Paper No. 7
`Filed: November 19, 2015
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________________
`
`JT INTERNATIONAL S.A.
`Petitioner,
`
`v.
`
`FONTEM HOLDINGS 1 B.V.
`Patent Owner.
`
`Case No. IPR2015-01587
`Patent No. 8,365,742
`
`__________________________________________________________________
`
`PETITIONER’S REPLY TO PATENT OWNER’S PRELIMINARY
`RESPONSE TO PETITION FOR INTER PARTES REVIEW OF U.S.
`PATENT NO. 8,365,742
`
`
`
`
`
`
`
`Filed: November 19, 2015
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________________
`
`JT INTERNATIONAL S.A.
`Petitioner,
`
`v.
`
`FONTEM HOLDINGS 1 B.V.
`Patent Owner.
`
`Case No. IPR2015-01587
`Patent No. 8,365,742
`
`__________________________________________________________________
`
`PETITIONER’S REPLY TO PATENT OWNER’S PRELIMINARY
`RESPONSE TO PETITION FOR INTER PARTES REVIEW OF U.S.
`PATENT NO. 8,365,742
`
`
`
`
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`TABLE OF CONTENTS
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`JTI IS NOT PRECLUDED FROM PETITIONING BASED ON THE
`
`BOARD’S DECISION IN VYWWARE .......................................................... ..1
`
`I.
`
`II.
`
`JTI IS NOT PRECLUDED FROM PETITIONING BASED ON THE
`BOARD’S DECISION IN VMWARE ............................................................ 1
`PATENT OWNER CANNOT SHOW PRIVITY UNDER § 315(B)
`PATENT OWNER CANNOT SHOW PRIVITY UNDER § 315(B)
`THROUGH EVENTS TAKING PLACE AFTER THE FILING OF
`THROUGH EVENTS TAKING PLACE AFTER THE FILING OF
`THE PETITION .............................................................................................. 3
`III. CONCLUSION ............................................................................................... 5
`
`THE PETITION ............................................................................................ ..3
`
`III.
`
`CONCLUSION ............................................................................................. . .5
`
`i
`
`
`
`
`
`TABLE OF AUTHORITIES
`
` Page(s)
`
`Cases
`Abb Tech., Ltd. v. IPCO, LLP,
`IPR2013-00482 (PTAB Feb. 4, 2014) .................................................................. 3
`
`Aruze Gaming Macau, Ltd. v. MGT Gaming, Inc.,
`IPR2014-01288 (PTAB Feb. 20, 2015) ............................................................ 4, 5
`
`Chi Mei Innolux Corp. v. Semiconductor Energy Lab. Co. Ltd.,
`IPR2013-00028 (PTAB Mar. 21, 2013) ............................................................... 3
`
`General Electric Co. v. Transdata, Inc.,
`IPR2014-01380 (PTAB Apr. 15, 2015) ................................................................ 4
`
`Gillig v. Nike, Inc.,
`602 F.3d 1354 (Fed. Cir. 2010) ............................................................................ 4
`
`Synopsis, Inc. v. Mentor Graphics Corp.,
`IPR2012-00042 (PTAB Feb. 22, 2013) ........................................................ 2, 3, 4
`
`Syntroleum Corp. v. Neste Oil OYJ,
`IPR2013-00178 (PTAB Sept. 4, 2013) ................................................................. 5
`
`Taylor v. Sturgell,
`553 U.S. 880 (2008) .............................................................................................. 2
`
`VMWare, Inc. v. Good Technology Software, Inc.,
`IPR2015-00031 (PTAB Mar. 6, 2015) ......................................................... 1, 2, 3
`
`Statutes
`
`35 U.S.C. § 315(b) ......................................................................................... 1, 2, 3, 4
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`ii
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`
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`IPR2015-01587
`
`Pursuant to the Board’s reply email of Nov. 12, 2015 to the parties,
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`Petitioner JT International S.A. (“Petitioner” or “JTI”) hereby files this Reply to
`
`Patent Owner’s Preliminary Response to Petition for Inter Partes Review.
`
`I.
`
`JTI IS NOT PRECLUDED FROM PETITIONING BASED ON THE
`BOARD’S DECISION IN VMWARE
`
`35 U.S.C. § 315(b) states that ‘[a]n inter partes review may not be instituted
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`if the petition requesting the proceeding is filed more than 1 year after the date on
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`which the petitioner, real party in interest, or privy of the petitioner is served with a
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`complaint alleging infringement of the patent.” Patent Owner has not shown this
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`one-year bar applies.
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`Patent Owner alleges that § 315(b) bars JTI from petitioning for inter partes
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`review of the ‘742 patent because (i) Logic Technology Development LLC
`
`(“Logic”) was served with an infringement complaint more than one year prior to
`
`the filing of the Petition, and (ii) JTI acquired Logic after JTI filed the Petition.
`
`See Paper 6 at 2-8. Patent Owner relies on the Board’s decision denying institution
`
`in VMWare, Inc. v. Good Technology Software, Inc., IPR2015-00031, Paper 11
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`(PTAB Mar. 6, 2015). See, e.g., Paper 6 at 4-7. VMWare does not support Patent
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`Owner’s position.
`
`In VMWare, the petition was precluded as untimely under § 315(b) given the
`
`petitioner admittedly became a privy with a defendant it acquired more than a year
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`after the defendant was served with the infringement complaint, but prior to the
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`1
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`
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`IPR2015-01587
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`filing of the IPR petition. VMWare, Inc., Paper 11 at 2. Therefore, VMWare did
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`not hold that events taking place after the filing of an IPR petition could bar the
`
`petition. In fact, it is illogical that later acts could bar an already filed petition;
`
`other Board decisions similarly reflect that events subsequent to a petition filing
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`are inapposite to the § 315(b) inquiry. For example, in Synopsys, Inc. v. Mentor
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`Graphics Corp., IPR2012-00042 (PTAB Feb. 22, 2013), the Board held that the
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`petitioner was not in privy with the defendant it acquired after filing the petition.
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`Paper 16 at 15-18 (finding no persuasive evidence that defendant was a subsidiary
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`of petitioner when the petition was filed).
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`VMWare is easily distinguishable from the facts here because JTI was not in
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`privity with Logic at any time prior to the Petition filing. The time line is clear.
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`Logic, not JTI, was served with the complaint in March 2014. Paper 6 at 5. JTI
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`subsequently filed the Petition on July 14, 2015 and, after filing the Petition,
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`acquired Logic on July 27, 2015. Id. at 5-6.1 Patent Owner has pointed to no
`
`evidence that, at the time of the Petition filing (1) JTI agreed to be bound by the
`
`determination of issues in the district court litigation alleging Logic infringes the
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`‘742 patent; (2) a “substantive legal relationship” existed between JTI and Logic;
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`(3) Logic represented JTI (adequately or otherwise) in the district court litigation;
`
`or (4) JTI assumed control over the district court litigation. See Taylor v. Sturgell,
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`1 Patent Owner incorrectly listed the filing date of the Petition as June 26, 2015.
`Compare Paper 6 at 5 with Paper 4 (Notice of Filing Date Accorded Petition).
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`2
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`
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`IPR2015-01587
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`553 U.S. 880, 892-95 (2008) (exceptions to general rule against nonparty
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`exclusion). Patent Owner points to a JTI announcement in April 2015 regarding
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`“an agreement to acquire Logic.” See Paper 6 at 5. However, the announcement
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`makes clear that the acquisition must receive regulatory clearance before the
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`acquisition can be completed. Ex. 2005. An agreement to acquire in the future
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`does not create privity between JTI and Logic. See Synopsys, Inc., IPR2012-
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`00042, Paper 16 at 16 (finding no evidence that an “agreement to acquire” in the
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`future created privity between petitioner and defendant). JTI is therefore not
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`barred from petitioning under § 315(b) based on VMWare.2
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`II.
`
`PATENT OWNER CANNOT SHOW PRIVITY UNDER § 315(b)
`THROUGH EVENTS TAKING PLACE AFTER THE FILING OF
`THE PETITION
`
`Instead of pointing to some evidence of privity between the time of service
`
`of the complaint and the Petition filing, Patent Owner relies on JTI’s acquisition of
`
`Logic after the Petition filing. See Paper 6 at 5-6. Patent Owner cannot establish
`
`
`2 In considering privity under § 315(b), the Board has also focused on whether the
`petitioner and the defendant were privies at the time the defendant was served with
`the infringement complaint. See, e.g., Abb Tech., Ltd. v. IPCO, LLP, IPR2013-
`00482, Paper 8 at 9 (PTAB Feb. 4, 2014) (finding patent owner did not
`persuasively show that petitioner was a privy of defendant when defendant was
`served with infringement complaint); Synopsys, Inc., IPR2012-00042, Paper 16 at
`16 (same); Chi Mei Innolux Corp. v. Semiconductor Energy Lab. Co. Ltd.,
`IPR2013-00028, Paper 14 at 6 (PTAB Mar. 21, 2013) (same). As detailed in
`Section II, JTI did not acquire Logic until well after Logic was served with the
`complaint alleging infringement of the ‘742 patent. Therefore, JTI is also not
`barred from petitioning under § 315(b) based on these other Board decisions.
`
`3
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`
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`IPR2015-01587
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`privity by pointing to an acquisition alone, especially one that takes place after the
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`Petition filing. See, e.g., Synopsys, Inc., IPR2012-00042, Paper 16 at 15-18; see
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`also Aruze Gaming Macau, Ltd. v. MGT Gaming, Inc., IPR2014-01288, Paper 13
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`at 19 (PTAB Feb. 20, 2015) (“[C]ontrol of a party to litigation through stock
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`ownership or corporate officership is not enough to create privity, absent a
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`showing that the corporate form has been ignored.”) (quoting Gillig v. Nike, Inc.,
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`602 F.3d 1354, 1362 (Fed. Cir. 2010)).
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`Patent Owner seemingly relies on General Electric Co. v. Transdata, Inc.,
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`IPR2014-01380 (PTAB Apr. 15, 2015), for the proposition that the existence of
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`privity at any point in litigation will bar a subsequent petition under § 315(b).
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`Paper 6 at 4, 7-8. That case, however, reinforces the notion that the privity inquiry
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`under § 315(b) is directed to whether the petitioner and the defendant were privies
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`at the time the defendant was served with the infringement complaint. General
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`Electric Co., IPR2014-01380, Paper 34 at 10-11 n.7 (finding petitioner and
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`defendant in privity at the time the defendant was served with complaint).
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`Moreover, contrary to the mere attorney argument in Patent Owner’s Preliminary
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`Response (Paper 6 at 7-8), there is no evidence that JTI and Logic ever admitted to
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`being privies with respect to the earlier litigation.
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`Even though the § 315(b) inquiry does not extend to facts taking place after
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`the filing of the petition, see, e.g., Synopsys, Inc., Paper 16 at 15-18, Fontem relies
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`4
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`IPR2015-01587
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`on post-acquisition activity: (1) JTI and Logic sharing the same counsel two
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`months after the acquisition; and (2) JTI after the acquisition becoming a real-
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`party-in-interest to the IPRs Logic filed. Paper 6 at 5-8. The fact parties share the
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`same counsel is not proof that the parties are privies, especially in this case when
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`the parties did not share the same counsel until after the acquisition. See Aruze
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`Gaming Macau, Ltd., IPR2014-01288, Paper 13 at 19-20 (rejecting patent owner’s
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`argument that petitioner and defendant are privies due to common counsel);
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`Syntroleum Corp. v. Neste Oil OYJ, IPR2013-00178, Paper 22 at 7 (PTAB Sept. 4,
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`2013) (finding that sharing counsel in a copending litigation does not establish that
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`co-defendants have the ability to control petitioner’s conduct in the Board
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`proceeding). Patent Owner further mischaracterizes the record by arguing that JTI
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`“supplanted” Logic as the real-party-in-interest to the IPRs Logic filed. Paper 6 at
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`7. Instead, JTI became a real-party-in-interest along with Logic after the
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`acquisition. Exs. 2007-2010.
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`III. CONCLUSION
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`For the reasons described above, Petitioner requests that the Board reject
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`Fontem’s privity challenge under § 315(b).
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`Date: November 19, 2015
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`Respectfully submitted,
`
`/Erik G. Swenson/
`Erik G. Swenson, Reg. No. 45,147
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`5
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`IPR2015-01587
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that a copy of the attached Petitioner’s
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`Reply to Patent Owner’s Preliminary Response to Petition for Inter Partes Review
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`was served on November 19, 2015, via electronic mail upon the following counsel
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`Joseph P. Hamilton
`Backup Counsel
`USPTO Reg. No. 51,770
`
`Perkins Coie LLP
`1888 Century Park East, Suite 1700
`Los Angeles, CA 90067
`Phone: 310-788-3271
`Facsimile: 310-788-3399
`JHamilton@PerkinsCoie.com
`
`ACandeloro@PerkinsCoie.com
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`
`
`/Sage Kruse/
`Sage Kruse
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`of record for Patent Owner:
`
`Michael J. Wise
`Lead Counsel
`USPTO Reg. No. 34, 047
`
`Perkins Coie LLP
`1888 Century Park East, Suite 1700
`Los Angeles, CA 90067
`Phone: 310-788-3210
`Facsimile: 310-788-3399
`MWise@PerkinsCoie.com
`
`patentprocurement@perkinscoie.com
`
`
`
`
`
`6
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