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`
` IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
` - - -
`GSI COMMERCE SOLUTIONS, INC. :
` :
` Petitioner, :
` :
` vs. : CBM2014-00025
` :
`LAWRENCE B. LOCKWOOD, :
` :
` Patent Owner. :
`--------------------------------------------
`EBAY, INC. AND GSI COMMERCE SOLUTIONS, INC.:
` :
` Petitioner, :
` :
` vs. : CBM2014-00026
` :
`LAWRENCE B. LOCKWOOD, :
` :
` Patent Owner. :
` - - -
` Friday, April 25, 2014
` - - -
` Teleconference held on the above date, beginning
` at approximately 10:00 a.m., and reported
` stenographically by Deborah C. Furey, RPR, CLR and
` Notary Public.
` - - -
`
` VERITEXT NATIONAL COURT REPORTING COMPANY
` MID-ATLANTIC DIVISION
` 1250 Eye Street, Suite 1201
` Washington, D.C. 20005
`
`VERITEXT NATIONAL COURT REPORTING COMPANY
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`Lockwood Exhibit 2020
`eBay Enterprise, Inc. and eBay, Inc. v. Lockwood
`IPR2014-00026
`
`

`

`Page 2
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`B E F O R E :
` A d m i n i s t r a t i v e P a t e n t J u d g e M e d l e y
` A d m i n i s t r a t i v e P a t e n t J u d g e W o o d .
`
`A P P E A R A N C E S :
` O R R I C K , H E R R I N G T O N & S U T C L I F F E , L L P
` B Y : D O N D A Y B E L L , E S Q U I R E
` B Y : J A M E S M A U N E , E S Q U I R E
` 7 7 7 S o u t h F i g u e r a S t r e e t
` S u i t e 3 2 0 0
` L o s A n g e l e s , C a l i f o r n i a 9 0 0 1 2
` 2 1 3 - 6 2 9 - 2 0 2 0
` d d a y b e l l @ o r r i c k . c o m
` j m a u n e @ o r r i c k . c o m
` R e p r e s e n t i n g t h e P e t i t i o n e r ,
`
` S T E R N E , K E S S L E R , G O L D S T E I N & F O X , P L L C
` B Y : R O G E R T G . S T E R N E , E S Q U I R E
` B Y : J A S O N D . E I S E N B E R G , E S Q U I R E
` B Y : S R E E K A R G A D D E , E S Q U I R E
` 1 1 0 0 N e w Y o r k A v e n u e , N . W .
` W a s h i n g t o n , D . C . 2 0 0 5 - 3 9 3 4
` 2 0 2 - 3 7 1 - 2 5 4 0
` r s t e r n e @ s k g f . c o m
` j e i s e n b e @ s k g f . c o m
` s g a d d e @ s k g f . c o m
` R e p r e s e n t i n g t h e P a t e n t O w n e r .
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`Page 3
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` P R O C E E D I N G
`
` JUDGE MEDLEY: Good morning. This
`
` is Judge Medley and I'm on the line with Judge
`
` Wood.
`
` We will go ahead and proceed. This
`
` conference call is in regard to CBM2014-00025 and
`
` 00026.
`
` At this time I would like to take a
`
` roll call, beginning with the petitioner.
`
` MR. DAYBELL: Thank you, your honor,
`
` this Don Daybell. The last name is D-a-y-b-e-l-l.
`
` And with me is my colleague, Jim Maune, last name
`
` M-a-u-n-e, Orrick, Herrington, counsel for
`
` petitioner.
`
` JUDGE MEDLEY: Thank you. And for
`
` patent owner?
`
` MR. STERNE: Good morning, Lead
`
` Judge Medley. This is Robert Sterne, from Sterne,
`
` Kessler this morning, and with me I have Jason
`
` Eisenberg, E-i-s-e-n-b-e-r-g, and Sreekar Gadde,
`
` spelled G-a-d-d-e, on for patent owner.
`
` JUDGE MEDLEY: Okay. Wonderful.
`
` All right. So I did hear the court reporter asked
`
` about the transcript. The transcript should be
`
` filed with the board an as exhibit, so we'll
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`Page 4
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` discuss that in a little bit, but you had asked
`
` how the front page -- you can list both cases on
`
` the front page, you don't need to list as two
`
` separate transcripts for each case, because I
`
` believe that the issues are germane to the two
`
` cases.
`
` Okay. So we understand that the
`
` petitioner requested this conference call, so if
`
` counsel for the petitioner could please explain
`
` the nature of the conference call.
`
` MR. DAYBELL: Yes, Your Honor, this
`
` bears on our authorization to file the CBM, which
`
` is a point we believe we've established in our
`
` petition but the patent owner has challenged it.
`
` In our petitions we asserted that we
`
` are authorized to file the CBM because petitioner
`
` has an obligation to indemnify its customer, which
`
` was sued by the patent owner in the underlying
`
` litigation, and that gives rise to a charge of
`
` infringement under the CBM statutes.
`
` The patent owner challenges this
`
` assertion in its preliminary response and at this
`
` point we're simply asking to provide a little
`
` additional clarity for the record, in the form of
`
` a brief declaration to explain the relationship
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`Page 5
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` between the underlying litigation and petitioner's
`
` authorization to file the CBM.
`
` As we noted in our initial contact
`
` with the board, this is an issue that has been
`
` addressed in the prior board decision, in
`
` CBM2013-00055, where essentially the exact relief
`
` that we're asking for here was authorized, so we
`
` don't see that there's any harm or any prejudice
`
` to the patent owner by adapting the same relief
`
` that was adopted in that case.
`
` JUDGE MEDLEY: Okay. We understand,
`
` though, there's an additional wrinkle that wasn't
`
` in that case that's in this case, in that the
`
` infringement action has been dismissed with
`
` prejudice; is that correct?
`
` MR. DAYBELL: I believe it is. Yes,
`
` yes, that infringement action has been dismissed
`
` with prejudice, yes, Your Honor.
`
` JUDGE MEDLEY: And I believe that
`
` the patent owner, in addition to you -- and I'll
`
` let them speak -- but as I understand it, they
`
` believe that that's an additional reason that you
`
` do not have standing. So we may ask you to brief
`
` that issue, as well.
`
` Okay. We'll hear from the patent
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`Page 6
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` owner right now.
`
` MR. STERNE: Good morning, Your
`
` Honor and your fellow judge.
`
` So first of all we would like to
`
` start by stating for the record that the
`
` petitioner should not be allowed a do-over of
`
` their petition. This is a second bite at the
`
` apple, so to speak.
`
` The petitioner knew about this
`
` issue. They have brought to the Board's attention
`
` the case of CBM2013-00055 but, in fact, in that
`
` situation or in that decision from the Board,
`
` which we believe is not binding here, there were
`
` sufficient differences that warrant the denial of
`
` the request that the petitioner seeks today, to
`
` provide additional evidence that it should have
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` provided in their original position, concerning
`
` two critical jurisdiction issues.
`
` The first issue, of course, is the
`
` alleged indemnification. They were very well
`
` aware of this issue, because it is their very --
`
` it's themselves in 2013-00055, it is captioned
`
` "GSI Commerce Solutions versus Clear with
`
` Computers, LLC," so they were well aware of this
`
` issue when they prepared and filed their petition.
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`Page 7
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` And when this decision was rendered
`
` by Judge Bisk in the 00055 case in January of this
`
` year, we had not filed our patent owner
`
` preliminary response.
`
` So they could have moved at that
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` point with the board to act to supplement their
`
` petition to fill in the defects that they
`
` obviously feel exist in their showing on
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` indemnification, and also in their required
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` showing of infringement, and they've done neither
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` of these things.
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` So now we find ourselves, after we
`
` have updated our mandatory notices, to bring to
`
` the Board's attention the order of dismissal with
`
` prejudice from the Eastern District of Texas, from
`
` Magistrate Judge John D. Love, that the underlying
`
` lawsuit with iRobot has been dismissed with
`
` prejudice as of April 10th, 2014.
`
` On April 16th of this year we filed
`
` in each case -- and I point to Exhibit 2015 and
`
` Paper Number 17 in CBM2014-00025 and also Paper 18
`
` and Exhibit 2019 in CBM2014-00026 -- we provided
`
` that order of dismissal with prejudice from Judge
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` Love to the Board.
`
` So the jurisdiction, if there ever
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`Page 8
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` was any, of an adequate case and controversy to
`
` support the CBM was divested from the Board with
`
` this order of dismissal with prejudice.
`
` And my final point, Your Honor, is
`
` that we brought to the Board's attention that we
`
` were working this issue with iRobot to settle the
`
` case when we prepared and filed our patent owner
`
` preliminary response.
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` So the petitioner has been on notice
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` of this issue for many weeks and we only find
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` ourselves here today, right before the Board has
`
` to make its trial institution decision, with this
`
` extraordinary request from the petitioner. So I
`
` rest my arguments for now.
`
` JUDGE MEDLEY: Okay. Thank you,
`
` Mr. Sterne.
`
` And counsel for petitioner,
`
` Mr. Daybell, we would like to hear a brief
`
` rebuttal.
`
` MR. DAYBELL: Thank you, Your Honor.
`
` The patent owner's counsel makes a very big deal
`
` about this dismissal with prejudice, but the Board
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` has already addressed this issue, as well, as to
`
` whether it finds the finality or final judgment in
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` the underlying case affects the petitioner's right
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`Page 9
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` to file a CBM. That was addressed in
`
` CBM2013-00042, entitled SAP versus Versata, and
`
` the paper that follows that decision, which was a
`
` decision instituting CBM review.
`
` The patent owner there argued that a
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` final judgment in the underlying case meant that
`
` no controversy remained for the CBM, and the board
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` there rejected that contention and found that
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` the -- both Rule 302(a), as well as Section 18
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` (a)(1)(b) of AIA simply literally meant that in
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` that case it was interpreting the suit for an
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` infringement provision rather than the charge with
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` infringement provision here. That simply meant
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` that if you have been sued or charged with
`
` infringement, you may file a petition for a CBM
`
` proceeding.
`
` They rejected the idea that a
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` subsequent final judgment had any affect on the
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` authorization or the authority to file a CBM
`
` proceeding, as long as at the time the proceeding
`
` was filed, the requirements of the rule and the
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` requirements of the statute were met, that a
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` person had been charged or sued with infringement,
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` that was all that was necessary.
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` And even if there is some weight or
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`Page 10
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` some consideration to be given to this subsequent
`
` dismissal with prejudice, it only dismissed iRobot
`
` and the patent owner's claims against iRobot. It
`
` does nothing to initiate or divest or do away with
`
` the charge of infringement that the patent owner
`
` levied against petitioner when it sued
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` petitioner's customer. That charge of
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` infringement is still there.
`
` The patent owner has not given a
`
` covenant not to sue to the petitioner. They have
`
` dismissed the case against the single customer
`
` with prejudice, but they have not given us a
`
` covenant not to sue. They have not done anything
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` to remove the threat of infringement that they
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` levied against us when they sued our customer.
`
` JUDGE MEDLEY: Could you respond to
`
` the lateness of your request, that Mr. Sterne had
`
` discussed?
`
` MR. DAYBELL: Sure.
`
` JUDGE MEDLEY: In other words, I
`
` guess, you know, was it the same counsel that was
`
` in CBM2013-00055 for GSI?
`
` MR. DAYBELL: No, Your Honor, it was
`
` not the same counsel. In fact, we are not the
`
` same counsel that was -- Orrick, Herrington, as
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`Page 11
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` you may recall from the record, was substituted in
`
` for the counsel who filed this petition in both of
`
` these cases. So, no, it was not the same counsel
`
` in the 55 petition, and we were, in fact, not the
`
` same counsel that filed the current petitions. We
`
` made our -- I don't recall the exact date, Your
`
` Honor, but we made our appearances a couple of
`
` weeks ago.
`
` JUDGE MEDLEY: When were you made
`
` aware of that case?
`
` MR. DAYBELL: The 55 case?
`
` JUDGE MEDLEY: Uh-huh.
`
` MR. DAYBELL: The first I personally
`
` became aware of that case would have been right
`
` around when we substituted in for prior counsel.
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` So I don't know the exact date, Your Honor, but,
`
` again, it would have been within the last couple
`
` of weeks.
`
` JUDGE MEDLEY: Okay. So you were
`
` not the -- current counsel for petitioner is not
`
` the counsel that filed the petition?
`
` MR. DAYBELL: Correct. We did not
`
` file the petitions we are discussing here today,
`
` nor did we file the petition in the 00055 CBM that
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` I addressed earlier.
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`Page 12
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` JUDGE MEDLEY: Okay. All right.
`
` Just give us a minute we're going to confer.
`
` MR. STERNE: This the Robert Sterne
`
` again. With permission from the Board, I would
`
` like to provide a little bit of a response to that
`
` if I may.
`
` JUDGE MEDLEY: Before you begin, one
`
` other question I had for counsel for petitioner
`
` before we give you a brief response time.
`
` Counsel for patent owner mentioned
`
` that, you know, hey, this is the second bite of
`
` the apple, so we would like you to respond to that
`
` argument, as well.
`
` MR. DAYBELL: I believe that we made
`
` our assertions in our petition. We asserted that
`
` we have authorization to file. We explained why
`
` we have authorization to file. All we're doing
`
` here is -- if the Board would like it -- is
`
` providing additional -- a little additional
`
` clarity to the public records, so that the
`
` connection between the underlying litigation and
`
` the petitioner -- in the relationship between the
`
` underlying and the petitioner is a little clearer
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` in case there is any confusion.
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` JUDGE MEDLEY: So is it your --
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`Page 13
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` MR. DAYBELL: I don't think this is
`
` a second bite at the apple -- I'm sorry -- I think
`
` it's just providing clarity to positions that are
`
` already set forth in our petition.
`
` JUDGE MEDLEY: So is it your
`
` position that initially there is no real
`
` requirement for a petitioner to present evidence,
`
` as the patent owner suggests, with your petition;
`
` that in other words, our rule says that you need
`
` to certify; to establish standing a petitioner at
`
` a minimum would be required to certify with an
`
` explanation that the patent that covers met the
`
` patent, and that the petitioner meets the
`
` eligibility requirements.
`
` So is it your position then that you
`
` necessarily weren't obligated at the beginning to
`
` provide evidence, but to the extent that now a
`
` patent owner has raised this, you are available to
`
` provide evidence?
`
` MR. DAYBELL: I think that's right,
`
` Your Honor. And we did certify all of that in our
`
` petition, in a pleading signed by counsel, under
`
` the provisions of Rule 11 of the patent office's
`
` rules. So we did certify that in a pleading
`
` signed by prior counsel.
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` JUDGE MEDLEY: Okay. Thank you.
`
` Mr. Sterne, you have a few minutes
`
` here, if you would like to say something else.
`
` MR. STERNE: Yes, Your Honor. First
`
` of all, as the board has indicated in the patent
`
` office roadshow that I've been part of, as well as
`
` in other publications on the PTAB website, that
`
` the petition is not noticed pleadings, it's fact
`
` pleadings. Certification is not enough here.
`
` We're talking about a fundamental issue to have
`
` eligibility to file a CBM.
`
` They have the burden of proof. They
`
` could have argued, which they did not, and
`
` provided sufficient evidence of which they
`
` provided none, that there was an adequate
`
` indemnification between them and iRobot. They did
`
` not do that.
`
` The other thing they could have
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` done, which they're now arguing today for the
`
` first time, that e-Bay is infringing, they have
`
` never shown that.
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` We have never accused e-Bay of
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` infringement, nor have we accused their subsidiary
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` GSI. We have never done that and they have shown
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` no proof for the record that we have.
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` They cannot be permitted to now
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` update their petition to provide justification for
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` their bare bones certification, just like the
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` Board didn't allow this to be done in an IPR
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` situation, in IPR2013-00139, Paper Number 27,
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` Page 3, where Judge Jameson Lee did not permit
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` this to happen.
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` A second point that I would like to
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` make is: Change of counsel has never been
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` sufficient to justify the fact that delay has
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` occurred throughout this case.
`
` If they wanted to bring this up, if
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` the party challenging the patent owner's patent,
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` GSI, wanted to bring this up, they had ample
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` opportunity to do this before the patent owner's
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` preliminary response, and after the patent owner's
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` preliminary response and not at the end of the
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` process.
`
` Final point: Unlike IPR where
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` there's a one-year deadline, there is no one-year
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` deadline here.
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` They cite to the SAP versus Versata
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` case. That case is still on appeal to the
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` district court from the federal circuit.
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` Here the case has been -- as a judge
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` in the Eastern District of Texas, Judge Love, has
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` said that the order of dismissal with prejudice
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` has occurred, the case is over, there's no appeal
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` right that either side has to the federal circuit.
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` So I would urge the Board to put the
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` CBM process in the proper context. As the federal
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` circuit indicated this morning, the issue of
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` institution is not appealable.
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` If this case goes forward with this
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` inadequate showing that GSI has provided, we will
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` have no relief; we will be forced to go through
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` the entire process, if the board institutes trial,
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` and then and only then will we be permitted the
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` opportunity to raise this issue at the federal
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` circuit. That is not fair and that is not the way
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` the CBM process should be run. Thank you.
`
` JUDGE MEDLEY: Okay. Thank you.
`
` Well, if we decide to authorize
`
` petitioner some supplemental briefing with respect
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` to this, as patent owner, of course you would have
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` an opportunity to respond.
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` MR. STERN: I understand, Your
`
` Honor, but I think that if you authorize any
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` supplemental briefing, it should be limited solely
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` to the issue of change of circumstance, which is
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` the fact that there is no longer a case in
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` controversy due to the order of dismissal with
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` prejudice.
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` I don't think that the petitioner
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` should be allowed to provide evidence to do a
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` do-over on their initial petition. I think they
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` should be limited solely to that issue.
`
` JUDGE MEDLEY: Okay. So as I
`
` understand, you're saying they shouldn't be
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` allowed to now come in and say, oh, to the extent
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` that the iRobot relationship is found to be no
`
` good, then we are still being charged with
`
` infringement because of e-Bay, the e-Bay
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` situation. That's what you're saying?
`
` MR. STERNE: That's correct, Your
`
` Honor, they should not be allowed to provide any
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` evidence or argument relating to their actual
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` infringement. They never alleged that and they
`
` had the burden to do that, and so any briefing
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` that they should be allowed to do, in our
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` position, is solely for the change of
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` circumstance.
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` If the Board permits them to provide
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` additional evidence concerning the alleged
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` indemnification, we don't think that is proper, we
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` think that what should be required is they file
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` another CBM, which they're totally allowed to do
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` under the rules.
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` JUDGE MEDLEY: Okay. I do want to
`
` ask counsel for petitioner, I think that counsel
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` for the patent owner has a good point there, you
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` are kind of moving the target then, if you say
`
` well, if the indemnification argument is no good,
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` then, oh, we're going to change position here and
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` we're still being charged with an infringement.
`
` MR. DAYBELL: Yes, Your Honor. In
`
` one of the two petitions we -- already we alleged
`
` that e-Bay was charged with infringement via a
`
` demand letter that was sent, so that's not true
`
` for the second petition. But for one of the two
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` petitions that allegation is already there.
`
` And the basis for our argument that
`
` we are charged with infringement or that GSI, the
`
` e-Bay enterprise is charged with infringement,
`
` arises from the charge that was delivered when
`
` they sued our customer iRobot.
`
` That infringement suit was both a
`
` suit against our customer iRobot, because we have
`
` an obligation to indemnify them, it arises as a --
`
` giving us authorization to file the CBM, but it
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` was also a charge of infringement against our
`
` product used by iRobot. And they have done
`
` nothing to dispel that charge of infringement
`
` against our product. All they've done is dismiss
`
` the single customer.
`
` They have not given up the covenant
`
` not to sue. They have not done anything to
`
` dismiss the charge of infringement that was
`
` presented when they filed the suit against our
`
` customer.
`
` JUDGE MEDLEY: To bring your
`
` petition how did you explain to the Board that you
`
` had standing? As I recall it was because of the
`
` relationship with iRobot, it had nothing to do
`
` with the fact of the demand letter that you
`
` mentioned.
`
` MR. DAYBELL: That was true in the
`
` 00025 petition -- forgive me if it get these
`
` numbers transposed -- in the 00025 petition that
`
` was true, but in the 00026 petition, which
`
` involved a different patent, we did receive a
`
` demand letter for that patent. So in that one we
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` alleged authorization to file a CBM on both
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` grounds.
`
` MR. STERNE: You Honor, may I
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` address this demand letter issue that they're now
`
` raising for the first time?
`
` JUDGE MEDLEY: Okay. Briefly. Then
`
` we need to wrap up.
`
` MR. STERNE: Okay. I'm sorry Your
`
` Honor.
`
` The case law is clear that a demand
`
` letter doesn't create necessarily a case in
`
` controversy, and we're going from a demand letter
`
` to the filing of a lawsuit. The facts are not in
`
` the record for either the demand letter or for the
`
` lawsuit.
`
` We never accused e-bay or iRobot --
`
` I mean e-Bay -- of infringing. The fact of the
`
` matter is that they had the burden to show this
`
` allegation when they filed the petition. They can
`
` rectify that by filing a new petition. We have no
`
` way to prevent them there from filing CBM petition
`
` after CBM petition. So we need to be protected
`
` here. They did not do their job. They should not
`
` be allowed a redo.
`
` JUDGE MEDLEY: Okay. Could you give
`
` us a minute to confer and then we will get back on
`
` the phone.
`
` MR. STERN: Yes, Your Honor.
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` MR. DAYBELL: Yes.
`
` - - -
`
` (Whereupon, there was a recess in
`
` the proceedings from 10:26 a.m. to
`
` 10:30 a.m.)
`
` - - -
`
` JUDGE MEDLEY: Okay. Thank you.
`
` We're back. We have now conferred and we would
`
` like additional briefing on this issue, so we will
`
` authorize the petitioner to file additional
`
` briefing. Of course we will allow the patent
`
` owner to have a chance to respond.
`
` We will set forth in an order the
`
` particularities and the reasoning behind
`
` authorizing the additional briefing.
`
` We would like to know from
`
` petitioner how quickly you could file some sort of
`
` paper with the Board.
`
` MR. DAYBELL: Today's Friday. We
`
` could move pretty quickly on this issue, I think,
`
` Your Honor.
`
` A VOICE: Would next Friday --
`
` JUDGE MEDLEY: Friday is too much
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` time.
`
` MR. DAYBELL: That's what I was
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` going to say. I wasn't sure who spoke on the
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` phone, that wasn't me.
`
` We can do it by next Wednesday,
`
` would that work?
`
` JUDGE MEDLEY: Well, the decision to
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` institute's due May 21st, so I was thinking
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` Tuesday.
`
` MR. DAYBELL: That's fine, Your
`
` Honor.
`
` JUDGE MEDLEY: And then give the
`
` patent owner until Friday to respond.
`
` MR. DAYBELL: That's fine, Your
`
` Honor.
`
` Your order may cover this when it
`
` comes out: With our briefing would you also like
`
` us to include a declaration along the lines of
`
` what was done in the 00055 case?
`
` JUDGE MEDLEY: Yeah, we'll specify.
`
` MR. DAYBELL: Okay.
`
` JUDGE MEDLEY: So, Mr. Sterne, would
`
` that be acceptable to you, by Friday to respond?
`
` MR. STERNE: Yes, Your Honor.
`
` JUDGE MEDLEY: All right. So are
`
` there any other questions or concerns?
`
` MR. DAYBELL: None from petitioner,
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` Your Honor.
`
` MR. STERN: Your Honor, can you give
`
` us any indication of pages that we will be allowed
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` or is that something you're going to consider?
`
` JUDGE MEDLEY: That's something
`
` we'll consider. You know, obviously, we don't
`
` want to have to authorize more pages than we think
`
` are necessary. Originally we had talked about
`
` saying five pages each, but it might be that we
`
` need more than that. So probably, I'm thinking,
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` five to seven or eight pages.
`
` Does anyone have a suggestion?
`
` MR. STERNE: Your Honor, I would say
`
` it depends on what issues are going to be allowed
`
` to be briefed, because, obviously, we're opening
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` up -- you know, we're opening up a big issue here,
`
` depending on how the Board rules, on what will be
`
` allowed to be briefed.
`
` And again, I think that the burden,
`
` as I said several times before, at the beginning
`
` of the process, was -- could have been addressed
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` by either party with any amount of space they
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` wanted within the page limits for the petition and
`
` the POPR.
`
` JUDGE MEDLEY: Thank you. If there
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` are no further questions.
`
` - - -
`
` (Discussion held off the
`
` record.)
`
` - - -
`
` JUDGE MEDLEY: I don't know
`
` necessarily t

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