`_____________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________________
`
`LUMENTUM HOLDINGS, INC., LUMENTUM, INC., and
`LUMENTUM OPERATIONS LLC
`Petitioner
`
`v.
`
`CAPELLA PHOTONICS, INC.
`Patent Owner
`
`_____________________
`
`Case IPR2015-00739
`Patent RE42,678
`_____________________
`
`
`PATENT OWNER’S MOTION TO TERMINATE
`
`
`
`
`
`Mail Stop “Patent Board”
`Patent Trial and Appeal Board
`U.S. Patent & Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
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`
`
`
`
`
`
`
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`Case IPR2015-00739 of
`U.S. Patent No. RE42,678
`
`TABLE OF CONTENTS
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`INTRODUCTION ............................................................................................... 1
`I.
`II. PETITIONER’S FAILURE TO MEET STATUTORY REQUIREMENTS
`REQUIRES TERMINATION. .................................................................................. 1
`1. The petition did not meet the statutory requirements of 35 U.S.C. §
`312(a)(2). ................................................................................................................ 1
`2. The petition is no longer correctable. .............................................................. 3
`3. JDSU-customer defendants in the district court litigation were privies of
`indemnifier JDSU, triggering a § 315(b) bar under GE v Transdata. .................... 4
`III. THE BOARD’S STATED CONCERNS ARE NOT DISPOSITIVE. ........... 5
`1. Even if the proper RPI was identified on the day the petition was filed, this
`is not dispositive. .................................................................................................... 6
`2. Even if evidence suggests that Petitioner identified the proper real parties-
`in-interest at some point during the proceeding, this is also not dispositive. ........ 7
`3. The Elekta case is distinguishable from this case because in that case the §
`312(a) issue was addressed pre-institution. ............................................................ 8
`IV. THE MAJORITY DECISION IN ELEKTA IS NOT CONTROLLING AND
`IS INCONSISTENT WITH OTHER BOARD DECISIONS; MOREOVER THE
`DISSENTING OPINION WARNED AGAINST THE GAMESMANSHIP IN
`THE INSTANT CASE. ............................................................................................. 9
`1. Elekta is inconsistent with other Board decisions. .......................................... 9
`2. This instant case would result in the realization of Elekta dissenting Judge
`Boucher’s warning of gamesmanship. ................................................................. 10
`In his partial dissent in Elekta, Judge Boucher warned of the dangers of
`a)
`allowing incorrect RPI to be corrected without consequences notwithstanding
`the rules. ............................................................................................................ 10
`b) Late correction of RPI without consequence is the exact gamesmanship
`likely at play in the instant proceeding. ............................................................ 10
`c) The Board’s discretion should only be extended in exceptional cases – not
`here where Petitioner used gamesmanship to obtain institution. ...................... 12
`V. RELIEF REQUESTED ..................................................................................... 12
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`Case IPR2015-00739 of
`U.S. Patent No. RE42,678
`
`I.
`
`INTRODUCTION
`
`On February 5, 2016, the Board authorized Capella to file a Motion to
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`Terminate to further explain the Board’s lack of jurisdiction to institute inter partes
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`review in this proceeding. See Order, Paper 31. Capella argues that Petitioner
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`failed to meet its statutory requirements under § 312(a)(2) and that the petition was
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`incomplete. Since the Board should not have considered the petition when it
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`instituted review, this proceeding should be terminated.
`
`II.
`
`MEET
`TO
`FAILURE
`PETITIONER’S
`REQUIREMENTS REQUIRES TERMINATION.
`1.
`
`The petition did not meet the statutory requirements of 35 U.S.C.
`§ 312(a)(2).
`The Patent Trial and Appeal Board may only consider a petition for inter
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`STATUTORY
`
`partes review if the petition meets certain statutory requirements, including
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`identification of all real parties-in-interest. 35 U.S.C. § 312(a)(2). Further, PTAB
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`rules require that petitioners file and timely update mandatory notices that
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`“[i]dentify each real party-in-interest for the party.” 37 C.F.R. § 42.8. The Board
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`has dismissed or terminated proceedings where the petition was incomplete and
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`should not have been considered. See Atlanta Gas Light Company v. Bennett
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`Regulator Guards, Inc. IPR2013-00453, Paper 88 (P.T.A.B., Jan. 6, 2015).
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`Petitioner filed this petition on February 14, 2015 and identified the RPI as
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`only JDS Uniphase Corporation. Petition at 1. On July 31, 2015, JDSU transferred
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`its interest in the instant action to Lumentum Operations LLC, an entity owned by
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`Case IPR2015-00739 of
`U.S. Patent No. RE42,678
`a subsidiary of Lumentum Holdings Inc. On the same day, JDSU became Viavi
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`Solutions. Under 37 C.F.R. § 42.8, JDSU had 21 days to inform the Board of the
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`change in RPI. On August 25, 2015, under the false belief that JDSU was still the
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`correct RPI, the Board instituted trial. After the Board instituted trial and 25 days
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`after the deadline to file an updated mandatory notice, Petitioner finally notified
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`the Board of the RPI change, on September 15, 2015.
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`Petitioner contends that it has complied with § 312(a) because “[§]312(a)
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`requires [only] that the petition identify the real parties in interest at the time of
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`filing.” Ex. 2035, 26:11-14. This interpretation is inconsistent with the language of
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`the statute and PTAB practices. The petition must identify the RPI for it to be
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`considered, and consideration does not occur at the moment of filing. Rather, when
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`terminating proceedings, the Board has made clear that consideration takes place
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`“at the time of institution.” See Corning Optical Communications RF, LLC, v. PPC
`
`Broadband, Inc., IPR2014-00440, Paper 68 at 25 (P.T.A.B., Aug. 18,
`
`2015)(terminating proceedings, stating the Board “cannot consider the Petitions,
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`and should not have considered them at the time of institution”); see also
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`Medtronic v. Robert Bosch Healthcare Systems, Inc., IPR2014-00488, Paper 52 at
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`19 (P.T.A.B., March 16, 2015). The instant case exemplifies why Petitioner’s
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`interpretation of the statute is nonsensical—between the time a petition is filed and
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`when the Board renders a decision to institute various events could occur that
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`might change key facts of a case, including the RPIs. Identifying the RPI solely at
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`the time of filing and failing to timely update mandatory notices is insufficient and
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`opens the door to gamesmanship and obfuscation.
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`Petitioner confuses the Board’s initial presumptions of the petition with the
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`statutory requirements. While the Board generally accepts the petitioner’s
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`identification of RPI at the time of filing the petition, this is merely a rebuttable
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`presumption—one that is not only refutable, but also does not relieve the petitioner
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`of its obligation to update the Board if there are any changes to the RPI. 77 Fed.
`
`Reg. 48612, 48695 (Aug. 14, 2012); 37 C.F.R. § 42.8. If § 312(a)(2) meant that the
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`petitioner only needed to identify the RPI at filing, there would be no purpose to
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`the rules on updating mandatory notices.
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`The petition is no longer correctable.
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`2.
`When a petition is incomplete, the corrected petition must be assigned a new
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`filing date. 37 C.F.R. § 42.106(b). But the law is unclear if a petition can be
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`amended under § 42.106 post-institution. See Atlanta Gas Light, IPR2013-00453,
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`Paper 88 at 13; see also Askeladden LLC v. Sean I. McGhie and Brian Buccheit,
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`IPR2015-00122, Paper 16 at 5 (P.T.A.B., Feb. 17, 2015)(“Correcting a petition
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`after institution may not be feasible.”). Particularly where, as here, the Petitioner
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`had the opportunity to correct the petition prior to the statutory deadline for
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`institution, but elected not to do so, the petition cannot be amended under §
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`Case IPR2015-00739 of
`U.S. Patent No. RE42,678
`42.106(b). The petition is incomplete, and this proceeding must be terminated.
`
`3.
`
`JDSU-customer defendants in the district court litigation were
`privies of indemnifier JDSU, triggering a § 315(b) bar under GE v
`Transdata.
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`Even if the petition is amendable, the petition would have to be assigned a
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`new filing date commensurate with the date the incorrect RIP information was
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`corrected. The new filing date would make the petition time-barred under 35
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`U.S.C. § 315(b). Privies of Petitioner were served with a complaint alleging
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`infringement of the ’678 patent on February 13, 2014. Correcting the petition to
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`reflect the Lumentum entities as RPI would require assigning the petition a filing
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`date more than a year after the day of service of the complaint. And under §
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`315(b), the petition would be statutorily barred.
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`The Board has held that a petitioner is in privity with a party it indemnifies if
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`the petitioner has the opportunity to exercise control over the party’s defense in an
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`infringement suit. General Electric Co. v. Transdata, Inc., IPR2014-01559, Paper
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`23 at 9 (P.T.A.B., April 15, 2015). A showing of absolute or even actual control is
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`not necessary—to prove privity, there simply must be an “opportunity” to exert
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`control. Id. Further, privity with respect to an infringement suit is sufficient to
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`implicate § 315(b) in an inter partes proceeding. Id. at 12.
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`Privity exists between Lumentum Operations LLC and its indemnified
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`customers, including Cisco Systems, Inc., Coriant GmbH, Fujitsu Network
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`Case IPR2015-00739 of
`U.S. Patent No. RE42,678
`Communications, Inc., and Ciena Corporation. See Ex. 1048, p. 459. Under
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`California Commercial Code § 2312(3), JDSU was obligated to indemnify these
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`entities for any infringement claims. JDSU passed this responsibility on to
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`Lumentum Operations LLC in their Contribution Agreement. Schedule 5.5(A)
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`specifically indicates that Lumentum assumed responsibility of the Capella
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`Photonics v. JDSU Customers litigations. Ex. 1050. While it is yet unclear whether
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`Lumentum exercises absolute control over those proceedings, absolute control is
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`not required, and it is clear Lumentum retains at least financial control. Thus,
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`Lumentum has an “opportunity to exert the appropriate level of control” which is
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`sufficient to prove privity under General Electric. General Electric, IPR2014-
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`01559, Paper 23. at 9. As a result, any filing date after February 13, 2015 bars the
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`petition in this action under § 315(b).
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`Any evidence to rebut the evident privity relationship between Lumentum
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`and its customers is not public information and is not accessible to Capella. If such
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`evidence exists, Lumentum will have to provide it to Capella and the Board.
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`III. THE BOARD’S STATED CONCERNS ARE NOT DISPOSITIVE.
`In its order granting permission to file this motion, the Board noted three
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`concerns: (1) that there is no dispute that the proper RPI was identified when the
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`Petition was filed; (2) that there is no evidence to suggest that Petitioner has failed
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`to identify the proper RPI after the corporate reorganization; and (3) in Elekta, Inc.
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`Case IPR2015-00739 of
`U.S. Patent No. RE42,678
`v. Varian Medical System, Inc., the Board determined that “35 U.S.C. § 312(a)(2)
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`does not define our jurisdiction with respect to inter partes review proceedings.”
`
`IPR2015-01401, Paper 19 at 6 (P.T.A.B., Dec. 31, 2015). None of these points are
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`dispositive.
`
`1.
`
`Even if the proper RPI was identified on the day the petition was
`filed, this is not dispositive.
`
`The Board first noted that that “there is no dispute that the proper real party-
`
`in-interest was identified when the Petition was filed.” Paper 31 at 4. But if merely
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`identifying the correct RPI at the time of filing were sufficient, there would be no
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`need for the requirement to update the RPI within 21 days of a change. This
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`requirement was implemented for good reason. When considering whether to
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`institute review, the Board must know who is challenging the patent. The purpose
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`of this requirement is to:
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`assist members of the Board in identifying potential conflicts, and to
`assure proper application of the statutory estoppel provisions. The
`latter, in turn, 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. 77 Fed. Reg. 48756, 48759 (Aug. 14,
`2012).
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`Further, “[t]he identity of a real party-in-interest might also affect the
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`credibility of evidence presented in a proceeding.” 77 Fed. Reg. 48612, 48617
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`(Aug. 14, 2012). These are all factors that are relevant at the time of institution
`
`when the Board makes its decision. Thus, identification of parties under §
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`312(a)(2) “is clearly an ongoing requirement that must be complied with during the
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`pendency of the petition.” GEA Process Eng’g, Inc. v. Steuben Foods, Inc.,
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`IPR2014-00041, Paper 140 at 12 (P.T.A.B., Dec. 23, 2014). If the Board condones
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`Petitioner’s concealing the corrected RPI information until after institution, it will
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`be signaling its view that the requirement to update within 21 days is meaningless.
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`2.
`
`Even if evidence suggests that Petitioner identified the proper
`real parties-in-interest at some point during the proceeding, this is
`also not dispositive.
`
`The Board next noted that there is “no evidence to suggest that Petitioner has
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`failed to identify the proper real parties-in-interest after the corporate re-
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`organization.” Paper 31 at 4. But if all that was required under § 312(a) was that
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`the proper RPI be identified at some point in the proceeding, there would be no
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`need for the consequences noted in 37 C.F.R. § 42.106. Indeed, the Board would
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`never dismiss or terminate proceedings related to RPI errors, but instead would
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`allow correction at any point in the proceeding. But the Board does terminate
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`proceedings based on a failure to name the correct RPIs, as it should since correct
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`identification of RPI can lead to § 315(b) time bars. See Corning Optical,
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`IPR2014-00440, Paper 68 at 25; Medtronic, IPR2014-00488, Paper 52 at 19;
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`Atlanta Gas Light, IPR2013-00453, Paper 88 at 14; GEA, IPR2014-00041, Paper
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`140 at 25-26.
`
`3.
`
`The Elekta case is distinguishable from this case because in that
`case the § 312(a) issue was addressed pre-institution.
`Finally, the Board noted that in Elekta, Inc. v. Varian Medical System, Inc.,
`
`the Board determined that “35 U.S.C. § 312(a)(2) does not define our jurisdiction
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`with respect to inter partes review proceedings.” Elekta, IPR2015-01401, Paper 19
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`at 6. But Elekta is distinguishable from the present case on its face. In Elekta, the
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`RPI issue was first raised by the patent owner in its Preliminary Response. The
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`petitioner filed an updated mandatory notice four days later to amend the RPIs.
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`The Board was able to consider the new RPI listed in the mandatory notice before
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`it instituted review almost two months later. Thus it was able to consider the issues
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`raised in the Patent Owner’s Preliminary Response, as well as any potential
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`conflicts or estoppel issues. Any detrimental effects of identifying the wrong party
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`could have been addressed and handled by the Board before it made its decision.
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`This scenario is distinguishable from the instant action where the issue was
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`prevalent before institution, but the Board was not made aware of it until after
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`Petitioner secured its review.
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`Case IPR2015-00739 of
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`IV. THE MAJORITY DECISION IN ELEKTA IS NOT CONTROLLING
`AND IS INCONSISTENT WITH OTHER BOARD DECISIONS;
`MOREOVER THE DISSENTING OPINION WARNED AGAINST
`THE GAMESMANSHIP IN THE INSTANT CASE.
`Even if Elekta were not easily distinguished on its facts, the Board should
`
`not conclude based on Elekta that “35 U.S.C. § 312(a)(2) does not define our
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`jurisdiction with respect to inter partes review proceedings.” At the outset, as the
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`Board notes, Elekta is not controlling. Paper 31 at 4. Indeed, Elekta is inconsistent
`
`with many other Board cases that treat § 312(a) as a threshold issue. Finally, the
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`dissenting opinion in Elekta sounded the alarm that the majority’s decision would
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`lead to the gamesmanship and concealment of RPI information seen in this case.
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`1.
`Elekta is inconsistent with other Board decisions.
`The Board’s Elekta decision to not enforce § 42.106 and assign a new filing
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`date directly conflicts with other recent Board decisions. Amazon.com Inc. v.
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`Appistry, Inc., IPR2015-00480, Paper 18 (P.T.A.B., July 13, 2015)(denying
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`institution where a new filing date for an amended petition was barred under §
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`315(b)); see also Medtronic, IPR2014-00488, Paper 52 (terminating proceedings
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`where a new filing date for an amended petition was barred by under § 315(b)).
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`The Elekta decision introduces inconsistency and unpredictability in Board rulings
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`and was not an appropriate use of its discretion under 37 C.F.R. § 42.5.
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`Even if Congress has not explicitly stated that § 312 is jurisdictional, the
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`Board has treated the identification of RPI as a threshold issue. See Atlanta Gas
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`Light, IPR2013-00453, Paper 88 at 7. Moreover, the Board has ruled on multiple
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`occasions that it cannot consider incomplete petitions. See Corning Optical,
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`IPR2014-00440, Paper 68 at 25; Medtronic, IPR2014-00488, Paper 52 at 19. The
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`Board has also stated that “[t]he AIA contains a direct sanction against petitions
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`that do not identify all RPIs, stating unambiguously that the petitions may not be
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`‘considered.’” Reflectix, Inc., v. Promethean Insulation Technology LLC,
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`IPR2015-00039, Paper 18 at 17 (P.T.A.B., Apr. 24, 2015). Thus, in practice, the
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`Board has treated § 312(a)(2) as a determinative provision.
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`2.
`
`This instant case would result in the realization of Elekta
`dissenting Judge Boucher’s warning of gamesmanship.
`a) In his partial dissent in Elekta, Judge Boucher warned of
`the dangers of allowing incorrect RPI to be corrected
`without consequences notwithstanding the rules.
`
`Judge Boucher dissented from the Elekta Board’s exercise of discretion
`
`under § 42.5 to “waive or suspend” the filing date provisions of § 42.106. He
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`warned that allowing the petitioner to identify additional RPI without changing the
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`filing date would “encourage concealment by petitioners, or other forms of
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`gamesmanship related to the timing of disclosing real parties-in-interest, that
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`otherwise are discouraged by our current rules.” Elekta, IPR2015-01401, Paper 19
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`at 26-27. In view of the instant action, Judge Boucher’s concern appears validated.
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`b) Late correction of RPI without consequence is the exact
`gamesmanship likely at play in the instant proceeding.
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`Petitioner has no incentive to be forthcoming with the identities of the RPI.
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`In related proceedings, the Board has allowed Petitioner and its customers to
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`successfully evade Capella’s diligent discovery requests seeking information
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`concerning the relationship between JDSU and its customers. See Fujitsu Network
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`Communications, Inc. v. Capella, IPR2015-00727, Ex. 2009 (denying Capella’s
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`request for discovery in the related PTAB proceedings). Capella’s discovery
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`requests stem from the suspicions raised by shared documents, witnesses, and
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`materials among the petitioners/defendants and by other signs that they are
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`working in concert. Dismissal of Patent Owner’s efforts to attain clarification on
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`this key RPI issue through routine and additional discovery only encouraged
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`concealment. Now with the waiver of the 21-day requirement for filing mandatory
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`notices and waiver of the new filing date requirement under § 42.106, the Board
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`offers Petitioner a fully furnished opportunity for gamesmanship.
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`Judge Boucher’s dissent speaks to this exact scenario. Patent Owners depend
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`on the enforcement of set practices and regulations that give order to PTAB
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`proceedings and keep petitioners from taking advantage of the review process. As
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`previously mentioned, the RPI requirement is meant to keep petitioners from
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`getting a second bite at the apple and to shield patent owners from harassment by
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`related parties. 77 Fed. Reg. at 48759. But Capella has not realized either benefit as
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`JDSU and its customers have been able to take successive bites of the apple by
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`disguising the same claims as separate patent challenges and fixing mistakes
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`between related proceedings. Evidently, failing to enforce standard rules in
`
`unexceptional cases not only opens the door for misconduct—but entices it.
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`c) The Board’s discretion should only be extended
`in
`exceptional cases – not here where Petitioner used
`gamesmanship to obtain institution.
`
`There is certainly an appropriate time for granting discretion under § 42.5,
`
`but this is not it. In an instance where a petitioner has clearly done all it could to be
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`forthcoming and disclose information in good faith, discretion may be appropriate.
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`Or in circumstances where the 21-day window for filing mandatory notices
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`actually overlaps with a decision to institute, the Board may be justified in waiving
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`certain requirements. But here, where Petitioner and its customers have resisted
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`disclosing information that could conclusively decide a statutory bar issue,
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`discretion is neither necessary nor appropriate. The Board should not use § 42.5 to
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`rescue uncooperative petitioners. Doing so only places patent owners at a
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`disadvantage in the IPR process and encourages petitioners to wait until after
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`institution to disclose correct RPI information. Even more troubling, exercising
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`such discretion in this case, together with the Board’s reticence to grant additional
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`discovery into RPI issues absent a “smoking gun,” encourages petitioners not to
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`disclose correct RPI information at all.
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`V. RELIEF REQUESTED
`These proceedings should be dismissed as the petition was incomplete and
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`should not have been considered at time of institution. The statute specifically
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`states that a petition can only be considered if the RPIs are identified. Petitioner
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`failed to update the Board when its petition no longer identified the correct parties,
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`and it led the Board to consider a non-existing entity at institution. Moreover,
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`amending the petition to identify the correct RPIs requires changing the filing date.
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`Waiving these rules and requirements that serve to avoid gamesmanship
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`undermines the purpose of the RPI requirements. The Board should require a new
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`filing date to the petition, and based on the § 315(b) bar, terminate these
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`proceedings.
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`
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`Respectfully submitted,
`
`/Jason D. Eisenberg/
`
`
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`Jason D. Eisenberg, Registration No. 43,447
`Counsel for Patent Owner
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`DATE: February 19, 2016
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`CERTIFICATION OF SERVICE
`
`The undersigned hereby certifies that true and correct copies of the above-
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`captioned PATENT OWNER’S MOTION TO TERMINATE was served
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`electronically via e-mail on February 19, 2016, in its entirety on the following:
`
`
`
`Walter C. Linder (Lead Counsel) walter.linder@FaegreBD.com
`Ken Liebman (Back-up Counsel) ken.liebman@FaegreBD.com
`Paul Sherburne (Back-up Counsel) paul.sherburne@FaegreBD.com
`
`FAEGRE BAKER DANIELS LLP
`90 South Seventh Street
`2200 Wells Fargo Center
`Minneapolis, MN 55402
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`STERNE, KESSLER, GOLDSTEIN & FOX P.L.L.C.
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`/Jason D. Eisenberg/
`
`Jason D. Eisenberg, Registration No. 43,447
`Counsel for Patent Owner
`
`
`
`Date: February 19, 2016
`
`1100 New York Avenue, N.W.
`Washington, D.C. 20005
`(202) 371-2600
`
`2770237_1.DOCX