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`Patent Owner SightSound Technologies, LLC
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`By: David R. Marsh, Ph.D.
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`Kristan L. Lansbery, Ph.D.
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`ARNOLD & PORTER LLP
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`555 12th Street, N.W.
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`Washington, DC 20004
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`Tel: (202) 942-5068
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`Fax: (202) 942-5999
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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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`APPLE INC.,
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`Petitioner,
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`v.
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`SIGHTSOUND TECHNOLOGIES, LLC,
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`Patent Owner.
`_______________
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`Case CBM2013-00023
`Patent 5,966,440
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`_______________
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`PATENT OWNER SIGHTSOUND TECHNOLOGIES, LLC’S
`OPPOSITION TO PETITIONER APPLE INC.’S MOTION
`TO EXCLUDE UNDER 37 C.F.R. §§ 42.62 and 42.64
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`TABLE OF CONTENTS
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`Page
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`I.
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`INTRODUCTION ......................................................................................... 1
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`II. ARGUMENT .................................................................................................. 1
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`A. Mr. Snell is Qualified to Opine Under F.R.E. 702 ........................... 1
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`B. Mr. Snell’s Opinions on Nexus Are Supported by Facts and
`Data ....................................................................................................... 5
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`C. Mr. Snell Validly Opined That ITMS Is “Co-Extensive” With
`the Claims and That the Claims Drove Commercial Success ......... 8
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`D. Mr. Snell’s Opinions Rely Upon the “Second Party”
`Construction Adopted by the Board ................................................. 9
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`E. Mr. Snell’s Opinions That Certain CompuSonics References
`Fail to Meet the Financial Requirements of the Challenged
`Claims Rely Upon the District Court’s Constructions of
`“Selling Electronically” and “Charging a Fee” Which Were
`Adopted by the Board .......................................................................13
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`III. CONCLUSION ............................................................................................14
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`-i-
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`I.
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`INTRODUCTION
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`Patent Owner SightSound Technologies, LLC (“Patent Owner”) hereby
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`submits this opposition to Petitioner Apple Inc.’s Motion to Exclude Under 37
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`C.F.R. §§ 42.62 and 42.64 (“Mot.”). Petitioner Apple Inc.’s (“Petitioner”) Motion
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`opens with a lengthy discussion of the admissibility and weight to be accorded
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`expert testimony, in essence conceding that there is no basis to exclude the
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`opinions of Mr. Snell. Yet, Petitioner then proceeds to criticize a few discrete
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`aspects of Mr. Snell’s written and oral testimony, criticism contrived only through
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`Petitioner’s fatal misstatements of law and contorted and selective presentation of
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`Mr. Snell’s actual testimony, and seeks to use its arguments as a basis to exclude
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`wide swaths of Mr. Snell’s opinions. For the reasons stated herein, Petitioner’s
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`Motion fails to undermine either the admissibility or the weight that the Board
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`should accord Mr. Snell’s opinions.
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`II. ARGUMENT
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`A. Mr. Snell is Qualified to Opine Under F.R.E. 702
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`Mr. Snell is qualified to provide the opinions found in Sections VII-IX of his
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`report. Mr. Snell has decades of engineering experience, specializing in design and
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`analysis of microelectronics, software, and systems for recording, playing,
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`synthesis, processing, and transferring electronic media over electronic networks.
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`Ex. 2353 ¶ 3. In 1976, Mr. Snell founded and was the first editor of COMPUTER
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`MUSIC JOURNAL, an academic journal on the application of a number of disciplines
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`such as computer science, signal processing mathematics, and electronics to the
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`composition, recording, editing, and processing of music, and has published
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`several books on such topics. Id. ¶ 6. It is undisputed that he is a person of skill in
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`the art and qualified to analyze the non-obviousness of the claims, their application
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`to the iTunes Music Store (“ITMS”), whether ITMS is co-extensive with and
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`embodies the claims, and whether there is a nexus between the invention and the
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`commercial success of ITMS.
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`Remarkably, Petitioner argues that Mr. Snell is not qualified to render the
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`opinions contained in Section VII of his report, which concern obviousness in view
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`of CompuSonics. Here, the proper analysis is whether the claimed invention
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`would have been obvious to one of ordinary skill after consideration of all the
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`facts. 35 U.S.C. § 103. As an undisputed person of such skill with expertise in
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`music, recording, electronic media, and digital audio processing, Mr. Snell is
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`qualified.1 If Petitioner believed otherwise, it is surprising that Petitioner chose not
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`1 Petitioner’s challenge to Mr. Snell’s non-obviousness opinion is particularly
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`surprising given that Petitioner offers opinions from individuals who were
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`admittedly not persons of ordinary skill in the art in 1988 on issues such as what
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`ideas were “prevalent in the industry” (Ex. 4413 (Robbin Decl.) ¶ 9; see Ex. 2377
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`(Robbin Dep.) at 14:22-23 (testifying Robbin graduated from high school in 1987))
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`Footnote continued on next page
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`to ask Mr. Snell a single question during his deposition about his opinions on the
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`CompuSonics references. See Ex. 4366.
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`Petitioner also attacks Mr. Snell’s credentials to provide the opinions in
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`Section IX of his report regarding commercial success, claiming Mr. Snell cannot
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`appropriately analyze “the variables that help explain why SightSound’s electronic
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`store failed while [ITMS] succeeded.” Mot. at 4-5. In fact, throughout its Motion,
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`Petitioner relies on the erroneous premise that the relevant inquiry for commercial
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`success is a comparison between Patent Owner’s online store and ITMS, and
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`wrongly assumes that Mr. Snell must prove that various features of ITMS that
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`Petitioner has identified do not explain its success. This is not the law.
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`As the Federal Circuit makes clear, the relevant inquiry is whether there is a
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`nexus between the patented invention and a commercially successful product. “A
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`prima facie case of nexus is generally made out when the patentee shows both that
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`there is commercial success, and that the thing (product or method) that is
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`commercially successful is the invention disclosed and claimed in the patent.”
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`Demaco Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387, 1392 (Fed. Cir.
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`1988). When the commercially successful product is coextensive with the asserted
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`Footnote continued from previous page
`and what persons of ordinary skill “often discussed and recognized” (Ex. 4414
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`(Kenswil Decl.) ¶ 52). See Paper 64 (Patent Owner’s Motion to Exclude).
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`-3-
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`claims, this “trigger[s] a presumption of a nexus between the [product’s]
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`commercial success and the claimed invention.” Teva Pharm. USA, Inc. v. Sandoz,
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`Inc., 723 F.3d 1363, 1372 (Fed. Cir. 2013) (citations omitted), cert. granted on
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`other grounds, 2014 WL 199529 (Mar. 31, 2014); see also Crocs, Inc. v. ITC, 598
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`F.3d 1294, 1310-11 (Fed. Cir. 2010). That presumption arises here because the
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`‘440 Patent claims cover a method for a customer to purchase and download audio
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`and/or video signals, which is precisely the method used by ITMS. Petitioner
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`disregards the law in suggesting that Patent Owner must show that ITMS “does not
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`embody inventions other than the invention of the Claims.” Mot. at 8. “A patentee
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`is not required to prove as part of its prima facie case that the commercial success
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`of the patented invention is not due to factors other than the patented invention. It
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`is sufficient to show that the commercial success was of the patented invention
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`itself. A requirement for proof of the negative of all imaginable contributing
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`factors would be unfairly burdensome, and contrary to the ordinary rules of
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`evidence.” Demaco, 851 F.2d at 1394 (emphasis in original) (citations omitted).
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`For the same reason, Petitioner’s effort to compare its business with Patent
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`Owner’s business is inapplicable. See Mot. at 5-8, 9-11. Petitioner cites no
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`authority that such a comparison is relevant and ignores case law cited by Patent
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`Owner teaching that the commercial success of the infringer and other members of
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`the industry is persuasive evidence of commercial success, even where the
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`-4-
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`patentee’s product was not commercially successful. See Paper 38 (Patent
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`Owner’s Response) at 65-66 (citations omitted).
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`Mr. Snell has opined that ITMS is an embodiment of and co-extensive with
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`the claims of the ‘440 Patent, and there can be no dispute that, based on his
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`training and experience (Ex. 2353 ¶¶ 3, 6), he is qualified to render such opinions.2
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`B. Mr. Snell’s Opinions on Nexus Are Supported by Facts and Data
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`Petitioner next attacks Mr. Snell’s opinion that non-patented features do not
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`explain the success of ITMS, taking out of context his observation that “[t]he user
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`interface of the ITMS does not appear to be significantly different than the user
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`interface of SightSound.com, which organized content in the same fashion, offered
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`2 Petitioner complains that Mr. Snell lacked sufficient underlying facts or data
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`upon which this conclusion “could legitimately be based.” Mot. at 5. Petitioner’s
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`assertion is remarkable because it was Petitioner who refused to provide internal
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`information concerning the operation of ITMS, limiting Mr. Snell (and its own
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`expert, Dr. Kelly) to publicly available information. Petitioner did so despite the
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`fact that internal documentation and source code support Mr. Snell’s opinions, as
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`evidenced in the redacted report of Dr. Tygar that reaches similar conclusions
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`based on internal information, which Petitioner has now reluctantly produced. See
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`Ex. 1 of Kelly Dep. (Ex. 2376).
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`-5-
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`the same purchasing and preview options, and also utilized cover art.” Ex. 2353
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`¶ 101; see Mot. at 5-6 (citing the same). As noted above, this is not the relevant
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`comparison. Here, the crux of Mr. Snell’s opinion is that Patent Owner is entitled
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`to the presumption of a nexus that Petitioner cannot rebut by pointing to features
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`other than the patented method (e.g., content or user interface) because such
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`features are not exclusive to ITMS and are equally available to those who purchase
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`their music on CD and upload it with Petitioner’s iTunes software. See Ex. 2353
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`¶¶ 78-81. The content available through ITMS was and is available to consumers
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`in the form of a physical CD and the consumer has the option of purchasing a CD
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`and uploading its contents to the iTunes software. By doing so, the consumer can
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`“experience [Petitioner’s] iTunes user interface, as well as sort and view their
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`music, cover art and transfer it to the iPod” (all of which are features Petitioner
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`asserts are responsible for the commercial success of ITMS). Id. ¶ 101. Therefore,
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`“the decision to purchase audio and video from the ITMS necessarily reflects the
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`consumer’s deliberate choice to purchase the content directly in its digital form
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`over telecommunications lines—i.e., to utilize the patented technology.” Id.
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`Thus, Petitioner’s critique that Mr. Snell allegedly did not “investigate the
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`features of the SightSound.com electronic store user interface” and could not say
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`whether certain ITMS features were “important to consumers, and therefore to
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`commercial success” (Mot. at 6-7 (emphasis omitted)), misses the point. In any
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`-6-
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`event, the identified features are irrelevant to commercial success. First, Petitioner
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`identifies zero evidence that any of the features it lists drove ITMS sales, even
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`though it conducts extensive consumer research and surveys into customer
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`preferences. Second, these features are free and can be experienced by consumers
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`who do not even make a purchase. Therefore, they cannot be the reason that a
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`consumer chooses to make a purchase using ITMS. Third, many of these features
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`were incorporated long after ITMS achieved commercial success. Petitioner
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`concedes that ITMS was successful at the time of its launch in April 2003, and its
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`expert had no choice but to concede that this was so before many features—such as
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`Genius—were added. Ex. 2375 (Kenswil Dep.) at 61:11-15, 71: 23-72: 3, 130:3-
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`17; Ex. 7 of Kenswil Dep. (Ex. 2174) (http://www.apple.com/pr/library/2003/06/
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`23iTunes-Music-Store-Hits-Five-Million-Downloads.html).3
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`3 While Petitioner complains that Mr. Snell is not “a financial analyst or sales
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`expert” (Mot. at 7), Petitioner’s expert, Mr. Kenswil, admitted his own lack of
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`expertise in advertising, marketing, financial analysis, and sales. Ex. 2375 at 38:9-
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`19. Additionally, to the extent non-patented features of ITMS are in any way
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`relevant (which they are not), it is Petitioner’s burden (not Patent Owner’s) to
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`rebut the presumption of a nexus by pointing to evidence that these features drove
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`Footnote continued on next page
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`-7-
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`C. Mr. Snell Validly Opined That ITMS Is “Co-Extensive” With the
`Claims and That the Claims Drove Commercial Success
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`Petitioner continually states that Mr. Snell’s opinion that ITMS is “co-
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`extensive” with the patented claims is without basis and should be disregarded
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`because Mr. Snell did not know the meaning of the term “co-extensive.” Mot. at
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`8-9. This is false. When asked, Mr. Snell answered that “co-extensive” meant
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`“the same scope . . . as the claims in the patents.”4 Ex. 4366 at 34:5-14. Further,
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`as set forth above, Petitioner mischaracterizes the law in suggesting that “[t]o show
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`co-extensiveness, Patent Owner must show that ITMS does not embody inventions
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`other than the invention of the Claims” (Mot. at 8-9), when in fact, the cited case
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`stands for precisely the opposite proposition. See Demaco, 851 F.2d at 1394.
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`Petitioner’s arguments that Mr. Snell has “no basis for opinions about
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`commercial success/failure” (Mot. at 9-11) is based on the same basic
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`Footnote continued from previous page
`commercial success. See Crocs, 598 F.3d at 1311 (citing Demaco, 851 F.2d at
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`1392).
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`4 Petitioner’s challenge to Mr. Snell’s understanding of patent law concepts is also
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`not well taken as its own expert who offered opinions on the “claimed invention”
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`did not understand the meaning of the term “claim” in the context of patent law.
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`See Paper 72 (Patent Owner’s Motion for Observations on Cross-Examination) at 9
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`(Observation #15); Ex. 2375 (Kenswil Dep.) at 43:9-44:6.
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`mischaracterization of the law. Accordingly, Patent Owner’s profitability or lack
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`thereof is irrelevant. That Mr. Snell did not analyze or form opinions regarding
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`Patent Owner’s business, or attempt to reconstruct its website, does nothing to
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`affect the admissibility or weight of his opinions in this proceeding.
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`Petitioner’s critique of Mr. Snell for not assessing whether Patent Owner or
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`Petitioner sold “more compelling content” and whether this affected “consumer
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`purchasing” is likewise irrelevant. Mot. at 10. While selection may, like many
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`factors, impact scale or profitability, content is the “good” sold through the
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`patented method and is widely available through other purchasing methods (i.e., on
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`a CD), and thus cannot be the reason that a digital download business is
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`successful. Here, ITMS is co-extensive with and embodies the patented method,
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`giving rise to a presumption of a nexus. Petitioner has no authority to suggest it
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`can rebut that presumption merely by pointing out that not every single
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`commercial embodiment of the invention was commercially successful.
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`D. Mr. Snell’s Opinions Rely Upon the “Second Party” Construction
`Adopted by the Board
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`Petitioner next suggests that Mr. Snell’s opinions rest upon an erroneous
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`construction of “second party.” Mot. at 11-13. Mr. Snell’s declaration makes clear
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`that he utilized the constructions adopted by the Board, with “second party” being
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`as “[a] second entity, whether a corporation or a real person.” Ex. 2353 ¶ 29.
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`While Mr. Snell’s statements at deposition identified consumers as potential
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`-9-
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`second parties, none of Mr. Snell’s opinions regarding the CompuSonics
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`references were influenced by this statement.
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`First, Petitioner incorrectly claims that Mr. Snell’s opinion that “second
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`memory” is limited to non-removable memory and excludes removable storage
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`mediums, such as records, tapes, CDs, cassettes, cartridges, optical disks, and
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`floppy disks, depends upon an improper construction of “second party.” Mot. at
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`12. Mr. Snell’s opinions that “second memory” is limited to non-removable
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`memory have nothing to do with the identity of the “second party,” and are based
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`instead on the patent claims, specification, and prosecution history as described in
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`his declaration. Mr. Snell’s declaration discusses the specification at length,
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`detailing how it identified the drawbacks of removable media:
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`The specification makes abundantly clear that the invention
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`precluded removable physical storage media as a second memory.
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`See Figure 1 (“hard disk” as second memory). It discussed the host of
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`inefficiencies associated with removable media which was a problem
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`solved by the invention, including that the removable physical media
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`were prone to limited storage capacity, damage and deterioration, low
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`sound quality, and copyright
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`infringement; and
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`the sale and
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`distribution of physical media was time consuming, costly, and
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`wasteful. See id. at 1:16-2:13. The ‘440 Patent’s novel method of
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`electronically selling and distributing digital video and digital audio
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`signals directly to a non-removable storage medium rendered these
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`problems moot and rendered unnecessary the time and costs
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`associated with manufacturing, packaging, shipping, and finally
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`shelving the removable physical media at a brick-and-mortar location.
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`See id. at 1:45-54.
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`Ex. 2353 ¶ 28. No part of Mr. Snell’s opinion that one of ordinary skill would
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`understand “second memory” to exclude removable storage mediums depends
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`upon a construction of “second party” or even refers to the “second party.”
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`Second, Petitioner incorrectly asserts that Mr. Snell ignored CompuSonics
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`DSP 2000 devices, some of which utilized hard drives. Mot. at 12. Again, Mr.
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`Snell’s opinions that certain exhibits, which Petitioner claims were ignored, do not
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`anticipate the ‘440 Patent reveals that these opinions have nothing to do with a
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`construction of “second party.” With respect to Exhibit 4309 (10/5/85 Billboard
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`Article), Mr. Snell did not opine that it failed to anticipate the invention because a
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`retailer could not be a “second party” as Petitioner suggests, but rather because the
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`only second party described in Exhibit 4309 is the consumer (the only party
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`described as making any purchase at all), who did not utilize a hard disk but was
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`described as recording a purchased transmission “onto a five-and-a-quarter inch
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`‘super floppy’ disk.” Ex. 2153 ¶ 45; see Ex. 4309. In Exhibit 4309, a retailer with
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`a DSP 2000 (potentially using a hard disk) was described as receiving “an album
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`master via digital transmission from the record company,” but as Mr. Snell pointed
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`out there is no disclosure of any payment by the retailer, let alone electronic
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`payment via telecommunications lines as required by the claims. Ex. 4309; Ex.
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`2353 ¶ 45.
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`With respect to Exhibit 4319 (“CompuSonics Video Application Notes”),
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`despite references to a “main disk” or “fixed disk drive,” Mr. Snell pointed out that
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`such references involved no sale at all, let alone an electronic sale, and involved a
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`single party (i.e., no financially distinct “first party” and “second party”). Ex. 2353
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`¶ 52. With respect to Exhibit 4323 (U.S. Patent No. 4,682,248), Mr. Snell noted
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`the lack of a sale or electronic transfer of money between two distinct parties. Ex.
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`2353 ¶ 54. Mr. Snell opined that Exhibit 4315 (Image of “Digital Audio
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`Telecommunication System”) disclosed neither a distinct first and second party nor
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`any type of sale or electronic transfer of money. Ex. 2353 ¶ 48.5 In sum,
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`Petitioner is wrong that Mr. Snell’s opinions on these exhibits were based on an
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`5 The remaining exhibits identified by Petitioner— Exhibits 4316 (7/16/84
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`CompuSonics Shareholder Letter), 4317 (AES Article), 4318 (10/10/85
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`CompuSonics Shareholder Letter), and 4324 (11/12/84 Fortune Magazine
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`Article)—all fail for the same reason: with respect to CompuSonics DSPs utilizing
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`hard disk equipment, none disclose financially distinct first and second parties
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`(regardless of their identities) nor a sale or electronic transfer of money. See Ex.
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`2353 ¶¶ 49, 50, 51, 55.
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`-12-
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`improper construction of “second party,” which perhaps explains why Petitioner’s
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`motion contained no substantive discussion of Mr. Snell’s actual opinions
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`pertaining to these exhibits.
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`E. Mr. Snell’s Opinions That Certain CompuSonics References Fail
`to Meet the Financial Requirements of the Challenged Claims
`Rely Upon the District Court’s Constructions of “Selling
`Electronically” and “Charging a Fee” Which Were Adopted by
`the Board
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`Finally, Petitioner argues that Mr. Snell’s opinions that certain
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`CompuSonics references fail to meet the financial requirements of the challenged
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`claims should be excluded. Mot. at 13-15. Petitioner claims that Mr. Snell is
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`precluded from identifying deficiencies in CompuSonics references that fail to
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`disclose “selling electronically” and/or “charging a fee” because the inventor, Mr.
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`Hair, made certain statements about electronic sales during patent prosecution.
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`Petitioner is wrong. As a person of ordinary skill, Mr. Snell is qualified to agree or
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`disagree with statements made by Mr. Hair—but more importantly, in assessing
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`whether the CompuSonics references at issue meet the electronic sale requirements
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`of the challenged claims, Mr. Snell appropriately applied the constructions of the
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`District Court which were adopted by the Board for “selling electronically” and
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`“charging a fee.” Ex. 2353 ¶ 29. The fact that the District Court construed these
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`terms in the first place, and that the Board adopted such constructions for use in
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`this proceeding, disproves Petitioner’s argument that such terms are somehow
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`foreclosed from further consideration because of the prosecution history.
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`Petitioner’s assertion that Mr. Snell somehow failed to consider the prosecution
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`history of the patents is similarly unfounded—the very paragraph cited by
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`Petitioner as “evidence” of this supposed failure confirms that for both the ‘573
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`and ‘440 patents, Mr. Snell reviewed their file history and reexamination history.
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`Ex. 2353 ¶ 15.
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`III. CONCLUSION
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`For the foregoing reasons, Patent Owner respectfully requests that the Board
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`deny Petitioner’s Motion to Exclude.
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`Dated: April 18, 2014
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` By:
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`Respectfully submitted,
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`/David R. Marsh/
`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
`Attorneys for Patent Owner
`SightSound Technologies, LLC
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`-14-
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`CERTIFICATE OF SERVICE
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`The undersigned certifies that a copy of the foregoing PATENT OWNER
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`SIGHTSOUND TECHNOLOGIES, LLC’S OPPOSITION TO PETITIONER
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`APPLE INC’S MOTION TO EXCLUDE UNDER 37 C.F.R. §§ 42.62 and
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`42.64 was served on April 18, 2014 to the following Counsel for Petitioner via
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`e-mail, pursuant to the parties’ agreement concerning service:
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`J. Steven Baughman, Lead Counsel
`Ching-Lee Fukuda
`ROPES & GRAY LLP
`Prudential Tower
`800 Boylston Street
`Boston, Massachusetts 02199-3600
`Steven.Baughman@ropesgray.com
`Ching-Lee.Fukuda@ropesgray.com
`ApplePTABServiceSightSound@ropesgray.com
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`Attorneys for Petitioner Apple Inc.
`
`/David R. Marsh/
`David R. Marsh (Atty. Reg. No. 41,408)
`ARNOLD & PORTER LLP
`555 12th Street, N.W.
`Washington, D.C. 20004
`Tel: (202) 942-5068
`Fax: (202) 942-5999
`
`-15-