UNITED STATES PATENT AND TRADEMARK OFFICE
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`____________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________________
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`COSTCO WHOLESALE CORPORATION,
`
`Petitioner,
`
`v.
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`ROBERT BOSCH LLC,
`
`Patent Owner.
`
`____________________
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`CASE NO. IPR2016-00034
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`U.S. Patent No. 6,973,698
`
`____________________
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`PATENT OWNER’S OPPOSITION TO PETITIONER’S MOTION TO
`EXCLUDE EVIDENCE PURSUANT TO 37 C.F.R. § 42.64(c)
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`
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`
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`
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`____________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________________
`
`COSTCO WHOLESALE CORPORATION,
`
`Petitioner,
`
`v.
`
`ROBERT BOSCH LLC,
`
`Patent Owner.
`
`____________________
`
`CASE NO. IPR2016-00034
`
`U.S. Patent No. 6,973,698
`
`____________________
`
`PATENT OWNER’S OPPOSITION TO PETITIONER’S MOTION TO
`EXCLUDE EVIDENCE PURSUANT TO 37 C.F.R. § 42.64(c)
`
`
`
`
`
`
`
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`
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`Patent Owner Robert Bosch LLC (“Patent Owner”) submits this response in
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`opposition to Petitioner Costco Wholesale Corporation’s (“Petitioner’s”) motion to
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`exclude evidence (the “Motion” or “Mot.”). Petitioner asks the Board to exclude
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`only (i) the prior testimony of Wilfried Merkel, given in court and under oath in a
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`prior proceeding (Ex. 2005 at 338–92), on the grounds that it is hearsay, and
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`(ii) three specific sentences in paragraph 6 of the declaration of Martin
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`Kashnowski (Ex. 2007), on the grounds that they are hearsay and not properly
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`supported under 37 C.F.R. § 42.65(b).
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`I. Mr. Merkel’s Testimony Should Not Be Excluded
`On October 24, 2016, Petitioner filed a “Motion to Strike Hearsay
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`Testimony of Wilfried Merkel [Exhibit 2005]”1 (Paper 31). The present motion to
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`“exclude” seeks substantially the same relief for substantially the same reasons—
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`i.e., that Mr. Merkel’s frail health prevents him from being subjected to live cross-
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`examination here and that, therefore, his prior testimony should be excluded from
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`evidence.
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`Nevertheless, should
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`the Board decide
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`to
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`take
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`this motion under
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`consideration, Mr. Merkel’s testimony should be admitted either under the hearsay
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`exception allowing prior testimony from unavailable witnesses and/or the residual
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`1 The bracketed “Exhibit 2005” appears in the original.
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`1
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`
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`hearsay exception, or, in the alternative, because Mr. Merkel’s subsequent
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`declaration (and Costco’s decision not to question him) cured any hearsay concern.
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`A. The Board’s Rule Governing “Testimony” Is Inapplicable
`Petitioner contends that the Board “does not even have the power to review”
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`Mr. Merkel’s prior testimony because it is neither an affidavit nor a deposition
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`transcript as supposedly required by the Board’s rules. Mot. at 5 (citing 37 C.F.R.
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`§ 42.53(a)). This cannot be true. The Board’s rules make the Federal Rules of
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`Evidence applicable to patent trials. 37 C.F.R. § 42.62(a). Those Rules include a
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`specific hearsay exception for prior testimony. Fed. R. Evid. 804(b)(1). Under
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`Petitioner’s theory, that exception would be available for deposition testimony but
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`not for trial testimony, because the latter would be a trial transcript rather than the
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`“deposition transcript” required by 37 C.F.R. § 42.53(a).
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`Viewed as a whole, the rule cited by Petitioner sets forth the procedure and
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`format for new testimony taken for the current trial, such as when and where it
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`should occur and the manner in which it should be taken. For example, the rule
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`requires that all testimony other than uncompelled direct testimony “be taken
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`during a testimony period set by the Board,” 37 C.F.R. § 42.53(b)(1). The rule
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`does not govern testimony taken long before the proceeding began. Therefore it is
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`irrelevant that Mr. Merkel’s prior testimony was not subjected to cross-
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`examination by Petitioner as part of this proceeding. See also id. § 42.51(b)(1)(ii)
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`
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`2
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`
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`(providing “[c]ross-examination of affidavit
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`testimony prepared
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`for
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`this
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`proceeding” as routine discovery (emphasis added)).
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`B. Mr. Merkel’s Prior Testimony Is Subject to the Hearsay
`Exception for Prior Testimony
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`The challenged exhibit is, on its face, excerpts from the transcript of a trial
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`taking place on April 15, 2010, in the United States District Court for the District
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`of Delaware. Ex. 2005 at 1. As noted by Petitioner, the transcript includes
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`testimony given by Mr. Merkel that day. See id. at 338 (pagination in original).
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`Petitioner has not pursued any objection to the authenticity of the transcript. See 37
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`C.F.R. § 42.64(c). This transcript is publicly available via the Public Access to
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`Court
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`Electronic
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`Records
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`(“PACER”)
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`system
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`(available
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`at
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`https://www.pacer.gov/). See Ex. 2017 ¶¶ 1–4 (submitted herewith as supplemental
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`evidence) (citing Ex. 2022, an unexcerpted version of Ex. 2005, also submitted as
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`supplemental evidence)).
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`The Federal Rules of Evidence permit the admission of a witness’s prior
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`testimony, provided that (a) the witness is unavailable, (b) the testimony was given
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`at a trial, hearing, or deposition, and (c) it is offered against a party who had, or
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`whose predecessor had, an “opportunity and similar motive to develop it.” Fed. R.
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`Evid. 804(b)(1). A “predecessor in interest” is “a party having a like motive to
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`cross-examine about the same matters as the present party would have” and who
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`“was accorded an adequate opportunity for such examination.” Lloyd v. Am.
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`
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`3
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`
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`Export Lines, Inc., 580 F.2d 1179, 1187 (3d Cir. 1978); see Supermarket of
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`Marlinton, Inc. v. Meadow Gold Diaries, Inc., 71 F.3d 119, 128 (4th Cir. 1995);
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`Clay v. Johns–Manville Sales Corp., 722 F.2d 1289, 1295 (6th Cir. 1983).
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`Mr. Merkel is unavailable because he “cannot be present or testify at the trial
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`or hearing because of … a then-existing infirmity [or] physical illness,” id.
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`804(a)(4). Submitted herewith as supplemental evidence is a declaration by Mr.
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`Merkel,2 in which he declares, “I have, for reasons of cardiac health, been advised
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`that I should not travel and should minimize my activities. . . . Because of my
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`health issues, I will not voluntarily give a deposition in this case.” Ex. 2021 ¶¶ 5–
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`6.3 While Petitioner will undoubtedly complain that this declaration is inadmissible
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`because Petitioner could not cross-examine Mr. Merkel on it, the Board is not
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`bound by the rules of evidence when deciding this type of admissibility question,
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`see Fed. R. Evid. 104(a), and is free to credit Mr. Merkel’s representation that he is
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`too ill to be cross-examined, particularly in the United States (Mr. Merkel lives in
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`Germany, Ex. 2021 ¶ 2).
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`2 The declaration and other supplemental evidence was served on Petitioner on
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`August 12, 2016, within the time allowed by 37 C.F.R. § 42.64(b)(2).
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`3 Petitioner also submitted this declaration in connection with its motion to strike
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`(Ex. 1106 at 6–8).
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`4
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`
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`The testimony undisputedly was given at a trial. See Ex. 2005 at 1.
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`The only issue challenged by Petitioner is whether Petitioner’s predecessor-
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`in-interest, Pylon, had an “opportunity and similar motive to develop” Mr.
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`Merkel’s testimony through cross-examination.
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`In the Pylon trial, the defendant was asserting the obviousness of Bosch
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`wiper patents, including two at issue in related proceedings IPR2016-00036 and -
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`00038 (U.S. Patent Nos. 6,292,974 and 6,944,905), (Ex. 2005 at 150:2–6), relying
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`on some of the same prior art as Costco has asserted here and in IPR2016-00038–
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`41, (id. at 162:25–163:2). The Merkel testimony is offered to prove that: (i) no
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`commercially viable beam blades existed before 2002, when Bosch satisfied the
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`long-felt need for them, (id. at 346:16–348:2); (ii) Bosch’s first commercial beam
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`blade (Aerotwin) and later product (Icon) practice the challenged claims, (id. at
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`353:22–354:1); (iii) these blades included a flexible spoiler with diverging legs
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`mounted on top of the blade, as well as plastic end caps, (id. at 359:12–360:4); and
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`(iv) beam blades are sensitive to changes caused by adding structures, (id. at
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`388:23–391:8). This testimony was relevant in the Pylon trial for the same reasons
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`as here: It is probative regarding objective evidence of non-obviousness and that
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`those skilled in the art thought that beam blade modifications would have negative
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`consequences. The underlying facts are relevant irrespective of the particular
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`patent being challenged or the prior art being asserted. Pylon thus had the same
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`5
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`
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`motivation for cross-examining Merkel as Costco has now, both in kind (to
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`invalidate Bosch’s wiper patents) and in degree (Pylon would ultimately be
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`enjoined from selling its beam blades after pursuing an appeal, see Robert Bosch
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`LLC v. Pylon Mfg. Corp., 659 F.3d 1142 (Fed. Cir. 2011)).
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`According to Petitioner, the requirement of similar motives is not met
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`because (1) Mr. Merkel does not mention the prior art at issue in this proceeding,
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`and (2) the ’698 patent was not at issue in the Pylon proceeding. But these facts do
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`not preclude admissibility; Petitioner ignores the general rule that the scope of
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`cross-examination is limited to the scope of the direct testimony, not just in district
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`court but also in inter partes review proceedings. See 37 C.F.R. § 42.53(d)(5)(ii).
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`Petitioner has not identified any subject relevant to this proceeding that Petitioner
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`could have developed through cross-examination here, but that Pylon would not
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`have pursued because of motives allegedly dissimilar from Petitioner. The fact
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`that Mr. Merkel’s testimony did not mention the patent or prior art at issue in this
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`proceeding means that neither Pylon nor Petitioner could have asked him about
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`those subjects, whether at trial in the Pylon matter or in this inter partes review.
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`And, had Patent Owner submitted a declaration by Mr. Merkel instead of the trial
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`transcript, attesting to the same facts as he did in the Pylon trial, Petitioner still
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`could not have cross-examined him beyond the scope of that declaration.
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`6
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`
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`Petitioner also notes the requirement that secondary considerations must
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`have some nexus to the patented invention, Mot. at 10, but proof of nexus is an
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`ultimate issue based on the entire record, not a prerequisite to admissibility of one
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`witness’s testimony. And, again, whatever Mr. Merkel did not testify to in his
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`direct testimony, Petitioner could not have cross-examined.
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`C. Mr. Merkel’s Testimony Is Subject to the Residual Hearsay
`Exception
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`Mr. Merkel’s testimony is also admissible under Rule 807 of the Federal
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`Rules of Evidence, because, as required by the rule, (1) it “has equivalent
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`circumstantial guarantees of trustworthiness”; (2) “it is offered as evidence of a
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`material fact”; (3) “it is more probative on the point for which it is offered than any
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`other evidence that the proponent can obtain through reasonable efforts”; and (4)
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`“admitting it will best serve the purposes of these rules and the interests of justice.”
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`The testimony was presented at trial and subject to cross-examination in a case that
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`would proceed to judgment, appeal, and a permanent injunction against Pylon.
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`This is a powerful circumstantial guarantee of trustworthiness. The facts for which
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`Mr. Merkel’s testimony is offered are material for the reasons discussed in Patent
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`Owner’s Response in this case. See Response at 22–24 (citing, e.g., Ex. 2005 at
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`346:16–348:2, 353:22–354:1, 359:12–360:4, 388:23–391:8). Its probative value is
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`shown by the fact that Mr. Merkel, before falling ill, traveled from Germany to
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`attend the Pylon trial. See Ex. 2021 ¶¶ 2–4. Patent Owner would not have proffered
`
`
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`7
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`
`
`
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`him at that trial or here if Mr. Merkel’s testimony were not important. And,
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`because Petitioner has made no attempt to procure contrary evidence—and has
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`rejected Patent Owners’s suggestion to ask written questions of Mr. Merkel, see
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`Ex. 1106 at 12, 14—justice would be disserved by excluding the testimony.
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`D. Mr. Merkel’s Subsequent Declaration Cures Any Hearsay
`Objection
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`Even if the Board were to determine that the transcript, standing alone, were
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`inadmissible hearsay, Patent Owner’s supplemental evidence cures the objection.
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`Mr. Merkel testified in his declaration that he “testified truthfully” at the Pylon
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`trial and “gave the best answers [he] then could to the questions [he] was asked.”
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`Ex. 2021 ¶ 4. Thus he has adopted his prior testimony as his current testimony.
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`Whereas in district court he might have been required to rehash the testimony
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`completely, the Board’s rules require uncompelled direct testimony to be written.
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`See 37 C.F.R. § 42.53(a). The fact that part of his written testimony takes the form
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`of a trial transcript is at worst a technicality, and no reason to exclude the
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`testimony of a man with failing “cardiac health,” Ex. 2021 ¶ 5, who did what he
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`could to have his knowledge considered in this proceeding. And, for the reasons
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`already briefed in connection with Petitioner’s motion to strike, Paper 34 at 4–5,
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`the Board should not exclude the new declaration for lack of cross-examination.
`
`
`
`8
`
`
`
`
`
`II. Mr. Kashnowski’s Testimony Should Not Be Excluded
`Petitioner seeks to exclude just three sentences from one paragraph of Mr.
`
`Kashnowski’s declaration. Those three sentences read, “Bosch tested these
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`products [Aerotwin and Icon] extensively before releasing them. One aspect tested
`
`was noise. The Bosch beam blades were quiet in operation, including when the
`
`wiping direction changes and the wiper strip flips from one side to the other.” Ex.
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`2007 ¶ 6. Petitioner seeks to exclude them because, in Petitioner’s view, they
`
`violate the Board’s rules and the rule against hearsay. Patent Owner disagrees.
`
`A. The Board’s Rules Do Not Require Any More Detail Than Mr.
`Kashnowski Provided
`
`The rule in question, 37 C.F.R. § 42.65(b), requires a party who “relies on a
`
`technical test or data from such a test” to provide an affidavit explaining certain
`
`details. “The language of §42.65 evokes Federal Rule of Evidence 702, which
`
`permits expert testimony if ‘scientific, technical, or other specialized knowledge
`
`will assist the trier of fact to understand the evidence or to determine a fact in
`
`issue.’” 3D-Matrix Ltd. v. Menicon Co., IPR2014-00398, Paper 11 at 8 (P.T.A.B.
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`Aug. 1, 2014). The “rules do not require that the declarant attesting to testing
`
`evidence be the person who actually conducted the test.” Corning Inc. v. DSM IP
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`Assets B.V., IPR2013-00049, Paper 90 at 5 (P.T.A.B. July 11, 2014).
`
`The three complained-of sentences from Mr. Kashnowski’s testimony do not
`
`constitute the kind of testimony that invokes this rule. Petitioner contends that Mr.
`
`
`
`9
`
`
`
`
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`Kashnowski is a fact witness. Mot. at 11. And, with respect to this testimony,
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`Patent Owner agrees. Mr. Kashnowski only testified that the blades were “quiet in
`
`operation.” This is not the kind of “technical test or data from such a test” that is
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`the subject of the rule. Petitioner is making a hypertechnical argument that is not
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`correct.
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`When the context of the challenged testimony is considered, Petitioner’s
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`objection is meritless. Mr. Kashnowski’s title is “Director, Commodities
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`Management” and formerly was “Director of Product Management for Wiping
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`Systems.” Ex. 2007 ¶ 1. The challenged testimony is offered in support of the
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`commercial success of Patent Owner’s products. See Response at 24–25. And, the
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`sentence immediately following the challenged testimony reads, “Those features
`
`were part of the reason for the great customer demand for these products.” Ex.
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`2007 ¶ 6. Thus, Mr. Kashnowski’s testimony indicates that the products were
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`sufficiently “quiet in operation” to positively affect customer demand. The details
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`that Petitioner claims are missing, such as “whether [the test was] in a wind tunnel
`
`or anechoic chamber” or whether there was a “decibel limit,” have no bearing on
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`the issues in this case. It is sufficient to know that the wipers were tested for noise,
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`including during flip-over, and that they were quiet in a way that contributed to the
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`products’ success.
`
`
`
`10
`
`
`
`
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`If Petitioner thought any technical details about the testing were relevant, it
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`could have sought a deposition of Mr. Kashnowski, but Petitioner did not. Instead,
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`Petitioner noticed only one deposition: that of Mr. Merkel, the one witness who
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`volunteered his unavailability.
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`B. Mr. Kashnowski’s Challenged Testimony Is Not Hearsay
`Hearsay is defined as “a statement that: (1) the declarant does not make
`
`while testifying at the current trial or hearing; and (2) a party offers in evidence to
`
`prove the truth of the matter asserted in the statement.” Fed. R. Evid. 801(c).
`
`Petitioner’s hearsay objection does not even get past this initial hurdle. None
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`of the challenged sentences contains any statement other than Mr. Kashnowski’s
`
`own statements made in the declaration itself, i.e., “while testifying at the current
`
`trial,” id.; see also 37 C.F.R. § 42.53(a) (requiring uncompelled direct testimony to
`
`be in the form of an affidavit). Mr. Kashnowski’s testimony as to what “Bosch”
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`did does not indicate that he is repeating any out-of-court statement by a corporate
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`entity. It is irrelevant to the rule against hearsay whether “Mr. Kashnowski actually
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`observed or played any role in the alleged noise testing,” Mot. at 13 (emphasis in
`
`original).
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`Petitioner did not pursue an objection for lack of personal knowledge, which
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`therefore is waived. See 37 C.F.R. § 42.64(c). But even if it had, the Federal Rules
`
`of Evidence do not require Mr. Kashnowski to identify the individuals who tested
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`
`
`11
`
`
`
`
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`Aerotwin and Icon, or to explicitly state that he observed the test himself. They
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`only require “evidence … sufficient to support a finding that the witness has
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`personal knowledge of the matter.” Fed. R. Evid. 602. Mr. Kashnowski’s
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`testimony surpasses this threshold. See, e.g., Ex. 2007 ¶ 1.
`
`
`
`
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`Respectfully submitted,
`
`
`
`Shearman & Sterling LLP
`
`
`
` /Patrick R. Colsher/
`Patrick R. Colsher (Reg. No. 74,955)
`Mark A. Hannemann (pro hac vice)
`Joseph M. Purcell, Jr. (pro hac vice)
`599 Lexington Ave
`New York, NY 10022
`Tel: (212) 848-7708
`
`Counsel for Patent Owner
`Robert Bosch LLC
`
`
`
`DATED: December 23, 2016
`
`
`
`
`12
`
`
`
`
`
`Certificate of Service
`
`The undersigned hereby certifies that the foregoing PATENT OWNER’S
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`OPPOSITION TO PETITIONER’S MOTION TO EXCLUDE EVIDENCE
`
`PURSUANT TO 37 C.F.R. § 42.64(c) was served via electronic mail on December
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`13, 2016, on the following counsel for Petitioner:
`
`Richard M. Koehl (richard.koehl@hugheshubbard.com)
`James R. Klaiber (james.klaiber@hugheshubbard.com)
`David E. Lansky (david.lansky@hugheshubbard.com)
`Stefanie Lopatkin (stefanie.lopatkin@hugheshubbard.com)
`James Dabney (james.dabney@hugheshubbard.com)
`
`
`
`
`
`
`
`
` /Patrick R. Colsher/
`Patrick R. Colsher
`Reg. No. 74,955
`Shearman & Sterling LLP
`599 Lexington Ave
`New York, NY 10022
`Tel: (212) 848-7708
`
`Counsel for Patent Owner
`Robert Bosch LLC
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