`By:
`Scott R. Brown
`
`Matthew B. Walters
`HOVEY WILLIAMS LLP
`10801 Mastin Blvd., Suite 1000
`Overland Park, Kansas 66210
`Tel: (913) 647-9050
`Fax: (913) 647-9057
`
`
`
`IPR2014-01121
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`ZHONGSHAN BROAD OCEAN MOTOR CO., LTD.; BROAD OCEAN
`MOTOR, LLC; AND BROAD OCEAN TECHNOLOGIES, LLC
`Petitioners
`
`v.
`
`NIDEC MOTOR CORPORATION
`Patent Owner
`
`
`
`Case No. IPR2014-01121
`U.S. Patent No. 7,626,349
`
`
`
`Before BENJAMIN D.M. WOOD, Administrative Patent Judge
`JAMES A. TARTAL, Administrative Patent Judge
`
`PATRICK M. BOUCHER, Administrative Patent Judge
`
`
`
`RESPONSE TO PETITIONERS’ MOTION TO EXCLUDE EVIDENCE
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`TABLE OF CONTENTS
`TABLE OF CONTENTS
`
`PORTIONS OF EXHIBIT 2003: CARRIER DECLARATION ..................... 2
`PORTIONS OF EXHIBIT 2003: CARRIER DECLARATION ................... ..2
`
` INTRODUCTION ............................................................................................ 1
`INTRODUCTION .......................................................................................... .. 1
`
`
`TABLE OF AUTHORITIES .................................................................................... ii
`TABLE OF AUTHORITIES .................................................................................. .. ii
`
`I.
`I.
`
`II.
`II.
`
`III. EXHIBITS 2004, 2005, AND 2007: PRESENTATIONS AND
`III. EXHIBITS 2004, 2005, AND 2007: PRESENTATIONS AND
` SPREADSHEETS ............................................................................................. 8
`SPREADSHEETS ........................................................................................... ..8
`
`IV. EXHIBITS 2010–2011, 2018–24: BOCKART DECLARATION AND
`IV. EXHIBITS 2010-2011, 2018-24: BOCKART DECLARATION AND
` ITS ATTACHMENTS ....................................................................................10
`ITS ATTACHMENTS .................................................................................. ..10
`
`V. CONCLUSION ..............................................................................................11
`V.
`CONCLUSION ............................................................................................ .. 1 1
`
`CERTIFICATE OF SERVICE ................................................................................12
`CERTIFICATE OF SERVICE .............................................................................. .. 12
`
`i
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`
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`
`
`
`TABLE OF AUTHORITIES
`
`
`
`Cases
`
`
`Applied Materials, Inc. v. Adv. Semiconductor Materials Am., Inc.,
` 98 F.3d 1563 (Fed. Cir. 1996) ................................................................................ 4
`
`Demaco Corp. v. F. Von Langsdorff Licensing Ltd.
` 851 F.2d 1387 (Fed. Cir. 1988) .............................................................................. 9
`
`In re DBC
` 545 F.3d 1373 (Fed. Cir. 2008) ........................................................................4, 10
`
`In re Glatt Air Techniques, Inc.
` 630 F.3d 1026 (Fed. Cir. 2011) ............................................................... 3, 4, 8, 10
`
`Land Grantors in Henderson, Union, Webster Counties, Ky. v. United States
` 86 Fed. Cl. 35 (2009) .............................................................................................. 7
`
`Lightning Lube, Inc. v. Witco Corp.
` 4 F.3d 1153 (3d Cir. 1993) ..................................................................................... 7
`
`Power Integrations, Inc. v. Fairchild Semiconuctor Int’l, Inc.
` 711 F.3d 1348 (Fed. Cir. 2013) ..........................................................................6, 9
`
`Tec Air, Inc. v. Denso Mfg. Mich. Inc.
` 192 F.3d 1353 (Fed. Cir. 1999) .............................................................................. 6
`
`Tokai Corp. v. Easton Enters., Inc.
` 632 F.3d 1358 (Fed. Cir. 2011) .............................................................................. 9
`
`
`
`
`
`
`
`ii
`
`
`
`
`Other Authorities
`
` Kenneth S. Brown, McCormick on Evidence § 249 (6th ed. 2006) ....................... 7
`
` 2
`
`
`37 C.F.R. § 1.68 .......................................................................................................10
`
`37 C.F.R. § 42.2 ...................................................................................................1, 10
`
`37 C.F.R. § 42.23 ....................................................................................................... 1
`
`37 C.F.R. § 42.64 ....................................................................................................... 1
`
`Fed. R. Evid. 701 ....................................................................................................... 7
`
`Fed. R. Evid. 801 ....................................................................................................... 9
`
`Fed. R. Evid. 803 ....................................................................................................... 9
`
`
`
`
`
`
`iii
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`
`
`
`I.
`
`INTRODUCTION
`
`Pursuant to 37 C.F.R. § 42.23 and the Federal Rules of Evidence, Patent
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`Owner, Nidec Motor Corporation (“Nidec”), opposes Petitioners’ Motion to
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`Exclude Evidence.
`
`As they note, Petitioners timely objected to the challenged portions of
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`Exhibits 2003–2005, Exhibit 2007, Exhibits 2010–2011, and Exhibits 2018–2014.
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`Motion at 1. But Petitioners’ motion completely ignores that Nidec timely
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`supplemented the challenged evidence pursuant to 37 C.F.R. § 42.64(b)(2),1 curing
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`several of the purported deficiencies that Petitioners now attack. See Exhibit 2036,
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`Patent Owner’s Appendix of Exhibits (filed concurrently herewith). Because
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`Petitioners do not argue in their motion that Nidec’s supplemental evidence failed
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`to cure the deficiencies they identify (or is deficient in any other way), Petitioners
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`have waived any argument regarding the sufficiency of the supplemental evidence.
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`37 C.F.R. § 42.23(b).
`
`For the reasons set forth below, Petitioners’ motion should be denied.
`
`
`1 Section 42.64(b)(2) permits service of supplemental evidence “within ten
`business days of service of the objection.” Petitioners’ objections were served
`Friday, May 15, 2015. Nidec’s supplemental evidence was served Monday, June 1,
`2015, which is ten business days after May 15 due to Memorial Day falling on
`Monday, May 25. See 37 C.F.R. § 42.2 (defining “business day” as “a day other
`than a Saturday, Sunday, or Federal holiday within the District of Columbia”).
`
`1
`
`
`
`
`II.
`
`PORTIONS OF EXHIBIT 2003: CARRIER DECLARATION
`
`The bulk of Petitioners’ motion attacks the sufficiency of portions of Exhibit
`
`2003, the inventor declaration of Mark Carrier. Petitioners assert that Mr. Carrier’s
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`averment in paragraph 24 that the Practicing Nidec Motors practice the invention
`
`claimed in the ’349 patent lacks any support. Specifically, Petitioners assert that
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`Mr. Carrier “performed no testing or analysis to confirm that each motor practices
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`sine wave commutation.” Motion at 1. But paragraph 24.a of revised Exhibit 2003
`
`(numbered Exhibit 2033 in Patent Owner’s Appendix of Exhibits) establishes Mr.
`
`Carrier’s knowledge that the Practicing Nidec Motors were designed to practice
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`sine wave commutation. See Exhibit 2033 at 15–17. Paragraph 24.a further
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`establishes that Mr. Carrier has examined the currents produced by the system
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`controllers of the Practicing Nidec Motors by observing the output from a
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`calibrated and properly operating oscilloscope, to confirm that the waveforms
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`generated by the controllers of the Practicing Nidec Motors are sine waves. See id.
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`Petitioners further assert that Mr. Carrier “did not personally confirm that
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`each motor uses independent Q and d axis currents.” Motion at 2. But Mr. Carrier
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`“directly participated in the development of” the Practicing Nidec Motors and
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`knows how they were designed. Id. at 15 ¶ 24.a. And paragraph 24.b of revised
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`Exhibit 2003, along with supplemental Exhibit 2027, establishes that Mr. Carrier
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`has examined a model used to code the digital signal processors of the Practicing
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`2
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`
`
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`Nidec Motors, to determine that both Q and d axis currents are developed
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`separately from each other and without reliance on each other. See Exhibit 2033 at
`
`17–19. In light of the averments made and supporting materials cited in paragraphs
`
`24.a and 24.b of revised Exhibit 2003—none of which are challenged or even
`
`mentioned in Petitioners’ motion—Petitioners’ argument that Mr. Carrier’s
`
`testimony in paragraph 24 is inadmissibly conclusory and speculative is without
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`merit.
`
`Petitioners next attack paragraph 23 of Mr. Carrier’s declaration because he
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`has not “testified how he knows that each and every ‘Practicing Nidec Motor’
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`meets each and every claim limitation in the claims that have been challenged.”
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`Motion at 2 (emphases added). Thus, Petitioners argue, his testimony is “irrelevant
`
`to secondary consideration issues.” Id. But this argument subjects Mr. Carrier and
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`Nidec to a standard that is not supported by the law. A patentee need not “submit
`
`commercial success evidence from multiple embodiments” of an invention claimed
`
`in a patent for that evidence to be relevant to secondary considerations. In re Glatt
`
`Air Techniques, Inc., 630 F.3d 1026, 1030 (Fed. Cir. 2011). Indeed, “[i]t seems
`
`unlikely that a company would sell a product containing multiple, redundant
`
`embodiments of a patented invention. The fact that [a patentee’s] commercial
`
`products only contain one [embodiment] does not make its commercial success
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`evidence irrelevant.” Id. Under this logic, “there would never be commercial
`
`3
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`
`
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`success evidence for a claim that covers more than one embodiment.” Id. But as
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`the Federal circuit has consistently held, a patent applicant “need not sell every
`
`conceivable embodiment of the claims in order to rely upon evidence of
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`commercial success.” In re DBC, 545 F.3d 1373, 1384 (Fed. Cir. 2008) (quoting
`
`Applied Materials, Inc. v. Adv. Semiconductor Materials Am., Inc., 98 F.3d 1563,
`
`1570 (Fed. Cir. 1996)).
`
`Commercial success evidence should be considered “so long as what was
`
`sold was within the scope of the claims.” Id. The Conopco decision cited by
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`Petitioners stands only for this unremarkable proposition. Petitioners’ argument
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`that the Practicing Nidec Motors must meet “each and every” claim is a
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`misapplication of the law. Nidec need not prove that every challenged claim covers
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`the Practicing Nidec Motors. For example, if one or more of the independent
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`claims are not obvious, then any dependent claims will necessarily also be non-
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`obvious.
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`Petitioner’s objection also fails to address that the Carrier testimony fully
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`establishes on its face that Practicing Nidec Motors are covered by claim 1.
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`Indeed, the statements in the Carrier declaration also fully establish that Practicing
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`Nidec Motors are covered by claim 19, the method analog to claim 1, and that
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`Practicing Nidec Motors are covered by claim 16, which merely substitutes
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`“blower” for “air moving component” in the claim language but is otherwise
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`4
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`
`
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`broader than claim 1 by claiming a blower assembly for an HVAC system instead
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`of an HVAC system.
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`As set forth in paragraph 24.a of revised Exhibit 2003, Mr. Carrier “directly
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`participated in the development of” the Practicing Nidec Motors and knows how
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`they were designed. Exhibit 2033 at 15. Paragraph 6 of both the original and
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`revised Exhibit 2003 establishes that he designed and developed motor controls
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`like those described and claimed in the ’349 patent, and that he is “knowledgeable
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`about commercial embodiments of the subject matter described and claimed in the
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`’349 patent by Nidec.” Exhibit 2003 at 3 ¶ 6; Exhibit 2033 at 3 ¶ 6. Further, the
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`right-hand column of the exemplary claim chart included in both the original and
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`revised Exhibit 2003 includes Mr. Carrier’s personal observations based on his
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`familiarity with the Practicing Nidec Motors. See Exhibit 2003 at 13–15 ¶ 24;
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`Exhibit 2033 at 13–15 ¶ 24.
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`Petitioners assert that Mr. Carrier’s statements regarding the commercial
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`success of the Practicing Nidec Motors are “nothing more than conjecture and
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`speculation, as well as lay opinion.” Motion at 2–3. But to make this argument,
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`Petitioners must ignore the factual basis for his assertions repeatedly set forth in
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`Mr. Carrier’s declaration. In promoting the Practicing Nidec Motors to customers,
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`Nidec touted their quiet operation, their constant airflow leading to improved
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`comfort and efficiency of the HVAC system, and their ability to operate in low line
`
`5
`
`
`
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`voltage. Exhibit 2003 at 15–21, 25 ¶¶ 25–34, 46; Exhibit 2033 at 19–27, 31 ¶¶ 25–
`
`34, 46; Sales of the Practicing Nidec Motors began in 2007, increased significantly
`
`in 2008, and continued to grow year after year—notwithstanding the fact that
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`Nidec did not increase its marketing spending or efforts. Exhibit 2003 at 24, 26–27
`
`¶¶ 45, 49; Exhibit 2033 at 30–31, 32–33 ¶¶ 45, 49. The Federal Circuit has
`
`recognized increased sales coupled with advertising and marketing materials
`
`touting patented features as evidence of commercial success. E.g., Power
`
`Integrations, Inc. v. Fairchild Semiconuctor Int’l, Inc., 711 F.3d 1348, 1368 (Fed.
`
`Cir. 2013). The significant year-to-year growth in sales of the Practicing Nidec
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`Motors also support’s Mr. Carrier’s testimony regarding increased market share. In
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`any event, while “sales figures coupled with market data provide stronger evidence
`
`of commercial success, sales figures alone are also evidence of commercial
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`success.” Tec Air, Inc. v. Denso Mfg. Mich. Inc., 192 F.3d 1353, 1361 (Fed. Cir.
`
`1999).
`
`Further, Petitioners’ attack on Mr. Carrier’s testimony as “lay opinion” is
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`meaningless, given his status as Nidec’s vice president of new product
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`development, who participated consistently since 2003 in customer meetings to sell
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`ECM to the market and in so doing touted the features achieved by the patented
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`invention. Exhibit 2003, ¶¶ 5–7, 34, 46; Exhibit 2033, ¶¶ 5–7, 34, 46. The owner or
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`an officer of a business is permitted “to testify to the value or projected profits of
`
`6
`
`
`
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`the business, without the necessity of qualifying the witness as an accountant,
`
`appraiser, or similar expert.” Fed. R. Evid. 701, Committee Notes on Rules—2000
`
`Amendment (citing Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir.
`
`1993) (no abuse of discretion in permitting the plaintiff’s owner to give lay opinion
`
`testimony as to damages, as it was based on his knowledge and participation in the
`
`day-to-day affairs of the business)). “Such opinion testimony is admitted not
`
`because of experience, training or specialized knowledge within the realm of an
`
`expert, but because of the particularized knowledge that the witness has by virtue
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`of his or her position in the business.” Mr. Carrier’s opinion on what sells
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`Practicing Nidec Motors is directly analogous to the situation contemplated in the
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`notes to Federal Rule of Evidence 701 making lay opinion admissible.
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`Finally, paragraph 48 of Mr. Carrier’s testimony contains no inadmissible
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`hearsay, as Mr. Carrier does not testify about any statements made by Gary Clark,
`
`Goodman’s vice president of sales. Rather, Mr. Carrier testifies as to his own
`
`personal knowledge and impressions gained as a result of that meeting. “[A]n out-
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`of-court statement is not hearsay if it is offered to show effect on the hearer.” Land
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`Grantors in Henderson, Union, Webster Counties, Ky. v. United States, 86 Fed. Cl.
`
`35, 69 (2009) (citing 2 Kenneth S. Brown, McCormick on Evidence § 249, at 134
`
`(6th ed. 2006)).
`
`7
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`
`
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`In sum, Petitioners’ attacks on portions of Mr. Carrier’s affidavit misapply
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`the applicable law and ignore several pertinent facts. Revised Exhibit 2003 should
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`be admitted in its entirety.
`
`III. EXHIBITS 2004, 2005, AND 2007: PRESENTATIONS AND
` SPREADSHEETS
`
`Petitioners’ first attack on these three exhibits is the same as one of their
`
`flawed arguments against Mr. Carrier’s declaration—i.e., that he “failed to
`
`properly prove that any Nidec ECM motor practices all of the challenged claims in
`
`the ’349 patent.” Motion at 4. But as explained above, relevant evidence to
`
`secondary considerations need not show commercial success of every conceivable
`
`embodiment of an invention claimed in a patent and Patent Owner need not
`
`demonstrate that “all of the challenged claims” are practiced. In re Glatt Air
`
`Techniques, Inc., 630 F.3d at 1030; In re DBC, 545 F.3d at 1384.
`
`Petitioners also argue that test reports contained in Exhibits 2004 and 2005
`
`is hearsay and lacks foundation. But Mr. Carrier laid the foundation for the test
`
`reports in these business records in his declaration. See Exhibit 2003 at 10–12
`
`¶¶ 21–22; Exhibit 2033 at 10–12 ¶¶ 21–22 Moreover, Petitioner’s citation to 37
`
`C.F.R. § 42.65 is inapposite. While that rule applies when an expert is putting in
`
`testing to prove a fact in dispute, it is not applicable to previously existing testing
`
`relied upon by a party in the ordinary course of business in a business record. In
`
`any event, the test reports contained in these exhibits are not hearsay because they
`
`8
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`
`
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`are not offered to show the truth of the matters asserted. See Fed. R. Evid.
`
`801(c)(2). Instead, the test reports are offered to show that Nidec touted the test
`
`results in its advertising and marketing presentations to potential customers, to
`
`establish a nexus between its increased sales and the patented invention. See Tokai
`
`Corp. v. Easton Enters., Inc., 632 F.3d 1358, 1379 (Fed. Cir. 2011) (“[A] prima
`
`facie case of nexus is generally made out when the patentee shows both that there
`
`is commercial success, and that the thing (product or method) that is commercially
`
`successful is the invention disclosed and claimed in the patent.”) (quoting Demaco
`
`Corp. v. F. Von Langsdorff Licensing Ltd., 851 F.2d 1387, 1392 (Fed. Cir. 1988));
`
`Power Integrations, Inc., 711 F.3d at 1368 (advertising and marketing materials
`
`touting patented features coupled with sales evidence serves as evidence of
`
`commercial success).
`
`With respect to Exhibit 2007, John Filla, Nidec’s director of product
`
`management for commercial and residential motors, laid the foundation for the
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`market and sales data reported therein. And Mr. Filla laid the foundation for
`
`Exhibit 2007. See Exhibit 2006 at 1–4 ¶¶ 1–7. Mr. Filla also established the
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`business record exception under Federal Rule of Evidence 803(6) for Exhibit 2007.
`
`Id.
`
`9
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`
`
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`Because Exhibits 2004, 2005, and 2007 neither lack foundation nor
`
`constitute inadmissible hearsay, Petitioners’ motion should be denied as to all three
`
`exhibits.
`
`IV. EXHIBITS 2010–2011, 2018–24: BOCKART DECLARATION AND
` ITS ATTACHMENTS
`
`Petitioners’ primary attack on Christopher Bockart’s expert declaration is
`
`based on its lack of the required warnings containing willful false statements
`
`required by 37 C.F.R. §§ 1.68 and 42.2. Again, Petitioners ignore Nidec’s
`
`supplemental evidence to make their argument. Paragraph 49 of revised Exhibit
`
`2010 (numbered Exhibit 2034 in Patent Owner’s Appendix of Exhibits) contains
`
`the required statement that Mr. Bockart is aware of such warnings. Exhibit 2034 at
`
`27 ¶ 49.
`
`Petitioners’ only other argument is that Mr. Bockart’s discussion of the
`
`Practicing Nidec Motors’ commercial success is “irrelevant” for the same reasons
`
`that Mr. Carrier’s testimony on this subject matter is purportedly “irrelevant. But
`
`as explained above, evidence regarding secondary considerations need not show
`
`commercial success of every conceivable embodiment of an invention claimed in a
`
`patent. In re Glatt Air Techniques, Inc., 630 F.3d at 1030; In re DBC, 545 F.3d at
`
`1384.
`
`Petitioners’ motion should be rejected with respect to Exhibits 2010–2011
`
`and Exhibits 2018–2014.
`
`10
`
`
`
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`V. CONCLUSION
`
`For the foregoing reasons, Patent Owner requests that the above-discussed
`
`evidence—revised Exhibit 2003, Exhibit 2004, Exhibit 2005, Exhibit 2007, revised
`
`Exhibit 2010, revised Exhibit 2011, and Exhibits 2018–2024—be admitted in their
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`entirety and that Petitioners’ motion be denied in all respects.
`
`Respectfully Submitted,
`
`
`
`
`
` /s/ Scott R. Brown
`Scott R. Brown, Reg. No. 40,535
`Matthew B. Walters, Reg. No. 65,343
`HOVEY WILLIAMS LLP
`10801 Mastin Blvd., Suite 1000
`Overland Park, Kansas 66210
`Tel: (913) 647-9050
`Fax: (913) 647-9057
`srb@hoveywilliams.com
`mbw@hoveywilliams.com
`
`ATTORNEYS FOR PATENT OWNER
`
`
`
`Dated: September 25, 2015
`
`
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`
`
`
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`
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`11
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`
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`CERTIFICATE OF SERVICE
`
`On September 25, 2015, a true and accurate copy of the foregoing Response
`to Petitioners’ Motion to Exclude Evidence was filed through the Patent Review
`Processing System and served on the following counsel for Petitioners via
`electronic mail:
`
`Steven F. Meyer
`Charles Baker
`LOCKE LORD LLP
`Three World Financial Center
`New York, New York 10281-2101
`Tel: (212) 415-8535
`
`
`smeyer@lockelord.com
`cbaker@lockelord.com
`
`
`
`
`
`
`
`
`
`
`
`
` /s/ Scott R. Brown
`
`
`
`
`
`12