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