`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`------------------------------------------X
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`Page 1
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`COSTCO WHOLESALE CORPORATION,
`
` Petitioner,
` vs.
`ROBERT BOSCH LLC,
` Patent Owner.
`
`Case Nos.: IPR2016-00034
` IPR2016-00036
` IPR2016-00038
` IPR2016-00039
` IPR2016-00040
` IPR2016-00041
`U.S. Patent No. 6,973,698
`U.S. Patent No. 6,944,905
`U.S. Patent No. 6,292,974
`U.S. Patent No. 7,228,588
`U.S. Patent No. 7,484,264
`U.S. Patent No. 8,099,823
`
`-------------------------------------------X
`
` Telephonic Conference
` Monday, September 11th, 2017
` (All Appearances Are Telephonic)
`
`Reported by:
`Tiffany Valentine
`JOB NO. 130272
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`TSG Reporting - Worldwide 877-702-9580
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`Robert Bosch Exhibit 2031 - Page 1
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
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`
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`Page 2
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` September 11, 2017
` 10:02 a.m.
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` Telephonic Conference, held before
`Tiffany Valentine, a Notary Public of the
`State of New York.
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`TSG Reporting - Worldwide 877-702-9580
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`Robert Bosch Exhibit 2031 - Page 2
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
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`Page 3
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`A P P E A R A N C E S:
`
`PATENT TRIAL AND APPEAL BOARD:
` APJ PHILLIP KAUFFMAN
` APJ WILLIAM SAINDON
` APJ BARRY GROSSMAN
`
` SHEARMAN & STERLING
` Attorneys for Patent Owner
` 599 Lexington Avenue
` New York, New York 10022
` BY: MARK HANNEMANN, ESQ.
` PATRICK COLSHER, ESQ.
`
` HUGHES HUBBARD & REED
` Attorneys for Petitioner
` One Battery Park Plaza
` New York, New York 10004
` BY: JAMES DABNEY, ESQ.
` JAMES KLAIBER, ESQ.
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`TSG Reporting - Worldwide 877-702-9580
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`Robert Bosch Exhibit 2031 - Page 3
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
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` PROCEEDINGS
` JUDGE KAUFFMAN: This is a call for
`IPR 34, 36, 38, 39, 40 and 41.
` Before I let patent owner speak, I
`want to say it looks to us like all of
`these cases are still pending before the
`Circuit, which would mean they have
`jurisdiction and we do not and we're
`limited to ministerial tasks. So that's
`the first thing I would like to understand,
`is where we stand on those cases.
` Number two, it sounds like, and I
`can't be sure, possibly we have the mandate
`back already on 41. So I would like to
`hear that. But it sounds like patent owner
`is asking us to vacate the final written
`decisions in those cases.
` I would like to understand exactly
`what you want. And if that is what you
`want, what authority you think there is for
`us to do that.
` MR. HANNEMANN: Good morning, your
`Honor. This is Mark Hannemann for patent
`owner.
` We would like the Board to vacate
`
`TSG Reporting - Worldwide 877-702-9580
`
`Robert Bosch Exhibit 2031 - Page 4
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
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` PROCEEDINGS
`its final written decisions on the theory
`that they have not been resolved yet on
`appeal. But primarily what we are seeking
`is an order terminating the proceedings
`regardless of what's done with the final
`written decision.
` JUDGE KAUFFMANN: I guess I'm not
`sure I understand.
` The final written decision has
`terminated each of those cases, with the
`exception in 41, that there is an
`outstanding request for rehearing.
` MR. HANNEMANN: Your Honor, my
`understanding of the statute is that the
`Board has not yet, and until any appeals
`are completed, will not enter a certificate
`revoking these patents. And so today they
`are in force and we would like to terminate
`the proceedings before any such certificate
`is issued.
` JUDGE KAUFFMAN: Are the -- so the
`41 case is no longer before the Circuit?
` MR. HANNEMANN: That's correct. As
`of the end of last week, the Federal
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`TSG Reporting - Worldwide 877-702-9580
`
`Robert Bosch Exhibit 2031 - Page 5
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
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`Circuit granted petitioner's motion to
`dismiss the appeal.
` JUDGE KAUFFMAN: What is the status
`of 34, 36, 38, 39 and 40?
` MR. HANNEMANN: Those appeals are --
`there's two chunks of those.
` One individual appeal is for, right
`now, going ahead and on track, that's 34.
`And the others have been stayed pending the
`outcome of the IPR in the appeal that was
`dismissed.
` JUDGE KAUFFMAN: Meaning 41 case?
` MR. HANNEMANN: Correct.
` JUDGE KAUFFMAN: Okay. Thank you.
` Mr. Hannemann, what authority do you
`think we have to vacate a final decision or
`terminate a proceeding after a final
`written decision has been entered?
` MR. HANNEMANN: Well, there are a
`number of different parts of the code and
`the statute that we think give the Board
`permission to terminate the IPR before the
`final written decision has been entered.
` One of those would involve a request
`
`TSG Reporting - Worldwide 877-702-9580
`
`Robert Bosch Exhibit 2031 - Page 6
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
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`from the petitioner to terminate --
` JUDGE KAUFFMAN: Mr. Hannemann, if I
`can stop you there.
` Each final, written decision has
`been entered even though the certificate
`hasn't been entered.
` MR. HANNEMANN: I am sorry, I
`misspoke, your Honor. You're absolutely
`right. I meant the certificate.
` JUDGE KAUFFMAN: Okay.
` MR. HANNEMANN: So one route would
`be that the petitioner seeks to have the
`proceeding terminated. Another would be
`under the Board's general authority -- that
`would be under CFR 4273-B, and then under
`the general, that would be a request for
`adverse judgment by petitioner.
` And then I think the Board has
`general authority under, for example, CFR
`42.5 to suspend the rules generally. And
`we think that would include terminating the
`proceedings.
` Obviously we understand the Board's
`authority so far, that the Board generally
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`TSG Reporting - Worldwide 877-702-9580
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`Robert Bosch Exhibit 2031 - Page 7
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
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`declines to vacate final written decisions
`on the grounds of settlement. We would
`make that request in our motion.
` But as I said, we understand the
`Board's current position on that particular
`issue.
` JUDGE KAUFFMAN: If I can, I have a
`couple of questions for you.
` So you said one authority would be
`under 4273-B. And what was the other
`authority you cited?
` MR. HANNEMANN: 42.5 A and B.
` JUDGE KAUFFMAN: General authority,
`okay.
` If I understood you correctly -- and
`you said 36, 38, 39 and 40 were stayed but
`for the action in 41 -- is that stay now
`going to be lifted because because 41 isn't
`before the Circuit anymore?
` MR. HANNEMANN: No. So 41 is the
`appeal they've dismissed at petitioner's
`request so that the Board could consider
`petitioner's motion for rehearing of one
`aspect of the final written decision.
`
`TSG Reporting - Worldwide 877-702-9580
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`Robert Bosch Exhibit 2031 - Page 8
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
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` The other four in that list, the
`appeals are stayed so they can be heard
`together with the appeal of 41, if and when
`it comes back up or goes back up, I should
`say, because the issues are so tightly
`similar.
` JUDGE KAUFFMAN: So they're waiting
`to see what's done with request for
`rehearing. The Circuit is waiting and then
`what happens next with 41 and that case?
`Do I have that correct?
` MR. HANNEMANN: You do, your Honor.
` JUDGE KAUFFMAN: So are you asking
`us simply to not enter the certificates for
`each of the cases or are you also asking
`that we vacate the final written decision?
` MR. HANNEMANN: I think we're going
`to ask to vacate the final written
`decisions in order to preserve our rights
`to appeal that decision. But as I said,
`the authority from the Board, as far as we
`know, is fairly uniform that the Board will
`likely decline to do that on the grounds of
`settlement.
`
`TSG Reporting - Worldwide 877-702-9580
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`Robert Bosch Exhibit 2031 - Page 9
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
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` I guess I characterize it as the
`primary relief we are seeking to stop the
`proceedings and have no certificates are
`entered.
` JUDGE KAUFFMAN: So you are aware of
`Board cases where someone has sought to
`vacate based on settlement post entry of a
`final written decision?
` MR. HANNEMANN: I believe we are,
`your Honor.
` JUDGE KAUFFMAN: Do you have
`citation for any of those cases?
` MR. HANNEMANN: We can supply one.
`We will either give you one in a moment
`here or we can supply one after the call.
` As I said, I'm not aware of any that
`are actually in our favor, but I'm aware of
`at least one where the Board, as I said,
`declined to vacate.
` JUDGE KAUFFMAN: If you get that for
`us before the end of the call, I would
`appreciate citation to, either for or
`against.
` Is there anything else you want to
`
`TSG Reporting - Worldwide 877-702-9580
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`Robert Bosch Exhibit 2031 - Page 10
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
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`say before I hear from petitioner?
` MR. HANNEMANN: One moment, please,
`your Honor.
` So the authority, by the way, that I
`was thinking of was in a covered business
`method patent procedure rather than in an
`IPR. But I'm not aware of any positive for
`us authority in the context of an IPR
`itself. But no, other than that, your
`Honor. Nothing further.
` JUDGE KAUFFMAN: Petitioner, I would
`like to hear what you think regarding that
`request.
` MR. DABNEY: This is James Dabney
`speaking for the petitioner Costco.
` As your Honor has pointed out, all
`of these proceedings were terminated by
`final written decisions. And what the
`patent owner is really seeking here is not
`termination, but vacatur of the final
`written decisions, which it is appealing to
`the Federal Circuit.
` So as to the five that are up on
`appeal to the Federal Circuits, that is 34,
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`TSG Reporting - Worldwide 877-702-9580
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`Robert Bosch Exhibit 2031 - Page 11
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
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`36, 38, 39 and 40, those are pending in the
`Federal Circuit right now. The patent
`owner has not terminated those appeals.
` So we agree with the suggestion made
`at outset of the call, that the Board
`doesn't really even have jurisdiction over
`those cases at this point, which were
`terminated in the Board months ago.
` As to case 41, as you are aware, the
`court issued a decision on September 7 and
`immediately issued a mandate in the
`decision itself, dismissing for lack of
`jurisdiction, the appeal that the patent
`owner took from case number 41. And our
`view is that that case was also terminated
`by final written decision and the issue is
`how is it going to be ultimately
`terminated, either with all claims
`invalidated or only some.
` So our view is that that case is one
`that is before the Board. We are not aware
`of any authority to vacate the decision.
`But it's certainly, to the extent that the
`termination comes from final written
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`Robert Bosch Exhibit 2031 - Page 12
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
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`
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`decision, certainly that is something that
`in view of the dismissal of the appeal the
`Board certainly has the authority to do and
`then the patent owner can take the appeal
`it says it wants to take from the final
`written decision in the 41 case.
` The other four cases, 36, 38, 39 and
`40 are all related to 41. So it would be
`sensible for those to, sort of, be handled
`as a group, it seems to me.
` JUDGE KAUFFMAN: Mr. Dabney, so tell
`me if I understand you correctly; you
`believe that the final written decision is
`a termination of each of those cases, with
`the exception of that 41 is an open issue
`and that the rehearing could exchange that
`decision?
` MR. DABNEY: Yes.
` JUDGE KAUFFMAN: And I would like to
`know your opinion, Mr. Dabney, as I read 35
`USC 318-B, it says that if there's been a
`final written decision once the time for
`appeal has terminated, the director shall
`issue and publish a certificate.
`
`TSG Reporting - Worldwide 877-702-9580
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`Robert Bosch Exhibit 2031 - Page 13
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
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`
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` It doesn't sound like there is any
`discretion there at all that if the case is
`done, then the certificate must be issued.
` Are you aware of any case law along
`those lines or opinions on the provision?
` MR. DABNEY: I haven't researched
`it, your Honor. But I do know that
`litigants routinely take the position that
`the issue answer of a final written
`decision automatically has estoppel affect
`in pending District Court cases.
` So I can just say that the practice
`that I have encountered is that litigants
`in District Courts are taking the view that
`this final written decisions do have affect
`as of that time.
` I have not researched whether or not
`there is discretion with regard to the
`issuance of the certificate. I would think
`to be fair to the appellant, that they have
`Appellate rights because they are entitled
`to exhaust.
` On the other hand, the statute does
`seem to have been deliberately designed for
`
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`Robert Bosch Exhibit 2031 - Page 14
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
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`Board decisions to be immediately effective
`without unlike reexamination proceedings.
` But I haven't researched it. You
`asked me to give you my off the top and
`that's all I have done.
` JUDGE KAUFFMAN: Okay. Thank you.
` If I wasn't clear, it's the director
`that issues the certificate, not the Board.
` MR. DABNEY: Yes, yes.
` JUDGE KAUFFMAN: Okay.
` Patent owner, back to you. I would
`like to know what you think about 318-B and
`any discretion that there is there.
` MR. HANNEMANN: Well, the first
`thing, your Honor, is whatever decisions
`that petitioner's counsel to which
`petitioner's counsel is referring about
`implication of an estoppel from an
`unsuccessful IPR, I'm not sure that that is
`really pertinent to the question.
` If entry of the certificate and if
`the IPR fails, there will not be a
`certificate entered. At least not to
`whatever claims are not found to be
`
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`Robert Bosch Exhibit 2031 - Page 15
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
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`
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`unpatentable.
` So a final written decision against
`the petitioner leaves nothing else to be
`done by the office.
` So, no; this is a greenfield in the
`law. As far as I know, there are a lot of
`aspects of the enterprise review statute
`that have not yet been sorted and I'm not
`aware of any cases or opinions directly
`relating to any discretion by the director,
`which was your question, or by the Board
`before the issue gets to the director,
`which is what we are attempting to raise
`today.
` I think there are implications of
`all of this for a lot of the current
`discussions about patent owner's
`constitutional rights. And you know what's
`going on with the oil states' case and
`related arguments that are being made.
` But that is a very long and round
`about way of saying, no, I don't know of
`any decisions addressing this issue one way
`or the other.
`
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`Robert Bosch Exhibit 2031 - Page 16
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
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` JUDGE KAUFFMAN: Thank you, patent
`owner.
` I need to have a discussion with the
`panel and we will take a break to do that.
`I just want to ask them if they have any
`other questions for me right now before we
`take that break.
` (Whereupon, a brief pause in
`proceedings took place.)
` JUDGE KAUFFMAN: Patent owner, Judge
`Kaufman again.
` Just to be clear, I understand that
`you're asking to file a motion in each of
`those cases requesting the relief you
`wanted, which is the decision be vacated
`and the certificate not be issued. Is that
`what you're asking for today?
` MR. HANNEMANN: Yes. Each of those.
`Maybe an and/or and or between those two
`things. But one way or another, stopping
`before any certificate is entered, Yes,
`your Honor. And we would do it of course
`in a written, motion. That's what we're
`seeking permission to do.
`
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`Robert Bosch Exhibit 2031 - Page 17
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
`
`Page 18
`
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` PROCEEDINGS
` JUDGE KAUFFMAN: This will take a
`couple minutes for me to discuss with the
`panel. I ask the parties and court
`reporter stay on and we should be back in a
`few minutes.
` (Whereupon, a brief pause in
`proceedings took place.)
` JUDGE KAUFMANN: This is Judge
`Kaufman. Everyone still here?
` MR. HANNEMANN: Yes, your Honor.
` MR. DABNEY: We are your Honor.
` JUDGE KAUFFMAN: Sorry to make you
`wait. This is an unusual question. I
`think rather than resolve it on the phone,
`the panel is going to deliberate this a
`little more and then event an order that
`explains how we would like to proceed.
` Patent owner, are there any other
`questions that you have at this time?
` MR. HANNEMANN: No. Thank you, your
`Honor.
` JUDGE KAUFFMAN: Mr. Dabney?
` MR. DABNEY: No, your Honor. Thank
`you.
`
`TSG Reporting - Worldwide 877-702-9580
`
`Robert Bosch Exhibit 2031 - Page 18
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
`
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`Page 19
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` PROCEEDINGS
` JUDGE KAUFFMAN: Thank you for the
`call. I am expecting an order will be
`entered in the next couple of days.
` MR. HANNEMANN: Thank you.
` MR. DABNEY: Thank you.
` (Proceedings concluded at 10:28
`a.m.)
`
`TSG Reporting - Worldwide 877-702-9580
`
`Robert Bosch Exhibit 2031 - Page 19
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`
`
`Page 20
`
` C E R T I F I C A T E.
`
`STATE OF NEW YORK )
` : SS.:
`COUNTY OF NASSAU )
`
` I, TIFFANY VALENTINE, a Notary
`Public for and within the State of New York, do
`hereby certify:
`
` That the witness whose examination
`is hereinbefore set forth was duly sworn and
`that such examination is a true record of the
`testimony given by that witness.
`
` I further certify that I am not
`related to any of the parties to this action by
`blood or by marriage and that I am in no way
`interested in the outcome of this matter.
`DATED: 9/18/17
`
`___________________________
` TIFFANY VALENTINE
`
`TSG Reporting - Worldwide 877-702-9580
`
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`Robert Bosch Exhibit 2031 - Page 20
`COSTCO (Petitioner) v. ROBERT BOSCH (Patent Owner)
`IPR2016-00034; IPR2016-00036; IPR2016-00038;
`IPR2016-00039; IPR2016-00040; IPR2016-00041
`
`