`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`HUGHES NETWORK SYSTEMS, LLC and
`HUGHES COMMUNICATIONS, INC.,
`Petitioner,
`v.
`CALIFORNIA INSTITUTE OF TECHNOLOGY,
`Patent Owner.
`
`Case IPR2015-00081
`Patent 8,284,833
`
`PTAB BOARD MEETING
`
`TAKEN ON
`WEDNESDAY, FEBRUARY 25, 2015
`10:01 A.M.
`
`701 FIFTH AVENUE, SUITE 5100
`SEATTLE, WASHINGTON 98104
`
`Job # 90815
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`CALTECH - EXHIBIT 2016
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`
`
`APPEARANCES
`
`Page 2
`
`Appearing on behalf of the Petitioner,
`Hughes Network Systems, LLC and Hughes Communications, Inc.:
`ELIOT WILLIAMS, ESQ.
`Baker Botts
`1001 Page Mill Road
`Palo Alto, California 94304
`
`Appearing on behalf of the Patent Owner,
`California Institute of Technology:
`MICHAEL ROSATO, ESQ.
`ANDY BROWN, ESQ.
`Wilson Sonsini Goodrich & Rosati
`701 Fifth Avenue
`Seattle, Washington 98104
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`Page 3
` PTAB BOARD MEETING 09:31
`PTAB BOARD MEETING 09:31
`WEDNESDAY, FEBRUARY 25, 2015 12:35
`10:01 A.M. 10:01
` MR. WILLIAMS: Hallied Gaugojak who's assisting us 10:01
`in this matter. 10:01
` JUDGE PERRY: Thank you very much. And who do we 10:01
`have representing the patent owner? 10:01
` MR. ROSATO: Yeah. Good morning, Your Honor. On 10:01
`the west coast this is Mike Rosato on behalf of the Patent 10:01
`Owner. And I have with me cocounsel Matthew Argenti and an 10:01
`associate Andy Brown here. And I wanted to let the parties 10:01
`know we have a court reporter on the line. 10:01
` JUDGE PERRY: Excellent. Since you have arranged 10:01
`for a court reporter please file a transcript of this call 10:01
`as an exhibit in the -- among the record papers. 10:01
` MR. ROSATO: We will do so, Your Honor. Thank 10:01
`you. 10:01
` JUDGE PERRY: Are there any others on the line not 10:01
`yet identified? Okay. 10:01
` Thank you all for participating in this 10:01
`panel-initiated call. The reason we initiated the call is 10:01
`simply to explore the facts related to Patent Owner's 10:01
`allegation in the preliminary responses that there are 10:01
`unnamed inter -- unnamed real parties in interest that
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`should have been set forth in the petitions. Let me assure 10:01
`everyone that we're not going to make any dispositive 10:01
`decisions on this call. We just want to explore the facts 10:01
`and that will help us determine next steps procedurally. 10:01
` So Patent Owner, let's begin with you. Would you 10:01
`mind just taking a minute or two to summarize for us your 10:02
`position with regard to these unnamed real parties in 10:02
`interest? 10:02
` MR. ROSATO: Certainly, Your Honor. 10:02
` So, you know, as we set forth in our preliminary 10:02
`responses and the panel has correctly noted, we believe that 10:02
`there are real parties in interest which exist but are not 10:02
`named in any of the petitions, any of the six petitions 10:02
`involved here. 10:02
` First there's EchoStar, which is the parent of the 10:02
`Hughes entities. It is not specifically named as a real 10:02
`party in interest in the petitions but they should be. 10:02
`There are various Dish entities that are not named as real 10:02
`parties in interest in the petitions but they should be. 10:02
`The only parties specifically named are several Hughes 10:02
`entities. And as we set forth in our preliminary responses 10:03
`for various reasons these parties identified should -- that 10:03
`we have identified, EchoStar and the Dish entities, should 10:03
`have been named. You know, the boundary lines are so
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`blurred between the Hughes, EchoStar and Dish entities that 10:03
`each of them either exercised control or could have 10:03
`exercised control in these IPR proceedings. 10:03
` Briefly EchoStar is the parent company of Hughes 10:03
`and public documents expressly state that EchoStar's legal 10:03
`team and general counsel control the legal affairs of the 10:03
`Hughes subsidiaries. The Dish entities are specifically 10:03
`named together with Hughes in the District Court litigation, 10:03
`though Dish entities are not named in the IPR petitions. 10:04
`But those entities are represented by common counsel at 10:04
`District Court. And counsel has even stood up in District 10:04
`Court and told the judge that Dish and Hughes would be 10:04
`pursuing IPRs at the patent office, which is exactly what we 10:04
`see here. And for various other reasons we think the 10:04
`evidence that we've submitted demonstrates that Dish also 10:04
`has either exercised control or clearly could have done so 10:04
`in these proceedings. 10:04
` Now, we feel we've made a prima facie showing on 10:04
`this issue. And that showing is supported by evidence 10:04
`including public documents and SEC filings. At this point, 10:04
`you know, the Petitioner certainly would be in possession of 10:04
`further evidence or have access to evidence relevant to this 10:04
`issue. We feel we made an initial showing and at this point 10:05
`the ultimate burden of proof on this issue now lies with the
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` PTAB BOARD MEETING 10:05
`Petitioner. 10:05
` JUDGE PERRY: Okay. Thank you very much. Let me 10:05
`ask one quick question. Is EchoStar, Corp. also sued under 10:05
`the patent involved in these IPRs? 10:05
` MR. ROSATO: Well, we discussed this briefly in 10:05
`the preliminary responses and we think that this gets to, 10:05
`you know, we're quite frankly scratching our heads a bit on 10:05
`why the Petitioner has decided not to name these parties 10:05
`which seem quite clearly necessary to be named. But with 10:05
`regard to EchoStar we identified that EchoStar wasn't 10:05
`specifically named in the complaint but at the time of the 10:05
`IPR filings there was a motion pending at District Court 10:05
`where Caltech was seeking leave to amend their complaint to 10:06
`add EchoStar. And that being pending before the court at 10:06
`the time, you know, if we have to venture a guess as to, you 10:06
`know, the thought process of the Petitioner, and Petitioner 10:06
`can speak more intelligently to this, we suspect that, you 10:06
`know, there was reluctance to specifically name EchoStar in 10:06
`these IPRs out of fear of compromising their litigation 10:06
`strategy. 10:06
` JUDGE PERRY: And let me turn to Petitioner and 10:06
`give them a chance to comment. First, Petitioner, is Hughes 10:06
`a wholly-owned subsidiary of EchoStar? 10:06
` MR. WILLIAMS: Yes.
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` JUDGE PERRY: Okay. Thank you. And is it also 10:06
`true as stated in the preliminary responses that there is a 10:06
`common shareholder that serves as both the chair of EchoStar 10:07
`and Dish, Charles Ergen? 10:07
` MR. WILLIAMS: Yes. 10:07
` JUDGE PERRY: Okay. 10:07
` MR. WILLIAMS: You asked if there is a common 10:07
`shareholder? Yes, there is a shareholder who has -- who has 10:07
`a substantial interest in both EchoStar and Dish. 10:07
` JUDGE PERRY: And do we correctly understand that 10:07
`he serves as the chair of both EchoStar and Dish? 10:07
` MR. WILLIAMS: I believe that's correct, yes. 10:07
` JUDGE PERRY: Okay. So please comment as you see 10:07
`fit on whatever Patent Owner stated to this point. 10:07
` MR. WILLIAMS: Sure. So let's address each of the 10:07
`issues separately. I mean I'm happy to comment on the 10:07
`thought process that went into naming the real party in 10:07
`interest because it was largely mine as lead counsel in 10:07
`trying to comply with what the Board's regulations and its 10:07
`panel opinions on this issue have elucidated for us in the 10:07
`practicing community about how to properly identify real 10:07
`party in interest. And the guidance that the Board's 10:07
`provided in the trial practice guide and in its opinions 10:08
`seems to be I think correctly that the real party in
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`interest is the party at whose behest the petition is filed. 10:08
`There are other factors that might be relevant of course to 10:08
`that determination but at the end of the day we believe 10:08
`that's the question that the Board is supposed to be 10:08
`answering when addressing whether the real party in interest 10:08
`has been identified. And in this case there is no doubt 10:08
`that that party is Hughes. 10:08
` Now we do concede of course there is a tight 10:08
`corporate relationship between Hughes and EchoStar, EchoStar 10:08
`being the parent of Hughes. And for that reason and because 10:08
`EchoStar does -- you know, does own all of Hughes we did 10:08
`identify in the section of our petitions entitled real party 10:08
`in interest EchoStar. And we identified in particular the 10:08
`relationship they have with Hughes, which is that they are 10:08
`the parent. 10:08
` So to the extent that that relationship creates a 10:08
`real party in interest situation vis a vis EchoStar they 10:08
`have been named. They have been identified in the real 10:09
`party in interest section of the petition. And certainly 10:09
`nothing in the statute nor the implementing regulations nor 10:09
`even the guidance suggests that any magic words have to be 10:09
`used in identifying real parties in interest. 10:09
` The other thing that we looked at when trying to 10:09
`identify the real party in interest in these petitions is
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`the Board's previous guidance. Or I should say the patent 10:09
`office's previous guidance back when -- before the PTAB 10:09
`existed when it was still called the BPAI. So there is a 10:09
`rule making, the final rule making of August 12th, 2004 by 10:09
`the BPAI, and I'll give you the cites for that in a second, 10:09
`that has a very specific section on how to identify properly 10:09
`a real party in interest in a brief to the Board where you 10:09
`have a situation like this where there's a parent that does 10:09
`own all of a subsidiary. And we have, I think, followed 10:09
`exactly the language that is suggested in those -- in that 10:10
`final rule making. 10:10
` JUDGE PERRY: There was of course supplemental 10:10
`rule making after the AIA statute passed. 10:10
` MR. WILLIAMS: Of course, yes. 10:10
` JUDGE PERRY: More specifically to AIA cases. 10:10
`Nevertheless, are you saying that since you listed EchoStar 10:10
`as the parent of Hughes in the real party of interest 10:10
`section of your petitions are you acknowledging then that 10:10
`EchoStar is a real party in interest? 10:10
` MR. WILLIAMS: I think what we're saying is the 10:10
`guidance from the Board at the time of the petition was 10:10
`somewhat ambiguous and the decision could have been that it 10:10
`was or it could have been that it wasn't. I mean on the 10:10
`facts in this case they are as I just recited them which is
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`that it was Hughes who directed our -- who gave us direction 10:10
`and guidance, made the decision to file the IPR and was 10:10
`involved in reviewing the IPR before it was filed and not 10:10
`EchoStar. So based on those facts we believe that EchoStar 10:11
`was not the real party in interest but we did recognize that 10:11
`reasonable minds could disagree about that in view of the 10:11
`guidance that does exist in the Board's guidelines. And so 10:11
`for that reason we did identify EchoStar in the section 10:11
`entitled real party in interest intending to cover this 10:11
`situation. 10:11
` So I guess what my response to your question, Your 10:11
`Honor, is that whether they are or they are not a real party 10:11
`in interest they have been identified as such in the 10:11
`petition, which is what the statute requires. 10:11
` JUDGE PERRY: So your stand is let it remain 10:11
`ambiguous at this point. You're not prepared to acknowledge 10:11
`that EchoStar is in fact a real party in interest. 10:11
` MR. WILLIAMS: I think-- 10:11
` JUDGE PERRY: I don't want to force you into doing 10:11
`that. 10:11
` MR. WILLIAMS: No, no, no. I think my point is 10:11
`that in the absence of a further definition of what it 10:11
`actually means to be a real party in interest it's hard for 10:11
`me to give you a definitive answer to that.
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` JUDGE PERRY: Okay. 10:12
` MR. WILLIAMS: But we recognize that ambiguity in 10:12
`filling out the section entitled real party in interest and 10:12
`in the abundance of caution identified them in that section. 10:12
` JUDGE PERRY: Okay. And it is your position that 10:12
`the Dish entities are not real parties in interest. 10:12
` MR. WILLIAMS: So yeah. Now let me move on then 10:12
`to the Dish entities because that is obviously a much 10:12
`different issue. 10:12
` So just at the outset let me say I learned this 10:12
`morning from my client that in the underlying District Court 10:12
`litigation, of which I am not counsel, Caltech, so the 10:12
`Patent Owner here, has not submitted any expert testimony in 10:12
`support of any infringement allegation against Dish. And 10:12
`it's my understanding that the parties are in discussions 10:12
`and perhaps have already agreed to dismiss Dish from the 10:12
`District Court litigation. So I think the facts as they 10:12
`are -- as they have been developing over the course of this 10:12
`litigation reveal Dish is not a significant player in that 10:12
`litigation. They are a tag-along company and they're 10:12
`certainly not controlling the decision making about the 10:13
`underlying District Court litigation nor this -- nor these 10:13
`series of IPR petitions. 10:13
` So that said, the allegations that I see in Patent
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`Owner's preliminary response goes solely to a former 10:13
`relationship that existed. I mean the two companies -- it 10:13
`is correct to say that Dish and Echo -- that Dish is a spin 10:13
`out of EchoStar or vice versa. I mean the two companies 10:13
`were related at one point in the past but today they are 10:13
`separate entities. They are separate publicly-traded 10:13
`companies. The corporate formalities are observed 10:13
`rigorously as they must being publicly-traded companies. 10:13
`And should the Board, you know, like to receive discovery on 10:13
`this issue we could certainly provide discovery showing that 10:13
`from recipient witnesses with knowledge who would testify 10:13
`that Dish had no input into these petitions, provided no 10:13
`financing for these petitions, and otherwise was uninvolved. 10:14
` So I did hear counsel for the Patent Owner use the 10:14
`word "control" in his opening discussion but I think there 10:14
`he's using the word control quite loosely. Clearly if 10:14
`there's one thing to be gained -- to be learned from reading 10:14
`the Board's decisions on real party in interest over the 10:14
`last year it's that the type of control that exists because 10:14
`of a financial ownership or a shareholder ownership in a 10:14
`company is not sufficient to establish control. That you 10:14
`must show control as to this particular proceeding as to 10:14
`this IPR to this petition and the allegations that have been 10:14
`made. And the evidence supported in the Patent Owner's
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`preliminary response we think did not even get to the level 10:14
`of rebutting the presumption that we properly named the real 10:14
`party in interest in this case. 10:14
` JUDGE PERRY: Okay. Thank you very much. Patent 10:14
`Owner, let me give you a chance to comment on what 10:14
`Petitioner has just said. 10:14
` MR. ROSATO: Sure. Thank you, Your Honor. 10:14
` So with regard to EchoStar, you know, the 10:14
`Petitioner still has not taken a position on this and that's 10:14
`concerning. I mean there's a clear question of is EchoStar 10:15
`a real party in interest. And I have not heard a clear 10:15
`answer to that. What I heard is we're not going to say one 10:15
`way or the other but we put them on paper, and that's good 10:15
`enough. That's not good enough. We need to know for 10:15
`various reasons and we don't have to turn to, you know, 10:15
`multiple decisions to explain why this is the case but we 10:15
`need to know whether EchoStar is a real party in interest. 10:15
`And the Petitioner is in the position to tell us that right 10:15
`now. 10:15
` We think that, you know, by virtue of the clear 10:15
`admission that they are a wholly-owning and controlling 10:15
`parent company with a common legal structure that is 10:15
`sufficient. That's what we're able to determine from public 10:15
`documents and we think that alone shows that they are a real
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`party in interest. But the fact that Petitioner is sitting 10:16
`there refusing to answer the question is concerning. We 10:16
`need to know the answer to this. And they listed them, you 10:16
`know, why. Are they a real party in interest or not? 10:16
` JUDGE PERRY: Okay, thank you. And do you 10:16
`continue to want to press that Dish, the two Dish entities, 10:16
`at least one of them is an unnamed real party in interest? 10:16
` MR. ROSATO: Absolutely. So with regard to Dish, 10:16
`you know, I'm not litigation counsel either, District Court 10:16
`litigation counsel. But Petitioner counsel here, his 10:16
`cocounsel is actually litigation counsel in the District 10:16
`Court. So they have a, you know, a direct channel into 10:16
`what's occurring there. And I would disagree with the 10:17
`characterization that was made with regard to Dish being a 10:17
`tag-along or any disposal of that underlying litigation. 10:17
`That's simply not an accurate representation. 10:17
` The reality is there's a second -- there is 10:17
`another second case going on which all the same parties are 10:17
`involved. Beyond that it's, you know, the fact that that 10:17
`second case exists is simply not relevant to the issue here. 10:17
`You know, we think it's a red herring. And we believe we 10:17
`set forth explanation in our preliminary responses supported 10:17
`by public documents and evidence showing that Dish has 10:17
`either exercised control in these IPRs or clearly could have
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`done so. And that is unfortunately a bell that cannot be 10:17
`unrung and it's irrelevant whether a second lawsuit exists 10:18
`or not. Control has been there and that's, you know, that 10:18
`is a factor that can't -- that can't be ignored. 10:18
` JUDGE PERRY: Okay, thank you. Let me ask one 10:18
`further question. Have you given any thought to what 10:18
`documents might be probative of fleshing out whether either 10:18
`of these or any of these entities that are unnamed should 10:18
`have been named? In other words what might be appropriate 10:18
`for a very targeted additional discovery that might resolve 10:18
`these questions? 10:18
` MR. ROSATO: Sure. I assume that's directed at 10:18
`me, Your Honor? 10:18
` JUDGE PERRY: Yes. And then I'll give Petitioner 10:18
`a chance to answer the same question. 10:18
` MR. ROSATO: Okay. So, you know, as I indicated I 10:18
`believe that the public documents we've cited, which include 10:18
`SEC filings with, you know, clear statements about common 10:19
`control and common legal teams, are sufficient to make that 10:19
`prima facie showing. And, you know, the burden is with the 10:19
`Petitioner at this point. Certainly they're going to be in 10:19
`possession of or have access to evidence that would further 10:19
`confirm this. 10:19
` You know, we could speculate as to what types of
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`documents those might include. And, you know, that would 10:19
`include among other things, you know, records, invoices and 10:19
`payment records for the IPRs as well as the District Court 10:19
`invalidity contentions, including those for May, you know, 10:19
`where common counsel for Dish and Hughes is developing their 10:19
`invalidity defenses that are mirrored in these IPRs. You 10:19
`know, any records of communications between the IPR counsel 10:20
`and defense counsel from the litigation relating to the 10:20
`IPRs. 10:20
` I'm sorry, somebody interrupted there but let me 10:20
`continue. And defense counsel from the litigation relating 10:20
`to the IPRs were cited prior. And I'm sorry, I wasn't sure 10:20
`if that was a question or maybe somebody-- 10:20
` JUDGE PERRY: You've already answered my question. 10:20
`Let me give Petitioner a chance to comment on this now. 10:20
` MR. WILLIAMS: Sure. But first let me just make 10:20
`sure I've clarified the record. I think I heard counsel say 10:20
`that the two-time cocounsel here is trial counsel. That's 10:20
`not the case. So we -- there was a situation early in the 10:20
`case where Mr. Guy appeared to seek an extension of time to 10:21
`answer the complaint in the District Court litigation 10:21
`because he's admitted in California and at the time they 10:21
`needed California counsel to do that. He has since 10:21
`withdrawn from the litigation and didn't -- has not
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` PTAB BOARD MEETING 10:21
`participated substantively in any of the pleadings, has not 10:21
`received any confidential information in the litigation. So 10:21
`I think it's a little misleading to suggest that PTAB 10:21
`counsel is the same as cocounsel here. 10:21
` But getting to the question that the Board was 10:21
`asking, what discovery might be appropriate here, I guess 10:21
`our concern is that some of the documents in discovery that 10:21
`was just discussed by Petitioner's counsel would clearly get 10:21
`into attorney-client communications between my firm and 10:21
`myself and my client. And I think there's a lot of mischief 10:21
`that can be achieved by using these kind of real party in 10:21
`interest disputes to try to poke into the privilege and put 10:21
`the Petitioner in sort of the impossible situation of having 10:21
`to either wave privileged communication in order to 10:21
`establish that's it's properly named the real party in 10:21
`interest or risk that the petition is denied on a procedural 10:22
`basis, especially on a record like this that is -- that 10:22
`really doesn't -- there's no evidence in the record as it 10:22
`exists today that Dish had any control over the decision to 10:22
`file this -- these IPR petitions. 10:22
` The fact that some of the prior art that's used in 10:22
`the petitions is the same as prior art being used in the 10:22
`District Court litigation is certainly not enough. It's not 10:22
`surprising that that would be the case. And the Board has
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` PTAB BOARD MEETING 10:22
`already I think addressed this issue on at least one other 10:22
`panel decision that we're happy to bring to the court's 10:22
`attention should it like to hear briefing on that question. 10:22
` JUDGE PERRY: Counsel, let me interrupt you. I'm 10:22
`more interested in control by EchoStar. 10:22
` MR. WILLIAMS: Sure. So as to that issue again I 10:22
`think -- let's just back up and look at the section of the 10:22
`petition where we identify the real party in interest. So 10:22
`we do follow exactly the way that the BPAI at least 10:22
`suggested that we should name the real party in interest in 10:22
`this case. So this is from volume 69 of the Federal 10:23
`Register in August 12th, 2004, page 49960. And the 10:23
`particular answer or the comment that was given by the Board 10:23
`appears on page 49975 in there. The final rules in the 10:23
`comment section says "One example of a statement identifying 10:23
`the real party in interest is: The real party in interest is 10:23
`X Corporation, the assignee of record, which is a subsidiary 10:23
`of a joint venture between Y Corporation and Z." So that 10:23
`type of formulation is exactly the way we named EchoStar 10:23
`here in the section on real party in interest. 10:24
` So we're not -- I don't intend to dispute that 10:23
`EchoStar is a real party in interest. If the Board -- if 10:23
`the Board were to conclude that its status as owner of 10:23
`Hughes makes it a real party in interest then it is a real
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`party in interest. If the Board were to say that it's not a