UNITED STATES PATENT AND TRADEMARK OFFICE
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`____________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________
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`Oracle Corporation
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`Petitioner,
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`v.
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`Clouding IP, LLC
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`Patent Owner
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`____________
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`IPR2013-00261
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`Patent 6,738,799
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`____________
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`JOINT MOTION TO TERMINATE PROCEEDING
`PURSUANT TO 35 U.S.C. § 317
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`____________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________
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`Oracle Corporation
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`Petitioner,
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`v.
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`Clouding IP, LLC
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`Patent Owner
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`____________
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`IPR2013-00261
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`Patent 6,738,799
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`____________
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`JOINT MOTION TO TERMINATE PROCEEDING
`PURSUANT TO 35 U.S.C. § 317
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`Pursuant to 35 U.S.C. § 317(a) Petitioner Oracle Corporation (“Oracle”) and
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`Patent Owner Clouding IP, LLC (“Clouding”) jointly request termination of
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`IPR2013-00261, which is directed to Patent 6,738,799 (the “’799 Patent”).
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`This inter partes review has not been instituted. Oracle filed its petition for
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`inter partes review on May 2, 2013. Clouding has not filed a preliminary response,
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`and one is not due until August 3, 2013. The parties have settled their dispute, and
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`have reached agreement to terminate this inter partes review.
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`The parties’ Settlement Agreement has been made in writing, and a true
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`copy of same is attached hereto as Exhibit 1.1 The parties desire that the
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`Settlement Agreement be maintained as business confidential information under
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`37 C.F.R. §42.74(c) and a separate joint request to that effect is being filed on
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`even date herewith.
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`As stated in 35 U.S.C. § 317(a), because Oracle and Clouding jointly
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`request this termination as to Petitioner Oracle, no estoppel under 35 U.S.C.
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`315(e) shall attach to Oracle.
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`1. Reasons Why Termination is Appropriate.
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`Termination with respect to Petitioner is proper under 35 U.S.C. § 317(a)
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`1 The Settlement Agreement is being filed electronically via the Patent Review
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`Processing System (PRPS) as “Parties and Board Only.”
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`1
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`because the parties are jointly requesting termination and the Office has not yet
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`“decided the merits of the proceeding before the request for termination is filed.”
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`Here, no decision instituting trial and no decision on the merits has been made.
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`Accordingly, the parties are entitled to terminate this proceeding as to Petitioner
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`under Section 317(a) upon their joint request.
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`Petitioner takes no position on whether this review proceeding should be
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`terminated with respect to Patent Owner.
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`Pursuant to the Board’s Order regarding the Conduct of the Proceeding
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`dated July 15, 2013, Patent Owner is providing comments as to why termination
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`with respect to Patent Owner is proper in Patent Owner’s Explanation as to Why
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`Termination Is Appropriate, attached hereto as Exhibit 2.
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`2. Related District Court Litigations and Status.
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`The ‘799 Patent is the subject of the following pending litigations:
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`Case Name
`Clouding IP,
`LLC v.
`Rackspace
`Hosting, Inc.
`Clouding IP,
`LLC v.
`Google, Inc.
`Clouding IP,
`LLC v.
`Amazon.com
`Inc.
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`
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`Defendants
`Docket No. Court
`1-12-cv-00675 DED Rackspace Hosting Inc.
`Jungle Disk, Inc.
`Rackspace US, Inc.
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`Status
`Pending
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`1-12-cv-00639 DED Google, Inc.
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`Pending
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`1-12-cv-00641 DED Amazon.com, Inc.
`Amazon Web Services,
`LLC
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`Pending
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`2
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`3. Future Participation by the Parties.
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`Pursuant to the Settlement Agreement, Petitioner Oracle will not further
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`participate in these proceedings, even if they are not terminated pursuant to this
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`joint motion.
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`Patent Owner’s participation in any further proceedings would depend upon
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`the conditions of same and Patent Owner reserves its right to so participate, if
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`necessary. Patent Owner notes, however, that in the absence of Petitioner, it is
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`unclear how these proceedings could properly proceed. In the event the Board does
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`not terminate the present proceedings, Patent Owner objects to the use of the
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`testimony of Petitioner’s declarant, whether as grounds for institution of the
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`proceedings or otherwise, as Patent Owner was not present or represented at the
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`taking of such testimony and has not had and will not have any opportunity to
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`cross-examine said declarant.
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`Dated: July 19, 2013
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`3
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`Respectfully submitted,
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`OBLON SPIVAK
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`/Greg H. Gardella/
`Greg H. Gardella (Reg. No. 46,045)
`Scott A. McKeown (Reg. No. 42,866)
`OBLON, SPIVAK, McCLELLAND,
`MAIER & NEUSTADT, LLP
`1940 Duke Street
`Alexandria, Virginia 22314
`Attorneys for Petitioner
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`/Tarek N. Fahmi/
`Tarek N. Fahmi (Reg. No. 41,042)
`FAHMI, SELLERS, EMBERT &
`DAVITZ
`84 W. Santa Clara St., Ste. 550
`San Jose, CA 95113
`Attorneys for Patent Owner
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`Dated: July 19, 2013
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`4
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`EXHIBIT 1
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`(Settlement Agreement filed electronically via the Patent Review Processing
`System (PRPS) as “Parties and Board Only”)
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`EXHIBIT 2
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`EXHIBIT 2EXHIBIT 2
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`____________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________
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`Oracle Corporation
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`Petitioner,
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`v.
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`Clouding IP, LLC
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`Patent Owner
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`____________
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`IPR2013-00261
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`Patent 6,738,799
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`____________
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`PATENT OWNER’S EXPLANATION
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`AS TO WHY TERMINATION IS APPROPRIATE
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`1
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`Patent Owner respectfully submits that this proceeding should be terminated
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`with respect to the Patent Owner because the merits of the petition have not been
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`determined, no motions or other matters are outstanding, and concluding these
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`proceedings at this early juncture promotes the Congressional goal to establish a
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`more efficient and streamlined patent system that, inter alia, limits unnecessary
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`and counterproductive litigation costs. See “Changes to Implement Inter Partes
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`Review Proceedings, Post-Grant Review Proceedings, and Transitional Program
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`for Covered Business Method Patents,” Final Rule, 77 Fed. Reg., no. 157, p.
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`48680 (Tuesday, August 14, 2012). By permitting termination of review
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`proceedings as to all parties, upon settlement of their disputes, the PTAB provides
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`a measure of certainty as to the outcome of such proceedings. This certainty helps
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`foster an environment that promotes settlements, creating a timely, cost-effective
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`alternative to litigation. In contrast, maintaining these proceedings in the absence
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`of Petitioner would create an environment in which the Patent Owner cannot
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`properly defend the patent at issue. For example, Petitioner will not hereafter be
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`making its declarants for cross-examination. Faced these with circumstances,
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`patent owners would have little, if any, reason to enter into compromises of the
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`kind reached between the present parties as they would still face the jeopardies and
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`costs associated with such proceedings without being able to avail themselves of
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`the benefits of same.
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`Moreover, because termination as to the Petitioner is mandatory upon joint
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`motion of the parties,1 once that termination is effected there will be no counter-
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`party in these proceedings and in enacting the applicable law Congress did not
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`intend in such circumstances that the PTAB would step into the shoes of the
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`Petitioner or assume an ex-parte examination role. Instead, The Leahy-Smith
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`America Invents Act replaced inter partes reexamination with review proceedings
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`and entrusted such matters to the Board rather than the examining corps.
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`Commenting on these marked changes to USPTO practice, Senator Kyl noted that
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`the new procedures were intended to be strictly adjudicative in nature, where “the
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`petitioner, rather than the Office, bears the burden of showing unpatentability.”
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`157 Congressional Record S1375, daily ed. March 8, 2011. As these changes were
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`borrowed from the Senator’s prior bill from the 110th Congress, S. 3600, he cited
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`with approval his comments in support of that prior legislation:
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`"The bill uses an oppositional model, which is favored by
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`PTO as allowing speedier adjudication of claims. Under a
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`reexam system, the burden is always on PTO to show that a
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`claim is not patentable. Every time that new information is
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`presented, PTO must reassess whether its burden has been
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`met. This model has proven unworkable in inter partes
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`1 35 U.S.C. § 317(a).
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`reexam, in which multiple parties can present information to
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`PTO at various stages of the proceeding, and which system
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`has experienced interminable delays. Under an oppositional
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`system, by contrast, the burden is always on the petitioner to
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`show that a claim is not patentable. Both parties present their
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`evidence to the PTO, which then simply decides whether the
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`petitioner has met his burden. 154 Congressional Record
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`S9987, daily ed. Sept. 27, 2008 (emphasis added).
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`Senator Kyl’s comments2 make clear that the new review proceedings were
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`not intended to devolve into the prior “unworkable” system of reexamination in
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`the event no petitioner was left. The Board’s role was intended to be that of an
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`adjudicator resolving a dispute between litigants, not an examiner. See, e.g.,
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`Statement of Sen. Kyl, 157 Congressional Record S1376, daily ed. March 8, 2011
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`2 Senator Kyl also explained that although section 316(a)(4) of the then-pending
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`Patent Reform Act of 2011, S.23, gave the USPTO discretion in prescribing
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`regulations governing the new proceeding, the USPTO had assured Congress that
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`it would “use this discretion to convert inter partes into an adjudicative
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`proceeding.” This change also was effectively compelled by section 316(e) of the
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`Act, which assigned to a petitioner the burden of proving a proposition of
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`unpatentability. 157 Congressional Record S1375, daily ed. March 8, 2011.
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`(“Currently, inter partes reexaminations usually last for 3 to 5 years. Because of
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`procedural reforms made by the present bill to inter partes proceedings, the Patent
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`Office is confident that it will be able to complete these proceedings within one
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`year. Among the reforms that are expected to expedite these proceedings are the
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`shift from an examinational to an adjudicative model, and the elevated
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`threshold for instituting proceedings.”) (emphasis added). In the face of a
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`negotiated settlement between the parties and the absence of any petitioner in the
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`proceedings, this role has been fully discharged and termination of the proceedings
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`is justified.
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`Finally, although 35 U.S.C. § 317(a) affords the Board discretion to
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`terminate proceedings or proceed to a final written decision when no petitioner
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`remains in the proceedings, such a final written decision is authorized only after a
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`review proceeding has been instituted. 35 U.S.C. § 318(a). Where, as here, no
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`review proceeding has been instituted, termination is appropriate. When the Rules
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`of Practice for trials before the PTAB were adopted, the USPTO noted that Section
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`42.74(a) affords the Board the opportunity to determine patentability,
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`notwithstanding any settlement between the parties. This rule was said to be
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`consistent with 35 U.S.C. 135(e), which provides that the Board is not required to
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`follow a settlement agreement in a derivation proceeding when it is inconsistent
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`with the evidence. 77 Fed. Reg. no. 157, p. 48625 (Tuesday, August 14, 2012). In
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`the present case, the parties’ Settlement Agreement is not inconsistent with any
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`evidence. While the parties’ retain their differing views on validity of the
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`underlying patent, such differences are a hallmark of any resolution of a dispute
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`prior to its final adjudication. Moreover, because these proceedings are at such an
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`early stage the Patent Owner has not even presented its evidence. 37 C.F.R. §
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`42.107(c). Thus, it is an open question as to how they could continue in the
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`absence of any petitioner. For example, any future motions by Patent Owner
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`would be unopposed. As Congress intended that the Board act solely as an
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`adjudicator, it is unclear how the Board would, or even could, act on such matters.
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`Proceeding to a final written decision under 35 U.S.C. § 317(a) in such
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`circumstances would, therefore, seem to present many obstacles and has the
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`potential to be manifestly unfair.
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` For at least the foregoing reasons, termination of these proceedings as to the
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`Patent Owner is respectfully requested.
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`Dated: July 19, 2013
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`Respectfully submitted,
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`/Tarek N. Fahmi/
`Tarek N. Fahmi (Reg. No. 41,042)
`FAHMI, SELLERS, EMBERT &
`DAVITZ
`84 W. Santa Clara St., Ste. 550
`San Jose, CA 95113
`Attorneys for Patent Owner
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`6
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`CERTIFICATE OF SERVICE
`The undersigned hereby certifies that a copy of the foregoing
`JOINT MOTION TO TERMINATE PROCEEDING
`PURSUANT TO 35 U.S.C. § 317
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`and its exhibits was served on July 19, 2013, by filing this document though
`the Patent Review Processing System as well as delivering a copy via electronic
`mail directed to the attorneys of record for the Petitioner at the following
`address:
`
`Greg Gardella
`Scott McKeown
`Oblon Spivak
`1940 Duke Street
`Alexandria, VA 22314
`cpdocketgardella@oblon.com
`cpdocketmckeown@oblon.com
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`The parties have agreed to electronic service in this matter.
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`Respectfully submitted,
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`/Tarek N. Fahmi/
`Tarek N. Fahmi
`Reg. No. 41,402
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`Dated: July 19, 2013
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`Fahmi, Sellers, Embert & Davitz
`84 W. Santa Clara St., Suite 550
`San Jose, CA 95113
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`Tel: 866-877-4883
`Fax: 408-773-6177
`Email: patents@fseip.com
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