UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________________
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________________
`
`EBAY ENTERPRISE, INC. AND EBAY, INC.
`Petitioner
`v.
`LAWRENCE B. LOCKWOOD
`Patent Owner
`_____________________
`Cases CBM 2014-00025 (Patent 7,010,508)
`CBM 2014-00026 (Patent 5,576,951)
`_____________________
`
`PETITIONER’S SUPPLEMENTAL BRIEF REGARDING PETITIONER’S
`ELIGIBILITY TO FILE THE PRESENT COVERED BUSINESS METHOD
`REVIEW PETITIONS
`
`
`_____________________
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________________
`
`EBAY ENTERPRISE, INC. AND EBAY, INC.
`Petitioner
`v.
`LAWRENCE B. LOCKWOOD
`Patent Owner
`_____________________
`Cases CBM 2014-00025 (Patent 7,010,508)
`CBM 2014-00026 (Patent 5,576,951)
`_____________________
`
`PETITIONER’S SUPPLEMENTAL BRIEF REGARDING PETITIONER’S
`ELIGIBILITY TO FILE THE PRESENT COVERED BUSINESS METHOD
`REVIEW PETITIONS
`
`
`
`I.
`
`INTRODUCTION
`Petitioner met the CBM filing requirements by certifying that it had been
`
`charged with infringement because of Patent Owner’s suit against Petitioner’s
`
`customer iRobot. Patent Owner’s later dismissal of its suit against iRobot cannot
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`retroactively negate these petitions and deprive the Board of authority to determine
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`the important questions of patentability raised therein. If this were permitted,
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`Patent Owners would be given a roadmap to insulating their patents from review,
`
`while continually attempting to enforce the patent.
`
`II.
`
`STATEMENT OF FACTS
`
`Petitioner provides, maintains, and operates e-commerce websites on behalf
`
`of numerous customers, including iRobot Corporation. Their service agreement
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`specifies that Petitioner will indemnify iRobot for lawsuits relating to Petitioner’s
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`service. Declaration of Howard I. Sherman, (“Sherman Decl.”) at ¶ 5.
`
`On May 22, 2013, Patent Owner brought a patent infringement lawsuit in the
`
`Eastern District of Texas against iRobot, asserting both U.S. Patent Nos. 5,576,951
`
`and 7,010,508 (hereinafter the “subject patents”). Landmark Technology, LLC. v.
`
`iRobot Corp., No. 6:13-cv-00411 (E.D. Tex. May 22, 2013). Patent Owner
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`identified a website provided by Petitioner as the accused instrumentality.
`
`Petitioner agreed to defend and indemnify iRobot under their agreement. Sherman
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`Decl. at ¶ 6.
`
`1
`
`
`
`Petitioner filed the present CBM petitions (“the ’025 Petition and the ’026
`
`Petition”) on November 4, 2013. The district court stayed the underlying litigation
`
`pending the institution decisions. Landmark Technology, LLC v. iRobot Corp., No.
`
`6:13-cv-00411-JDL, Dkt. 47 (E.D. Tex. Jan. 24, 2014). Afterward, Patent Owner
`
`unilaterally gave iRobot, but not Petitioner, a Covenant Not to Sue under the
`
`subject patents and moved to dismiss the litigation. Id., Dkt. 49 (E.D. Tex. March
`
`5, 2014). The court dismissed the case on April 10, 2014.
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`Id., Dkt. 52.
`
`III. ARGUMENT
`
`a. Petitioner Has Satisfied the Certification Requirement and Wishes To
`Supplement to Provide Further Clarity.
`Petitioner met the statutory requirements when it certified that it was eligible
`
`for CBM Review. ’025 Petition at 2-3; ’026 Petition at 3-4. The Board’s rules
`
`require nothing more. 37 C.F.R. § 42.304; Office Trial Practice Guide, Final Rules,
`
`77 Fed. Reg. 48763 (Aug. 14, 2012). Sub-section II(B)3 of the Trial Practice Guide
`
`explains that the petition must certify that the patent is available for review and
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`that the petitioner is not barred, citing Rules 104(IPRs), 204 (PGRs) and 304
`
`(CBMs). Id. Sub-section II(B)1 of the Guide adds that a complete petition for IPR
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`requires only that the petitioner certify that it is eligible for IPR and that § 42.204
`
`creates similar petition requirements for PGR, which includes CBM reviews. Id.
`
`However, per the Board’s order, the following facts relate to this request to
`
`clarify the record: Through its former counsel, Petitioner filed the present CBM
`
`2
`
`
`
`petitions on November 4, 2013. The Patent Owner filed its Preliminary Responses
`
`on February 18 and 21, 2014, raising arguments against the sufficiency of
`
`Petitioner’s indemnification certification. ’025 PO Prelim. Resp. at 8-10; ’026 PO
`
`Prelim. Resp. at 9-11. During this time, Petitioner was changing CBM counsel.
`
`Petitioner retained present counsel who appeared in these cases on April 11, 2014.
`
`’025 POA (Paper 15); ’026 POA (Paper 16). Present counsel represented
`
`Petitioner in district court litigations, including the lawsuits brought by the plaintiff
`
`Clear with Computers, LLC (“CWC”). Clear with Computers, LLC v. Dick’s
`
`Sporting Goods, Inc. No. 6:12-cv-00674-LED (E.D. Tex. Sept. 19, 2012). Present
`
`counsel knew that in the CWC CBM, the Board requested clarification on the
`
`indemnity relationship between Petitioner and the sued defendants. GSI
`
`Commerce Solutions, Inc. v. Clear with Computers, LLC, No. CBM2013-00055,
`
`Paper 9 (P.T.A.B. January 10, 2014). Upon being retained, present counsel
`
`suggested Petitioner file a similar clarification in the present CBMs.
`
`b. Petitioner Complied With The CBM Statutory Filing Requirements.
`Petitioner has met the statutory CBM filing requirements under the America
`
`Invents Act (“AIA”). To file a CBM petition, a petitioner must certify that “the
`
`person… has been sued for infringement of the patent or has been charged with
`
`infringement under the patent.” AIA § 18(a)(1)(B). A party is charged with
`
`infringement when “a real and substantial controversy regarding infringement of a
`
`3
`
`
`
`covered business method patent exists such that the petitioner would have standing
`
`to bring a declaratory judgment action in Federal court.” 37 CFR § 42.302.
`
`Petitioner’s properly certified that it was charged with infringement because
`
`Patent Owner sued Petitioner’s customer, iRobot, for patent infringement for using
`
`Petitioner’s system and Petitioner agreed to defend and indemnify iRobot.
`
`Sherman Decl. at ¶¶ 4, 5. Petitioner therefore had declaratory judgment standing,
`
`allowing it to file a CBM petition. See Arris Group Inc. v. British Telecomm. Plc,
`
`639 F.3d 1368, 1375 (Fed. Cir. 2011)(stating a supplier has declaratory judgment
`
`standing when “the supplier is obligated to indemnify its customers from
`
`infringement liability…”). Furthermore, this Board has recognized that such
`
`indemnity relationships impart CBM eligibility. GSI Commerce Solutions, Inc. v.
`
`Clear with Computers, LLC, Paper 16 at 8-11 (P.T.A.B. March 6, 2014); SAP
`
`America, Inc. v. Pi-Net International, Inc., No. CBM2013-00013, Paper 15 at 3-5
`
`(P.T.A.B. Sept. 19, 2013).
`
`c. Patent Owner’s Dismissal of Its District Court Case Against iRobot is
`Irrelevant to Petitioner’s CBM Petitions
`Patent Owner’s dismissal of the underlying iRobot litigation has no effect on
`
`Petitioner’s properly filed CBM petitions. When the Petitioner filed the petitions,
`
`Petitioner was charged with infringement through its indemnification obligations.
`
`Patent Owner’s assertion that the dismissal of the underlying litigation
`
`somehow retroactively defeats Petitioner’s CBM eligibility is baseless. Patent
`
`4
`
`
`
`Owner confuses the AIA’s statutory requirement with the Article III constitutional
`
`“case and controversy” standing requirement, which does not apply to the Board.
`
`See 37 C.F.R. § 42.74(a)(establishing Board’s independent power to determine
`
`patentability). Eligibility to file a CBM is governed solely by the AIA and the
`
`corresponding regulations, which require only that the charge of infringement exist
`
`when the petition is filed:
`
`“A person may not file a petition for a transitional proceeding with
`respect to a covered business method patent unless the person or the
`person's real party in interest or privy has been sued for infringement
`of the patent or has been charged with infringement under that
`patent.” AIA § 18(a)(1)(B)(emphasis added). See also 37 CFR §
`42.302 (restating when a person may file a CBM petition).
`
`Notably, neither the statute nor the regulations require that a petitioner
`
`maintain any supposed “standing” following the filing of the petition.
`
`Furthermore, the Board has already recognized that post-petition events in
`
`the underlying litigation do not affect compliance with AIA § 18(a)(1)(B). In SAP
`
`America, Inc., et al v. Versata Development Group, Inc., the patent owner argued
`
`that the petition failed under § 18(a)(1)(B) because the district court entered final
`
`judgment after the filing of the CBM petition, eliminating the controversy. No.
`
`CBM2013-00042, Paper 12 at 11-12 (P.T.A.B. Feb. 26, 2014). Despite the post-
`
`petition developments, The Board rejected this argument and ruled that the literal
`
`5
`
`
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`language of § 18(a)(1)(B) required only that the petitioner had been sued for
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`infringement when it filed the petition. Id.
`
`Additionally, in Interthinx, Inc. v. CoreLogic Solutions, LLC, the Board
`
`similarly did not terminate the CBM despite the absence of a case or controversy.
`
`There, the petitioner received a non-infringement verdict in the underlying
`
`litigation and the parties agreed to terminate the CBM proceeding as part of a
`
`settlement. No. CBM2012-00007, Paper 44 at 2-3 (P.T.A.B. Oct. 25, 2013).
`
`Nevertheless, the Board continued to a final written decision even though there
`
`was an apparent lack of a case or controversy. Id. Paper 47 at 2-3 (P.T.A.B. Nov.
`
`12, 2013).
`
`Accordingly, Petitioner’s petitions were properly filed because Petitioner
`
`was “charged with infringement” when the petitions were filed. This is the only
`
`inquiry under § 18(a)(1)(B). Neither the statute nor the Board’s prior decisions
`
`require consideration of any subsequent events, such as iRobot’s dismissal.
`
`d. Ruling That a Unilateral Covenant Not to Sue Defeats Jurisdiction
`Would Cripple the CBM Process.
`Congress enacted CBM review to address the problems caused by non-
`
`practicing entities (“NPEs”) extracting settlements from numerous defendants
`
`based on dubious business method patents in litigations that rarely ever reach the
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`merits. See H.R. Rep. No. 112-98, pt. 1, at 54 (2011)(describing the CBM
`
`provisions as a response to the “patent troll” problem). If Patent Owner’s
`
`6
`
`
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`argument succeeds here, an NPE could terminate a CBM review, at any stage, by
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`dismissing its underlying litigation against a petitioner (or its indemnified
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`customer), thereby preventing review and allowing the NPE to continue extracting
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`settlements from less-tenacious defendants. Patent Owner has asserted the subject
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`patents against over 80 defendants, including six more since it covenanted not to
`
`sue iRobot. See e.g. Landmark Technology, LLC v. Boyd Gaming Corp., No 6:14-
`
`cv-00244 (E.D. Tex. April 4 2014). Patent Owner has settled early, thus
`
`preventing these cases from reaching a Markman hearing. Patent Owner’s
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`dismissal of iRobot is another attempt to prevent review of the patents’ validity. If
`
`the Board permits this tactic, it would give NPEs a roadmap to keep the Board
`
`from fulfilling its mandate to eliminate invalid patents. H.R. Rep. No. 112-98, pt.
`
`1, at 54 (2011) (stating the purpose of CBM Review is to review the validity of
`
`poor quality patents).
`
`IV. CONCLUSION
`For the foregoing reasons, Petitioner respectfully requests that the Board
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`institute CBM review of both subject patents.
`
`Dated: April 29, 2014
`
`Respectfully submitted,
`
`By:
`
`-
`
`/Don Daybell/
`Don Daybell
`Registration No. 50,877
`Attorneys for Petitioner,
`EBAY ENTERPRISE, INC. AND
`EBAY, INC.
`
`7
`
`
`
`CERTIFICATION OF SERVICE (37 C.F.R. §§ 42.6(e))
`
`The undersigned hereby certifies that the above-captioned
`
`“PETITIONER’S SUPPLEMENTAL BRIEF REGARDING PETITIONER’S
`
`ELIGIBILITY TO FILE THE PRESENT COVERED BUSINESS METHOD
`
`REVIEW PETITIONS” with exhibit and updated Exhibit List was served in its
`
`entirety on April 29, 2014, upon the following parties via electronic mail:
`
`Counsel for Patent Owner
`
`Robert Greene Sterne
`rsterne@skgf.com
`Donald J. Featherstone
`donf-PTAB@skgf.com
`Jason D. Eisenberg
`jasone-PTAB@skgf.com
`Byron L. Pickard
`bpickard-PTAB@skgf.com
`Richard M. Bemben
`rbemben-PTAB@skgf.com
`Sterne, Kessler, Goldstein & Fox P.L.L.C.
`1100 New York Avenue, N.W.
`Washington, D.C. 20005-3934
`
`By:
`
`/Sally Hartwell/
`Sally Hartwell
`
`8
`
`
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