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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`IBG LLC, INTERACTIVE BROKERS LLC,
`TRADESTATION GROUP, INC., TRADESTATION SECURITIES, INC.,
`TRADESTATION TECHNOLOGIES, INC., and IBFX, INC.,
`Petitioner
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`v.
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`TRADING TECHNOLOGIES INTERNATIONAL, INC.
`Patent Owner
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`Case CBM2015-00182
`Patent No. 6,772,132
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`PETITIONERS’ REQUEST FOR REHEARING
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`CBM2015-00182
`Patent No. 6,772,132
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`I.
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`Statement of Relief Requested
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`Petitioners request rehearing of the Board’s April 15, 2016 Order (Paper 25)
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`(“Order”) authorizing cross examination of Mr. Atsushi Kawashima. Prior
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`authorization is not required to file this Request for Rehearing. 37 C.F.R. §
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`42.71(d). “The request must specifically identify all matters the party believes the
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`Board misapprehended or overlooked, and the place where each matter was
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`previously addressed in a motion, an opposition, or a reply.” Id.
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`II.
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`Introduction
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`The Order sets out that “the parties disagree as to whether cross examination
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`of Petitioner’s witness, Mr. Atsushi Kawashima, falls under the routine discovery
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`rule or under the additional discovery rule.” (Order, at 1-2.) Then, without
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`resolving this disagreement, and without hearing from Petitioners, the Order
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`concludes that “Patent Owner is authorized to cross examine Mr. Atsushi
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`Kawashima.” (Order, at 3.) This arbitrary and capricious conclusion should be
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`reversed for at least two reasons.
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`First, to the extent that the basis for authorizing the cross-examination of Mr.
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`Kawashima is “routine discovery,” the Order overlooks the Board’s consistent
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`interpretation of the Rule for routine discovery. Numerous decisions from the
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`Board stand for the proposition that routine discovery does not apply to preexisting
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`evidence not prepared for the instant proceeding. Petitioners have no relationship
`1
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`CBM2015-00182
`Patent No. 6,772,132
`with or control over Mr. Kawashima. The only testimony of Mr. Kawashima relied
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`upon by Petitioners is recorded testimony from a deposition taken on November
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`21, 2005, in a prior litigation involving Patent Owner involving events that
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`occurred in 1998. Unlike Patent Owner, Petitioners were not involved in this prior
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`litigation and did not participate in this deposition.
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`Second, to the extent that the basis for authorizing the cross-examination of
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`Mr. Kawashima is “additional discovery,” the Order overlooks the requirements
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`for granting additional discovery in CBM proceedings. Patent Owner must show
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`“good cause” for the additional cross-examination of Mr. Kawashima under the
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`modified Garmin factors outlined in Bloomberg Inc. v. Markets-Alert Pty Ltd.,
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`CBM2013-00005, Paper 32 (May 29, 2013). No such showing has been made here,
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`and the Order makes no reference to “good cause” or the Garmin factors.
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`III. Factual Background
`On March 17, 2016, Patent Owner filed an objection to Petitioner’s Exhibit
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`1019 as hearsay. (Paper 23, at 1-2, 4.)1 Exhibit 1019 is a transcript of a deposition
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`1 Exhibit 1019 was used against Patent Owner in prior CBM proceedings
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`and Patent Owner did not object to Exhibit 1019 on the basis of hearsay in any of
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`those prior proceedings. See Trading Technologies Int’l, Inc. v. TD Ameritrade
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`2
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`CBM2015-00182
`Patent No. 6,772,132
`of Mr. Kawashima, taken on November 21, 2005, in a prior litigation involving
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`Patent Owner. Petitioners were not parties to this prior litigation and did not
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`participate in the deposition Mr. Kawashima. The deposition transcript is
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`preexisting documentary evidence that was filed previously in another proceeding.
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`The deposition transcript is referenced in the petition (Paper 7, at 11) and the
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`institution decision (Paper 19, at 25-29). The deposition transcript is relevant to
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`whether the TSE user manual was publicly available and thus prior art to the
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`challenged patent. (Id.)2
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`During a March 23, 2016 Board call held in this matter, Petitioners
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`explained that counsel for Patent Owner attended the deposition of Mr. Kawashima
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`and had an opportunity to cross-examine Mr. Kawashima. (Ex. 1041, Transcript of
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`March 23, 2016 Board Call, at 4:14-21.) Petitioners also argued that they are under
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`Holding Corp., CBM2014-00131, 133, 135 and 137. Patent Owner also did not
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`request a deposition of Mr. Kawashima in those prior proceedings.
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`2 Exhibit 1019 is former testimony of an unavailable, third party witness
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`given in a lawful deposition where Patent Owner had an opportunity to cross-
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`examine. Exhibit 1019 fits within the hearsay exceptions of FRE Rules 804 and
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`807 and, as such, is admissible evidence that can be relied upon at trial in this
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`proceeding.
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`3
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`CBM2015-00182
`Patent No. 6,772,132
`no obligation to make Mr. Kawashima available for cross-examination under
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`routine discovery, as the deposition transcript was not prepared for this preceding.
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`(Ex. 1041, at 5:3-10.) Notwithstanding, as a courtesy, Petitioners indicated that
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`they were in the process of locating Mr. Kawashima, a resident of Japan, to assess
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`his current availability to provide testimony in this proceeding. (Id., at 10:12-
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`11:16.) Subsequent to this Board call, Petitioners informed Patent Owner that Mr.
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`Kawashima, who remains an employee of the Tokyo Stock Exchange, was
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`unwilling to come to the United States for a deposition in this proceeding. Mr.
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`Kawashima also indicated he was unwilling to be deposed in Japan.3 Mr.
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`Kawashima has no relationship with Petitioners and he is not under their control.
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`In response, Patent Owner twice approached the Board by email. First, on
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`April 5, 2016, Patent Owner sought authorization to file a motion to dismiss
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`grounds relying on the TSE reference from this proceeding. (Ex. 1039.) The Board
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`3 It is Petitioners’ understanding that a voluntary deposition taken in Japan must be
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`taken at the U.S. Embassy in Tokyo and can take many months to schedule.
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`Further, Japan is not a signatory to the Hague Convention on the Taking of
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`Evidence Abroad in Civil or Commercial Matters (1980). Thus, it is Petitioners’
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`understanding that neither a U.S. Court, nor the Board, can compel testimony in
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`Japan of a Japanese citizen because it will violate Japan’s judicial sovereignty.
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`4
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`Patent No. 6,772,132
`denied this request, indicating that “Patent Owner may include such arguments in
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`its Patent Owner Response.” (Ex. 1039.) Second, Patent Owner approached the
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`Board on April 12, 2016, seeking the deposition of Mr. Kawashima under routine
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`discovery, or in the alternative, leave to file a motion for additional discovery. (Ex.
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`1040.) Recognizing that Mr. Kawashima’s testimony was not provided in an
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`affidavit prepared for this proceeding, and, therefore, Patent Owner’s discovery
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`request was “outside of the situations specifically covered by the rules,” Patent
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`Owner requested that the Board “otherwise order” that Mr. Kawashima be made
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`available for cross-examination under 37 C.F.R. § 42.51(b)(1). (Id.) The Board did
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`not conduct a conference call with the parties or permit briefing on the issue, but,
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`instead, issued the Order of April 15, 2016, authorizing Patent Owner to cross
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`examine Mr. Kawashima, concluding that “it is Petitioner’s responsibility to secure
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`the availability of Mr. Kawashima.” (Order, at 3.)
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`IV. Argument
`A. The Order Overlooks the Law on Routine Discovery
`Under the Rule for “routine discovery,” 37 C.F.R. § 42.51(b)(1)(ii),
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`“[e]xcept as the Board may otherwise order . . . [c]ross examination of affidavit
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`testimony is authorized within such time period as the Board may set.” The Board
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`has consistently interpreted this Rule as not applying to preexisting testimony not
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`5
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`Patent No. 6,772,132
`prepared for the instant proceeding. In CBS Interactive Inc. v. Helferich Patent
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`Licensing, LLC, IPR2013-00033, Paper 85 (Sept. 3, 2013), the Board explained:
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`[I]f the [testimony relied upon] was prepared for the purposes of the
`instant inter partes review, cross-examination of the witness is
`permitted as routine discovery. In contrast, if the [testimony] was not
`prepared for purposes of the instant inter partes review—such as
`preexisting documentary evidence that was filed previously in another
`proceeding—cross-examination of the witness would not be provided
`as routine discovery under 37 C.F.R. § 42.51(b)(1)(ii). In the latter
`situation, the Board will take into consideration whether a party has
`had an opportunity to cross-examine the witness and will give the
`[testimony] appropriate weight, if any.
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`In CBS, the pre-existing document was a declaration filed in a prior inter
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`partes reexamination proceeding. Consequently, the declarant would not have been
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`deposed. This is because although reexamination procedure allows for submission
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`of evidence in affidavit form (37 C.F.R. §§ 1.131, 1.132), the rules do not provide
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`for cross-examination of those affiants. See 37 C.F.R. §§ 1.902–1.997. Even under
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`those circumstances, without any opportunity to cross-examine, the Board denied
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`routine discovery in CBS. Here, counsel for Patent Owner actually attended the
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`deposition of Mr. Kawashima and had an opportunity to cross-examine him. The
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`Board’s reasoning in CBS has been followed by numerous panels to deny routine
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`discovery relating to preexisting testimony not prepared for the instant proceeding.
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`See, e.g., GEA Process Engineering, Inc. v. Steuben Foods, Inc., IPR2014-00041,
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`Paper 41 (June 11, 2014) (denying cross-examination of declarants from a prior
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`6
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`Patent No. 6,772,132
`reexamination under routine discovery); Mexichem Amanco Holdings S.A. de C.V.
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`v. Honeywell International, Inc., IPR2013-00576, Paper 29 (August 15, 2014)
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`(denying cross-examination of declarants from prior reexaminations under routine
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`discovery); Organik Kimya AS v. Rohm and Haas Company, IPR2014-00185,
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`Paper 42 (December 18, 2014) (denying cross-examination of a declarant from a
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`prior ITC proceeding); Praxair Distribution, Inc. v. INO Therapeutics LLC,
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`IPR2015-00529, Paper 33 (December 22, 2015) (denying cross-examination of
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`declarants from the prosecution of the challenged patent under routine discovery).
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`Here, Mr. Kawashima’s testimony is from a prior litigation involving related
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`patents4 owned by Patent Owner. Specifically, Exhibit 1019 is the transcript of the
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`deposition of Mr. Kawashima, taken on November 21, 2005, in Trading
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`Technologies International, Inc., v. eSPEED, Inc., Case No. 04-cv-5312, United
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`States District Court, Northern District of Illinois, Eastern Division. The deposition
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`transcript is preexisting documentary evidence that was filed previously in another
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`proceeding. As such, routine discovery under 37 C.F.R. § 42.51(b)(1)(ii) does not
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`apply to the testimony of Mr. Kawashima submitted by Petitioners as Exhibit
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`1019.
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`4 U.S. Patent Nos. 6,766,304 and 6,772,132, both currently subject to CBM.
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`7
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`Patent No. 6,772,132
`The facts of this case are not analogous to the facts of either IPR2013-00253
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`or PGR2015-00011, where cross-examination of pre-existing affidavit testimony
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`was authorized under routine discovery. In IPR2013-00253, cross-examination of a
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`declarant from the prosecution of the challenged patent was granted where the pre-
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`existing declaration was submitted in the patent owner’s response and consisted of
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`testimony from the patent owner’s founder, also a named inventor and current
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`executive. Ikaria, Inc. v. GeNO LLC, IPR2013-00253, Paper 20, at 2 (April 1,
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`2014). Similarly, in PGR2015-00011, cross-examination of a declarant from the
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`prosecution of the challenged patent was granted where the pre-existing
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`declaration was submitted in the patent owner’s response and consisted of
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`testimony from the patent owner’s current president and CEO, one of the co-
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`inventors of the challenged patent. Altaire Pharmaceuticals, Inc. v. Paragon
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`Bioteck, Inc., PRG2015-00011, Paper 29, at 1-2 (April 1, 2016). Unlike both of
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`these cases, Petitioners have no relationship with or control over Mr. Kawashima.
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`He is a resident of Japan and employee of the Tokyo Stock Exchange. In addition,
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`Petitioners had no involvement in eliciting the testimony of Mr. Kawashima that is
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`Exhibit 1019. Accordingly, unlike the findings in IPR2013-00253 or PGR2015-
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`00011, the pre-existing testimony of Mr. Kawashima should not be considered
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`“affidavit testimony” within the meaning of 37 C.F.R. § 42.51(b)(1)(ii).
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`8
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`Patent No. 6,772,132
`Patent Owner appears to agree that the Rule for routine discovery does not
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`address the requested additional cross-examination of Mr. Kawashima. In its April
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`13, 2016 email to the Board, Patent Owner recognized that “Normally, Mr.
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`Kawashima’s direct testimony would have been provided in an affidavit prepared
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`for this proceeding, and that testimony would be subject to routine discovery. But,
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`in these proceedings, Mr. Kawashima’s direct testimony was submitted in the form
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`of a deposition transcript.” (Ex. 1040.) Consequently, Patent Owner argued that
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`“Because we are outside of the situations specifically covered by the rules, the
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`Board’s intervention is needed to resolve the resulting discovery dispute.” (Id.)
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`Specifically, Patent Owner requested that the Board “otherwise order” that Mr.
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`Kawashima be made available for cross-examination under routine discovery.
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`(Id.)5
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`5 Patent Owner provides no legal basis for reading the phrase “Except as the
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`Board may otherwise order” in 37 C.F.R. § 42.51(b)(1)(ii) to expand the scope of
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`the rule for routine discovery. To the contrary, the Board has interpreted this
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`phrase to be limiting. See Daifuku Co., Ltd. V. Murata Machinery, Ltd., IPR2015-
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`00083, Paper 16, at 3 (July 2, 2015) (“Thus, such ‘routine discovery’ is subject to
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`Board discretion to limit or prohibit cross examination . . . depending on the facts
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`of a particular proceeding.”).
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`9
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`CBM2015-00182
`Patent No. 6,772,132
`The Order does not provide a basis in the Rules for authorizing the cross
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`examination of Mr. Kawashima. While the Order states that “[w]e understand that
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`Petitioner may be of the impression that cross examination of a witness whose
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`testimony was obtained during a prior proceeding does not fall under the routine
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`discovery rule,” (Order, at 2-3), the Order provides no legal basis for refuting this
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`understanding or for supporting the decision authorizing cross-examination. To the
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`extent that the basis for authorizing the cross-examination of Mr. Kawashima is
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`“routine discovery,” the Order should be reversed as it represents a marked
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`departure from the existing law on routine discovery and, without explanation,
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`arbitrarily and capriciously adopts a view different from earlier panels.
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`B.
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`The Order Overlooks the Requirements for Granting Additional
`Discovery in CBM Proceedings
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`In CBM proceedings, “[r]equests for additional discovery may be granted
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`upon a showing of good cause as to why the discovery is needed.” 37 C.F.R. §
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`42.224(a). “Consistent with the statutory provisions and legislative intent of the
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`AIA, there is a strong public policy to limit discovery in administrative trial
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`proceedings, as opposed to the practice in district court patent litigations that have
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`broad discovery.” Bloomberg Inc. v. Markets-Alert Pty Ltd., CBM2013-00005,
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`Paper 32 at 1 (May 29, 2013). Patent Owner has the burden of proof in establishing
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`entitlement to the additional cross-examination of Mr. Kawashima, by addressing
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`the Garmin factors, as modified by Bloomberg Inc. v. Markets-Alert Pty Ltd.,
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`CBM2015-00182
`Patent No. 6,772,132
`CBM2013-00005, Paper 32 (May 29, 2013). No such showing has been made
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`here, and the Order makes no reference to “good cause” or the Garmin factors.
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`One of the Garmin factors applicable to CBM proceedings is that there be
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`more than a possibility and mere allegation that something useful will be found.
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`Bloomberg Inc. v. Markets-Alert Pty Ltd., CBM2013-00005, Paper 32, at 5 (May
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`29, 2013)( “A good cause showing requires the moving party to provide a specific
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`factual reason for expecting reasonably that the discovery will be ‘useful.’”). Here,
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`it is not reasonable to expect that an additional cross-examination of Mr.
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`Kawashima will be useful.
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`Patent Owner had a full opportunity to cross-examine and did cross-examine
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`Mr. Kawashima on the testimony relied upon by Petitioners when the original
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`testimony was provided. Indeed, present counsel of record for Patent Owner
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`participated actively in this prior deposition. As reflected in Exhibit 1019, present
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`at the November 21, 2005 deposition of Mr. Kawashima were Matthew J.
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`Sampson, Leif R. Sigmond, Jr., and Steven F. Borsand, on behalf of Patent Owner
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`(then Plaintiff). (Ex. 1019, at 2.)6 Mr. Samson conducted the cross-examination.
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`6 Matthew J. Sampson and Leif R. Sigmond, Jr. are partners in the law firm
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`McDonnell Boehnen Hulbert & Berghoff LLP, representing Patent Owner in this
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`11
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`CBM2015-00182
`Patent No. 6,772,132
`(Id., at 74-119.) To date, Patent Owner has not explained what it would obtain
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`from Mr. Kawashima through the requested additional cross-examination that it
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`was unable to obtain in the prior cross-examination. In addition, the prior
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`testimony provided by Mr. Kawashima, relied upon by Petitioners, concerns the
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`public availability of the TSE user manual in 1998, nearly 20 years ago. Patent
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`Owner has not explained how cross-examination from Mr. Kawashima today
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`would be better evidence regarding activities in 1998 than the cross-examination
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`taken more than 10 years ago. Certainly Mr. Kawashima’s recollection cannot be
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`assumed to have improved with time.
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`To the extent the basis for authorizing the cross-examination of Mr.
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`Kawashima is additional discovery, the Order’s sua sponte action of granting
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`additional discovery without briefing by the parties overlooks the rules and
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`procedures for CBM proceedings, and the conclusion that cross-examination of
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`Mr. Kawashima is authorized, without addressing any of the Garmin factors, is
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`arbitrary and capricious.
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`proceeding. Steven F. Borsand is Executive Vice President Intellectual Property
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`for Patent Owner, designated back-up counsel in this proceeding.
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`12
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`CBM2015-00182
`Patent No. 6,772,132
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`V. Conclusion
`In authorizing cross examination of Mr. Kawashima, the Order improperly
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`overlooks the existing law on routine discovery and rules and procedures for
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`additional discovery. For at least these reasons, the Order should be reversed.
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`Patent Owner should be required to file a motion for additional discovery showing
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`“good cause” for the requested additional cross-examination of Mr. Kawashima,
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`which Petitioners should be permitted to oppose.
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`
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`Date: April 29, 2016
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`1100 New York Avenue, N.W.
`Washington, D.C. 20005-3934
`(202) 371-2600
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`
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`STERNE, KESSLER, GOLDSTEIN & FOX P.L.L.C.
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`/Richard M. Bemben #68658/
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`Robert E. Sokohl (Reg. No. 36,013)
`Lori A. Gordon (Reg. No. 50,633)
`Richard M. Bemben (Reg. No. 68,658)
`Attorneys for Petitioners
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`13
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`CERTIFICATION OF SERVICE
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`CBM2015-00182
`Patent No. 6,772,132
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`The undersigned hereby certifies that on April 29, 2016, the foregoing
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`PETITIONER’S REQUEST FOR REHEARING and any accompanying
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`exhibit(s) were served electronically via e-mail in their entireties on the following
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`counsel of record for the Patent Owner:
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`Erika H. Arner (Lead Counsel)
`Joshua L. Goldberg (Back-up Counsel)
`Kevin D. Rodkey (Back-up Counsel)
`Rachel L. Emsley (Back-up Counsel)
`FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP
`erika.arner@finnegan.com
`joshua.goldberg@finnegan.com
`kevin.rodkey@finnegan.com
`rachel.emsley@finnegan.com
`trading-tech-CBM@finnegan.com
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`Steven F. Borsand (Back-up Counsel)
`Trading Technologies International, Inc.
`tt-patent-cbm@tradingtechnologies.com
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`Michael D. Gannon (Back-up Counsel)
`Leif R. Sigmond, Jr. (Back-up Counsel)
`MCDONNELL, BOEHNEN, HULBERT & BERGHOFF LLP
`gannon@mbhb.com
`sigmond@mbhb.com
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`STERNE, KESSLER, GOLDSTEIN & FOX P.L.L.C.
`
`
`/Richard M. Bemben #68658/
`
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`Robert E. Sokohl (Reg. No. 36,013)
`Lori A. Gordon (Reg. No. 50,633)
`Richard M. Bemben (Reg. No. 68,658)
`Attorneys for Petitioners
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`
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`Date: April 29, 2016
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`1100 New York Avenue, N.W.
`Washington, D.C. 20005-3934
`(202) 371-2600
`2803513_1.DOC
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