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`BEFORE THE PATENT TRIAL AND APPEAL BOARD IN THE UNITED
`STATES PATENT AND TRADEMARK OFFICE
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`Trial No.:
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`IPR 2013-00083
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`In re:
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`U.S. Patent No. 6,415,280
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`Patent Owners:
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`PersonalWeb Technologies, LLC & Level 3 Communications
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`Petitioner:
`Inventors:
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`EMC Corp. and VMware, Inc.
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`David A. Farber and Ronald D. Lachman
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`* * * * * * * * * * *
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`November 21, 2013
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`PATENT OWNER’S OPPOSITION TO PETITIONER’S MOTION TO
`EXCLUDE EVIDENCE PURSUANT TO 37 C.F.R. § 42.64(c)
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`Patent owner (PO) PersonalWeb Technologies, LLC hereby opposes
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`petitioner’s motion to exclude evidence.
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`A. THE LICENSE AGREEMENTS AND BERMEISTER
`TESTIMONY SHOULD NOT BE EXCLUDED
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`Petitioner has moved to exclude three license agreements (Exs. 2010, 2011
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`and 2012) where the patent involved in this IPR was licensed, as well as testimony
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`of Mr. Bermeister (Exs. 2009 and 2014) relating to those license agreements.
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`Petitioner’s motion to exclude this evidence should be denied for at least the
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`reasons explained herein.
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`The Federal Circuit recently relied on similar licenses and testimony in
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`reversing a finding of obviousness. Transocean Offshore Deepwater Drilling, Inc.
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`v. Maersk Drilling USA, 699 F.3d 1340, 1353 (Fed. Cir. 2012). The three license
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`agreements submitted by PO, and the Bermeister testimony, are relevant to
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`secondary considerations and should not be excluded for the reasons explained in
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`Transocean. Id. Indeed, the Federal Circuit explained that such evidence “must”
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`be considered. Id. at 1349. Despite PO having cited and relied upon Transocean
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`in its main Response in support of Exs. 2009-2012, it is particularly telling that
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`petitioner ignored Transocean in its Motion to Exclude. Transocean is recent law,
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`good law, and has not been overruled.
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`In Transocean, the license agreements related to both the patent-in-suit as
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`well as foreign counterparts and other patents not involved in the case.
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`Transocean, 699 F.3d at 1353. The same applies here, as the three license
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`IPR 2013-00083
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`agreements relate to both the ‘280 patent as well as other patents in the family not
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`at issue in this particular IPR. The Skype license is for the ‘791 and ‘280 patents,
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`and all continuations thereof. (Ex. 2010, at 1.) The Kinetech/Brilliant license is
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`for the ‘791 patent, and all continuations thereof which includes the ‘280 patent.
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`(Ex. 2011, at 1.) And the Sharman license is for the ‘791 patent, and all
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`continuations thereof which includes the ‘280 patent. (Ex. 2012, at 2.) Thus, each
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`of these agreements licenses at least the ‘280 patent, and according to Federal
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`Circuit precedent the fact that other patents are also licensed under these
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`agreements does NOT somehow eliminate the nexus with the challenged claims of
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`the ‘280 patent or render these licenses irrelevant. Transocean, 699 F.3d at 1353.
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`A sufficient nexus exists because the patent including the challenged claims at
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`issue has been licensed, and the license was objectively entered into between
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`different companies for legitimate business purposes and not for the purpose of
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`settling any litigation – just like in Transocean. Petitioner has submitted no
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`evidence to the contrary.
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`In Transocean, the court relied on the fact that the licenses were not for the
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`purpose of settling any litigation. Transocean, 699 F.3d at 1353. Likewise, the
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`three license agreements here (Exs. 2010-2012) were not for the purpose of settling
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`any litigation, which indicates that the licensees believed there was value in the
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`patents and paid substantial amounts for them. (Ex. 2009, ¶ 6; and Ex. 2014, ¶ 3.)
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`IPR 2013-00083
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`Again, there must be a sufficient nexus with the challenged claims here given that
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`the Federal Circuit found a sufficient nexus with similar facts in Transocean.
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`Petitioner also contends that the Skype license (Ex. 2010) should be
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`excluded because of alleged overlapping business interests. To the contrary, the
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`evidence states that Mr. Bermeister had “no personal interest in Skype at the time
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`the Skype license was agreed to.” (Ex. 2014, ¶ 2; see also Bermeister Dep. 12-14
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`and 115 [Ex. 1077].) Petitioner has provided no evidence that licensee Skype did
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`not objectively value the licensed patents at the time the license was entered into.
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`Attorney argument and unsupported allegations are not evidence.
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`Moreover, contrary to petitioner’s allegations, the evidence and testimony
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`demonstrates that the Kinetech/Brilliant and Sharman license agreements (Exs.
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`2011-2012) were negotiated at arms-length and in good faith by different
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`companies for legitimate business reasons, and that no person or entity negotiated
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`on both sides of any of these agreements. (Bermeister Dep. 159-161 [Ex. 1077].)
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`The evidence demonstrates that prior to the Kinetech/Brilliant license agreement
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`(Ex. 2011), there was no significant relationship between Kinetech and Brilliant.
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`(Bermeister Dep. 24-25 [Ex. 1077].) One individual (e.g., Lachman), who
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`conducted no negotiating on behalf of Brilliant, allegedly owning stock in both
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`companies is not a basis for excluding a license agreement such as Ex. 2011 as this
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`does not establish that Kinetech did not objectively value the patents that were
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`licensed. (Bermeister Dep. 160-161 [Ex. 1077].) For example, Ford and Chevrolet
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`(GM) have overlapping business interests (both are interested in selling cars) and
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`certainly have common shareholders – but no reasonable person would allege that
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`they are the same company or that a patent license from one to the other was not
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`objectively negotiated at arms length. Again, petitioner has provided no evidence
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`that any of the licensees did not objectively value the licensed patents at the time
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`the licenses were entered into.
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`Petitioner relies heavily on In re Antor Media Corp., 689 F.3d 1282, 1293-
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`94 (Fed. Cir. 2012). This case is easily distinguished. First, unlike Antor Media,
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`the license agreements in this IPR are tangible and part of the record. Second,
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`unlike Antor Media, there is evidence of record in this IPR that the license
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`agreements were not for the purpose of settling any litigation, which indicates that
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`the licensees objectively believed there was value in the patents and paid
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`substantial amounts for them. (Ex. 2009, ¶ 6; Ex. 2014, ¶ 3.) Third, the Board
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`“did consider” the licenses in Antor Media – the Board did not “exclude” them as
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`petitioner requests here.
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`Petitioner also relies on Iron Grip Barbell Co. v. USA Sports, Inc., 392 F.3d
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`1317 (Fed. Cir. 2005). This case is also easily distinguished. First, in Iron Grip
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`the licenses at issue were not of record (they are of record in this IPR). Second, the
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`licenses in Iron Grip were for “settlement of litigation.” Because the licenses were
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`for “settlement of litigation” in Iron Grip, they were found not indicative of
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`commercial success “because it is often cheaper to take licenses than to defend
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`infringement suits.” Id. at 1342. Unlike Iron Grip, there is evidence of record in
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`this IPR that the license agreements were not for the purpose of settling any
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`litigation, which indicates that the licensees believed there was value in the patents
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`and paid substantial amounts for them. (Ex. 2009, ¶ 6; Ex. 2014, ¶ 3.) Third, the
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`Federal Circuit did consider the licenses in Iron Grip – neither the Federal Circuit
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`nor district court “excluded” them as petitioners request here.
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`According, in view of the foregoing, the license agreements (Exs. 2010-
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`2012) and Bermeister declarations (Exs. 2009 and 2014) are relevant to secondary
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`indicia of nonobviousness under FRE 402. Moreover, there is no danger of
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`confusing or misleading a “jury” here under FRE 403, and in any event petitioner
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`has provided no evidence that this relevant evidence is unfair, misleading, needless
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`or wasteful.
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`Indeed, petitioner’s arguments regarding Exs. 2009-2012 and 2014 are
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`largely directed toward the weight of this evidence - not its admissibility.
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`Petitioner’s motion to exclude in this respect should be denied because “a motion
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`to exclude may not be used to challenge the sufficiency of the evidence to prove a
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`particular fact.” Trial Practice Guide, 77 Fed. Reg. 48756, 48767.
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`Petitioner also makes arguments about Mr. Bermeister’s “personal
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`knowledge” and “foundation.” Contrary to petitioner’s allegations, Mr.
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`Bermeister’s testimony regarding the license agreements and the amounts paid has
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`foundation and is based on his personal knowledge. (Ex. 2009, ¶¶ 2-9; Ex. 2014,
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`¶¶ 1 and 3; and Bermeister Dep. 117-121, 159-161 [Ex. 1077].) Mr. Bermeister
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`was personally involved in the negotiation of these license agreements, and
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`therefore his testimony relating to these agreements is based on his personal
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`knowledge under FRE 602 and has clear foundation. Id. Moreover, contrary to
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`petitioner’s allegation, documents do evidence the 5,000,000 warrants that Mr.
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`Bermeister referred to in paragraph 4 of his supplemental declaration, with an SEC
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`Form 10-KSB stating that the warrants were later valued at a much higher amount
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`of $2,096,000.00. (Bermeister Dep. 158-59 [Ex. 1077].)
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`B. PATENT OWNER’S RESPONSE TO PETITIONER’S
`“STATEMENT OF MATERIAL FACTS” REGARDING THE
`LICENSE AGREEMENTS AND BERMEISTER TESTIMONY
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`Petitioner included a section entitled “Statement of Material Facts”
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`beginning on page 2 of its motion. However, petitioner’s “Statement of Material
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`Facts” section did not include alleged facts “set forth as a separately numbered
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`sentence” and thus is not compliant with Rule 42.22(c). There are many different
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`sentences in each numbered paragraph on pages 2-7 of the motion – each sentence
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`is not broken out by a number. Because each sentence is not broken out by a
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`number, PO cannot tell which alleged “fact” corresponds to each number and
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`cannot reasonably separate petitioner’s arguments from alleged facts. Similarly, it
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`is unclear if numbered paragraphs 2-10 on pages 2-7 of the motion are intended to
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`be alleged “facts” – especially given that they too are not in sentences broken out
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`by respective numbers. Accordingly, PO respectfully submits that Rule 42.23(a)
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`should not apply here because petitioner’s section entitled “Statement of Material
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`Facts” is not compliant with Rule 42.22(c), and it is unclear what facts (as opposed
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`to arguments) are even being alleged by petitioner.
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`In any event, PO hereby attempts to identify what petitioner seems to allege
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`as “material facts” and responds to the same.
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`i. Petitioner alleges in numbered paragraph 1 that: “Patent Owner
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`has not proffered any evidence establishing a nexus between the
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`licenses and the challenge claims.” PO denies this allegation, and
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`states that this is in dispute for the reasons explained above in
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`Section A.
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`ii. Petitioner alleges in numbered paragraph 1 that: “the parties to
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`these licenses had, and in most cases continue to have, interlocking
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`and overlapping ownership and business interests.” Petitioner
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`makes similar allegations in the other numbered paragraphs of its
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`motion. To the extent that petitioner contends this means that the
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`licenses were not objectively negotiated at arms length, PO denies
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`these allegations and states that they are in dispute for the reasons
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`explained above in Section A. Moreover, overlapping business
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`interests or ownership does not warrant exclusion – see the
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`Ford/Chevrolet example above in Section A.
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`iii. Other material facts discussed above in Section A are also in
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`dispute, including but not limited to: whether Mr. Bermeister’s
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`testimony is based on his personal knowledge, whether it lacks
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`foundation, and whether the respective licensees objectively
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`believed there was value in the patent involved in this IPR.
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`iv. In numbered paragraphs 2 and 5, petitioner argues that the
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`Kinetech and Sharman licenses do not mention the ‘280 patent.
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`This is in dispute. As discussed above in Section A, these
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`agreements license the ‘791 patent and all continuations thereof –
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`the ‘280 patent is one of these continuations.
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`v. Petitioner alleges that the licenses were not objective and should be
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`excluded because Mr. Lachman had “significant” ties to Brilliant
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`at the time the parties entered into the license (e.g., see paragraph 3
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`on page 3 of petitioner’s motion). This is in dispute. As explained
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`above, Mr. Lachman did no negotiating on behalf of Brilliant. See
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`also Section A above including the Ford/Chevrolet example.
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`vi. Petitioner alleges in numbered paragraph 4 that Mr. Bermeister’s
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`valuation did not follow “reliable methods.” Again, petitioner has
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`provided no evidence to support this allegation. This is denied and
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`in dispute.
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`vii. Any fact alleged by petitioner that is inconsistent with PO’s
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`points above in Section A is disputed.
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`C. CONCLUSION
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`Petitioner’s motion to exclude should be denied for the foregoing reasons.
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`NIXON & VANDERHYE P.C.
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`By: /Joseph A. Rhoa/
`Joseph A. Rhoa
`Reg. No. 37,515
`Counsel for Patent Owner PersonalWeb
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`CERTIFICATE OF SERVICE
`I hereby certify service of the foregoing Patent Owner’s Opposition to
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`Petitioner’s Motion to Exclude Evidence to the following lead counsel for
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`petitioner on November 21, 2013 via email (under an agreement between the
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`parties):
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`Peter M. Dichiara
`WilmerHale
`60 State Street
`Boston, MA 02109
`(peter.dichiara@wilmerhale.com)
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`By: /Joseph A. Rhoa/
`Joseph A. Rhoa
`Reg. No. 37,515
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