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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`APPLE, INC.
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`Petitioner
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`v.
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`CHESTNUT HILL SOUND INC.
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`Patent Owner
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`
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`Case IPR2016-00794
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`Patent 8,090,309
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`
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`PATENT OWNER’S RESPONSE TO PETITIONER’S
`MOTION TO EXCLUDE
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`Case IPR2016-00794
`Patent 8,090,309
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`TABLE OF CONTENTS
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`I. Exhibits 2004, 2015, and 2016 Are Not Hearsay and Are Properly
`Authenticated ....................................................................................................... 1
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`A. Exhibits 2004, 2015, and 2016 Are Not Offered for the Truth
`of the Matter Asserted and Thus Are Not Hearsay ....................................... 2
`B. Exhibits 2015 and 2016 Are Properly Authenticated Under
`Rule 803(6) .................................................................................................... 3
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`II. Exhibits 2008 and 2009 Are Not Offered for the Truth of the Matter
`Asserted and Thus Are Not Hearsay ................................................................... 7
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`III. Exhibit 2014 Is Also Admissible Because It Captures Admissions
`by Party Opponent ............................................................................................... 9
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`IV. The Board Should Consider Patent Owner’s Evidence Under the
`Residual Hearsay Exception .............................................................................. 10
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`V. Patent Owner Requests That the Board Take Judicial Notice of
`Filings Before the District Court and Readily Ascertainable Facts .................. 11
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`TABLE OF AUTHORITIES
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`Case IPR2016-00794
`Patent 8,090,309
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`Cases
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`Anderson v. United States
` 417 U.S. 211 (1974) ................................................................................................ 2
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`Conoco Inc. v. Department of Energy
` 99 F.3d 387 (Fed. Cir. 1996) ..............................................................................4, 6
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`Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co.
` CBM2012-00002, Paper 66 (January 23, 2014) ..................................................... 1
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`QSC Audio Products, LLC v. Crest Audio, Inc.
` IPR2014-00127, Paper 43 (April 29, 2015).......................................................... 11
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`REG Synthetic Fuels, LLC v. Neste Oil Oyj
` 841 F.3d 954 (Fed. Cir. 2016) ................................................................................ 2
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`S.E.C. v. Guenthner
` 395 F. Supp. 2d 835 (D. Neb. 2005) ....................................................................... 1
`
`U.S. v. McIntyre
` 997 F.2d 687 (10th Cir. 1993) .............................................................................. 10
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`VirtualAgility Inc. v. Salesforce.com, Inc.
` 759 F.3d 1307 (Fed. Cir. 2014) ............................................................................ 12
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`Rules
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`Fed. R. Evid. 201 ..................................................................................................... 12
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`Fed. R. Evid. 801 ...................................................................................................2, 8
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`Fed. R. Evid. 801(d)(2) .............................................................................................. 9
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`Fed. R. Evid. 803(6) .......................................................................................... 3, 4, 6
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`Fed. R. Evid. 803(6)(A) ............................................................................................. 4
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`Fed. R. Evid. 803(6)(B) ............................................................................................. 5
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`Fed. R. Evid. 803(6)(C) ............................................................................................. 5
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`Fed. R. Evid. 803(6)(D) ............................................................................................. 6
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`Fed. R. Evid. 803(6)(E) .............................................................................................. 6
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`Fed. R. Evid. 807 .............................................................................................. 10, 11
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`Petitioner misapprehends the evidentiary goals of this Board, sitting as a
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`non-jury tribunal with a limited discovery scope. The Board has previously noted
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`that “the Board, sitting as a non-jury tribunal with administrative expertise, is well-
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`positioned to determine and assign appropriate weight to the evidence presented in
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`this trial, without resorting to formal exclusion that might later be held reversible
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`error.” Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co., CBM2012-
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`00002, Paper 66 at 70 (January 23, 2014) (citing e.g., S.E.C. v. Guenthner, 395 F.
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`Supp. 2d 835, 842 n.3 (D. Neb. 2005)). The Board should liberally construe the
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`rules of evidence, here, and consider Patent Owner’s evidence of secondary
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`considerations because that non-hearsay evidence is properly authenticated,
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`relevant, and appropriate for Board examination.
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`I.
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`Exhibits 2004, 2015, and 2016 Are Not Hearsay and Are Properly
`Authenticated.
`Although addressed separately by Petitioner, Exhibits 2015 and 2016
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`(collectively) are the same as Exhibit 2004. The papers that were filed together as
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`Exhibit 2004 were simply separated into two separate exhibits for easier reference
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`in the later filings. Those exhibits consist of press releases. The objections to all
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`three of those exhibits1 are addressed together, here.
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`1 Petitioner addresses these exhibits on pages 1-4 and 11-15 for Exhibit 2004
`and Exhibits 2015 and 2016, respectively. See Petitioner’s Motion to Exclude, Paper
`No. 23.
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`A. Exhibits 2004, 2015, and 2016 Are Not Offered for the Truth of
`the Matter Asserted and Thus Are Not Hearsay.
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`Rule 801 does not apply to exclude Exhibits 2004, 2015, and 2016 because
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`those exhibits are not offered for the truth of the matter asserted in the statements.
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`“Out-of-court statements constitute hearsay only when offered in evidence to prove
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`the truth of the matter asserted.” Anderson v. United States, 417 U.S. 211, 219
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`(1974). In one example of the complexity of this analysis, the Federal Circuit
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`determined that the exclusion of emails discussing the difficulty of reaching a
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`sample purity percentage was error. REG Synthetic Fuels, LLC v. Neste Oil Oyj,
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`841 F.3d 954, 964 (Fed. Cir. 2016). Although the question of the required sample
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`purity was an issue in the case, the emails were offered as proof of what the author
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`knew about the required purity and when he knew it, not whether the purity level
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`had been reached. Id. While the goal in admitting the statements, when the author
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`knew of the purity requirements, was closely tied to whether the author had
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`achieved those results, statements were permitted to prove the first even if they
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`addressed the second.
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`In this case, all three exhibits are offered as proof of the secondary
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`considerations of non-obviousness. Specifically, they are offered to demonstrate
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`that the George product, the commercial embodiment of the ’309 patent, was
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`praised by others. Those exhibits are quoted as noting that the George product
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`won a Best of Show award at the 2007 Macworld Expo (Patent Owner’s Response,
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`Paper No. 16, at 26) and that it won additional awards from PC Magazine, LapTop
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`and Mac|Life (Patent Owner’s Response, Paper No. 16, at 7 and 25-26). Patent
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`Owner is offering those statements as indicia that the George product, embodying
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`the claims of the ’309 patent, was praised by others. It is not the accuracy of the
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`praise—whether or not the George product did win a Best of Show award or other
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`awards—but rather the existence of the praise in the first place that is integral to
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`the evaluation of secondary considerations. Since it is the praise as praise and not
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`as evidence of the winning of awards, those statements are not offered for the truth
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`of the matter asserted, and are by definition not hearsay. Consequently Exhibits
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`2004, 2015, and 2016 should not be excluded and should be duly considered by the
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`Board.
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`B. Exhibits 2015 and 2016 Are Properly Authenticated Under Rule
`803(6).
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`Exhibits 2015 and 2016 are further admissible under the exception of Rule
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`803(6) because they are properly authenticated records of a regularly conducted
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`activity. Rule 803(6) permits records of regularly conducted activity to be
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`admitted if those records are supported by the testimony of “the custodian or other
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`qualified witness.” Robert Friedman, Chairman and CEO of Chestnut Hill Sound
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`Inc., Petitioner, submitted a sworn declaration in support of the admission of
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`Exhibits 2015 and 2016 as business records.
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`While Petitioner quibbles that the records are press releases generated by a
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`third party, that is immaterial. As the Federal Circuit notes, “[c]ourts have made
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`clear, however, that the “custodian or other qualified witness” who must
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`authenticate business records need not be the person who prepared or maintained
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`the records, or even an employee of the record-keeping entity…” Conoco Inc. v.
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`Department of Energy, 99 F.3d 387, 391-92 (Fed. Cir. 1996). In Conoco the Court
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`was faced with whether purchase statements generated for Koch Oil Company by
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`Getty Oil Company, which were then transmitted to Conoco, and later to the
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`Department of Energy, were admissible when ultimately offered as evidence by the
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`Department of Energy). Despite the tortured chain of custody, the Federal Circuit
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`determined that those invoices were admissible despite the authenticating party not
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`being the originating party. Id.
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`Like the purchase invoices in Conoco, Patent Owner’s evidence of praise by
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`others meets all the requirements of Rule 803(6). Rule 803(6)(A) requires that the
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`record of the act or event be made “at or near the time by--or from information
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`transmitted by--someone with knowledge.” Exhibit 2015 published on January 12,
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`2007, at or near the time of the Macworld Expo, quotes Jason Snell, the
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`VP/Editorial Director of Macworld, cites to the Macworld Video Podcast (Podcast
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`#5) featuring a profile of the Best of Show winners (which included the George
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`product), and quotes Steve Krampf, who at the time was the CEO of Chestnut Hill
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`Sound.2 Mr. Snell, the Macworld Podcast, and Mr. Krampf, all quoted at or near
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`the time of the Macworld Expo, were persons with knowledge of the information
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`underpinning the article.
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`Likewise, Exhibit 2015 was published on April 27, 2007, at or near the time
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`that the George system received its accolades from PC Magazine, LapTop, and
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`Mac|Life. Mr. Krampf is again quoted expressing delight at the reception the
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`George product received. Mr. Krampf, based upon his role in Chestnut Hill Sound
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`at that time, was undoubtedly a person with knowledge of the acts and events
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`surrounding the accolades for the George product.
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`Mr. Friedman’s testimony further meets the requirements of Rule 803(6)(B)
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`and (C) in that the record was kept in the regular course of the Patent Owner’s
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`business, and making the record was a regular practice of that activity. Mr.
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`Friedman testified that Chestnut Hill Sound Inc. regularly made a record of the
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`Press Releases issued, and that the attached press releases (Exhibits 2015 and
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`2016) are exact duplicates of the original press releases. See Friedman Decl., at ¶
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`2 Petitioner complains that Krampf was not offered for cross-examination, and
`that this is somehow grounds to disregard the evidence of praise by others. But as
`explained above, Patent Owner does not present Exhibits 2015 and 2016 for the truth
`of the matters asserted regarding what awards the George product won or even what
`Mr. Krampf stated at the time. Patent Owner presents Exhibits 2015 and 2016 as
`evidence of praise by others for purposes of the secondary consideration analysis.
`Additionally, Mr. Krampf, the then-CEO of Chestnut Hill Sound, was not an “other”
`for purposes of the secondary consideration analysis.
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`4. As discussed above, the law does not require that Patent Owner generate the
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`record to maintain it as a business record. See Conoco, 99 F.3d at 391-92.
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`Otherwise, most business records (tax records, receipts, invoices from vendors,
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`etc.) would not be considered to be valid business records.
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`Elements (D) and (E) of Rule 803(6) are also satisfied since the declaration
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`of Mr. Friedman was appropriately filed to support the exhibits, and there is no
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`indication of a lack of trustworthiness. Since all of the elements of Rule 803(6) are
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`met, Exhibits 2015 and 2016 are admissible.
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`Petitioner is reading requirements into the Federal Rules of Evidence that do
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`not exist. Petitioner asserts that the statements were not “made by an “employee or
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`representative with knowledge of the act, event, condition, opinion, or diagnosis,
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`recorded,” and thus [Patent Owner] has not shown that the business record
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`exception, or any other exception to the rule against hearsay, applies these
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`statements.” But that text does not appear within the scope of Rule 803(6).
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`Finally, it bears repeating that Petitioner does not dispute that any of these
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`laurels were bestowed upon Patent Owner’s product. Petitioner merely objects to
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`the manner in which they are offered to the Board. The goal of the evidentiary
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`rules in proceedings before the Board is not to prevent the admission of undisputed
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`facts, but to review a record that is as complete as possible before determining the
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`non-obviousness of a patent. The secondary considerations here are significant
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`and worth evaluating on a complete record.
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`II. Exhibits 2008 and 2009 Are Not Offered for the Truth of the
`Matter Asserted and Thus Are Not Hearsay.
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`Exhibits 2008 and 2009, articles published about the George product in
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`magazines, are not hearsay because those exhibits are not offered for the truth of
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`the matter asserted in the statements. The Patent Owner, by offering these
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`Exhibits, is establishing that the George product was commercially successful and
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`that it was praised by others. The statements quoted in the Patent Owner’s
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`Response are evidence of positive reviews, not the quality of the George product.
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`Patent Owner’s Response cites these Exhibits pursuant to the secondary
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`considerations analysis, namely the factors of commercial success and praise by
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`others. For example, Patent Owner notes that “industry publications praised
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`George’s remote device” and then cites Exhibit 2008 in support of that
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`proposition. See Patent Owner’s Response, Paper No. 16, at 27. Exhibit 2008
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`refers to George as an impressive package of technology, but Patent Owner did not
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`cite Exhibit 2008 for the truth of the statement that George was in fact an
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`impressive package of technology. Rather, Patent Owner cited Exhibit 2008 as
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`evidence that George was commercially successful and praised by others in the
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`relevant industry.
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`Patent Owner’s Response goes on to quote the article calling the system “an
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`impressive package of technology, a great iPod speaker system, and a very good
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`desktop stereo.” Patent Owner is not attempting to prove that George is
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`impressive, great, or even very good, but rather Patent Owner is offering these
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`statements as evidence of commercial success and praise by others, as embodied
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`by rave reviews from industry publications. Likewise, Patent Owner continues to
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`cite to Exhibit 2008 to note that the reviewer describes the “unique and compelling
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`combination of features” of the challenged system. But Patent Owner is not
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`attempting to prove that the combination of features is unique and compelling.
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`Patent Owner is simply offering these statements as indicia for the secondary
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`factors of commercial success and praise by others. The statements made in these
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`Exhibits are about the specific features of the George system. The Patent Owner is
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`offering these statements as evidence of praise by others. The out of court
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`declarant offers no statements regarding praise by others. Consequently, these
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`statements are not hearsay since they are not offered to prove the truth of the
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`matter asserted, and they are admissible. Petitioner’s objections regarding the
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`admissibility of Exhibit 2008 under Rule 801 should be overruled.
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`In the same vein as Exhibit 2008, several citations are made to Exhibit 2009
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`to illustrate the secondary considerations of commercial success and praise by
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`others. Specifically, Exhibit 2009 is cited as describing George as having four and
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`a half stars, being very capable, having a wide variety of functions, being
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`advanced, easy to use, and the “new king of the iPod dock mountain.” Patent
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`Owner is not attempting to prove that the challenged claims are any of those
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`things. Patent Owner is instead offering these statements as indicia of the praise by
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`others in the industry and commercial success of the George product, which
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`embodied the challenged claims.
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`III. Exhibit 2014 Is Also Admissible Because It Captures Admissions
`by Party Opponent.
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`Petitioner’s objections to statements made by the Petitioner in Exhibit
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`2014 are explicitly excluded from hearsay under Rule 801(d)(2). The statement
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`that the Petitioner was “impressed with [Patent Owner] Chestnut Hill Sound’s
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`technology plans and that no one else in the industry had approached [Petitioner]
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`with a similar plan” was offered by Petitioner’s representative to the Patent Owner.
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`It is by definition, not hearsay and should be considered by the Board, as should
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`any other statements made by Petitioner to Patent Owner. If Petitioner wishes to
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`dispute whether that statement was made, then it should offer counter-evidence.
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`Petitioner’s sales of the George product in its stores (Exhibit 2014 at ¶¶ 20-
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`21) are likewise an admission by a party-opponent. U.S. v. McIntyre, 997 F.2d
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`687, 703-04 (10th Cir. 1993) (“Some nonverbal conduct, such as the act of
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`pointing to identify a suspect in a lineup, is clearly the equivalent of words,
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`assertive in nature, and to be regarded as a statement.”). These statements are not
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`hearsay, by definition, and should be evaluated by the Board.
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`IV. The Board Should Consider Patent Owner’s Evidence Under the
`Residual Hearsay Exception.
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`In addition, the above-raised arguments, the residual hearsay exception also
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`applies, and Patent Owner’s evidence should be considered by the Board. Rule
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`807 provides that a hearsay statement is not excluded if: (1) the statement has
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`equivalent circumstantial guarantees of trustworthiness; (2) it is offered as
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`evidence of a material fact; (3) it is more probative on the point for which it is
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`offered than any other evidence that the proponent can obtain through reasonable
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`efforts; and (4) admitting it will best serve the purposes of these rules and the
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`interests of justice. For example, the statement that the George product won the
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`Best of Show award at the 2007 Macworld Expo has equivalent circumstantial
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`guarantees of trustworthiness because it is independently verifiable by reviewing
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`the Macworlds website:
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`http://www.macworld.com/article/1054835/bosprofile.html (Mathew Honan, Expo
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`Best of Show winner profiles, MACWORLD, published Jan. 12, 2007, last visited
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`March 28, 2017). Visiting Macworld’s website reveals that the George product
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`was one of several which won Best of Show in 2007. Patent Owner is offering the
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`statement as evidence of a material fact: it is one of several indicia of secondary
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`considerations that go directly to the issue of the non-obviousness of the claims of
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`the ’309 patent. The exhibits offered are more probative than any other evidence
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`available to Patent Owner through reasonable efforts, since the custodian of the
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`Macworld records is not under the control of Patent Owner.
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`Finally, admitting the evidence serves both the evidentiary rules and justice.
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`Petitioner is not disputing that Patent Owner’s product won Best of Show,
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`Petitioner merely wants to exclude that evidence because it shows the praise from
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`others that the product embodying the claims of the ’309 patent received. It is not
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`the goal of the Federal Rules of Evidence to exclude facts upon which there is no
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`dispute. The offered exhibits fall within the residual exception, and establishing
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`this as an exceptional case is not required by Board precedent. QSC Audio
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`Products, LLC v. Crest Audio, Inc., Final Written Decision in IPR2014-00127
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`(April 29, 2015) (finding that the four requirements of Rule 807 were met, with no
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`analysis of whether it was an “exceptional case”).
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`V.
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`Patent Owner Requests That the Board Take Judicial Notice of
`Filings Before the District Court and Readily Ascertainable Facts.
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`Petitioner’s objections to Exhibit 2004 and 2014 (filed in the District Court
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`litigation) as unauthenticated are spurious. Petitioner cannot accurately contend
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`that the documents are not authentic copies of the district court filings (and it does
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`not so contend). Instead, Petitioner complains that Patent Owner did not provide
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`evidence that it is an authentic copy of the district court filing. Judicial records are
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`“capable of accurate and ready determination by resort to unquestionable sources,”
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`and therefore, judicial notice of records filed before other tribunals is appropriate.
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`VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1312-13 (Fed. Cir. 2014)
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`(taking judicial notice of filing before the Board). Consequently, Patent Owner
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`requests that the Board take judicial notice of Exhibits 2004 (and by extension the
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`excerpted Exhibits 2015 and 2016) and 2014 and find that they are properly
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`authenticated.
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`If the Board is unpersuaded by the arguments regarding hearsay and
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`authentication presented herein with respect to Exhibits 2008, 2009, 2015, and
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`2016, Patent Owner requests that the Board take judicial notice of the fact that the
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`George product won Best of Show at the 2007 Macworld Expo under Rule 201 and
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`that the Board take judicial notice of the various reviews published about the
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`George product. The facts in question are adjudicative facts (existence of the
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`accolades and praise, not the content) which can be accurately and readily
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`determined on the Macworld Expo website and the websites of the reviews, cited
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`above. The accuracy of those websites in publishing their own content, such as the
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`Best of Show winners, cannot be reasonably questioned.
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`Dated: March 30, 2017
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`Respectfully submitted,
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`Chestnut Hill Sound Inc.
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`By: /Hamad M. Hamad/
`
`Hamad M. Hamad, Reg. No. 64,641
`Alexis (Steinberg) Mosser, Reg. No. 74,650
`CALDWELL CASSADY CURRY, P.C.
`2101 Cedar Springs Road, Suite 1000
`Dallas, Texas 75201
`Telephone: 214.888.4848
`Facsimile: 214.888.4849
`hhamad@caldwellcc.com
`amosser@caldwellcc.com
`chillsound@caldwellcc.com
`ccc-ptab@caldwellcc.com
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`CERTIFICATE OF SERVICE UNDER 37 C.F.R. § 42.6 (e)(4)
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`It is hereby certified that on this 30th day of March, 2017, a copy of the
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`foregoing document was served via electronic mail, as previously consented to by
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`Petitioner upon the following counsel of record:
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`W. Karl Renner, IPR39521-0016IP2@fr.com
`Joshua A. Griswold, PTABInbound@fr.com
`Katherine A. Vidal, PTABInbound@fr.com
`Dan Smith, PTABInbound@fr.com
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`
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`Date: March 30, 2017
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` /Hamad M. Hamad/
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`Hamad M. Hamad, Reg. No. 64,641
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