`Filed: July 28, 2015
`
`
`
`
`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 IPR2015-00059
`Patent 7,916,781
`
`_____________________________
`
`
`
`PATENT OWNER’S RESPONSE
`PURSUANT TO 37 C.F.R. § 42.120
`
`
`
`I.
`II.
`III.
`
`IV.
`
`V.
`
`VI.
`
`Case IPR2015-00059
`Patent 7,916,781
`
`TABLE OF CONTENTS
`
`Page
`STATEMENT OF PRECISE RELIEF REQUESTED ....................................................... 1
`INTRODUCTION AND OVERVIEW OF ARGUMENT ................................................. 1
`FAILURE TO NAME REAL PARTIES-IN-INTEREST .................................................. 2
`A.
`The Real Party-In-Interest Requirement ................................................................. 3
`B.
`Ability to Control is Sufficient ............................................................................... 4
`C.
`The Petition Fails To Identify Real Parties-In-Interest ........................................... 5
`1.
`The Petition Fails to Identify EchoStar as a Real Party-In-Interest ............ 5
`
`DISH Is Also a Real Party-In-Interest ........................................................ 8
`2.
`
`
`
`a)
`
`b)
`
`Unrebutted facts show DISH is a real-party-in-interest .................. 9
`
`Petitioner Misapprehends the Correct Standard: Totality of
`the Circumstances ......................................................................... 16
`
`c)
`
`Petitioner’s Response to the Discovery Order Does Not
`Alter the Totality of the Circumstances ........................................ 18
`The Petition is Incomplete Because of Failure to Identify Real Parties-in-
`Interest, Which Requires Termination .................................................................. 19
`PETITIONER HAS NOT DEMONSTRATED DIVSALAR QUALIFIES AS
`PRIOR ART UNDER 35 U.S.C. § 102(B) ....................................................................... 20
`A.
`The Record Does Not Establish That Divsalar Was Published at the 1998
`Allerton Conference .............................................................................................. 21
`The Fradenburgh Declaration Does Not Establish That Divsalar Was
`Published by At Least April 30, 1999 ................................................................... 24
`1.
`The Fradenburgh Declaration Fails on Its Face to Establish
`
`Divsalar as 102(b) Prior Art ...................................................................... 24
`Petitioner Did Not Make Ms. Fradenburgh Available for Cross-
`Examination .............................................................................................. 27
`PETITIONER’S CLAIM CONSTRUCTION IGNORES KEY LIMITATIONS
`OF THE CLAIMS AT ISSUE .......................................................................................... 29
`A.
`Legal Standard ...................................................................................................... 29
`B.
`“first encoding operation being a linear transform operation that generates
`L transformed bits” ............................................................................................... 31
`“the second encoding operation including an accumulation operation in
`which the L transformed bits generated by the first encoding operation are
`accumulated”......................................................................................................... 40
`DIVSALAR DOES NOT ANTICIPATE CLAIMS 1 AND 2 ......................................... 45
`A.
`The Petition fails to explain its proffered inherency theory ................................. 46
`B.
`Divsalar does not disclose a “first encoding operation” utilizing irregular
`repetition ............................................................................................................... 47
`Divsalar does not disclose a “second encoding operation” involving
`addition of multiple input bits at each accumulation step ..................................... 50
`
`D.
`
`B.
`
`2.
`
`
`
`C.
`
`C.
`
`-i-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`Claim 2 is not anticipated for the same reasons as claim 1 .................................. 52
`D.
`VII. CONCLUSION ................................................................................................................. 53
`VIII. APPENDIX ....................................................................................................................... 54
`
`
`
`-i-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`I.
`
`STATEMENT OF PRECISE RELIEF REQUESTED
`
`Hughes Network Systems, LLC and Hughes Communications, Inc.
`
`(collectively, “Petitioner”) filed a petition for inter partes review of claims 1-7, 13-
`
`16, and 19 of U.S. Patent No. 7,916,781 (“the ‘781 patent,” Ex. 1005). The Board
`
`issued its decision instituting trial (“Decision,” Paper 18) on only one ground of
`
`challenge and only with respect to two claims of the ‘781 patent. The ground of
`
`challenge on which trial was instituted alleges anticipation under 35 U.S.C. 102(b)
`
`of claims 1 and 2 by Divsalar (Ex. 1011).
`
`The patent owner (“Caltech”) hereby requests that the Board now dismiss
`
`the sole ground of challenge remaining in this inter partes review, so as to confirm
`
`claims 1 and 2 of the ‘781 patent as not unpatentable.
`
`II.
`
`INTRODUCTION AND OVERVIEW OF ARGUMENT
`
`First, Caltech maintains that the petition fails to identify all real parties-in-
`
`interest (“RPI”). EchoStar Corporation (“EchoStar”) has now been recognized by
`
`the Board as an RPI, yet Petitioner never identified EchoStar as such in the
`
`petition. As to the DISH parties (“DISH”), Hughes still has not rebutted evidence
`
`that DISH should have been named. Hughes misapprehends the relevant case law,
`
`and has been evasive with respect to discovery.
`
`Second, the Petition fails to establish that the Divsalar reference, the sole
`
`reference at issue as the basis of the instituted ground, qualifies as a “printed
`
`publication” and prior art under 35 U.S.C. § 102(b) as asserted. Petitioner has
`
`never asserted, let alone established, that Divsalar was published at the Allerton
`
`conference, as mentioned in the institution Decision. Petitioner’s witnesses
`
`-1-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`actually provide testimony to the contrary. The librarian declaration on which
`
`Petitioner relies to establish the publication date actually asserted provides no
`
`reliable basis for the testimony. Moreover, the declaration should be expunged
`
`because Petitioner was unwilling to provide the witness for cross examination.
`
`Third, with regard to the sole remaining ground of challenge alleging
`
`anticipation, the claim construction advanced by Petitioner and adopted by the
`
`Board in the Decision is unduly broad in view of the specification. When the
`
`claims are properly construed, Divsalar fails to teach a “first encoding operation
`
`being a linear transform operation that generates L transformed bits,” and “the
`
`second encoding operation including an accumulation operation in which the L
`
`transformed bits generated by the first encoding operation are accumulated.”
`
`III. FAILURE TO NAME REAL PARTIES-IN-INTEREST
`
`As explained in Caltech’s preliminary response, the petition should be
`
`dismissed and the proceeding should be terminated because Petitioner failed to
`
`identify all real parties-in-interest as required by 35 U.S.C. § 312(a)(2) and 37
`
`C.F.R. § 42.8(b)(1). Paper 13 pp. 3-14; Paper 16. The petition identifies only
`
`Hughes Network Systems, LLC and Hughes Communications, Inc. as real parties-
`
`in-interest. It at least fails to identify EchoStar, even though the Board recognizes
`
`that EchoStar is in fact a real party-in-interest. Decision p. 2 n.1. The petition also
`
`fails to identify DISH Network Corporation, DISH Network L.L.C. and dishNET
`
`Satellite Broadband L.L.C. (collectively, “DISH”), even though EchoStar and
`
`DISH are under common control. The existence of financially controlling
`
`interests, closely intertwined business relationships, overlapping ownership and
`
`-2-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`management, indemnification agreements, shared counsel and common litigation
`
`strategy clearly establish under the totality of the circumstances that DISH at least
`
`had the ability to control the IPR and is a real party-in-interest to this proceeding.
`
`Petitioner’s failure to identify DISH as well as EchoStar as real parties-in-interest
`
`is fatal to the petition.
`
`A. The Real Party-In-Interest Requirement
`
`The requirement regarding real parties-in-interest is clear: “A petition [for
`
`inter partes review] may be considered only if . . . [it] identifies all real parties in
`
`interest.” 35 U.S.C. § 312(a)(2). Identification of real parties-in-interest assists
`
`“members of the Board in identifying potential conflicts” and assures “proper
`
`application of the statutory estoppel provisions.” Trial Practice Guide, 77 Fed.
`
`Reg., 48,759 (Aug. 14, 2012). The requirement “seeks to protect patent owners
`
`from harassment via successive petitions by the same or related parties, to prevent
`
`parties from having a ‘second bite at the apple,’ and to protect the integrity of both
`
`the USPTO and Federal Courts by assuring that all issues are promptly raised and
`
`vetted.” Id.
`
`Real party-in-interest analysis is “highly fact-dependent” and judged by the
`
`totality of the circumstances rather than any “bright-line test.” Id. There are a
`
`number of relevant factors, including, but not limited to: (1) an agreement to be
`
`bound; (2) pre-existing substantive legal relationships between the named and
`
`unnamed parties, including preceding and succeeding owners, and assignee and
`
`assignor; (3) adequate representation by someone with the same interests, such as a
`
`trustee or fiduciary; (4) assumption of control over the proceeding; (5) agency; and
`
`-3-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`(6) a special statutory scheme expressly foreclosing successive litigation, such as
`
`bankruptcy and probate proceedings. Taylor v. Sturgell, 553 U.S. 880, 893–895,
`
`893 n.6 (2008); see also 77 Fed. Reg. at 48,759 (citing Taylor factors). Moreover,
`
`real party-in-interest is determined from the totality of the circumstances rather
`
`than a piecemeal consideration of individual facts. Atlanta Gas Light Co.
`
`v.Bennett Regulator Guards, Inc., Case IPR2013-00453, Paper 88 at 12 (PTAB
`
`Jan. 6, 2015) (“We emphasize that our determination that AGLR possessed
`
`sufficient control over the proceeding to conclude—in combination with
`
`application of other Taylor factors—that it is a real party in interest does not hinge
`
`on any particular, isolated fact.”).
`
`B. Ability to Control is Sufficient
`
`“A common consideration is whether the non-party exercised or could have
`
`exercised control over a party’s participation in the proceeding.” 77 Fed. Reg. at
`
`48,759. The non-party’s participation may be overt or covert, and the evidence
`
`may be direct or circumstantial, but the evidence as a whole must show that the
`
`non-party possessed control, or the ability to control, from a practical standpoint.
`
`Gonzalez v. Banco Cent. Corp., 27 F.3d 751, 759 (1st Cir. 1994). Indeed, the
`
`Board has recognized that it is sufficient to establish an ability “to call the shots.”
`
`Galderma S.A. v. Allergan Indus., SAS, IPR2014-01422, Paper 14 at 8, 12 (PTAB
`
`Mar. 5, 2015) (quoting Gonzales, 27 F.3d at 758). A patent owner, therefore, is
`
`not required to prove that an unnamed party exerted actual control over a
`
`-4-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`proceeding, a practice that makes sense because proof of actual control will
`
`generally be in the hands of the petitioner alone. As discussed below, the evidence
`
`of record demonstrates that DISH had, at minimum, the ability to control this
`
`proceeding.
`
`C. The Petition Fails To Identify Real Parties-In-Interest
`
`
`1.
`
`The Petition Fails to Identify EchoStar as a Real Party-In-
`Interest
`
`In the Decision, the Board correctly recognized that EchoStar and Hughes
`
`Satellite Systems Corporation, another corporate entity related to Hughes and
`
`EchoStar, are both real parties-in-interest. Decision, p. 2 n.1. Yet neither of these
`
`companies was identified as such in the petition. Rather, Petitioner chose to
`
`sidestep the requirement to affirmatively and unambiguously identify all real
`
`parties-in-interest and instead, Petitioner placed the onus on the Board to decide
`
`which named parties should be considered real parties-in-interest. The Board
`
`should not reward this type of gamesmanship nor endorse it as satisfying 35 U.S.C.
`
`312(a)(2), particularly given the purpose of this provision as a protection for patent
`
`owners and the burden this proceeding places on the Board’s resources.
`
`The petition is clear about one thing—only Hughes Network Systems, LLC
`
`and Hughes Communications, Inc. are named as the real parties-in-interest:
`Real Party in Interest: Hughes Network Systems, LLC and Hughes
`Communications, Inc. (“Petitioner” or “Hughes”) are the real parties
`in interest. Hughes is a provider of broadband satellite services.
`EchoStar Corporation is the parent of Hughes Satellite Systems
`Corporation, which is the parent of Hughes Communications, Inc.
`
`-5-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`Pet. p. 1 (emphasis added). EchoStar was not identified as a real party-in-interest,
`
`nor did Petitioner intend to unambiguously do so as its subsequent conduct makes
`
`clear.
`
`Petitioner confirmed in a telephonic hearing with the Board that its intent
`
`was to place the burden of determining whether EchoStar is or is not a real party
`
`on the Board:
`So we’re not – I don’t intend to dispute that EchoStar is a real party in
`interest. If the Board were to conclude that its status as owner of
`Hughes makes it a real party in interest then it is a real party in
`interest. If the Board were to say that it’s not a real party in interest,
`just stating that alone, then it’s not.
`
`Ex. 2016 at 18:22-19:4. Petitioner was (and is) transparently attempting to
`
`preserve its options to Caltech’s detriment.
`
`Petitioner’s identification of EchoStar as a corporate parent is not the same
`
`thing as naming it a real party-in-interest. See Medtronic, Inc. v. Robert Bosch
`
`Healthcare Sys., Inc., IPR2014-00607, Paper 56 at 19 (PTAB March 16, 2015). In
`
`Medtronic, the Board was faced with similar circumstances where the petitioner
`
`identified a single party as the real party-in-interest (“Medtronic, Inc. is the real
`
`party-in-interest for petitioner.”) and then identified its wholly-owned subsidiary
`
`Cardiocom as the party that had been sued for infringement by the patent owner.
`
`Medtronic, IPR2014-00607, Paper 1 at 3. In granting the patent owner’s motion to
`
`terminate for failure to name the subsidiary as a real party-in-interest, the Board
`
`recognized that “although Medtronic identified itself in the Petitions as the parent
`
`of Cardiocom, it never identified Cardiocom as a ‘real party-in-interest.’”
`
`-6-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`Medtronic, IPR2014-00607, Paper 56 at 19 (“Whether Medtronic’s corporate
`
`structure was disclosed is not the issue; what matters is whether Medtronic
`
`identified ‘all’ real parties-in-interest under 35 U.S.C. § 312(a)(2).”). 1
`
`As in Medtronic, Petitioner’s decision to refuse to affirmatively identify
`
`EchoStar as a real party-in-interest in favor of subsequently identifying it as a
`
`related corporate entity does not meet the bar for satisfying the statute. This is
`
`particularly true given Petitioner’s motivation at the time in the related district
`
`court case, where Petitioner was trying to avoid having EchoStar implicated as a
`
`
`
`1 Caltech is aware that the Board had earlier reached a different conclusion
`
`under similar circumstances, finding that identifying a corporate parent in the real
`
`party-in-interest section was sufficient to satisfy 35 U.S.C. § 312(a)(2). Motorola
`
`Mobility LLC v. Intellectual Ventures II LLC, IPR2014-00504, Paper 12 at 4-6
`
`(PTAB Sept. 10, 2014). Even so, the Board explained that ambiguous
`
`identification of all of the real parties-in-interest “complicates the Office’s
`
`objective of conducting proceedings in a ‘timely, fair, and effective manner’” and
`
`expressly declined to rule on whether this manner of identifying a company unduly
`
`injects ambiguity into any later estoppel determinations, leaving that matter for the
`
`courts. Id. at 5-6 (quoting 77 Fed. Reg. at 48,756). Neither decision has been
`
`designated precedential. The Motorola decision fails to vindicate the purposes of
`
`the requirement even as it acknowledges them, while the subsequent Medtronic
`
`termination decision upholds the requirement.
`
`-7-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`party to the proceeding. The decision to mention EchoStar but not identify it a real
`
`party-in-interest was not a mere oversight, but a strategic decision to preserve a
`
`position it took in district court. Caltech asserted the ‘781 patent against Hughes in
`
`federal district court and named DISH Network Corporation, DISH Network
`
`L.L.C., and dishNET Satellite Broadband L.L.C. as co-defendants. Ex. 1021 p. 2.
`
`On September 30, 2014, Caltech filed a motion for leave to amend its complaint to
`
`add EchoStar as a defendant, and the motion was pending when Petitioner’s IPR
`
`was filed. Ex. 2004. Hughes and EchoStar surely recognized at the time that
`
`stating EchoStar was a real party-in-interest would negatively affect their
`
`opposition to the motion in district court.
`
`It is beyond a doubt at this stage that EchoStar is a real party-in-interest to
`
`this proceeding. It is also indisputable that, while Petitioner named EchoStar in the
`
`“Real Party in Interest” section of the petition, it did not actually identify EchoStar
`
`in the list of entities identified as real parties. Petitioner should not be allowed to
`
`benefit from the ambiguity this created, both in this proceeding and in litigation in
`
`the courts to Caltech’s prejudice.
`
`
`2.
`
`DISH Is Also a Real Party-In-Interest
`
`Caltech explained in its preliminary response as well as its supplemental
`
`briefing on the real party-in-interest issue the numerous factors showing DISH is a
`
`real party-in-interest to this proceeding. See Paper 13 at 7-13; Paper 16. The
`
`Board noted in instituting trial that “[t]he record is still being developed as to
`
`whether DISH is an unnamed real party in interest.” Decision, p. 2. The Board
`
`should find that DISH is an unnamed real party-in-interest to this proceeding
`
`-8-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`because Petitioner has done nothing to rebut Caltech’s showing that this is the
`
`case. Petitioner’s response to Caltech’s showing misstates the standard under
`
`which a real party-in-interest is determined, and its response (or lack thereof) to the
`
`Board’s discovery order on this issue raises more questions than it answers.
`
`a)
`
`Unrebutted facts show DISH is a real-party-in-
`interest
`
`As discussed in Caltech’s earlier filings on this issue, examination of the
`
`Taylor factors and DISH’s financially controlling interest in Hughes, among other
`
`things, indicates that DISH is a real party-in-interest that should have been
`
`disclosed in the petition.
`
`First, DISH and EchoStar (Hughes’s parent) are under common control
`
`because the controlling shareholder of DISH has a “financially controlling interest”
`
`in Hughes. See Zoll, IPR2013-00609, Paper 15 at 10; Rules of Practice for Trials
`
`Before the Patent Trial and Appeal Board and Judicial Review of Patent Trial and
`
`Appeal Board Decisions, 77 Fed. Reg. 48,617 (Aug. 14, 2012). In fact, EchoStar
`
`and DISH literally were the same company until the DISH Network service brand
`
`was spun off as DISH Network Corporation on January 1, 2008. Ex. 2005 ¶ 9.
`
`While EchoStar and DISH are now technically separate entities, a substantial
`
`majority of the voting power of both companies is owned by Charles W. Ergen,
`
`who acts as Chairman of both companies. Ex. 2006 p. 8. Mr. Ergen possesses
`
`approximately 80.8% of the total voting power of EchoStar and 85.1% of the
`
`voting power of DISH; he has the ability to elect a majority of directors and to
`
`control all matters requiring stockholder approval at both companies, making both
`
`-9-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`EchoStar and DISH “controlled companies” under NASDAQ listing rules. See id.
`
`at 42-43; Ex. 2009 p. 47. EchoStar and DISH are under “common control” as
`
`explicitly represented in Annual Reports, public documents. Ex. 2010 p. 15
`
`(“EchoStar and DISH are entities under common control.”). Additionally,
`
`transactions between EchoStar and DISH are not even considered arm’s length
`
`transactions because of the common ownership and management. Ex. 2006 p. 7
`
`(“We have potential conflicts of interest with DISH Network due to our common
`
`ownership and management.”). Thus DISH is a real party-in-interest. See
`
`Galderma S.A, IPR2014-01422, Paper 14 at 12 (noting historical control, common
`
`officers and common directors) (“We need not consider whether [the common
`
`president] did or did not, directly or indirectly, exercise this control. It is sufficient
`
`that he had, in the words of Gonzales, ‘the power— . . . to call the shots.’”).
`
`Second, the close relationship between Hughes, EchoStar, and DISH
`
`indicates that the three companies remain so inextricably intertwined that all are
`
`real parties-in-interest. See 77 Fed. Reg. at 48,760 (non-party’s “relationship with
`
`the petitioner” is relevant to real party-in-interest analysis). When DISH spun off
`
`of EchoStar, DISH entered into agreements to provide EchoStar with management
`
`and administrative services, including legal services. Ex. 2006 pp. 24, 195. DISH
`
`and EchoStar have overlapping directors and executive officers, many of whom
`
`have financial interests in both companies, including Mr. Ergen and an Executive
`
`Vice President “responsible for the development and implementation of advanced
`
`technologies that are of potential utility and importance to both.” Id. pp. 43, 198.
`
`DISH’s General Counsel, who “is responsible for all legal and government affairs
`
`-10-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`for DISH Network and its subsidiaries,” is also an EchoStar director. Ex. 2009
`
`p. 30. Here the companies are so intertwined and there is so much “corporate
`
`blurring” that both DISH and EchoStar should be considered real parties-in-interest
`
`in addition to Hughes. See Atlanta Gas Light Co., IPR2013-00453, Paper 88 at 6,
`
`11.
`
`Third, the highly interdependent legal and business relationships between
`
`Hughes, EchoStar and DISH show that the three companies share a common
`
`interest in the IPR proceedings and a motive to control. See Paramount Home
`
`Entertainment Inc. v. Nissim Corp., IPR2014-00961, Paper 11 at 8 (PTAB Dec. 29,
`
`2014) (parties to patent-related litigation had “documented interest” in invalidating
`
`patent). One of the potentially infringing products in the district court litigation is
`
`a set-top box used by DISH. EchoStar is the sole supplier of DISH’s set-top boxes.
`
`Ex. 2009 p. 16. Moreover, DISH Network has historically been “the primary
`
`customer of our EchoStar Technologies segment,” accounting for 90.1%, 76.9%
`
`and 79.4% of segment revenue for the years ended December 31, 2013, 2012 and
`
`2011, respectively. Ex. 2006 p. 10. Similarly, Hughes has an agreement with
`
`DISH through 2024 to distribute satellite internet services under DISH’s dishNET
`
`brand. Ex. 2006 p. 11; Ex. 2009 pp. 200-
`
`201. The legal, strategic, and operational
`
`relationships illustrate a highly
`
`interdependent, triangular relationship
`
`between these entities:
`
`This strategic triangular alignment creates strong commonality of interest
`
`-11-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`and makes lack of control (or the ability to control) and coordination between the
`
`three inconceivable.
`
`Fourth, an indemnification agreement at the time of the DISH spin-off
`
`indicates that DISH has a “financially controlling interest” and a “pre-existing
`
`substantive legal relationship” with EchoStar and thus, by extension, Hughes. See
`
`Taylor, 553 U.S. at 893–895; 77 Fed. Reg. at 48,759. In the spin-off, DISH
`
`distributed its digital set-top box business and infrastructure and other assets and
`
`liabilities to EchoStar.2 Ex. 2006 p. 8. As part of the deal, DISH is contractually
`
`obligated to indemnify EchoStar “for any liabilities or damages resulting from
`
`intellectual property claims relating to the period prior to the Spin-off as well as
`
`DISH Network’s acts or omissions following the Spin-off.” Id. pp. 174, 186-188.
`
`EchoStar publicly acknowledges that it is the ultimate source of the DISH and
`
`Hughes products at issue in the Caltech infringement suit, including DISH’s set-
`
`top box receivers and Hughes’ satellite broadband products. Ex. 2010 p. 32
`
`(“Caltech claims that the HopperTM set-top box that we [EchoStar] design and sell
`
`to DISH Network, as well as certain of our Hughes segment’s satellite broadband
`
`products and services, infringe the asserted patents by implementing the DVB-S2
`
`standard.”). EchoStar also publicly acknowledges that “[w]e [EchoStar, Hughes,
`
`
`
`2 Indeed, here there could be said to be a pre-existing substantive legal
`
`relationship between “preceding and succeeding owners” of the potentially
`
`infringing products under the second Taylor factor. See Taylor, 553 U.S. at 894.
`
`-12-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`and DISH] intend to vigorously defend this case.” Id. Thus, EchoStar’s own
`
`public statements establish not only a financially controlling interest, but also “an
`
`agreement to be bound” under the first Taylor factor and a “pre-existing
`
`substantive legal relationship” under the second. See Taylor, 553 U.S. at 893-94.
`
`Fifth, there is substantial evidence that EchoStar and DISH have participated
`
`in and actually exercised control over this proceeding and the related litigation.
`
`EchoStar’s subsidiary (Hughes) and DISH are co-defendants in the federal action
`
`brought by Caltech in the Central District of California.3 EchoStar’s subsidiary
`
`(Hughes) and DISH are represented by the same counsel in that litigation and have
`
`acted in concert throughout the litigation, whether under a joint defense agreement
`
`or otherwise. Ex. 2011 p. 1 (“Counsel of record for the following party or parties:
`
`Dish Network Corporation, Dish Network LLC Hughes Communications Inc.,
`
`Hughes Network Systems LLC, dishNET Satellite Broadband LLC”).
`
`The companies jointly responded to Caltech’s complaint (Ex. 2005 pp. 1, 3),
`
`and their cooperation has continued throughout, including the joint filing of
`
`invalidity contentions. Ex. 2012. At the initial scheduling conference on April 7th,
`
`2014, the companies even jointly informed the district court that they would be
`
`pursuing inter partes review of the Caltech patents before the PTAB:
`
`
`
`3 As noted above, Caltech’s motion to formally add EchoStar as a defendant
`
`was pending before the district court at the time the companies filed their petition
`
`for inter partes review.
`
`-13-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`MR. MARCUS: Good afternoon, Your Honor. David Marcus from
`the Wilmer Hale firm on behalf of defendants [Dish Network
`Corporation, Dish Network LLC, Hughes Communications Inc.,
`Hughes Network Systems LLC, dishNET Satellite Broadband LLC].
`
`Ex. 2013, 0003:22-24.
`
`THE COURT: Are you really going to contend that it’s invalid?
`MR. MARCUS: Absolutely, Your Honor. And that brings me to
`another point.
`...
`We also, I wanted to bring to the Court’s attention we anticipate
`bringing an IPR review in the patent office.
`
`Ex. 2013, 0034:22 – 0035:5.
`
`Counsel for Hughes and DISH made no distinction made between particular
`
`defendants. Instead, the defendants represented that they collectively anticipated
`
`bringing an IPR challenge at the Patent Office. The IPR was subsequently filed,
`
`with overlap between district court litigation counsel for Hughes and DISH, and
`
`IPR counsel in this proceeding. 4
`
`DISH and Hughes have, in fact, advanced in lock step throughout the course
`
`
`
`4 As Caltech pointed out in its preliminary response, Petitioner’s backup
`
`counsel in this inter partes proceeding (G. Hopkins Guy, III) was counsel for both
`
`Hughes and DISH in the district court proceeding at the time the petition was filed,
`
`although he requested to withdraw from the district court proceeding in December
`
`2014. Ex. 2011.
`
`-14-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`
`of the litigation. It is inconceivable that control over (and costs of) development of
`
`prior art identification and argument, which is similarly reflected in both the PTAB
`
`and district court invalidity attacks, rested solely with one defendant, particularly
`
`where both parties are represented by the same counsel at the district court (with
`
`overlap in counsel at the PTAB at the time the petition was filed), and acted
`
`uniformly throughout the litigation.
`
`Moreover, a comparison of the arguments advanced in the district court
`
`litigation and the arguments advanced in this proceeding suggests a common
`
`litigation strategy and, therefore, control. See Zoll, IPR2013-00609, Paper 15 at 12
`
`(“unified actions” in “multi-state patent war” indicative of control). Indeed, the
`
`prior art and arguments advanced in the district court litigation are the same prior
`
`art and arguments raised in the petition. See Ex. 2012 pp. 47-62; Ex. 2014 pp. 4-6.
`
`Moreover, as noted above, at the time the petition was filed there was overlap
`
`between district court litigation counsel for Hughes and DISH, and IPR counsel in
`
`this proceeding. The existence of common counsel and common arguments, as
`
`well as joint representations to the district court regarding the IPRs, strongly
`
`indicates a common litigation strategy with shared costs. Such “unified action”
`
`provides, at a minimum, circumstantial evidence of control.
`
`This is more than sufficient evidence to warrant dismissal of the petition and
`
`termination of this proceeding for failure to name all real parties-in-interest,
`
`particularly if the totality of the circumstances are considered, as precedent
`
`requires.
`
`-15-
`
`
`
`Case IPR2015-00059
`Patent 7,916,781
`Petitioner Misapprehends the Correct Standard:
`Totality of the Circumstances
`
`b)
`
`Petitioner has presented no evidence rebutting Caltech’s showing that DISH
`
`should be considered a real party-in-interest.5 What’s more, in attempting to
`
`distinguish the circumstances surrounding this proceeding from the numerous
`
`similar cases in which the Board has found failure to properly name all real parties-
`
`in-interest, Petitioner has improperly focused on each individual factual basis cited
`
`by Caltech. In doing so, Petitioner ignores that this issue is decided based on the
`
`totality of the circumstances, not whether any one particular fact is sufficient on its
`
`own to prove a real party-in-interest.
`
`In its Reply Brief Regarding Identification of Real Parties-in-Interest (Paper
`
`15), Petitioner improperly focuses on whether DISH “funds and directs and
`
`controls” this IPR. Paper 15 at 2 (emphasis in original). That is not the applicable
`
`standard. Rather, “[i]f a nonparty can influence a petitioner’s actions in a
`
`proceeding before the Board, to the degree that would be expected from a formal
`
`copetitioner, that party should be considered [a real party-in-interest] to the
`
`proceeding.” Apistry, Inc. v. Amazon.com, Inc., IPR2015-00480, Paper 18 at 4
`
`(PTAB July 13, 2015) (denying institution based on failure to name all real parties-
`
`
`
`5 Petitioner’s attempt to introduce an in-house counsel declaration on this issue
`
`was recognized as unauthorized and the declaration was expunged. Paper 21 at 4.
`
`This expungement, in turn, was the basis for the Board deeming many of Caltech’s
`
`discovery requests regarding the real party-in-interest issue