surveys quarterly (Exhibit 2109 ¶ 4),
`
`SightSound’s targeted requests implicate no more than a dozen or so documents.
`
`IV. CONCLUSION
`
`For the foregoing reasons, Patent Owner SightSound respectfully requests
`
`that the Board grant its motion to take limited discovery of Petitioner Apple.
`
`Dated: November 15, 2013
`
`/David R. Marsh/
`David R. Marsh, Ph.D. (Reg. No. 41,408)
`Kristan Lansbery, Ph.D. (Reg. No. 53,183)
`
`– 10 –
`
`
`
`ARNOLD & PORTER LLP
`Attn: IP Docketing
`555 12th Street, N.W., Washington, DC 20004
`Tel: (202) 942-5068, Fax: (202) 942-5999
`
`– 11 –
`
`
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