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`UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________________
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`EBAY ENTERPRISE INC. AND EBAY, INC.
`Petitioner
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`v.
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`LAWRENCE B. LOCKWOOD
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`Patent Owner
`_____________________
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`Case CBM2014-00025
`U.S. Patent No. 7,010,508
`_____________________
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`LOCKWOOD’s REPLY BRIEF TO EBAY’S SUPPLEMENTAL
`BRIEF ALLEGING ELLIGIBILITY TO FILE CBMS
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`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
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`Case CBM2014-00025
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`eBay’s primary argument is that it only had to “certify” whether it had
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`standing to file its CBM petitions. But that is wrong: Rule 302(a) requires a CBM
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`petition to “demonstrate,” not merely certify, standing. If the Board agrees with
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`Lockwood on this point, it need not consider eBay’s remaining arguments, because
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`eBay will have failed to satisfy its burden as petitioner, leaving a denial of the
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`petitions as the only appropriate action by the Board.
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`The Board should also not enter the untimely Sherman declaration into these
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`cases. First, the rules do not allow eBay to enter evidence at this stage of the cases
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`or to otherwise supplement its petitions. Second, eBay fails to explain why the
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`Sherman declaration could not have been filed with its petitions. Third, the
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`substance of the Sherman declaration is mere attorney argument—he does not
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`provide any evidence about the terms of the alleged indemnification agreement
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`between eBay and iRobot.1
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`Finally, following well established declaratory-judgment precedent, the
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`dismissal with prejudice of the iRobot law suit and Lockwood’s grant of a
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`covenant not to sue iRobot divested the Board of its jurisdiction to consider the
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`CBM petitions. So the Board should deny institution for lack of standing.
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`1 The appropriate process for eBay to fill evidentiary gaps is filing new
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`CBM petitions after the Board dismisses the present petitions.
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`I.
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`Case CBM2014-00025
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`Argument
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`eBay provided no evidence of standing and wrongly argues mere
`certification of standing is sufficient.
`eBay asserts that the law only requires that it certify it has standing. eBay is
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`wrong. Rule 304 states: “The petitioner must demonstrate… that the petitioner
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`meets the eligibility requirements of §42.302 [who may petition]” (emphasis
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`added).2 eBay’s brief ignores this basic point, as it must, because its petitions lack
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`any evidence demonstrating standing.
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`eBay, as petitioner, must meet its burden of production (i.e., provide
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`admissible evidence) when it files its petitions and as the CBMs proceed—notice
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`pleading does not suffice. 37 C.F.R. § 42.20(c). The Board has explained the
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`burden stating “[a]rguments of counsel cannot take the place of factually supported
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`objective evidence.” 77 Fed. Reg. 48702. And contrary to eBay’s position that a
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`Rule 11 basis for attorney allegations is enough in a petition (’026 Paper 21, pp. 2-
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`4), denials of petitions for lacking sufficient evidence are now commonplace.3
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`2 eBay incorrectly cites Rule 204 for its assertion that a certification is enough
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`because Rule 204 applies to PGRs, not CBMs.
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`3 See, e.g., CBM2014-00010 (Paper 20, p. 9) (“Petitioner’s conclusory language in
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`the petition …without more, is not sufficient to demonstrate that the claimed
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`subject matter is not a technical invention.”); IPR2013-00101 (Paper 14, p. 10)
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`Case CBM2014-00025
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`Despite Rule 302’s clear requirement that petitioners provide evidence of
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`standing, eBay’s brief does not point to any evidence in the petitions that supports
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`its assertion that it has standing. Instead, eBay seeks to add the Sherman
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`declaration (’026 Paper 21, pp. 2-3). But the Sherman declaration suffers the same
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`problem as eBay’s petitions: it is merely a signed attorney statement that an alleged
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`agreement to indemnify exists. The Sherman declaration does not provide a single
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`term from this alleged indemnification agreement. The records of these CBMs still
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`lack any evidence of the scope or amount of any alleged indemnification. In short,
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`eBay asks the Board to trust it that there is an indemnity agreement, and eBay
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`deprives Lockwood of any ability to test whether any alleged indemnity agreement
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`in fact gives rise to a declaratory judgment standing. For this reason alone,
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`institution of the Petitions should be denied.
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`II.
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`eBay should not be allowed to correct its petitions or enter supplemental
`information.
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`Although eBay has alleged 37 C.F.R. § 42.11 allows it to plead without
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`providing evidence, eBay still asks the Board for a mulligan to either correct the
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`standing argument in its petitions (37 C.F.R. § 42.104(c) for correcting petitions)
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`and/or to supplement the petitions with information allegedly showing standing in
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`(“the Petition lacks sufficient evidence, for example, in the form of testimony or
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`other probative evidence...”).
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`Case CBM2014-00025
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`the proceeding (37 C.F.R. §42.123 for entering supplemental evidence). But Rule
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`104 does not allow correcting their petitions without an authorized motion, which
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`the Board denied in the Order (’026 Paper 20), and Rule 123 does not allow the
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`submission of supplemental information before institution. So the Sherman
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`declaration should be excluded.
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`eBay’s sole basis for why it should be allowed to “clarify” the standing
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`argument here is the ruling of another Board panel in the ’055 CBM. But eBay
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`conveniently fails to explain the substantial differences between the facts and
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`procedural posture of the ’055 CBM and the Lockwood CBMs. First, the patent
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`owner in the ’055 CBM consented to the petitioner submitting a declaration. So,
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`the ’055 CBM provides no guidance on how to resolve this issue when there is not
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`consent. Second, GSI acted more promptly in the ’055 CBM (two months before
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`decision) than eBay does here (weeks before decision). eBay knew in January
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`2014, before Lockwood filed its POPRs, that the same evidentiary gaps existed in
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`the Lockwood CBMs as in the ‘055 CBM. But eBay waited four months to act on
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`this knowledge in the Lockwood CBMs. Entry4 of new counsel does not toll
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`eBay’s timeliness to act.
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`Even if there were no differences between the proceedings, eBay fails to
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`explain why the Sherman declaration was not filed with the petition, why it was
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`4 It is not clear from the Brief when eBay hired new counsel.
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`Case CBM2014-00025
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`not filed when a similar statement was filed in the ’055 CBM, or why they waited
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`until the eve of the due date for the decision. eBay’s only remedy should be to file
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`new CBM petitions that include all of the evidence they now believe is required to
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`demonstrate they have standing.
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`III. Extinguishment of the iRobot litigation divests the Board of CBM
`jurisdiction.
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`In enacting the CBM proceeding, Congress sought to limit the eligible pool
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`of petitioners to persons who would have had standing to file a declaratory-
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`judgment suit in federal district court. It stands to reason that Congress similarly
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`intended that petitioner maintain that standing throughout a CBM, just as a
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`declaratory-judgment plaintiff must do in federal court.5 Even if eBay somehow
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`met its burden as petitioner, this CBM should still be dismissed because there is no
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`underlying case or controversy between Lockwood and iRobot—that suit has been
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`dismissed and iRobot has a covenant not to sue.
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`Extinguishing of the threat of suit during a declaratory judgment proceeding
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`divests a Federal court of jurisdiction. It should do the same for CBM proceedings
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`because the Board’s tied standing in CBM review to standing for declaratory
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`5 The Board in ’055 CBM indicated this reasoning is sound (Paper 16, pp. 10-11).
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`Case CBM2014-00025
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`judgment.6 So, in contrast to eBay’s misunderstanding of the law (’026 Paper 21,
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`pp. 4-7), should events arise during the course of a CBM proceeding that would
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`divest a Federal court of jurisdiction in a declaratory judgment action, the Board
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`should also use its discretion to divest itself of jurisdiction.
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`The courts have held that “upon filing of an appropriate pleading” in the
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`declaratory judgment act means “the actual controversy must be extant at all stages
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`of review, not merely at the time the complaint is filed.”7 For example, “a covenant
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`not to sue for patent infringement divests the trial court of subject matter
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`jurisdiction over claims that the patent is invalid, because the covenant eliminates
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`any case or controversy between the parties.”8 Similarly, the Supreme Court held
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`6 Rule 302(a) defines “charged with infringement” to mean “a real and substantial
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`controversy regarding infringement … such that the petitioner would have standing
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`to bring a declaratory judgment action in Federal court.”
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`7 Revolution Eyewear, Inc. v. Aspex Eyewear, Inc. 556 F.3d. 1294 (Fed. Circ.
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`2009); see also Nasatka v. Delta Scientific Corp., 58 F.3d 1578 (Fed. Cir. 1995)
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`(finding events occurring while an appeal is pending that makes it impossible for
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`the court to grant effectual relief, the appeal must be dismissed as moot.)
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`8 Dow Jones & Co., Inc. v. Ablaise Ltd., 606 F.3d 1338, 1346 (Fed. Cir. 2010).
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`Even though Dow Jones brought a DJ action prior to defendants issuing a covenant
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`Case CBM2014-00025
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`“[a] case becomes moot and therefore no longer a ‘Case’ or ‘Controversy’…when
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`the issues presented are no longer live.”9 Here, the iRobot litigation was dismissed
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`with prejudice after Lockwood granted a covenant not to sue to iRobot and its
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`customers. So under Already, Revolution Eyewear, Dow Jones, Nasatka, and the
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`Board decision in the ‘055 CBM, the Board should use its discretion to find it no
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`longer has jurisdiction, assuming it ever did, and the Petitions should be denied for
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`lack of standing.
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`Finally, the Board should encourage litigants to end law suits as a means to
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`end CBMs for judicial and Board economy. And eBay’s false allegations
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`Lockwood is trying to avoid Markman and an court invalidity review should be
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`ignored. Most of the settlements were driven by the defendants and not Lockwood,
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`and the PTO has validated Lockwood’s patents through the many reexamination
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`certificates issued over the years – including two for the ‘951 patent.
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`not to sue, the covenant not to sue “extinguished any current or future case or
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`controversy between the parties, and divested the district court of subject matter
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`jurisdiction.” Id. at 1348.
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`9 Already, LLC v. Nike, Inc. 133 S.Ct. 721, 726 (2013) (finding no jurisdiction for a
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`defendant for counterclaims when the plaintiff dismissed the law suit and granted a
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`covenant not to sue.)
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`Date: May 2, 2014
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`Case CBM2014-00025
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`Respectfully submitted,
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`By: /Robert Greene Sterne/
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`Robert Greene Sterne (Reg. No. 28,912)
`Lead Counsel for Patent Owner– Lawrence B.
`Lockwood
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`Case CBM2014-00025
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`CERTIFICATION OF SERVICE
`The undersigned hereby certifies that the foregoing LOCKWOOD’s
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`REPLY BRIEF TO EBAY’S SUPPLEMENTAL BRIEF ALLEGING
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`ELLIGIBILITY TO FILE CBMS, the Exhibit List, and all associated Exhibits
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`were served electronically via e-mail on May 2, 2014, in its entirety on the
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`following:
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`Lead Counsel
`Don Daybell, Reg. No. 50,877
`Orrick, Herrington & Sutcliffe
`LLP
`2050 Main Street, Suite 1100
`Irvine, CA 92614-8255
`Main: (949) 567-6700
`Direct: (949) 852-7735
`Fax: (949) 567-6710
`Email: ddaybell@orrick.com
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`Back-up Counsel
`James Maune, Reg. No. 67,187
`Orrick, Herrington & Sutcliffe LLP
`2050 Main Street, Suite 1100
`Irvine, CA 92614-8255
`Main: (949) 567-6700
`Direct: (949) 852-7721
`Fax: (949) 567-6710
`Email: jmaune@orrick.com
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`Respectfully Submitted,
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`BY: /Robert Greene Sterne/
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`Robert Greene Sterne (Registration No. 28,912)
`Lead Counsel for Patent Owner – Lawrence B.
`Lockwood
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`Date: May 2, 2014
`1100 New York Avenue, N.W.
`Washington, D.C.20005-3934
`(202) 371-2600
`1847620_1.DOCX
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