Filed on behalf of TQ Delta, LLC
`By: Peter J. McAndrews
`Thomas J. Wimbiscus
`Scott P. McBride
`Christopher M. Scharff
`McAndrews, Held & Malloy, Ltd.
`500 W. Madison St., 34th Floor
`Chicago, IL 60661
`Tel: 312-775-8000
`Fax: 312-775-8100
`E-mail: pmcandrews@mcandrews-ip.com
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`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________
`
`ARRIS GROUP, INC.
`Petitioner
`
`v.
`
`TQ DELTA, LLC
`Patent Owner
`_____________
`
`
`Case No. IPR2016-00430
`Patent No. 7,835,412
`_____________
`
`
`PATENT OWNER’S PRELIMINARY RESPONSE
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`
`
`By: Peter J. McAndrews
`Thomas J. Wimbiscus
`Scott P. McBride
`Christopher M. Scharff
`McAndrews, Held & Malloy, Ltd.
`500 W. Madison St., 34th Floor
`Chicago, IL 60661
`Tel: 312-775-8000
`Fax: 312-775-8100
`E-mail: pmcandrews@mcandrews-ip.com
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________
`
`ARRIS GROUP, INC.
`Petitioner
`
`v.
`
`TQ DELTA, LLC
`Patent Owner
`_____________
`
`
`Case No. IPR2016-00430
`Patent No. 7,835,412
`_____________
`
`
`PATENT OWNER’S PRELIMINARY RESPONSE
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`TABLE OF CONTENTS
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`I.
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`INTRODUCTION ........................................................................................... 1
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`II.
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`SUMMARY OF THE ’412 PATENT ............................................................. 9
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`III. CLAIM CONSTRUCTION ..........................................................................10
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`IV. NO REVIEW SHOULD BE INSTITUTED BECAUSE PETITIONER IS
`BARRED UNDER 35 U.S.C. §315(b) AND LACKS STANDING ............10
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`A. Factual Background of Petitioner Arris ................................................... 11
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`B. The 1-Year Bar of 35 U.S.C. § 315(b) Applies to Any Privy of a
`Company Served With a Complaint And Is Not Limited in Time .......... 13
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`C. Even if Privity Must Exist as of the Petition Date for § 315(b)’s
`Bar to Apply, That Requirement Would Also Be Satisfied Here ............ 17
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`V. NO REVIEW SHOULD BE INSTITUTED WITH RESPECT TO THE
`GROUNDS RAISED BY PETITIONER ......................................................18
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`A. Ground 1: Obviousness of Claims 1, 3, 5, 7, 9, 11, and 16-21 Over
`US Patent 4,679,227 (Hughes), US Patent 4,438,511 (Baran), and
`US Patent 5,838,268 (Frenkel) ................................................................. 22
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`1. The Combination of the Hughes, Baran, and Frenkel Would
`Still Fail to Disclose Several Claim Elements ....................................23
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`2. Petitioner Fails to Provide Sufficient Non-Conclusory Evidence
`to Support a Reason to Combine the References ...............................32
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`B. Ground 2: Obviousness of Claims 2, 4, 6, 8, 10, and 12 Over US
`4,679,227 (Hughes), US Patent 4,438,511 (Baran), US 5,838,268
`(Frenkel), and US 6,219,378 (Wu) ........................................................... 38
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`1. The Combination of the Hughes, Baran, Frenkel, and Wu
`Would Still Fail to Disclose Several Claim Elements ........................39
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`2. Petitioner Fails to Provide Sufficient Non-Conclusory Evidence
`to Support a Reason to Combine the References ...............................42
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`3. The Combination of References Renders the Primary
`Reference “Hughes” Inoperable .......................................................45
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`C. Ground 3: Obviousness of Claims 13-15 Over US 4,679,227
`(Hughes), US Patent 4,438,511 (Baran), US 5,838,268 (Frenkel),
`and TR-024 ............................................................................................. 46
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`1. The Combination of the Hughes, Baran, Frenkel, and TR-024
`Would Still Fail to Disclose Several Claim Elements ........................47
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`2. Petitioner Fails to Provide Sufficient Non-Conclusory Evidence
`to Support a Reason to Combine the References ...............................55
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`VI. CONCLUSION ..............................................................................................59
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`EXHIBIT LIST
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`Exhibit 2001: Co-operation Agreement
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`Exhibit 2002: 10/21/2015 Arris Press Release
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`Exhibit 2003: Common Defense Agreement, May 20, 2015
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`Exhibit 2004: 12/23/2015 Pace Press Release
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`Exhibit 2005: 1/4/2016 Arris Press Release
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`Exhibit 2006: Corporate Disclosure Statement, 13-cv-01835-RGA, (D. Del.), D.I.
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`142, Filed 02/17/16
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`Exhibit 2007: Second Amended Complaint for Patent Infringement, 13-cv-01835-
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`RGA, (D. Del.), D.I. 24, Filed and Served via ECF on 02/07/14
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`I.
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`INTRODUCTION
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`Patent Owner TQ Delta, LLC (“TQ Delta” or “Patent Owner”) submits this
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`preliminary response to the Petition filed by Arris Group, Inc. (“Arris” or
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`“Petitioner”) requesting inter partes review of claims 1-21 of U.S. Pat. No.
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`8,238,412 (“the ’412 patent”).
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`As an initial matter, the Board must deny Institution of this proceeding under
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`the 1-year bar date of 35 U.S.C. § 315(b). 2Wire, Inc., a privy of Petitioner Arris
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`and a real party in interest, was served with a complaint alleging infringement of
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`the ’412 Patent on February 7, 2014—more than one year before the January 3,
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`2016 filing date of this Petition. Arris is the acquirer and successor-in-interest of
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`2Wire. Arris should not be allowed to circumvent the statutory bar of § 315(b),
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`especially when Arris controls the on-going district court proceedings where it can
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`still challenge the validity of the ’412 patent.
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`But in any event, the Petition fails to demonstrate a reasonable likelihood
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`that claims 1-21 of the ’412 patent are unpatentable. Each of the asserted prior art
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`references differs significantly from the inventions claimed by the ’412 patent.
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`Numerous claim limitations are missing from each of the asserted prior art
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`references. Not surprisingly, each of Petitioner’s asserted grounds
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`for
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`unpatentability
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`therefore
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`relies on obviousness.
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` Petitioner, however,
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`unsuccessfully attempts to cobble together various discrete features from multiple
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`different prior art references, with no rhyme or reason, no evidence of any reason
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`for doing so, and no evidence of any reasonable expectation of success.
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`At this stage, therefore, the Board should decline instituting trial on each of
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`the three proposed Grounds for several straightforward reasons.
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`Ground 1: First, Petitioner’s asserted obviousness combination fails to
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`disclose several limitations of each of the challenged claims. None of the
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`references discloses at least including ((a) “transmitting a message, wherein the
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`message comprises one or more data variables that represent the test information,
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`wherein bits in the message are modulated onto DMT symbols using Quadrature
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`Amplitude Modulation (QAM) with more than 1 bit per subchannel,” as required
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`by each of claims 1, 3, 5, 7, 9, 11, and 16-12, (b) transmitting as a data variable
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`“power level per subchannel information,” as required by each of claims 1, 3, 5, 7,
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`9, 11, and 19-21, or (c) transmitting as a data variable “received idle channel noise
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`information,” as required by claims 16-18.
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`With respect to 1, 3, 5, 7, 9, 11, and 19-21, Petitioner incorrectly infers that
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`Hughes transmits “power level per subchannel information,” when in fact what is
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`transmitted is available power level information. (See infra at §IV.A.1.)
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`Petitioner also overlooks that Hughes discloses communicating that information by
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`modulating only 1 bit per subchannel—not “more than 1 bit” as required by the
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`’412 patent claims. (See id.)
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`Similarly, with respect to claims 16-18, Petitioner misleadingly argues that
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`Hughes discloses transmitting “receive noise” data, which it alleges constitutes
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`“frequency domain received idle channel noise.” But in fact, the complete
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`disclosure of Hughes states that the noise data is merely used locally as one
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`variable
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`to determine “which carrier
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`frequencies will support
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`two bit
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`transmission.” The noise data is never transmitted. The information of which
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`carrier frequencies will support communicating two bits of information is what is
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`communicated between the modems—and not the noise data. And even if Hughes
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`did disclose transmitting “frequency domain received idle channel noise” (which it
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`does not), Hughes discloses communicating that information by modulating only 1
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`bit per subchannel—not “more than 1 bit” as required by the ’412 patent claims.
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`Finally, with respect to the Quadrature Amplitude Modulation (QAM)
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`recited in all the challenged claims, the only reference asserted by Petitioner as
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`allegedly disclosing modulating onto DMT symbols “using Quadrature Amplitude
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`Modulation (QAM)” (Frenkel) never in fact discloses QAM—it only discloses
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`what it refers to as “Quadrature Amplitude Shift Keying (QASK).” Petitioner
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`provides no expert testimony that QASK is the same thing as QAM—Petitioner
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`cites to only a single hearsay patent.
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`Second, the only reason provided in the Petition why it would allegedly have
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`been obvious to combine Hughes, Baran, and Frenkel in Ground 1 is a single
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`sentence that simply parrots the Supreme Court’s KSR decision:
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`“As shown below, the subject matter of claims 1, 3, 5, 7, 9, 11, and
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`16-21 was described by the combination of US Patent 4,679,227
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`[Hughes], US Patent 4,438,511 [Baran] and US 5,838,268 [Frenkel] in
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`a manner that would have led a person of ordinary skill in the art to
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`the claimed subject matter through the exercise of only routine skill,
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`since the modification of ‘227 Patent to include the teachings of ‘511
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`Patent and ‘268 Patent is demonstrative of the application of a known
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`technique to a known device to yield predictable results under 35
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`U.S.C. §103.”
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`(Pet. at pp. 15-16.)
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`But Petitioner never explains or provides any actual “articulated reasoning
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`with rational underpinnings” for why one of ordinary skill in the art would have
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`been motivated to combine the teachings of the three patents (e.g., any advantages,
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`desirability, or usefulness in making the combination), how the application of
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`routine skill would have resulted in this combination, what the result would be, or
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`why the result would have been predictable. Petitioner also does not cite to any
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`specific paragraphs from the declaration of its expert, Mr. McNally, to support its
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`conclusory obviousness allegation. (See Pet. at pp. 16-17.) But even if Petitioner
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`had done so, that cannot remedy the lack of support or reasoning in the Petition.
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`(See infra at §IV.A.2, citing authority.) And, any event, Mr. McNally’s declaration
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`is just as conclusory as the Petition and also fails to provide sufficient reasoning or
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`rationale to support obviousness. (See infra at §IV.A.2, discussing McNally
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`declaration.) The Board has repeatedly rejected such conclusory allegations as
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`insufficient to show obviousness and should do so here. (See infra, citing cases.)
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`Ground 2: The proposed combination of references for Ground 2 fails to
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`disclose several elements of claims 2, 4, 6, 8, 10, and 12. Initially, because claims
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`2, 4, 6, 8, 10 and 12 depend from claims 1, 3, 5, 7, 9, and 11 respectively, Ground
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`2 fails for the same reasons as Ground 1. Moreover, the asserted combination of
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`four patents (Hughes, Baran, Frenkel, and the additional Wu patent) also does not
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`teach the additional limitation found in each of claims 2, 4, 6, 8, 10, and 12,
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`namely “wherein the power level per subchannel information is based on a Reverb
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`signal.” The only reference that Petitioner alleges discloses the additional
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`limitation of claims 2, 4, 6, 8, 10, and 12 is Wu. But Wu only teaches calculating
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`power spectral density (PSD) based on a received Reverb signal. (Id.) The
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`calculated PSD is not “power level per subchannel information” as required by the
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`claims, and the Petition does not even allege, much less demonstrate that the two
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`are one and the same. And nowhere does Wu teach transmitting any such
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`information as part of “test information” in a message.
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`In addition, the Petition provides insufficient articulated reasoning to support
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`obviousness for Ground 2. Petitioner again does not allege why a person of
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`ordinary skill in the art would have had a reason to combine the teachings of Wu
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`with the teachings of Hughes, Baran, and Frenkel—e.g., why there would have
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`been a reason to use Wu’s Reverb method to detect power level per subchannel
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`information that is in turn transmitted as part of a diagnostic message. Petitioner
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`only provides
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`the same single-sentence, conclusory allegation regarding
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`obviousness as in Ground 1, modified only to add reference to the Wu patent. (Pet.
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`at p. 41 (conclusorily alleging that combining the references would have been a
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`result of “routine skill” and would have been “predictable”).) For the same reasons
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`as in Ground 1, the Board should reject the Petition’s Ground 2.
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`Ground 3: Petitioner’s Ground 3 is likewise deficient for similar reasons.
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`First, the combination of references does not disclose all of the elements of claims
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`13, 14, and 15. For the same reasons as in Ground 1, none of the identified
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`references discloses sending a diagnostic message “wherein bits in the message
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`were modulated onto DMT symbols using Quadrature Amplitude Modulation
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`(QAM) with more than 1 bit per subchannel,” as recited in each of those claims.
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`(See infra at §IV.C.1.) In addition, none of the references discloses transmitting a
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`message comprising test information “wherein at least one data variable of the one
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`or more data variables comprises an array representing Signal to Noise ratio per
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`subchannel during Showtime information,” as also required by the claims.
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`As discussed in detail below, Hughes discloses measuring only noise (not
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`Signal to Noise ratio) and does not disclose transmitting that noise information.
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`(See infra at IV.C.1.) Baran does not disclose transmitting any noise, much less
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`Signal to Noise ratio related information. (See id.) Petitioner does not allege that
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`Frenkel or Wu disclose this feature. (See id.) And contrary to Petitioner’s
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`convoluted arguments, the TR-024 forum printout (which Petitioner has not
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`sufficiently shown is authentic prior art) only discloses measuring Signal to Noise
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`Ratio information, but not transmitting that information during Showtime. (See
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`id.)
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`Perhaps recognizing the lack of disclosure of this claim element in its
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`asserted references, what Petitioner really does is improperly relies on not just the
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`four alleged printed publications identified in Ground 3, but also on the alleged
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`capabilities of prior products (e.g., Telebit Trailblazer modem) and multiple non-
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`authenticated, hearsay documents regarding various prior DSL standards or typical
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`features of SNMP DSL modems. (See infra at §IV.C.1.) But prior products are
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`not allowable prior art for an IPR, and Petitioner never specifically identifies any
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`of the products or other documents as part of Ground 3. (See 35 U.S.C.
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`§311(b)(only patents and printed publications may form the basis for an IPR
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`petition).) And even if the various products and other documents that Petitioner
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`cites were proper references on which to base obviousness, Petitioner’s ultimate
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`conclusion rests on a circular and illogical assumption that because the “only way”
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`for an SNMP modem to obtain Signal to Noise Ratio information from another
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`modem is to “collect the data over the multicarrier link,” that any such modem
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`must in fact be collecting such data over a link. (See Pet. at p. 54.) Petitioner’s
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`circular argument, unsupported by express or inherent disclosure in any of the
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`asserted prior art references, should be rejected.
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`Second, Ground 3 should be rejected because—just like Grounds 1 and 2—it
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`provides only bare conclusions regarding obviousness, without sufficient
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`articulated reasoning. Ground 3 primarily rests on the same conclusory sentence
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`regarding alleged obviousness set forth in Grounds 1 and 2, parroted from the
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`Supreme Court’s KSR decision. (See Pet. at p. 43 (alleging again that the
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`combination of references “is demonstrative of the application of a known
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`technique to a known device to yield predictable results”).) Ground 3 does,
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`however, include a little more, also stating that it allegedly “would have been
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`obvious to one ordinary skill in the art at the time the invention was made to
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`incorporate the teachings of the ’268 Patent, the ’511 Patent, and TR-024 reference
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`with the teachings of the ’227 Patent in order to formulate a signal to noise ratio
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`value from respective signal power and noise values and transmit test information
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`comprising one or more such data variables, ‘wherein at least one data variable of
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`the one or more data variables comprises an array representing Signal to Noise
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`ratio per subchannel during Showtime information,’ as specified in Limitation
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`[D].” (Pet. at p. 57.) But that allegation is also merely conclusory and circular.
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`Petitioner just argues that it would have been obvious to add element D to
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`references A, B, and C, so that references A, B, and C have element D. The Board
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`has consistently rejected such arguments. (See infra at §IV.C.2.)
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`Accordingly, Petitioner has not carried its burden of showing that any of
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`claims 1-21are unpatentable. Should the Board institute review, however, Patent
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`Owner reserves the right to explain why Petitioner’s proposed combinations do not
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`make sense from a technological standpoint. Patent Owner reserves the right to
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`explain how the cited references are incompatible or would be rendered inoperable
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`or unsuitable for their intended purposes, why the prior art teaches away from the
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`combinations, and why a person of ordinary skill in the art would have reasons not
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`to make the combinations. Patent Owner also reserves the right to object to, and
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`move to exclude, Petitioner’s non-authenticated and hearsay evidence.
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`II.
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`SUMMARY OF THE ’412 PATENT
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`The ’412 patent is one of a series of patents by the named inventors in the
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`field of digital subscriber line (“DSL”) technology. DSL is a technology that
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`provides high-speed broadband access over the wires of telephone network.
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`The inventors were substantial contributors of core technology to DSL
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`standards on behalf of TQ Delta’s predecessor in interest, Aware, Inc., a world-
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`leading innovator and provider of DSL technologies. Some of the core
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`technologies developed by Aware, including the inventions of the ’412 Patent,
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`have been adopted for use in other communications systems, such as Multimedia
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`over Coax (“MoCa”), which is used for high-speed communication of content over
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`coaxial cables within a home. Petitioner used the inventions of the ’412 patent in
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`both its DSL and MoCA products.
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`III. CLAIM CONSTRUCTION
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`The Petition offers no proposed claim constructions for any terms. Patent
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`Owner TQ Delta agrees that, for purposes of determining whether to institute based
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`on the Petition (i.e., whether there is a reasonable likelihood that Petitioner will
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`prevail in demonstrating that a challenged claim is unpatentable), there is no need
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`to construe any of the terms of the claims.
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`IV. NO REVIEW SHOULD BE INSTITUTED BECAUSE PETITIONER
`IS BARRED UNDER 35 U.S.C. §315(b) AND LACKS STANDING
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`Under 35 U.S.C. § 315(b), an inter partes review “may not be instituted if
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`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.” 35 U.S.C. § 315(b). “Whether a
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`party who is not a named participant in a given proceeding nonetheless constitutes
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`a ‘real party-in-interest’ or ‘privy’ to that proceeding is a highly fact-dependent
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`question.” Office Patent Trial Practice Guide, Fed. Reg. 48759 (Aug. 14, 2012).
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`“The Office intends to evaluate what parties constitute ‘privies’ in a manner
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`consistent with the flexible and equitable considerations established under federal
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`caselaw.” Id. Under 35 U.S.C. § 315, to find privity between a party served with a
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`complaint and petitioner, it is not necessary that the party and petitioner be in
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`privity at the time of service of the complaint alleging infringement. See VMWare,
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`Inc. v. Good Technology Software, Inc., Case IPR2015-00027, Paper 11 at 4
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`(P.T.A.B. February 20, 2015) (refusing to “conclude that privity under § 315(b) is
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`determined only at the time of service of a complaint alleging infringement of the
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`challenged patent.”). Here, the Petition should be denied on its face because
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`Petitioner Arris is simply the successor-in-interest of another company, 2Wire,
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`Inc., which has been involved in litigation with Patent Owner for over two years.
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`A.
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`Factual Background of Petitioner Arris
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`The facts are uncontroverted. On February 7, 2014, Patent Owner served
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`2Wire with a Second Amended Complaint (Ex. 2007) alleging infringement by
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`2Wire of the ’412 Patent (the “2Wire Lawsuit”).1 At the time of the filing of the
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`Second Amended Complaint, 2Wire was a wholly-owned subsidiary of Pace Plc.
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`It is therefore incontrovertible that, at least since February 7, 2015, 2Wire and Pace
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`1 On November 7, 2013, Patent Owner filed an original complaint against 2Wire,
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`Inc.’s sister company Pace Americas, Inc. in the United States District Court for
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`the District of Delaware. The Second Amended Complaint, which is referenced
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`and relied upon for purposes of this Patent Owner’s Preliminary Response, added
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`2Wire, Inc. and Pace Plc as defendants. (Ex. 2007.)
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`Plc have been barred from challenging the validity of the claims of ’412 Patent in
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`an inter partes review proceeding under 35 U.S.C. § 315(b). The 2Wire Lawsuit is
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`ongoing, and the ’412 patent’s validity is being challenged in the 2Wire Lawsuit.
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`Subsequently, on April 22, 2015, Arris and Pace Plc entered into a Co-
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`operation Agreement to implement a Scheme for the Acquisition and Merger of
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`Pace/2Wire and Arris. (Ex. 2001, Co-Operation Agreement dated 4/15.) The Co-
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`operation Agreement provided, inter alia, that “Arris, through one of its wholly-
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`owned Affiliates, New Arris, intends to announce a firm intention to acquire the
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`entire issued and to be issued share capital of Pace on the terms and subject to the
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`conditions referred to in this Agreement and set out in the 2.7 Announcement.”
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`(See id. at p. 2.) The Co-Operation Agreement further provided that “[t]he
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`Acquisition [was] intended to be effected by way of a scheme of arrangement
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`(‘Scheme’) under sections 895 to 899 of the UK Companies Act.” (Id.) On May
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`20, 2015, Arris and Pace/2Wire entered into a Common Defense Agreement. (Ex.
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`2003, Common Defense Agreement dated 5/20/15.) On October 21, 2015, “Arris’
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`stockholders approved the merger agreement implementing ARRIS’ pending
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`acquisition of Pace and the related reorganization in a cash and stock transaction.”
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`(See Ex. 2002, 10/21/15 Arris Press Release.) Dealing in Pace shares was
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`suspended on December 23, 2015. (Ex. 2004, 12/23/15 Pace Press Release). All
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`that was left on January 4, 2016 was final closing of the merger. (Ex. 2005, 1/4/16
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`Arris Press Release.) Knowing that the merger was about to close, Arris filed the
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`present Petition on January 2, 2016, in an apparent attempt to create an argument
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`that the bar of § 315(b) does not apply.
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`B. The 1-Year Bar of 35 U.S.C. § 315(b) Applies to Any Privy of a
`Company Served With a Complaint And Is Not Limited in Time
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`Importantly, § 315(b) does not limit the cut-off date for determining whether
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`privity exists between a barred party and a Petitioner to only the date of the
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`petition. Indeed, the only dates referenced in § 315(b) are the dates when the 1-
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`year period starts and stops. See 35 U.S.C. § 315 (b) (an inter partes review “may
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`not be instituted if the petition requesting the proceeding is filed more than 1 year
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`after the date on which the petitioner, real party in interest, or privy of the
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`petitioner is served with a complaint alleging infringement of the patent”). In other
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`words, the express language of § 315(b) does not read that inter partes review may
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`not be instituted if the petition is filed more than one year after the date on which a
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`“privy of the petitioner as of the date of the Petition” is served with a complaint.
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`Such an interpretation would improperly read words into the statute that are not
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`present. See, e.g., Momenta Pharms., Inc. v. Amphastar Pharms., Inc., 686 F.3d
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`1348 (Fed. Cir. 2012) (it is improper to “read words into [a] statute in violation of
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`the express language chosen by Congress”).
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`In contrast, what § 315(b) does state regarding the privity determination is
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`that it is decided by the Board when determining whether or not to institute the
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`13
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`inter partes review. That date is set by the statute as “within 3 months after (1)
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`receiving a preliminary response to the petition under section 313; or (2) if no such
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`preliminary response is filed, the last date on which such response may be filed.”
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`35 U.S.C. § 314.
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`Accordingly, under the plain language of the statute, the Board cannot
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`institute review here, where Arris has acquired a company that otherwise was
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`barred from filing a petition under § 315(b).2 This is the only result that makes
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`sense, because after a merger or acquisition, the acquiring party becomes the
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`“successor-in-interest” to the acquired party. Indeed, for other legal bars such as
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`estoppel, injunctions, or res judicata, an acquiring company that becomes a
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`“successor-in-interest” to another company steps into the shoes of the predecessor
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`company for purposes of such legal bars. See, e.g., Jamesbury Corp. v. Litton
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` The Board’s non-binding, non-precedential decision in Synopsys, Inc. v. Mentor
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`2
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`Graphics Corp. does not compel a different result. See Synopsys, Inc. v. Mentor
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`Graphics Corp., IPR2012-00042, Paper 16 at 18 (P.T.A.B. February 22, 2013)
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`(finding no privity relationship to successor entity). In any case, Synopsys is
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`factually distinguishable. In Synopsys, the prior district court proceeding was
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`dismissed with prejudice before the defendant was acquired by the petitioner
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`Synopsys. See IPR2012-00042, Paper 16 at 3.
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`14
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`Patent Owner’s Preliminary Response
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`Indus. Prods., Inc., 839 F.2d 1544, 1555 (Fed. Cir. 1988), overruled on other
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`grounds by A. C. Aukerman Co. v. R. L. Chaides Constr. Co., 960 F.2d 1020 (Fed.
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`Cir. 1992) (equitable estoppel as to predecessor-in-interest transfers to successor-
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`in-interest); Additive Controls & Measurement Sys. v. Flowdata, Inc., 154 F.3d
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`1345, 1352 (Fed. Cir. 1998) (“An injunction may survive the dissolution of the
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`corporation at which it is directed and continue to bind any successor in interest to
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`the original defendant.”) As the Federal Circuit has explained, “[s]uch a rule is
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`necessary to prevent an enjoined defendant from nullifying a decree by carrying
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`out prohibited acts through aiders and abettors, although they were not parties to
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`the original proceeding.” Additive Controls, 154 F.3d at 1352.
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`That same concern is true here. Allowing a party that would otherwise be
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`barred under § 315(b) from pursuing an inter partes proceeding by filing the
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`petition through a soon-to-be merger partner would be a huge loophole. Here there
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`is no question that Arris is at least in privity now with a party that is otherwise
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`time-barred from filing a petition under § 315(b)—Arris acquired the entirety of
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`Pace/2Wire. See, e.g., VMWare, Inc. v. Good Technology Software, Inc., Case
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`IPR2015-00027, Paper 11 at 2 (P.T.A.B. March 6, 2015) (Petitioner in privity with
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`acquired company “as a result of the acquisition”). As a result of the acquisition,
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`Arris is the “successor-in-interest” of Pace/2Wire. At this point, Arris essentially
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`is Pace/2Wire and has stepped into the shoes of Pace/2Wire. See 3M v. Eco Chem,
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`15
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`Inc., 757 F.2d 1256 (Fed. Cir. 1985) (a successor in interest “steps into the shoes of
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`its predecessor” and “assumes the obligations of the predecessor’s pending
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`litigation”). Allowing Arris to file the present Petition would be essentially the
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`same as letting Pace/2Wire improperly file a petition after the 1-year bar date, or
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`letting Pace/2Wire simply change its legal name or corporate structure to
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`circumvent § 315(b).
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`Additionally, in the ongoing 2Wire Lawsuit, Arris (as the ultimate corporate
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`parent of 2Wire), controls or has the ability to assume control of the 2Wire
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`Lawsuit. (Ex. 2006, Amended Corporate Disclosure Statement filed in 2Wire
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`Lawsuit.) And control of the 2Wire Lawsuit is an important consideration in
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`concluding that Arris, a nonparty in the 2Wire Lawsuit, is in fact a privy of 2Wire
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`and, therefore, properly barred under 35 U.S.C. § 315. See Wavemarket Inc. v.
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`Locationet Systems Ltd., IPR2014-00920, Paper 23 at 6 (P.T.A.B. January 22,
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`2015) (noting that “the weight of authority discussed in the Trial Practice Guide
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`indicates that control is an important consideration in the determination of whether
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`a non-named party is a privy.”). Also, for a finding of privity, it is not necessary
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`that Arris actually control the 2Wire Lawsuit. It is sufficient if Arris has a “legal
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`right, to assume control” of the on-going 2Wire Lawsuit. See Aruze Gaming
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`Macau, Ltd. v. MGT Gaming, Inc., IPR2014-01288, Paper 13 at 14 (P.T.A.B.
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`February 20, 2015) (noting “that actual assumption of control of the lawsuit is not
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`16
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`Patent Owner’s Preliminary Response
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`necessary for a finding of privity; the opportunity, or legal right, to assume control
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`is sufficient.”). Because Arris had and will have an opportunity to assume control
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`of the 2Wire Lawsuit and therefore exercise its right to challenge the validity of the
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`’412 patent in the 2Wire Lawsuit, this Petition filed by Arris must be denied under
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`35 U.S.C. § 315. Id. at 15 (stating that a petition may be properly denied under 35
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`U.S.C. § 315 if “the petitioner’s relationship with the prior litigant was sufficiently
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`close that it can be said that the petitioner had, or will have, a full and fair
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`opportunity to litigate the validity of the patent in that prior action. If we are
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`satisfied that petitioner has ‘enjoyed its day in court’ through its relationship with
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`the litigant, it is fair to consider the parties to be privies.” (emphasis added)).
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`C. Even if Privity Must Exist as of the Petition Date for § 315(b)’s Bar
`to Apply, That Requirement Would Also Be Satisfied Here
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`Alternatively, to the extent the Board is inclined to interpret § 315(b) as
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`requiring absolute privity in the form of a consummated merger between the
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`parties before the filing date of a petition, other panels have counseled against
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`adopting such a “bright line” interpretation of § 315(b). See, e.g,. Wavemarket Inc.
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`v. Locationet Systems Ltd., IPR2014-00920, Paper 23 at 6 (P.T.A.B. January 22,
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`2015) (stating that “there is no “bright line test” for determining the necessary
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`quantity or degree of participation to qualify as a privy based on the control
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`concept.”). If the Board interprets § 315(b) as requiring privity before the filing
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`date of the Petition, notwithstanding the effective merger date of January 4, 2016
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`(which based on public records appears to merely be a corporate formality), it is
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`incontrovertible from the history of corporate interactions between Pace Plc and
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`Arris going back to April 22, 2015 (i.e. entering into the Co-operation Agreement
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`and culminating in the final approval of the merger on December 22, 2015), that
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`Pace Plc and Arris were in privity well before the January 2, 2016 filing date of
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