UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`Page 1
`
`) )
`
` DAICEL CORPORATION,
`
`Petitioner, )
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`)
`
`) )
`
`)
`
`)
`
`)
`
`vs.
`
` CELANESE INTERNATIONAL
`
` CORPORATION,
`
`Patent Owner. )
`
`CASE NO. IPR 2015-00170
`
`Conference Call held before Administrative
`
`Patent Judges LINDA M. GAUDETTE, CHRISTOPHER L.
`
`CRUMBLEY, JON B. TORNQUIST, held via telephone
`
`conference and transcribed by Jennifer M. Daly, CSR,
`
`a Licensed Shorthand Reporter, on Wednesday,
`
`September 30, 2015, at 1:00 p.m.
`
`REPORTED BY: JENNIFER M. DALY, RPR, CSR
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`LICENSE NO.: 084-004688
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`www.veritext.com
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`Veritext Legal Solutions
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`IPR2015-00171
`Exhibit 1040
`888-391-3376
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`Page 1
`
`) )
`
` DAICEL CORPORATION,
`
`Petitioner, )
`
`)
`
`) )
`
`)
`
`)
`
`)
`
`vs.
`
` CELANESE INTERNATIONAL
`
` CORPORATION,
`
`Patent Owner. )
`
`CASE NO. IPR 2015-00170
`
`Conference Call held before Administrative
`
`Patent Judges LINDA M. GAUDETTE, CHRISTOPHER L.
`
`CRUMBLEY, JON B. TORNQUIST, held via telephone
`
`conference and transcribed by Jennifer M. Daly, CSR,
`
`a Licensed Shorthand Reporter, on Wednesday,
`
`September 30, 2015, at 1:00 p.m.
`
`REPORTED BY: JENNIFER M. DALY, RPR, CSR
`
`LICENSE NO.: 084-004688
`
`www.veritext.com
`
`Veritext Legal Solutions
`
`IPR2015-00171
`Exhibit 1040
`888-391-3376
`
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`Page 2
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`A P P E A R A N C E S :
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` F O L E Y & L A R D N E R , L L P
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` B Y : M R . M I C H A E L H O U S T O N , E S Q .
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` m h o u s t o n @ f o l e y . c o m
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` M R . G E O R G E B E C K , E S Q .
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` g b e c k @ f o l e y . c o m
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` 3 2 1 N o r t h C l a r k S t r e e t , S u i t e 2 8 0 0
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` C h i c a g o , I l l i n o i s 6 0 6 5 4
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` ( 3 1 2 ) 8 3 2 - 4 3 7 8
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` O n b e h a l f o f t h e P e t i t i o n e r ;
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` K I L P A T R I C K , T O W S E N D & S T O C K T O N , L L P
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` B Y : M R . J U S T I N K R I E G E R , E S Q .
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` j k r i e g e r @ k i l p a t r i c k t o w s e n d . c o m
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` M R . J O S H U A P O N D , E S Q .
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` M S . N I C O L E T T A M . K E N N E D Y , E S Q .
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` 6 0 7 1 4 t h S t r e e t N W , S u i t e 9 0 0
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` W a s h i n g t o n , D C 2 0 0 0 5
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` ( 2 0 2 ) 4 8 1 - 9 9 2 2
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` O n b e h a l f o f t h e P a t e n t O w n e r .
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`Page 3
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` MR. HOUSTON: This is Michael Houston
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` of Foley & Lardner on behalf of Daicel.
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` MR. BECK: This is George Beck of
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` Foley & Lardner for Daicel.
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` MR. HOUSTON: We expect one or more
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` callers from the other side, who is Celanese,
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` then we will have probably multiple judges from
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` the PTO on as well.
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` MR. KRIEGER: Good afternoon,
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` Justin Krieger is on the line for patent owner,
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` Celanese.
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` MR. HOUSTON: Hi, Justin, Mike and
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` George are on, as well as the court reporter
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` currently.
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` MR. KRIEGER: Hi, Mike. Hi, George.
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` Nicki Kennedy and Josh Pond are here as well
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` with me.
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` THE COURT: Just to recap for the
`
` record, petitioner requested this call on
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` September 25 pursuant to our September 9 order
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` in which we gave petitioner until September 29
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` to request a conference call with the board for
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` the purpose of providing us with the identity
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` of its proposed new expert and the scope of the
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` expert's testimony.
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` THE COURT: As requested by the board
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` in an e-mail communication on Monday of this
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` week, petitioner sent an e-mail yesterday to
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` the board with attached copies of the
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` declarations of the new expert witness --
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` MS. REPORTER: I'm sorry, Judge,
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` Judge, Judge, you were cutting out on my end.
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` I got "declarations of the expert
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` witness."
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` THE COURT: If you continue to have
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` this problem, I will call in on a new line,
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` just let me know.
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` Petitioner sent an e-mail with the
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` attached copies of the declarations of its new
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` expert, Mr. Jones, showing added and subtracted
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` changes of Mr. Cooper's prior testimony. They
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` also provided a table with citations for each
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` tract change along with a brief explanation of
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` the change and a copy of Mr. Jones' CV.
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` After petitioner sent its e-mail on
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` September 25, patent owner also sent an e-mail
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` to the board renewing its request to -- for
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` authorization to file -- to terminate three
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` IPRs based on the original ground outlined in
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` the September 4 e-mail, and discussed during
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` the September 8 conference call with the board,
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` and patent owner states that its motion to
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` terminate are also based on additional grounds
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` arising from substantive changes the proposed
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` replaced expert would make to Mr. Cooper's
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` testimony and the different backgrounds of the
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` two experts as described by petitioner and
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` patent owner this past week.
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` Petitioner, I'll start with you. In
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` the event that we authorize the filing of
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` Mr. Jones' declarations, what is his
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` availability to appear for a deposition?
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` MR. HOUSTON: He's generally
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` available, Your Honor. I think he is on trial,
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` perhaps, this week, but after this week, I
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` believe he said October 4th, he has indicated
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` he is available and will make himself available
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` for deposition.
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` THE COURT: Okay. And would it be
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` accurate for me to say that if we authorize the
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` filing of Mr. Jones' declarations, you no
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` longer rely on Mr. Cooper's testimony and would
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` not object to the board explicitly stating that
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` Mr. Cooper's testimony will not be considered?
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` MR. HOUSTON: I think that's right,
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` Your Honor. I would defer to the board's
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` preferred procedure for that, but that is what
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` we have attempted to do is to find a new expert
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` that can provide identical testimony and be
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` able to sit for a deposition to defend that
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` testimony in such a way that Mr. Cooper -- his
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` testimony would no longer be needed.
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` I just simply leave it to the board
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` in, sort of, procedural aspects in terms of the
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` fact that the original IPRs were instituted
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` based on Mr. Cooper's testimony.
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` THE COURT: Right. One of my concerns
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` is that Mr. Jones, in his declaration,
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` indicates that he's relying on new exhibits,
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` one of them being a supplemental declaration of
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` Jeremy Cooper.
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` What is that supplemental declaration?
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` MR. HOUSTON: That was a declaration
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` that Mr. Cooper prepared and we served on
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` patent owner in response to their evidentiary
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` objections to Mr. Cooper's testimony. Their
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` objections, I believe, are in the record,
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` Your Honor. I don't have the
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` exhibit number right in front of me, but those
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` have been filed, and so in response to those,
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` he prepared a supplemental declaration which
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` that -- in fairness to Mr. Jones, we thought we
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` should share with him, so we have seen that.
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` I guess I need to go back and
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` review his -- take a look at his declaration
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` now. I don't necessarily think that it's
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` something that he needs to rely on for his
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` testimony in the original declaration, the one
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` that we had sent you, but we did want to
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` disclose that it's something he had seen and is
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` aware of.
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` THE COURT: Okay. So -- but that
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` was -- that supplemental declaration was
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` previously served on the patent owner?
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` MR. HOUSTON: Yes, Your Honor.
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` THE COURT: Okay.
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` MR. KRIEGER: Your Honor, I'm sorry,
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` Justin Krieger, real briefly. I just wanted to
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` let you know that patent owner did object to
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` that as improper supplemental information, but
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` that is still pending.
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` THE COURT: Okay. Well, patent owner,
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` if Mr. Cooper's declaration were not considered
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` by the board in rendering its decisions in the
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` IPRs, will the patent owner still be --
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` MS. REPORTER: I'm sorry, Judge,
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` you're cutting out. Will the patent owner
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` still be?
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` THE COURT: -- deprived of a full and
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` fair opportunity to respond to the petition or
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` otherwise be prejudiced?
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` MR. KRIEGER: Your Honor, patent owner
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` would respectfully still be prejudiced by a
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` replacement declaration of Mr. Jones.
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` That is patent owner's position, and
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` that is based on three reasons that were
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` largely discussed in the September 8th
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` teleconference. I can real briefly go over
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` them again.
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` The first is that cross-examination of
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` a testifying expert is central to affording
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` patent owner with due process under the law,
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` and that would be, in fact, denied by providing
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` a replacement expert for Mr. Cooper since that
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` replacement expert, it is our belief, could not
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` fully testify to many circumstances surrounding
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` the preparation and basis for the original
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`Page 9
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` Cooper declaration.
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` Second --
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` THE COURT: But if we have a rule that
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` says that its expert testimony disclosed the
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` underlying facts or data in which the opinion
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` is based, it's entitled to little or no weight,
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` so can't we just give little weight to any
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` testimony on the part of Mr. Jones that is not
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` supported by something other than the Cooper
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` declaration?
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` MR. KREIGER: The problem here,
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` Your Honor, is multiple.
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` One of them is that we will never be
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` provided with an opportunity to probe
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` Mr. Cooper personally on the underlying
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` testimony that he authored himself. And so we,
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` patent owner, will be substantially prejudiced
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` by the inability to cross-examine Mr. Cooper
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` personally on that issue, and we will be
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` deprived of the ability to ascertain those
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` circumstances surrounding the preparation of
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` and the basis of the original Cooper
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` declaration.
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` In addition --
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` THE COURT: At this point, it's no
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` longer the Cooper declaration. It would be the
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` Jones declaration, and, therefore, Mr. Jones
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` would have to testify as to everything stated
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` in that declaration because it's his testimony.
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` MR. KRIEGER: I understand that
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` position. I think the issue here lies largely
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` on a new basis of objection to Mr. Jones
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` specifically, and this goes ultimately to
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` several facts that are at issue in the IPRs.
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` The patents that are in issue relate
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` to a so-called low-water acetic acid synthesis
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` processes, and Mr. Cooper, his background was
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` in that area. He worked for BP, who was a
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` Monsanto licensee of that technology. He has
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` patents in that area, and so his background was
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` much more in the area of low-water
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` carbonylation chemistry.
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` Mr. Jones, based on his CV that has
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` been provided by petitioner, appears to have a
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` very different background, and he worked for
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` Eastman Chemical Company, which often makes
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` acetic acid and acetic anhydride but by a very
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` different process. It's a so-called anhydrous
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` process, for co-producing acetic anhydride and
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` acetic acid. It's a very different process.
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` It has an incredibly different contamination of
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` by-product profile, a very radically different
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` separation system, and the patents at issue
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` relate to acetaldehyde removal.
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` Acetaldehyde is a particular
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` by-product that is formed in low-water
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` carbonylation processes, not formed in the
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` processes that Mr. Jones appears to have
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` background in.
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` So because the patents are focused on
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` a very specific separation scheme for removing
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` acetaldehyde, we would submit, Your Honor, that
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` patent owner would be deprived of the ability
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` to fully probe an expert who is knowledgeable
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` in the area and who could have, in fact,
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` prepared the declaration at issue here and that
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` that would, in fact, amount to depravation of
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` due process for patent owner.
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` THE COURT: Wouldn't that simply go to
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` the weight of Mr. Jones' testimony? I mean, if
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` he doesn't have the requisite background to
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` support these statements, then why could we not
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` just give that less weight?
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` MR. KRIEGER: The issue is that, yes,
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` Your Honor, that the board could certainly give
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` that testimony less weight, however, there
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` still would be a depravation of testimony in
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` which -- that may have been elicited in terms
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` of cross-examining Mr. Cooper or somebody else
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` who is fully versed in the technology at issue
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` here.
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` So that testimony will forever be lost
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` if that -- this testimony at issue is replaced
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` by Mr. Jones' testimony, who appears to have a
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` very different background. So our ability to
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` probe Mr. Jones on the questions that we may
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` have otherwise probed to Mr. Cooper would
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` elicit incredibly different responses, and
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` patent owner would have lost substantial
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` testimony that may have been used in terms of
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` preparing a substantive response.
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` THE COURT: Okay. You said you had
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` several reasons.
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`Page 13
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` Do you have any additional reasons why
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` this is prejudicial to you?
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` MR. KRIEGER: The other primary reason
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` would be that the original declaration appeared
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` to be based, in many respects, on specific
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` personal knowledge, and that personal
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` knowledge, by definition, cannot be further
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` probed by a deposition of a substitute or
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` replacement expert. And we went into several
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` of those bases in the prior call. If Your --
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` if Your Honor would like, I'd be happy to go
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` into those again.
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` THE COURT: No, I -- it's in the
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` record. I think it's all -- was discussed
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` during the prior conference call that's in the
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` record.
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` In your e-mail, I believe you had
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` indicated that there was some substantive
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` differences. What -- in the two declarations,
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` what are those differences?
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` MR. KRIEGER: Your Honor, I already
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` alluded to one of the major ones, but, in
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` essence, it is patent owner's position that the
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` use of a replacement declaration should not be
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`Page 14
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` used as a tool to submit additional evidence or
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` additional -- certainly additional testimony,
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` and that any modification, whether they're
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` simple or substantive or typographical errors,
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` that that's simply not the forum to be
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` addressed, in a replacement declaration, and
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` it's inappropriate, patent owner would submit,
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` to correct such errors in this way.
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` In addition, the citation to the new
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` pieces of evidence that Your Honor alluded to,
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` including more than 30 pages of additional
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` testimony of Mr. Cooper in his supplemental
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` declaration, amounts to, in essence, a
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` supplementation of the case in chief of
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` petitioner of 30 pages of additional testimony
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` that patent owner would then be obligated to
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` probe in cross-examination resulting again in
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` substantial undue prejudice to patent owner.
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` These are arguments that patent owner
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` was never provided an opportunity to respond to
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` by preliminary response. They were all served
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` in response to objections made by patent owner
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` as alluded to earlier.
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` So patent owner would certainly object
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` to any changes, no matter how minor, other
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` than, perhaps, changes in background of the
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` individual himself that would otherwise change
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` even one word of the testimony that's currently
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` of record in petitioner's case in chief.
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` THE COURT: Okay. Petitioner, the new
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` evidence that was cited in Mr. Jones'
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` declaration, is that absolutely necessary or
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` can that be eliminated.
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` MR. HOUSTON: Well, again, Your Honor,
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` first, for purposes of this declaration, it can
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` be eliminated. It's -- he is simply adopting
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` the same testimony as Mr. Cooper gave as to all
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` of the primary issues. They're straight out of
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` his background. He's gone through these
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` declarations in great detail, is comfortable
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` with them, feels like he can adopt that
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` testimony as his own and defend it. Those --
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` that supplemental evidence, again, was mainly
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` listed there for completeness.
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` If he is -- if he is disclosing what
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` he has reviewed -- and for purposes of making
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` the declaration, we wanted to be complete
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` there, but none of that evidence is cited in
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` this declaration, nor does it need to be cited
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` in this declaration.
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` So I think, in that way, Your Honor,
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` for this declaration, it could be eliminated.
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` One issue, though, I think this does
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` raise is that we presume, and I think we've had
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` an indication from patent owner to this effect,
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` that if Mr. Cooper submits these declarations,
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` patent owner assumes to raise the same or
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` substantially the same evidentiary objections.
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` And I suppose in that situation, under
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` the rules, then we would be given the
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` opportunity to submit supplemental evidence in
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` response to those objections, and so it may
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` very well be similar to what Mr. Cooper did.
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` We would have to, you know, address that with
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` Mr. Jones if and when the occasion arises.
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` But I'm trying to get to a clear
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` answer to Your Honor's question. I don't think
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` any of these exhibits are relied on in these
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` primary declarations, and in that respect, they
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` could be eliminated. They are simply listed to
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` be, you know, complete in terms of the
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` materials that Mr. Jones was asked to review
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` and did review when he was deciding whether or
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` not he could, you know, adopt this testimony as
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` his own and be prepared to defend it in a
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` deposition.
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` THE COURT: Patent owner, in looking
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` through the declaration of -- Mr. Jones'
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` declarations, I -- you know, I noticed that
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` there were some changes, but I didn't see where
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` the particular paragraphs that were changed
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` were actually relied upon in the petition.
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` So, it's not completely clear to me
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` how those petitions or just corrections, which
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` appear to be corrections, obvious errors, would
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` be problematic.
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` Can you explain more specifically what
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` you view as problematic other than, obviously,
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` the new exhibits that are listed?
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` MR. KRIEGER: So, I suppose,
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` Your Honor, the first issue there is the fact
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` that they were referenced at all in the
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` replacement declaration would open the door for
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` us -- for patent owner to have to address all
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` of those issues, all of those exhibits, all of
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` that additional testimony in the initial
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`Page 18
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` deposition of Mr. Jones in the event that the
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` board agrees to the replacement declaration.
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` So that's first of all. In addition,
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` we would object to any changes, however small,
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` but there are substantive changes here that are
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` made.
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` For example, some modifications to
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` claimed construction arguments are made in
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` these declarations.
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` THE COURT: At what paragraphs are
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` those where there are substantive changes?
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` MR. KRIEGER: So, for example,
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` Your Honor, in Paragraph 33 and 34, there are
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` changes to certain definitions of the term
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` raffinate, for example.
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` But I suppose patent owner's position
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` here is that there really shouldn't be any
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` changes, even seemingly incidental ones
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` relating to typographical errors. That's not
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` the purpose of a replacement declaration. If
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` they are simply typographical errors, we are
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` going to understand that, the board would
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` understand that, and there shouldn't really be
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` any need for clarifying that.
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`Page 19
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` To the extent they become relevant,
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` patent -- petitioner, excuse me, would be
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` entitled to address those clarifications in the
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` reply brief if they became relevant.
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` So I think this entire issue could be
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` disposed of in the event that the board
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` determined that a replacement declaration is
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` appropriate by simply saying there may not be
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` any, no matter how small, modifications to the
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` original testimony in the replacement
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` declaration, Your Honor.
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` In fact, it's non-precedential, but
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` the decision that petitioner recently relied
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` upon in their first request for conference
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` call, the Corning Gilbert, IPR 2013-00347,
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` specifically alluded to that issue, that there
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` shouldn't be any changes, and paper 20 of that
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` decision cited by petitioner, the board
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` indicated, quote, Literally having the same
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` wording, unquote, in their order in paper
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` No. 20, and we're, in essence, to the extent
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` the board determines that a replacement
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` declaration is appropriate, are requesting
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` similar treatment here.
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` THE COURT: Okay. Petitioner, do you
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` have anything to say in response?
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` MR. HOUSTON: Yes, Your Honor, I do.
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` I think that the circumstance we find
`
` ourselves in here is slightly different than
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` that prior case there.
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` It did seem like the panel was maybe
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` leaning towards a different procedure, one
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` where they were literally going to replace or
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` swap out the declaration one for the other, and
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` we think that's, perhaps, why they were
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` insisting on identical wording among them. It
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` also didn't appear to us from the record,
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` Your Honor, that those involved, you know,
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` lengthy expert declarations going to,
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` basically, all of the issues in the case, and
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` I'll finally point out, as far as we can tell,
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` that procedure was never enacted because I
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` guess, ultimately, their -- the original expert
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` or the original witness, I should say,
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` sufficiently recovered or was made available
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` for deposition by some means, so they never
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` followed through with that.
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` Procedurally, we thought the better
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`Page 21
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` way to proceed that's provided for under the
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` rules is the submission of supplemental
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` information, you know, given the rather unusual
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` and unfortunate circumstances here, and in that
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` situation, it didn't seem to us to be
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` appropriate to require Mr. Jones to adopt the
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` testimony word for word where he's being asked
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` to sign this declaration as his own sworn
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` testimony.
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` And by and large, he's willing to do
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` that, but in reviewing the declarations, he
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` picked up on a few things. We think they're
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` minor. Your Honor alluded to the fact that
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` these aren't paragraphs that are relied upon in
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` the decisions. The word raffinate doesn't
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` appear anywhere in the board's decisions.
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` These aren't heavily contested issues,
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` at least they haven't been up until now, and we
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` didn't think it was fair to ask Mr. Jones to
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` sign on to sworn testimony that, you know, he
`
` has these minor issues with, and since it
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` doesn't substantively change any issues that
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` we're aware of in the case, this seems like the
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` most, you know -- the fairest way to proceed as
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`Page 22
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` to all parties, including Mr. Jones having to
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` sign these things.
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` THE COURT: I'm going to -- patent
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` owner, do you have anything further to say at
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` this point?
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` MR. KRIEGER: The central issue,
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` Your Honor, for patent owner really lies in the
`
` fact that petitioner, in argue, should not be
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` permitted to insulate its position by
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` substituting an expert who has a very different
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` background and cannot be sufficiently probed to
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` the issues, the substantive technical issues
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` that could be elucidated from a deposition of
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` the original Mr. Cooper, and so we just don't
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` feel that it's appropriate for them to pick an
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` expert with that sort of expectation or outcome
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` for patent owner that they just are completely
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` in a different situation and unable to properly
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` probe the individual to the underlying facts
`
` that are central to these IPRs, and that that,
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` in fact, does amount to a violation of patent
`
` owner's due process.
`
` THE COURT: Okay. I'm just going to
`
` get off the line for a moment and discuss with
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` the panel on this, and I will get back on the
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` line and let you know what we have decided, if
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`Page 23
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` we have any further questions, okay?
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` MR. HOUSTON: Yes.
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` MR. KRIEGER: Yes. Thank you,
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` Your Honor.
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` MR. HOUSTON: Thank you.
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` (Short break was taken.)
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` THE COURT: Hello, this is
`
` Judge Gaudette. The panel is back on the line.
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` Petitioner and patent owner, are you both
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` present?
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` MR. HOUSTON: Yes, Your Honor,
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` petitioner is.
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` MR. KRIEGER: And patent owner.
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` THE COURT: Patent owner?
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` MR. KRIEGER: Yes, Your Honor.
`
` THE COURT: The panel has determined
`
` that we will allow petitioner to file the
`
` proposed Jones declarations and the CV with the
`
` exception that we would like the declarations
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` to be changed to eliminate the proposed
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` Exhibits 1 -- 1031 through 1035, and we would
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` like Mr. Jones to state that he considered
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`Page 24
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` these documents and just list them. In other
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` words, they won't be exhibit numbers, they will
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` just be listed as documents he considered.
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` MR. HOUSTON: So just so I can
`
` clarify, Your Honor, this is Michael Houston
`
` for petitioner. The way it's currently listed
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` in that is Paragraph 60 says, I have considered
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` the following documents in forming my opinions,
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` and those were added to the end.
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` You would prefer -- the panel would
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` prefer to see, perhaps, those exhibits removed
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` from the table but then a second sentence or
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` something added to that paragraph that says, I
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` have also reviewed blank, and list those five
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` documents and not give them exhibit numbers?
`
` THE COURT: Correct. We don't want
`
` them filed.
`
` MR. HOUSTON: Okay. Sure, we can do
`
` that, Your Honor.
`
` Just for clarity, I don't think we had
`
` intended to file these, at least not absent
`
` some kind of a motion to exclude a file from
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` patent owner, but that's fine, we can do it
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` that way, Your Honor.
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` THE COURT: Okay. I did notice that
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` in one of the declarations, I think it's 170,
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` that I believe one of the paragraphs lists an
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` Exhibit 1031, and I know that it was in the
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` original Cooper declarations, so you may want
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` to remove that.
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` MR. HOUSTON: We will search for it,
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` Your Honor. There's a cite to a
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` Page Number 1031. I'm doing a word search
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` right now, Your Honor, and I -- I only --
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` THE COURT: Oh, I'm sorry, you are
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` correct. I thought there was an exhibit
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` number. Okay. No problem.
`
` Then, with regard to the scheduling
`
` order, you indicated that Mr. Jones would be
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` available on October 4th.
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` Patent owner, what would be your plan
`
` for deposing Mr. Jones.
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` MR. KRIEGER: Well, in view of the
`
` substantial delay here that our -- our current
`
` state, I would suggest that if the board would
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` be -- we would appreciate it, and I presume
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` that petitioner would be in agreement with
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` this, but Mike, you can speak to that, but the
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`Page 26
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` ultimate deadlines, six and seven, we would
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` request that those be moved, potentially as
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` much as seven weeks, Your Honor, to allow time
`
` for us to move all of the other deadlines
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` accordingly, and if -- it seems like this is
`
` one of those situations where if the board
`
` needed it, it certainly seems like it would
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` rise to the level of good cause under
`
` Section 316(a), such that if needed, the board
`
` could provide additional time at the end of the
`
` day to render their decisions, but I suppose
`
` that would be our initial request.
`
` We have not spoken with petitioner on
`
` that specifically, other than we would have to
`
` address that preliminary issue before we
`
` discussed scheduling of the other deadlines.
`
` THE COURT: Yeah, my question is
`
` actually when would you be prepared to depose
`
` Mr. Jones, because in looking at the current
`
` schedule, and you originally scheduled to
`
` depose Mr. Cooper on September 3rd, so now we
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` are a month beyond that.
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` So, I was thinking of extending your
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` due date to -- by one month. Possibly, I could
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`Page 27
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` give you five weeks, you know, if you can be
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` ready to depose Mr. Jones in a week, and then
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` I -- I'm sorry, that would be due date one I
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` would be extending.
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` Due date two, however, I would only
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` extend by three weeks, so we're, essentially,
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` taking a week off of the time that petitioner
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` was given to reply. We're shortening, you
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` know, time to reply.
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` And all other dates would be extended
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` by t
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