UNITED STATES PATENT AND TRADEMARK OFFICE
`______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
`
`APPLE INC.,
`Petitioner
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2015-00015
`Patent 8,118,221 B2
`______________________
`
`Before the Honorable JENNIFER S. BISK, RAMA G. ELLURU, JEREMY M.
`PLENZLER, and MATTHEW R. CLEMENTS, Administrative Patent Judges.
`
`
`PETITIONER APPLE INC.’S BRIEF ON ESTOPPEL
`
`
`
`
`
`
`
`______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
`
`APPLE INC.,
`Petitioner
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2015-00015
`Patent 8,118,221 B2
`______________________
`
`Before the Honorable JENNIFER S. BISK, RAMA G. ELLURU, JEREMY M.
`PLENZLER, and MATTHEW R. CLEMENTS, Administrative Patent Judges.
`
`
`PETITIONER APPLE INC.’S BRIEF ON ESTOPPEL
`
`
`
`
`
`
`
`
`CBM2015-00015
`Patent 8,118,221 B2
`
`
`
`
`
`TABLE OF CONTENTS
`
`
`I.
`
`Apple Should Not Be Estopped Under 35 U.S.C. § 325(e)(1) ........................ 1
`A. Apple Could Not Reasonably Have Raised Its Alice-Based
`§ 101 Ground at the Time of Filing the Earlier Petition ....................... 1
`Apple Is Not “Maintain[ing] a Proceeding Before the Office” ............ 4
`B.
`The Board Should Proceed to a Final Written Decision Even If Apple
`Were to Be Terminated from this Proceeding ................................................. 4
`III. The Board May Use Apple’s Arguments at the Hearing in Its Final
`Written Decision Even If Apple Is Terminated from this Proceeding ............ 6
`
`II.
`
`
`
`
`
`CBM2015-00015
`Patent 8,118,221 B2
`
`
`
`
`
`
`The Board’s October 9, 2015 Order (Pap. 42) requested briefing on whether
`
`35 U.S.C. § 325(e)(1), in view of the final written decision in CBM2014-00102
`
`(“CBM-102”) invalidating claim 1 of the ’221 patent, estops Apple “from arguing
`
`[the unpatentability of] claim 1 . . . at the November 9 hearing” in this proceeding.
`
`The Board also stated that, “[i]f a party’s position is that Apple is not[1] estopped . .
`
`. the briefing should address whether there are any restrictions on [the Board’s] use
`
`of Apple’s arguments at the November 9 hearing in [its] final written decision.”
`
`Apple respectfully submits that it should not be estopped because it could
`
`not “reasonably” have raised its Alice-based § 101 ground at the time of the earlier
`
`petition, nor is Apple “maintain[ing]” this proceeding by merely participating in
`
`oral argument, given that the evidentiary record is closed. If estoppel were to ap-
`
`ply, the Board should terminate Apple from this proceeding but proceed to a final
`
`written decision, especially in view of the late stage of this case. Further, the
`
`Board may use any arguments from the hearing in its final written decision here.
`
`I.
`
`Apple Should Not Be Estopped Under 35 U.S.C. § 325(e)(1)
`
`A.
`
`Apple Could Not Reasonably Have Raised Its Alice-Based § 101
`Ground at the Time of Filing the Earlier Petition
`
`1 It appears the Board likely meant this statement to address the situation where
`
`Apple is estopped, but in any event the question of restrictions would seem not to
`
`otherwise arise (see discussion infra at § III).
`
`
`
`1
`
`
`
`CBM2015-00015
`Patent 8,118,221 B2
`Under 35 U.S.C. § 325(e)(1) (emphases added):
`
`
`
`
`
`The petitioner in a [CBM] review of a claim . . . that results in a final
`written decision under section 328 (a) . . . may not request or maintain
`a proceeding before the Office with respect to that claim on any
`ground that the petitioner raised or reasonably could have raised dur-
`ing that [CBM] review.
`The pertinent estoppel inquiry is not a bright-line test about what could have been
`
`written in the Petition. Rather, the “reasonably” language “softens the could-have-
`
`raised estoppel” rule in place pre-AIA, which had been “amenable to the interpre-
`
`tation that litigants are estopped from raising any issue that it would have been
`
`physically possible to raise.” 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011)
`
`(statement of Sen. Kyl) (emphasis added); see also Rules of Practice for Trials, 77
`
`Fed. Reg. 48612, 48638 (Aug. 14, 2012).
`
`Apple could not “reasonably” have raised in its original Petition the Alice-
`
`based § 101 grounds presented later in its CBM2015-00015 (“CBM-15”) Petition
`
`because seminal case law relied on did not yet exist. Alice Corp. Pty. Ltd. v. CLS
`
`Bank International, 134 S. Ct. 2347 (2014) significantly clarified the correct stand-
`
`ard for evaluating computer-related patent claims under § 101 (especially sys-
`
`tem/device claims, like at issue here), but did not issue until after Apple filed its
`
`CBM-102 Petition and shortly before filing its Petition here. Cf. Smartflash LLC v.
`
`Apple Inc., Nos. 2015-1701, -1707, 2015 WL 4603820, at *13 (Fed. Cir. July 30,
`
`
`
`2
`
`
`
`CBM2015-00015
`Patent 8,118,221 B2
`2015) (Newman, J., dissenting) (“That Apple waited while this section 101 issue
`
`
`
`
`
`was wending its way to Court review and resolution was not imprudent. . . .”).
`
`The Board has previously acknowledged the impact Alice had on CBM pro-
`
`ceedings, confirming the different treatment of § 101 pre- and post-Alice. For ex-
`
`ample, in Westlake Servs., LLC v. Credit Acceptance Corp., CBM2014-00176, the
`
`Board did not institute review of certain system claims on § 101 grounds in a prior
`
`petition, reasoning that they “recited specific computer components and interac-
`
`tions between those components.” See Inst. Dec., 2015 WL 576798 at *5 (Feb. 9,
`
`2015). Alice later issued, and the Supreme Court also vacated and remanded the
`
`Federal Circuit’s Ultramercial II decision, causing the Federal Circuit to reverse its
`
`earlier holding (Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014)
`
`(Ultramercial III)). The petitioner then filed a second petition under § 101 against
`
`the non-instituted claims, which the Board instituted “[i]n light of this recent guid-
`
`ance from the Supreme Court and the Federal Circuit.” Id. at *5-6. The Board lat-
`
`er noted in that proceeding that “Alice did not exist at the time of the [earlier] De-
`
`cision on Institution,” and stressed the change in case law: “two Supreme Court
`
`decisions [(Alice and Ultramercial)], one of which vacated key precedent [(Ultra-
`
`mercial II)] on which the [earlier] Decision to Institute relied, as well as a Federal
`
`Circuit decision [(Ultramercial III)] effectively reaching a conclusion opposite of
`
`that key precedent.” Westlake, Pap. 28 at 2-6 (representative); see also Apple Inc.
`
`
`
`3
`
`
`
`CBM2015-00015
`Patent 8,118,221 B2
`v. SightSound Techs., LLC, CBM2013-00019, Inst. Dec., Pap. 17 at 20-22 (denying
`
`
`
`
`
`institution pre-Alice, citing Ultramercial II). Indeed, Apple’s § 101 Petition relied
`
`on the substantial similarities between the claims found ineligible in Alice and the
`
`claims challenged in Apple’s Petition. See, e.g., Pap. 2 at 28-33; Pap. 9 at 27-32.
`
`B.
`
`Apple Is Not “Maintain[ing] a Proceeding Before the Office”
`
`Section 325(e)(1) restricts a petitioner only from “request[ing] or main-
`
`tain[ing] a proceeding.” And a petitioner is not “maintaining” a proceeding after
`
`the evidentiary record has closed: “the trial is already completed” because “a trial
`
`before the Board is conducted on paper.” CBS Interactive Inc. v. Helferich Patent
`
`Licensing, LLC, IPR2013-00033, Pap. 118 at 2-3 (Oct. 23, 2013). In contrast to a
`
`passive phrase like “remain a party to a proceeding,” “maintain a proceeding” con-
`
`notes active participation in the proceeding while the evidentiary record remains
`
`open. Indeed, by oral argument “[n]o new evidence or arguments may be present-
`
`ed.” Trial Practice Guide, 77 Fed. Reg. 48756, 48768 (Aug. 14, 2012); see CBS,
`
`Pap. 118 at 2. The oral hearing serves to direct the Board to evidence and argu-
`
`ments already in the record, and the Board may continue this proceeding even
`
`without Apple (as discussed infra), such that “maintain[ing]” must mean some-
`
`thing more.
`
`II.
`
`The Board Should Proceed to a Final Written Decision Even If Apple
`Were to Be Terminated from this Proceeding
`
`If the Board were nonetheless to determine that Apple is estopped, the Board
`
`
`
`4
`
`
`
`CBM2015-00015
`Patent 8,118,221 B2
`still remains authorized to “proceed to a final written decision under section
`
`
`
`
`
`328(a).” 35 U.S.C. § 327(a); see also 37 C.F.R. § 42.74; Progressive Cas. Ins. Co.
`
`v. Liberty Mut. Ins. Co., Nos. 2014-1466 et al., 2015 WL 5004949, at *2 (Aug. 24,
`
`2015).2 Though Patent Owner has made no request for such relief, the Board
`
`should reject any argument that this proceeding should be terminated in its entirety
`
`(i.e., not just with respect to Apple) under § 42.72 if Apple is estopped, “in view of
`
`the advanced stage of th[is] proceeding and the number of existing district court
`
`cases” involving this patent and third parties (including litigations stayed in reli-
`
`ance on this proceeding). Yahoo! Inc. v. CreateAds LLC, IPR2014-00200, Pap. 40
`
`at 2 (Feb. 26, 2015); see Smartflash, 2015 WL 4603820, at *1-2 & n.1, *9-10 (Fed.
`
`Cir. July 30, 2015) (’221 patent litigations against Samsung, Google, and Amazon
`
`stayed pending instituted CBM reviews); Pap. 25 at 4-5. Indeed, in similarly-
`
`postured cases—even where both parties requested termination—the Board has
`
`terminated the petitioner but continued the proceedings given the advanced stage
`
`of the proceeding, where “trial issues had been briefed fully.” BlackBerry Corp. v.
`
`MobileMedia Ideas LLC, IPR2013-00016, Pap. 31 at 3 (Dec. 11, 2013); e.g., Inter-
`
`2 Were the Board to find that estoppel prevents Apple from participating in the oral
`
`hearing, it should terminate Apple from the proceeding to make clear that the
`
`§ 325(e)(2) litigation estoppel provision would not apply from a final decision in
`
`the current proceeding. 35 U.S.C. § 327(a).
`
`
`
`5
`
`
`
`CBM2015-00015
`Patent 8,118,221 B2
`thinx, Inc. v. Corelogic Solutions, LLC, CBM2012-00007, Pap. 47 at 2-3 (Nov. 12,
`
`
`
`
`
`2013); cf. also Google Inc. v. Unwired Planet, LLC, IPR2014-00037, Pap. 20 at 2-
`
`3 (June 12, 2014).
`
`III. The Board May Use Apple’s Arguments at the Hearing in Its Final
`Written Decision Even If Apple Is Terminated from this Proceeding
`
`As discussed above, the Board does not permit new arguments to be ad-
`
`vanced at the oral argument; thus, the arguments to be discussed on November 9
`
`are already before the Board, and may certainly be considered. Indeed, Apple is
`
`aware of no statute or regulation that would restrict the Board from considering the
`
`arguments, admissions of the parties, or conclusions of the Board in any other pro-
`
`ceeding, in issuing its final written decision, regardless of estoppel. As the Board
`
`is aware, the instant proceeding is one of several between these parties and against
`
`this and related patents. The issues, evidence, and arguments in each of these in-
`
`terrelated proceedings are frequently similar, if not identical, and the Board is free
`
`to consider the parties’ admissions and parallel arguments from one proceeding in
`
`resolving any other relevant proceeding. Just as it might consider any other deci-
`
`sion of the Board or admission of a party, the Board may employ the CBM-102 fi-
`
`nal decision (as well as the other final decisions on related patents in CBM2014-
`
`00106, -108, & -112) in deciding the live issues in this proceeding, such as factual
`
`findings pertinent to the Mayo step 2 inquiry already made as to obviousness in
`
`
`
`6
`
`
`
`CBM2015-00015
`Patent 8,118,221 B2
`CBM-102, -106, -108, and -112,3 as well as rulings on issues in Patent Owner’s
`
`
`
`
`
`current motion to exclude that have already been argued and decided (see Pap. 43
`
`at 2-3, 5-6). Again, because the arguments Apple would make at the November 9
`
`hearing are already reflected in the record, there is no prohibition against their con-
`
`sideration in the Board’s final written decision in this matter.
`
`October 21, 2015
`
`
`
`
`
`
`
`Respectfully submitted,
`By /J. Steven Baughman/
`J. Steven Baughman, Lead Counsel
`
`
`3 See, e.g., CBM-102 Pap. 52 at 3 (implementation of components in patent is not
`
`critical); CBM-106 Pap. 52 at 4 (same); CBM-108 Pap. 50 at 4 (same); CBM-112
`
`Pap. 48 at 4 (same); CBM-102 Pap. 52 at 8-10 (construing payment data); CBM-
`
`106 Pap. 52 at 8-10; CBM-112 Pap. 48 at 8-10 (same);CBM-102 Pap. 52 at 20, 28-
`
`30 (claimed payment data processing obvious); id. at 31-33 (claimed transfer of re-
`
`quested content responsive to payment validation data obvious); CBM-106 Pap. 52
`
`at 12 (claimed payment data storage and output obvious); id. at 14-16, 20-22 (im-
`
`plementation of a SIM card obvious); CBM-108 Pap. 50 at 10-12, 14-16 (imple-
`
`mentation of a SIM card obvious); CBM-112 Pap. 48 at 13, 19-21 (claimed pay-
`
`ment data obvious).
`
`
`
`7
`
`
`
`CBM2015-00015
`Patent 8,118,221 B2
`
`
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that a copy of the foregoing PETITIONER
`
`APPLE INC.’S BRIEF ON ESTOPPEL was served on October 21, 2015, to the
`
`following Counsel for Patent Owner via e-mail, pursuant to the parties’ agreement
`
`concerning service:
`
`Michael R. Casey
`J. Scott Davidson
`DAVIDSON BERQUIST JACKSON & GOWDEY LLP
`8300 Greensboro Drive, Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Facsimile: (571) 765-7200
`mcasey@dbjg.com
`jsd@dbjg.com
`docket@dbjg.com
`
`Attorneys for Patent Owner Smartflash LLC
`
`/s/ Darrell W. Stark
`Darrell W. Stark
`
`
`
`ROPES & GRAY LLP
`
`8
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