`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`ARRIS GROUP, INC.
`Petitioner
`
`v.
`
`C-CATION TECHNOLOGIES, LLC
`Patent Owner
`
`
`
`Case: IPR2014-00746
`
`
`
`PETITIONER’S OPPOSITION TO PATENT OWNER’S MOTION FOR
`ADDITIONAL DISCOVERY
`
`
`
`
`
`
`
`
`Mail Stop PATENT BOARD
`Patent Trial and Appeal Board
`United States Patent and Trademark Office
`PO Box 1450
`Alexandria, Virginia 22313–1450
`Submitted Electronically via the Patent Review Processing System
`
`
`
`I.
`
`PRELIMINARY STATEMENT
`
`Patent Owner has not shown that the additional discovery it seeks—
`
`confidential contracts between Petitioner and its largest customer—is “necessary in
`
`the interest of justice” because it has failed to demonstrate that “something useful
`
`will be found.” See 35 U.S.C. § 316(a)(5); Garmin Int’l, Inc. v. Cuozzo Speed
`
`Techs. LLC, IPR2012-00001, Paper 26 at 6-8 (PTAB Mar. 5, 2013). Because
`
`Patent Owner has not—and indeed cannot—show that the sought-after agreements
`
`would prove Petitioner has already had its day in court (thus subjecting Petitioner
`
`to any exception to the prohibition on nonparty preclusion), Patent Owner’s motion
`
`for additional discovery should be denied.
`
`I.
`
`ARGUMENT
`A.
`Patent Owner’s Motion fails to address fully Garmin Factor 1, which
`
`Patent Owner Fails to Properly Address Garmin Factor 1
`
`requires a showing that “in fact something useful will be uncovered.” Garmin,
`
`IPR2012-00001 at 6. The Board has explained that “useful” in the context of
`
`Garmin Factor 1 “does not mean merely ‘relevant’ and/or ‘admissible.’” Id. at 7
`
`(emphasis added). Instead, “‘useful’ means favorable in substantive value to a
`
`contention of the party moving for discovery.” Id.
`
`While Patent Owner states that it intends to use the requested agreements to
`
`try to show Petitioner could have controlled the earlier litigation, Patent Owner
`
`does not explain how the agreements can establish Petitioner was in privity with
`1
`
`
`
`
`
`
`
`Comcast in the earlier litigation. Thus, how those agreements might be used to add
`
`substantive value to Patent Owner’s analysis of an alleged bar under 35 U.S.C. §
`
`315(b) is speculative. See Broadcom Corp. v. Telefonaktiebolaget LM Ericsson
`
`(PUBL), IPR2013-00601, Paper 23, at 7 (Jan. 24, 2014) (Garmin Factor 1 requires
`
`a showing that “something useful will be found” in establishing privity to warrant
`
`additional discovery). There is good reason for the lack of analysis in this regard:
`
`Even if all factual allegations included in Patent Owner’s Motion are true—and
`
`that an agreement similar to that on Petitioner’s website exists between Petitioner
`
`and Comcast1—such an agreement alone cannot give rise to privity as discussed
`
`below. Thus, Patent Owner has not shown why the discovery is in the interest of
`
`justice. See 37 C.F.R. § 42.51(b)(2) (2012).
`
`B.
`
`Even Assuming Patent Owner’s Factual Assumptions Are True,
`The Agreements Will Not Be “Useful” in Evaluating Privity
`1.
`
`Patent Owner Does Not Address the Highly Material
`Broadcom Decision Mentioned in the Board’s Order
`Authorizing This Motion
`In Broadcom Corp. v. Telefonaktiebolaget LM Ericsson (PUBL), IPR2013-
`
`00601, Paper 23 (Jan. 24, 2014), the Board denied a motion for additional
`
`discovery into various information a Patent Owner contended were related to
`
`1 Petitioner does have agreements with Comcast and those agreements do include
`
`indemnification provisions.
`
`
`
`2
`
`
`
`
`
`privity. Despite a litany of evidence already in Patent Owner’s possession showing
`
`that Petitioner assisted its customers with the defense of the litigation, the Board
`
`denied the motion relying in part on Garmin Factor 1. Id. at 6-7. In reaching its
`
`conclusion, the Board explained that “[t]o show privity” a Patent Owner must
`
`make a “showing that [Petitioner] would be bound by the outcome of the” earlier
`
`litigation. Id. No such showing was made in Patent Owner’s Motion.
`
`Here, not only does Patent Owner fail to present any evidence which would
`
`tend to show that Petitioner was involved in the defense of the earlier litigation (let
`
`alone “jump[ed] in and [gave] the case full and active defense as though
`
`[Petitioner] were the real named party,” Bros, Inc. v. W.E. Grace Mfg. Co., 261
`
`F.2d 428, 429 (5th Cir. 1958)), Patent Owner also does not show how Petitioner
`
`was allegedly so involved in the earlier litigation so as to have been effectively a
`
`party to that litigation.2
`
`
`2 There is likely good reason for this. The earlier action was dismissed with
`
`prejudice. See Ex. 1025 (dismissing “all claims . . . with prejudice”). Since
`
`preclusion is a two-way street for parties to litigation and their privies, see, e.g.,
`
`Postal Telegraph Cable Co. v. City of Newport, 247 U.S. 464, 476 (1918), the
`
`dismissal with prejudice operates as a final judgment precluding re-litigation of
`
`issues that were—or should have been—raised in the earlier suit, see Yesh Music v.
`
`
`
`
`
`3
`
`
`
`
`
`2.
`
`Patent Owner Misinterprets the Opportunity to Control
`Aspects of Privity
`
`The question of privity under 35 U.S.C. § 315(b) is at its foundation a
`
`question of nonparty preclusion. In United States law there is a “deep-rooted
`
`historic tradition that everyone should have his own day in court,” and “[a] person
`
`who was not a party to a suit generally has not had a ‘full and fair opportunity to
`
`litigate’ the claims and issues settled in that suit.” Taylor v. Sturgell, 553 U.S. 880,
`
`892-93 (2008) (quoting Richards v. Jefferson County, 517 U.S. 793, 797 (1996)).
`
`In Taylor, the Supreme Court explained that there were “six categories” of
`
`exceptions to the rule against non-party preclusion, most of which are inapplicable
`
`here.3 A nonparty can be bound to a judgment when it “assume[d] control” over
`
`the litigation in which the judgment was rendered such that the nonparty had “the
`
`opportunity to present proofs and argument” and thus had its day in court. Taylor,
`
`Lakewood Church, 727 F.3d 356, 364 n.1 (5th Cir. 2013) (“[A] dismissal with
`
`prejudice is an adjudication on the merits operating as a final judgment.” (emphasis
`
`in original)); cf. Litchfield v. Crane, 123 U.S. 549, 551-52 (1887) (finding party
`
`that was neither a party to a suit nor a privy of a party was not estopped and
`
`explaining that “estoppels to be good, must be mutual”).
`
`3 Patent Owner makes no attempt to show which category or categories it will rely
`
`on to make its privity argument.
`
`
`
`4
`
`
`
`
`
`553 U.S. at 895. Opportunity to be heard—whether exercised or not—and actual
`
`control over the action is key.
`
`Patent Owner takes isolated statements from the Patent Trial Practice Guide
`
`to argue that a party “could have exercised control” over a proceeding if it had an
`
`indemnification agreement. See Mot. (Paper 10) at 4. In making this argument,
`
`Patent Owner disregards the context of the statements in the Trial Practice Guide.
`
`The Trial Practice Guide explains that the “opportunity to control” a litigation must
`
`be the same as “might be reasonably expected between two formal coparties.”
`
`Trial Practice Guide, 77 Fed. Reg. 78756, 78759 (Aug. 14, 2012). As Taylor
`
`makes clear, the concepts of nonparty preclusion are based on an opportunity to be
`
`heard and fundamental notions of due process. Taylor, 553 U.S. at 891 (“The
`
`federal common law of preclusion is, of course, subject to due process limitations”
`
`and explaining that a nonparty generally has not had a “full and fair opportunity to
`
`litigate”); see also Nat’l Spiritual Assembly of Baha’is of U.S. Under Hereditary
`
`Guardianship, Inc. v. Nat’l Spiritual Assembly of the Baha’is of the United States
`
`of Am., Inc., 628 F.3d 837, 849 (7th Cir. 2010) (“The concept of privity . . . is
`
`ultimately bounded by due process, which starts from a ‘presumption that each
`
`person has a right to her day in court.’”). Thus, a mere invitation to take over the
`
`defense of a litigation—with or without an indemnification agreement—is simply
`
`insufficient to demonstrate privity for the purposes of nonparty preclusion.
`
`
`
`5
`
`
`
`
`
`Here, Patent Owner does not appear to contend that evidence will show
`
`control of the earlier litigation. Patent Owner also has not contended that
`
`Petitioner was, as a practical matter, able to take over the defense of a litigation
`
`that involved numerous products from numerous manufacturers.4 At best, Patent
`
`Owner wants to rely on an indemnification provision in a contract that it concedes
`
`was relevant only to a subset of products at issue in the earlier litigation that says
`
`nothing about the practicalities (or lack thereof) of taking over the specific
`
`litigation.
`
`
`4 In addition to ARRIS products, both Motorola Mobility and Cisco products were
`
`also at issue in the earlier litigation. See Ex. 2008 at 15. Patent Owner has not
`
`explained why or how Petitioner would have assumed control over the litigation
`
`and thus assumed liability for other manufacturers’ products under the terms of the
`
`indemnification agreement. Moreover, although Patent Owner notes that Petitioner
`
`acquired Motorola Mobility, the acquisition was years after the earlier litigation
`
`was filed and is thus irrelevant. See, e.g., Synopsys, Inc. v. Mentor Graphics Corp.,
`
`IPR2012-00042, Paper 60, 12 (PTAB Feb. 19, 2014) (“This rule [37 C.F.R. §
`
`42.101(b)] makes clear that it is only privity relationships up until the time a
`
`petition is filed that matter; any later-acquired privies are irrelevant.”).
`
`
`
`6
`
`
`
`
`
`3.
`
`The Agreement Relied on by Patent Owner Has Several
`Conditions Precedent to Indemnity and Patent Owner Has
`Not Shown How It Will Demonstrate Those Conditions
`Were Satisfied Based Solely on the Agreements
`
`The form agreement from Petitioner’s website relied upon by Patent Owner
`
`has several conditions precedent to any indemnification obligation. Patent Owner
`
`addresses only one of them. The conditions not addressed by Patent Owner
`
`include: (a) prompt notice of the claim and (b) an exchange of all evidence. None
`
`of the discovery sought by Patent Owner, which is limited to agreements with
`
`indemnity provisions, would show that Comcast gave Petitioner prompt notice and
`
`exchanged all evidence. Therefore, the agreements themselves will not prove
`
`useful. Instead, this motion which the Patent Owner touts as seeking “narrow”
`
`discovery may well be the beginning of an extensive and iterative foray in an
`
`attempt to find evidence of privity that simply is not present here.
`
`B.
`
`Patent Owner’s Reliance on A Settlement of a Contractual
`Dispute To Infer Liability Under a Contractual Indemnification
`Provision is Improper
`
`Patent Owner asks the Board for an inference that Petitioner was a privy of
`
`Comcast because Petitioner settled a contractual dispute with Comcast over
`
`potential indemnification claims. This is improper for at least two reasons. First,
`
`any such inference would have a chilling effect on settlement of indemnification
`
`claims arising out of patent infringement actions contrary to the public policy
`
`favoring settlement of disputes. Cf. Foster v. Hallco Mfg. Co., Inc., 947 F.2d 469,
`
`
`
`7
`
`
`
`
`
`477 (Fed. Cir. 1991) (“[T]he Federal Circuit has repeatedly expressed the view that
`
`there is a strong public interest in settlement of patent litigation.”). Indeed, Federal
`
`Rule of Evidence 408(a)(1) precludes the use of payment in compromise as
`
`evidence of liability. Patent Owner has offered no reason why settlement of a
`
`contractual claim should not get the same treatment by the Board under the Federal
`
`Rules of Evidence. See 37 C.F.R. § 42.62 (“[T]he Federal Rules of Evidence shall
`
`apply to a proceeding.”). Second, Patent Owner ignores that payment justifications
`
`for settlement of claims by Petitioner might be based upon the desire to maintain
`
`good business relationships with Petitioner’s largest customer, as opposed to any
`
`perceived legal obligation. Therefore, the inference Patent Owner seeks from the
`
`settlement is not just improper, it is unfounded.
`
`II. CONCLUSION
`For the foregoing reasons, Patent Owner’s motion for additional
`
`discovery should be denied.
`
`Dated: July 11, 2014
`
`
`
`
`
`
`
`
`
`Respectfully submitted,
`
`/Andrew R. Sommer/
`Andrew R. Sommer
`Reg. No. 53,932
`Lead Counsel for Petitioner ARRIS
`Group, Inc.
`
`8
`
`
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`Pursuant to 37 C.F.R. §§ 42.6(e) and 42.105(a), this is to certify that on July
`
`11, 2014, I caused to be served a true and correct copy of the foregoing
`
`“PETITIONER’S OPPOSITION TO PATENT OWNER’S MOTION FOR
`
`ADDITIONAL DISCOVERY” by electronic mail on counsel for the Patent Owner
`
`at:
`
`
`
`Lewis V. Popoviski
`lpopoviski@kenyon.com
`
`Jeffrey S. Ginsberg
`jginsberg@kenyon.com
`
`David J. Kaplan
`djkaplan@kenyon.com
`
`David J. Cooperberg
`dcooperberg@kenyon.com
`
`Dated: July 11, 2014
`
`
`
`
`
`
`
`
`WINSTON & STRAWN LLP
`1700 K Street NW
`Washington, DC 20006
`
`
`1
`
`
`Respectfully submitted,
`
`/Andrew R. Sommer/
`Andrew R. Sommer
`(Reg. No. 53,932)
`Counsel for Petitioner ARRIS Group,
`Inc.
`
`