Trials@uspto.gov
`571-272-7822
`
`
`
`
` Paper 23
` Entered: January 22, 2015
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`WAVEMARKET INC. d/b/a LOCATION LABS,
`Petitioner,
`
`v.
`
`LOCATIONET SYSTEMS LTD.,
`Patent Owner.
`____________
`
`Case IPR2014-00920
`Patent 6,771,970 B1
`____________
`
`
`Before KRISTEN L. DROESCH, GLENN J. PERRY, and
`SHERIDAN K. SNEDDEN, Administrative Patent Judges.
`
`DROESCH, Administrative Patent Judge.
`
`
`
`
`
`
`DECISION ON REQUEST FOR REHEARING
`37 C.F.R. § 42.71(d)
`
`I. INTRODUCTION
`Wavemarket, Inc. d/b/a Location Labs (“Petitioner”) filed a Petition
`
`for inter partes review of claims 1–17 and 19 of U.S. Patent No. 6,771,970
`B1 (“the ’970 Patent”) on June 9, 2014. Paper 3 (“Pet.”). The ’970 Patent is
`
`
`571-272-7822
`
`
`
`
` Paper 23
` Entered: January 22, 2015
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`WAVEMARKET INC. d/b/a LOCATION LABS,
`Petitioner,
`
`v.
`
`LOCATIONET SYSTEMS LTD.,
`Patent Owner.
`____________
`
`Case IPR2014-00920
`Patent 6,771,970 B1
`____________
`
`
`Before KRISTEN L. DROESCH, GLENN J. PERRY, and
`SHERIDAN K. SNEDDEN, Administrative Patent Judges.
`
`DROESCH, Administrative Patent Judge.
`
`
`
`
`
`
`DECISION ON REQUEST FOR REHEARING
`37 C.F.R. § 42.71(d)
`
`I. INTRODUCTION
`Wavemarket, Inc. d/b/a Location Labs (“Petitioner”) filed a Petition
`
`for inter partes review of claims 1–17 and 19 of U.S. Patent No. 6,771,970
`B1 (“the ’970 Patent”) on June 9, 2014. Paper 3 (“Pet.”). The ’970 Patent is
`
`
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`Case IPR2014-00920
`Patent 6,771,970 B1
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`also at issue in several district court proceedings. See Pet. 2; Paper 7, 1–2.
`LocationNet Systems Ltd. (“Patent Owner”) filed a Preliminary Response
`(Paper 8, “Prelim. Resp.”) asserting the Petition is barred under 35 U.S.C.
`§ 315(b) because it was filed more than one year after Petitioner’s privies
`were each served with a complaint alleging infringement of the ’970 Patent.
`Prelim. Resp. 16–21. Patent Owner filed a Request for Rehearing of our
`Decision of December 16, 2014 (Paper 11, “Dec.” or “Decision”) instituting
`inter partes review of claims 1–17 and 19 of the ’970 Patent. Paper 15
`(“Req. Reh’g”). For the reasons that follow, the Request for Rehearing is
`denied.
`
`II. STANDARD OF REVIEW
`In its request for rehearing, the dissatisfied party must identify,
`specifically, all matters the party believes the Board misapprehended or
`overlooked, and the place where each matter was addressed previously.
`37 C.F.R. § 42.71(d). Upon a request for rehearing, the decision on a
`petition will be reviewed for an abuse of discretion. 37 C.F.R. § 42.71(c).
`
`III. DISCUSSION
`Patent Owner contends that in our Decision to institute inter partes
`
`review we misapprehended or overlooked the following matters:
`(a) privity need not be assessed at the time the third parties were served
`with infringement complaints (Req. Reh’g 1, 3–5);
`(b) preclusion based on privity can apply even in the absence of control
`(id. at 2, 13–15); and
`(c) Patent Owner’s evidence demonstrating: (1) privity at the time of
`service of the infringement complaints (id. at 1, 7–10), and (2) privity
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`based on Petitioner’s control over the third parties’ defense in the
`district court proceedings prior to the Petition filing (id. at 2, 7, 10–13;
`see id. at 5–6).
`
`A. Privity Need Not be Assessed at Time of Service of Complaints
`Patent Owner argues that we misapprehended or overlooked the law
`of privity because privity need not be assessed at the time that Sprint,
`AT&T, and T-Mobile were served respectively with complaints. Req.
`Reh’g. 1, 3–4 (quoting Dec. 8). Patent Owner contends that 35 U.S.C.
`§ 315(b) does not require privity to exist at the time a complaint asserting
`patent infringement is served on a privy of a petitioner. Id. at 4 (quoting
`35 U.S.C. § 315(b)); see id. at 1. Patent Owner further contends that based
`on the plain language of the statute, the assessment of privity should take
`into account the relationship of the parties up until the petition is filed. Id. at
`4–5 (citing 37 C.F.R. § 42.101; Synopsis, Inc. v. Mentor Graphics Corp.,
`IPR2012-00042, slip op. 12 (PTAB Feb. 19, 2014) (Paper 60)); see id. at 1.
`Patent Owner does not identify, specifically, where arguments
`regarding the timing of the existence of privity in the context of 35 U.S.C.
`§ 315(b) were raised previously in its Preliminary Response. See 37 C.F.R.
`§ 42.71(d). In any event, Patent Owner’s arguments are not persuasive
`because they focus narrowly on a portion of our Decision addressing the
`time of service of the complaints (see Req. Reh’g 1, 3–4 (quoting Dec. 8)),
`but disregard the portion of our Decision addressing later participation in the
`district court proceedings (see Dec. 8–9). Specifically, our Decision stated:
`we are not persuaded, on this record, that [] Petitioner exercised
`control or could have exercised control over Sprint’s AT&T’s
`and T-Mobile’s later participation in the respective district court
`
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`proceedings based on the existence of indemnitee-indemnitor
`relationships, the ‘acceptance of the defense by [Petitioner],’
`and retention of counsel from Dentons by Petitioner, Sprint,
`AT&T, and T-Mobile.
`Dec. 8–9.
`
`B. Privity in the Absence of Control
`Patent Owner argues that we misapprehended or overlooked legal
`authority for finding preclusion based on privity in the absence of control,
`and instead focused only on evidence of control. Req. Reh’g. 13–14 (citing
`Cal. Physicians’ Serv. v. Aoki Diabetes Research Inst., 163 Cal. App. 4th
`1506, 1523–25 (Cal. App. 2008); Asahi Glass Co., Ltd. v. Toledo Eng’g Co.,
`505 F. Supp. 2d 423, 434–36 (N.D. Ohio 2007); Dec. 8); see Req. Reh’g 2.
`Patent Owner further argues that the relevant inquiry is whether the
`relationship between Petitioner and each of Sprint, AT&T, and T-Mobile is
`sufficiently close to establish a privity relationship that bars institution of
`inter partes review at this stage. Id. at 14; see id. at 13 (citing Office Patent
`Trial Practice Guide, 77 Fed. Reg. 48,756, 48,759 (Aug. 14, 2012) (“Trial
`Practice Guide”)).
`In its Preliminary Response, Patent Owner argued that privity exists
`between Petitioner and Sprint, AT&T, and T-Mobile and cited Asahi Glass
`as persuasive authority for finding privity based on three requirements––an
`indemnification agreement, retention of shared counsel, and a joint defense
`agreement. See Prelim. Resp. 16–20. Patent Owner’s arguments in the
`Request for Rehearing disregard our discussion in the Decision addressing
`the insufficiency of Patent Owner’s contentions and supporting evidence
`regarding at least one of the three Asahi Glass requirements, specifically, the
`joint defense agreement. See Dec. 8 (finding Petitioner’s objections to
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`document requests based on joint defense privilege and common interest
`privilege and Petitioner’s failure to deny the existence of joint defense
`agreements was not tantamount to an admission of the existence of joint
`defense agreements and/or common interest agreements).
`Patent Owner also does not identify, specifically, where arguments
`regarding finding preclusion based on privity in the absence of control,
`relying on Cal. Physicians, were raised previously in its Preliminary
`Response. See 37 C.F.R. § 42.71(d). We cannot overlook or misapprehend
`arguments not raised previously.
`We are not persuaded that we misapprehended or overlooked legal
`authority for finding preclusion based on privity in the absence of control, or
`that we improperly focused only on evidence of control. The Trial Practice
`Guide offers the following guidance on determining whether a non-named
`party in a given proceeding constitutes a “privy” to that proceeding: (1) it is
`a “highly fact-dependent question” to be assessed on a “case-by-case basis”
`taking into consideration how courts have viewed the term “privy;” (2) it is
`to be evaluated “in a manner consistent with the flexible and equitable
`considerations established under federal case law,” including an analysis that
`“seeks to determine whether the relationship between the purported ‘privy’
`and the relevant other party is sufficiently close such that both should be
`bound by the trial outcome and related estoppels.” Trial Practice Guide at
`48,759 (citing Taylor v. Sturgell, 553 U.S. 880, 893–895, 893 n.6 (2008);
`18A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal
`Practice & Procedure §§ 4449, 4451 (2d ed. 2011) (“Wright & Miller”).
`The Trial Practice Guide further explains that multiple factors are relevant to
`the question of whether a non-party may be recognized as a “privy,”
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`including the common consideration of “whether the non-party exercised or
`could have exercised control over a party’s participation in a proceeding.”
`Id. (citing Taylor v. Sturgell, 553 U.S. at 893–895, 893 n.6; Wright & Miller
`§ 4451). “The concept of control generally means that it should be enough
`that the nonparty has the actual measure of control or opportunity to control
`that might reasonably be expected between two formal coparties,” but there
`is no “bright line test” for determining the necessary quantity or degree of
`participation to qualify as a privy based on the control concept. Id. (citing
`Wright & Miller § 4451; Gonzalez v. Banco Cent. Corp., 27 F.3d 751
`(1st Cir. 1994)). Thus, the weight of authority discussed in the Trial Practice
`Guide indicates that control is an important consideration in the
`determination of whether a non-named party is a privy.
`
`Patent Owner’s argument that privity may be found in the absence of
`control relies on one case cited in the “Trial Practice Guide” –– Cal.
`Physicians. Patent Owner’s argument discounts the weight of authority in
`the Trial Practice Guide demonstrating that control over a party’s
`participation in proceedings is an important consideration in determining
`whether a non-named party is a privy to that proceeding. See Dec. 8 (citing
`Trial Practice Guide 77 Fed. Reg. at 48,759 (citing Taylor, 553 U.S. at
`894)). It is notable that immediately prior to citing Cal. Physicians as an
`example, the Trial Practice Guide qualifies the case with the following
`statement:
`But whether something less than complete funding and control
`suffices to justify similarly treating the party requires
`consideration of the pertinent facts. See e.g., Cal. Physicians,
`163 Cal. App. 4th 1506, 1523–25 (discussing the role of control
`
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`in the ‘‘privy’’ analysis, and observing that ‘‘preclusion can
`apply even in the absence of such control’’).
`77 Fed. Reg. at 48,760 (emphasis added). Although the Trial Practice Guide
`cites Cal. Physicians as an example, the Trial Practice Guide retains an
`emphasis on control. This emphasis on control in the Trial Practice Guide is
`consistent with federal case law cited therein. For example, in Taylor, the
`Court sets out several categories of exceptions to the rule against nonparty
`preclusion including the following: (1) a variety of pre-existing substantive
`legal relationships between the person to be bound and a party to the
`judgment, such as, preceding and succeeding owners of property, bailee and
`bailor, and assignee and assignor; (2) a nonparty is bound by a judgment if
`control over the litigation was assumed; and (3) a party bound by a judgment
`may not avoid preclusion by relitigating through a proxy. 553 U.S. at 893–
`895 (citations omitted). Similarly, in Gonzalez, the court explains “[i]f a
`nonparty either participated vicariously in the original litigation by
`exercising control over a named party or had the opportunity to exert such
`control, then the nonparty effectively enjoyed his day in court, and it is
`appropriate to impute to him the legal attributes of party status for purposes
`of claim preclusion.” 27 F.3d at 758 (citations omitted).
`
`Patent Owner’s Evidence of Privity
`
`1. Privity at Time of Service of Complaints
` Patent Owner argues that we misapprehended or overlooked evidence
`
`establishing privity at the time of service of the infringement complaints on
`Sprint, AT&T, and T-Mobile. Req. Reh’g. 1, 7–10. Patent Owner argues
`that Petitioner has admitted to the existence of indemnification provisions in
`each of its license agreements, and also admitted to the indemnification in
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`the district court proceedings. Id. at 8 (citing Prelim. Resp. 19 (citing
`Ex. 2110 at 10–11)). In support of its argument, Patent Owner makes the
`following assertions: (1) the license agreements were produced by
`defendants T-Mobile, AT&T, and Sprint in the district court proceedings on
`March 14, 2014, July 14, 2014, and July 15, 2014, respectively (id. (citing
`Prelim. Resp. 19 (citing Ex. 2110, 10–11))); (2) Petitioner confirmed on
`August 28, 2014 that it has agreed to indemnify Sprint, AT&T, and
`T-Mobile (id. at 9 (citing Prelim. Resp. 19 (citing Ex. 2117, 17, ll. 1–4)));
`and (3) counsel for Sprint and T-Mobile confirmed on September 16, 2014
`that Petitioner had accepted the defense of Sprint, AT&T, and T-Mobile (id.
`at 9–10 (citing Prelim. Resp. 18(citing Ex. 2116, 5, ll. 16–19))).
`
`In our Decision, we considered the evidence presented by Patent
`Owner and determined that it was not sufficient to demonstrate that at the
`time of the service of the complaints, Petitioner exercised control or could
`have exercised control over the district court proceedings based on the
`indemnitee-indemnitor relationships. See Dec. 8 (citing Ex. 2110, 2117).
`A request for rehearing is not an opportunity to express disagreement with a
`Decision.
`
`In any event, Patent Owner’s evidence is insufficient to
`demonstrate that, at the time of service of the infringement complaints
`on January 29, 2013, January 31, 2013, and March 12, 2013, Petitioner
`agreed to indemnify Sprint, AT&T, and T-Mobile and “accepted the
`defense.” The evidence relied upon by Patent Owner does not specify
`the date(s) on which Petitioner agreed to indemnify Sprint, AT&T, and
`T-Mobile and “accepted the defense.” See Ex. 2116, 5, ll. 16–19; Ex. 2117,
`17, ll. 1–4.
`
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`We are also not persuaded by Patent Owner’s new argument that the
`
`titles of the license agreements (i.e., Master Services Agreement, License
`and Services Agreement) suggest that the agreements were in place prior to
`service of the infringement complaints. See Req. Reh’g. 9. Although the
`license agreements between Petitioner and Sprint, AT&T, and T-Mobile
`may have been in place prior to service of the infringement complaints on
`January 29, 2013, January 31, 2013, and March 12, 2013, Patent Owner does
`not direct us to evidence to demonstrate that the indemnification provisions
`of the license agreements were in force prior to, or at the time of, service of
`the infringement complaints.
`
`
`2. Privity Based on Petitioner’s Control of Defense Prior to Petition Filing
`
`Patent Owner argues that we misapprehended or overlooked evidence
`demonstrating privity based on Petitioner’s exercise of control over Sprint,
`AT&T, and T-Mobile in the respective district court proceedings prior to the
`Petition filing date of June 9, 2014. Req. Reh’g 2, 7, 10–13; see also id. at
`5–6 (arguing that Patent Owner presented evidence establishing privity
`prior to, and at time of, the Petition filing (citing Prelim. Resp. 17–19;
`Exs. 2110, 2111, 2116, 2117)). Patent Owner argues that we
`misapprehended the evidence that Petitioner’s counsel Mark Hogge and
`counsel from Dentons LLP entered appearances on behalf of Sprint, AT&T
`and T-Mobile several months before the Petition was filed. Id. at 10–12
`(citing Prelim. Resp. 18, 20–21; Exs. 2107, 17; 2108, 14; 2109, 11; 2113, 5
`Docket No. 18; 2115, 6 Docket No. 23); see also id. at 6–7 (arguing the
`Decision misapprehends the fact that Exhibits 2107, 2108, 2109, and 2111
`are all dated prior to June 9, 2014). Patent Owner also asserts that there is
`no dispute that Petitioner accepted its obligation to indemnify Sprint, AT&T,
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`and T-Mobile and control the defense of each customer in the respective
`district court proceedings prior to the June 9, 2014 Petition filing. Id. at 12;
`see id. at 7 (citing Prelim. Resp. 19 (citing Ex. 2117, 17)). Lastly, Patent
`Owner argues that Petitioner admitted that it and each of Sprint, AT&T and
`T-Mobile have been operating pursuant to a joint defense and/or common
`interest agreement since prior to June 9, 2014. Id. at 12–13 (citing Prelim.
`Resp. 19 (citing Ex. 2111, 12–15, 26–27); 20 (citing Ex. 2107, 14; Ex. 2108,
`12; Ex. 2109, 8)).
`
`Patent Owner does not identify where in the Preliminary Response
`that Patent Owner argued, specifically, that the evidence demonstrates the
`following: (1) Mark Hogge and counsel from Dentons LLP entered
`
`appearances on behalf of Sprint, AT&T and T-Mobile several months before
`the Petition was filed (compare Req. Reh’g 10–12, with Prelim. Resp. 18–
`19); (2) Petitioner accepted its obligation to indemnify Sprint, AT&T, and
`T-Mobile prior to the June 9, 2014 filing of the Petition (compare Req.
`Reh’g 7, 12, with Prelim. Resp. 18–19 (citing Ex. 2116, p. 5, ll. 16–19;
`Ex. 2117, p. 17, ll. 1–4)); and (3) Petitioner and each of Sprint, AT&T and
`T-Mobile have been operating pursuant to a joint defense and/or common
`interest agreement since prior to June 9, 2014 (compare Req. Reh’g. 12–13,
`with Prelim. Resp. 19–20). We cannot overlook or misapprehend
`arguments not raised previously. We also note that Patent Owner’s citation
`to Exhibits 2113 and 2115 to support its argument are presented for the
`first time in the Request for Rehearing. Compare Req. Reh’g 10–12, with
`Prelim. Resp. 20–21.
`Furthermore, Patent Owner’s arguments disregard the portions of our
`Decision addressing the following: (1) control over Sprint’s, AT&T’s, and
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`T-Mobile’s later participation in the respective district court proceedings
`based on the existence of indemnitee-indemnitor relationships, “acceptance
`of the defense”, and retention of counsel from Dentons LLP by Petitioner,
`Sprint, AT&T, and T-Mobile (see Dec. 8–9); and (2) Petitioner’s objections
`to document requests based on joint defense privilege and common interest
`privilege, along with a failure to deny the existence of joint defense
`agreements, is not tantamount to an admission of the existence of joint
`defense agreements and/or common interest agreements (see Dec. 8 (citing
`Ex. 2111, 12–15, 26–27)). A request for rehearing is not an opportunity to
`express disagreement with the Decision.
`Regarding Patent Owner’s assertion that Petitioner exercised control
`over the defense of Sprint, AT&T, and T-Mobile prior to the June 9, 2014
`Petition filing, we again note that the evidence presented by Patent Owner
`does not specify the date(s) on which Petitioner agreed to indemnify Sprint,
`AT&T, and T-Mobile and “accepted the defense.” See Ex. 2116, 5, ll. 16–
`19; Ex. 2117, 17, ll. 1–4. All that can be inferred from Patent Owner’s
`evidence is that Petitioner agreed to indemnify Sprint, AT&T, and
`T-Mobile prior to August 28, 2014, and “accepted the defense” prior to
`September 16, 2014. See id. The evidence presented by Patent Owner is
`insufficient to demonstrate that Petitioner agreed to indemnification, and
`“accepted the defense” prior to the June 9, 2014 Petition filing. See id.
`Furthermore, Patent Owner does not provide sufficient explanation as to
`how: (1) “the acceptance of the defense by [Petitioner] regarding
`indemnification between [Petitioner] and any of the defendants,” (Ex. 2116,
`5, ll. 16–19); and (2) the appearance of Mr. Abbati (Vice President of
`Finance for Petitioner) at a settlement conference because of the
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`Patent 6,771,970 B1
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`indemnification (Ex. 2117, 17, ll. 1–4), and (3) counsel’s representation that
`Petitioner “ha[s] to pay the fees for any settlement” (id.) amounts to the
`acceptance of an obligation to control the defense of each customer. See
`Req. Reh’g. 6–7, 9–10, 12; see also Prelim. Resp. 18 (arguing Petitioner has
`control over the defense of the customers in the district court proceedings
`based on “acceptance of the defense by [Petitioner]”).
`
`IV. CONCLUSION
`For all the foregoing reasons, we are not persuaded that we
`
`misapprehended or overlooked the law of privity, 35 U.S.C. § 315(b), and
`Patent Owner’s evidence. Accordingly, we did not abuse our discretion in
`finding that the Petition is not barred under 35 U.S.C. § 315(b).
`
`V. DECISION ON REHEARING
`Petitioner’s Request for Rehearing is denied.
`
`
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`Case IPR2014-00920
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`PETITIONER:
`Mark L. Hogge
`DENTONS US LLP
`mark.hogge@dentons.com
`
`PATENT OWNER:
`Thomas Engellenner
`Reza Mollaaghababa
`Andy Chan
`PEPPER HAMILTON LLP
`engellennert@pepperlaw.com
`mollaaghababar@pepperlaw.com
`chana@pepperlaw.com
`
`
`13
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`
`
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