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`UNITED STATES PATENT AND TRADEMARK OFFICE
`________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`________
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`CISCO SYSTEMS, INC., et al.
`Petitioner,
`
`v.
`
`TQ DELTA LLC,
`Patent Owner.
`________
`
`Case IPR2016-01020 (Patent 9,014,243)
`Case IPR2016-01021 (Patent 8,718,158)
`________
`
`Record of Oral Hearing
`Held: August 3, 2017
`________
`
`
`
`Before SALLY C. MEDLEY, TREVOR M. JEFFERSON, and
`MATTHEW R. CLEMENTS, Administrative Patent Judges
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`Case IPR2016-01020 (Patent 9,014,243)
`Case IPR2016-01021 (Patent 8,718,158)
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`APPEARANCES:
`
`ON BEHALF OF THE PETITIONER:
`
`David L. McCombs, Esquire
`
`
`Theodore M. Foster, Esquire
`
`
`Gregory P. Huh, Esquire
`
`
` Haynes and Boone, LLP
`
`
`2523 Victory Avenue, Suite 700
`
`
`Dallas, Texas 75219
`
`
`ON BEHALF OF THE PATENT OWNER:
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`
`Peter J. McAndrews, Esquire
`
`
`Christopher M. Scharff, Esquire
`
`
`Rajendra A. Chiplunkar, Esquire
`
`
`McAndrews Held & Malloy, Ltd.
`
`
`500 West Madison Street, 34th Floor
`
`
`Chicago, Illinois 60661
`
`
`The above-entitled matter came on for hearing on Thursday, August 3, 2017,
`
`commencing at 2:56 p.m., at the U.S. Patent and Trademark Office, 600 Dulany Street,
`Alexandria, Virginia.
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`Case IPR2016-01020 (Patent 9,014,243)
`Case IPR2016-01021 (Patent 8,718,158)
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` P R O C E E D I N G S
` JUDGE MEDLEY: Good afternoon. We are on
` the record. This is the hearing for IPR 2016 01020
` and 1021. Cisco Systems, et al. versus TQ Delta.
` Each side has 40 minutes to argue.
` Petitioner, you will proceed first,
` to present your case with respect to the challenged
` claims and grounds for which we instituted a trial.
` And then thereafter, patent owner, you may have
` time to respond and petitioner, you may reserve
` rebuttal time.
` At this time we would like the parties
` to please introduce themselves beginning with
` petitioner.
` MR. MCCOMBS: Your Honors, I'm David
` McCombs with Haynes & Boone, and with me is Theo
` Foster and Gregory Huh and Dina Blikshteyn. Also we
` have with us today, on behalf of Dish Networks we
` Jennifer Volk and Stephen McBride from Cooley. And
` then also we have for the Comcast entities we
` have Corey Manley with Duane Morris.
` JUDGE MEDLEY: And Mr. Foster, you will be
` presenting?
` MR. FOSTER: That's correct.
` JUDGE MEDLEY: And patent owner?
` MR. MCANDREWS: Good afternoon, Your
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` Honor. I'm Peter McAndrews with McAndrews Held &
` Malloy. With me I have Rajendra Chiplunkar, Chris
` Scharff, and Ben Mann from our law firm. I also
` have from TQ Delta, their representative is Mark
` Roach and Nada Roget, and one of the inventors from
` the patent portfolio, Marcos Tzannes.
` JUDGE MEDLEY: All right. On August 1st,
` 2017, patent owner filed papers styled Patent Owner’s
` Objections to Petitioner's Demonstratives. Patent
` owner’s objections are dismissed because they are
` improper since patent owner did not demonstrate
` sufficiently that the contents of the objected-to
` slides raised new issues or evidence, rather the
` objected-to slides contained references to arguments
` and evidence of record.
` Again, we remind the parties that the
` demonstratives are not evidence but demonstratives
` and that we may not even enter them into the
` record. For all these reasons, we dismiss the
` objections to petitioners' demonstratives.
` Petitioner, at this time you may
` proceed.
` MR. FOSTER: Thank you, Your Honor.
` Good afternoon and may it please the
` court. I'd like to jump straight into the issues
` in this case and first point out that patent owner
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` does not dispute that the substantive limitations
` of the claims at issue here are taught in the
` prior art. The main issue raised in papers
` concerns the obviousness of combining the two main
` references. Those are Shively and Stopler. And
` we believe that that combination, looking at Slide
` 2, that combination flows from ordinary
` engineering problem solving skills applied in
` light of three simple observations that would have
` been apparent to a person of ordinary skill in
` this art.
` Those are, first, that Shively's
` bit-spreading technique, while it improves the
` data communication by allowing more data to be
` communicated using otherwise unusable portions of
` the frequency spectrum, it does have a side effect
` in that it causes an increase in the
` peaked-to-average power ratio for PAR of the
` transmitted signal; second, that increase in PAR
` is undesirable for a very large number of reasons;
` and third, that the secondary reference, Stopler,
` teaches a phase scrambler, which is a well known
` technique in the prior art for reducing PAR.
` So the combination would have been
` obvious to a person of ordinary skill of the art
` from these three simple statements.
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` Because we will be talking about the
` ordinary level of skill in the art, I'd like to
` reference what that is. Looking at Slide 5, as we
` put in the petition, the ordinary level of skill
` in this art is represented by someone with a
` master's degree in electrical or computer
` engineering and five years of experience working
` with multicarrier communications technologies.
` That level of ordinary skill we
` identified in the petition. It was well supported
` by the declaration testimony of our expert, Dr.
` Jose Tellado, who is doing research in this area
` in the prior art time frame on these very same
` issues. And his testimony was this was
` representative of what ordinarily skilled
` practitioners working with these issues had in the
` time frame.
` Patent owner has not contested this, and
` so this is an uncontested ordinary level of skill
` in the art.
` Jumping to Slide 4 and looking, just for
` brief orientation, at Claim 1 of the '158 patent,
` the technology at issue with these two patents
` relates -- as we see in the last two stanzas of
` the '158 patent, the technology relates to
` modulating or transmitting a bit of data on one --
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` one bit of data from a plurality of fixed data on
` a carrier signal and then transmitting and
` modulating the same bit on a second carrier
` signal. So the claims recite sending the same bit
` on these two carriers. And that is exactly what
` Shively does.
` Looking at Slide 7, we have portions of
` the Shively reference which describes, quote,
` spreading a single block of data, one or more
` bits, over multiple channels, close quote. Or
` alternately stated, the same concept as, quote,
` modulating a second set of respective carriers to
` represent redundantly at least one portion of the
` the data stream, close quote.
` So Shively is plainly teaching this
` concept of transmitting the same bit on two
` carriers recited in the claims. That is, I
` believe, uncontested.
` As Dr. Tellado explained, however,
` looking at Slide 8, that transmission technique of
` transmitting the same bits on multiple subcarriers
` does have a side effect, specifically it can cause
` a higher peak-to-average power ratio or PAR.
` Turning to Slide 9, patent owner more or
` less illustrated what this concept looks like.
` Looking at the graph on Slide 9 from patent
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` owner's response, we see on the left an example
` where 25 carriers have all been modulated to carry
` the same value, the bit value of zero. So they
` are all in phase. And then when they get summed
` together to create a multicarrier signal, which we
` see on the right, that multicarrier signal is, for
` the most part, a very low power, that it has these
` occasional excursions. We see these very high
` peaks occasionally within the signal. And those
` high peaks, relevant to the low average power
` level is what is representative or indicative of a
` high PAR signal.
` Turning to Slide 10, as I mentioned,
` patent owner basically conceded that Shively's
` technique does lead to high PAR. Looking at the
` patent owner's response, they acknowledge --
` again, this is Slide 10 -- they acknowledge that a
` high PAR can occur where the same bit or bits are
` purposely sent in a redundant matter on multiple
` carriers, which is exactly what Shively was
` teaching.
` Going to Slide 12, the second basic fact,
` as I mentioned, is that the increase in PAR, which
` results directly from Shively's technique is
` undesirable.
` As Dr. Tellado explained with his first
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` declaration -- looking at a portion of that on slide
` 13 -- a person of ordinary skill in this art,
` someone with a master's degree and five years'
` experience, would have been quite familiar with the
` problems associated with a high PAR signal in
` multicarrier communications technologies, at least
` to a number of problems, including the use of
` components that are expensive, that are inefficient.
` And when those components are not sufficiently
` designed to encounter a signal that has a PAR that
` is greater than they are capable of handling, that
` can result in amplitude clipping, which causes data
` transmission errors.
` And so because of those many deleterious
` effects associated with an increasing PAR, Dr.
` Tellado found that a person of ordinary skill in the
` art would have sought a solution for that.
` Looking at Slide 14, patent owner's expert
` essentially agreed with all of those points. He
` noted that a high or increased peak-to-average power
` ration is associated with components that are
` expensive and power hungry, that could consume a
` large amount of power, and in his word were, quote,
` impractical, close quote.
` Dr. Short further agreed, looking at Slide
` 15, that because of those disadvantages, engineers
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` would have been interested in using techniques to
` reduce PAR.
` So, so far we have the first two basic
` observations that I mentioned at the top are
` essentially undisputed.
` Turning to Slide 16, that brings us to my
` point number 3, and that's that Stopler provides a
` solution to this problem in Shively in its teaching
` of a phase scrambler which can reduce PAR.
` Looking at slide 17, first I want to
` clarify there's no dispute that Stopler describes a
` phase scrambler. It's labeled as such quite plainly
` in Stopler's figure 5, and it's part of component
` 82, which is a QAM mapper and phase scrambler.
` Turning to Slide 18, Stopler describes the
` application of that component, which is responsible
` for, among other things, mapping data into QAM
` symbols, tone by tone, which references -- tone by
` tone references the individual carriers or
` subcarriers equivalently stated, which make up the
` multicarrier transmission signal. And then Stopler
` further explains that a phase scrambling sequence is
` applied to those symbols.
` Turning to Slide 19, Dr. Tellado has
` further explained in his deposition testimony that
` in the late 1990s, when he was doing his thesis work
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` on this prior technology and on these PAR issues,
` phase scrambling -- direct quote from him -- quote,
` phase scrambling was probably the most popular way,
` close quote, of reducing PAR. And in his second
` deposition he reiterated that it was well known when
` he wrote his thesis that phase scrambling was a
` technique for reducing PAR.
` I want to pause briefly here because this
` was the central issue in dispute at the time of
` institution. At the time of institution we had the
` evidence from Dr. Tellado explaining that phase
` scrambling was an obvious way to reduce PAR in
` Shively, and we have attorney argument from the
` patent owner. Well, we are now nine months later
` and we have more evidence from Dr. Tellado that not
` only was i t apparent to know, but phase scrambling
` was perhaps the most popular way of reducing PAR.
` And turning to Slide 20, we have Dr.
` Short, patent owner's expert, who essentially has no
` opinion on this. When we asked him whether or not
` he believed that randomizing the phases of
` individual carriers was a known technique before
` 1990 for reducing PAR, the phase scrambling was
` think was known in the art, his answer was, I don't
` know. He did not have any opinion one way or the
` other. He had no basis for knowledge, no testimony
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` whatsoever as whether or not this would have been
` known.
` So we've got just an increase in disparity
` in evidence between petitioner and patent owner at
` this point. We have Dr. Tellado's well informed
` testimony from his experience, and we have
` Dr. Short's nonanswer, his lack of evidence, his
` lack of knowledge, and his lack of opinion regarding
` this.
` So I think the evidence here on this point
` of obviousness of the combination is even more
` lopsided now than it was at the time of the
` institution.
` Turning to Slide 25, patent owner has put
` forward an argument regarding the way that they read
` Stopler and Stopler's disclosure of its
` phase-scrambling technique. And patent owner has
` asserted that Stopler is not scrambling the phases
` of QAM symbols. But that's not the natural reading
` of Stopler. But patent owner asserts that Stopler's
` technique is, instead, scrambling groups of QAM
` symbols. All of the QAM symbols that would be
` transmitted together as a single multicarrier
` signal, that group of QAM symbols in the aggregate
` known as something called the DMT symbol. But that
` position was rather directly undermined by their
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` expert in deposition.
` We see here on Slide 25 the highlighted
` quote from Stopler where it states that the phase
` scrambler is applied to all symbols. And patent
` owner's expert in deposition agreed that the
` reference to all symbols is a reference to QAM
` symbols. So patent owner's expert agrees that the
` phase scrambler is being applied to the QAM symbols,
` not DMT symbols.
` If we look at the end of that quotation
` from Stopler, the last two lines, Stopler is
` discussing selecting the amount of rotation to be
` applied to the symbol, singular. If Stopler is
` applied to all symbols and those symbols are QAM
` symbols and if an amount of rotation is being
` applied to one symbol, Stopler is plainly describing
` applying the phase scrambler, QAM symbol by QAM
` symbol, tone by tone, carrier by carrier, which,
` again, was basically a restatement of this well
` known technique of phase scrambling that Dr. Tellado
` testified to.
` Going to Slide 27 finally, this is back to
` essentially undisputed issues. Patent owner -- I'm
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` sorry -- this slide is slightly mislabeled. This is
` patent owner's expert, Dr. Short.
` Dr. Short agreed that by rotating symbols,
` by changing their phases, you can reduce the
` peak-to-average ratio, that changing the phases of
` individual symbols is a technique for reducing PAR.
` But that is the result.
` And so Stopler's description and
` disclosure of changing the phases of individual QAM
` symbols is indeed a technique for reducing PAR. And
` for the reasons that Dr. Tellado explained,
` especially that it was a very popular and well known
` technique, would have been obvious to a person of
` ordinary skill in the art that this was suitable
` solution to the issue raised by Shively, that
` Shively, by transmitting the same data on multiple
` carriers increases the PAR. Stopler then provides
` the solution for that.
` Looking at Slide 28, patent owner's other
` principal argument is that Shively's technique is
` applicable only to long lines. And by long lines,
` the patent owner means lines that are at least
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` 18,000 feet in length.
` But that's pretty directly disputed by the
` text of Shively itself, which states that its
` technique is applied, quote, to compensate for high
` attenuation and/or high noise, close quote, in the
` communications channel. And certainly high noise
` can occur on a short line. High noise is not
` necessarily affiliated with a long line. And
` Shively references that combination of attenuation
` and noise in multiple places, and in general,
` looking at the second quote on Slide 28, Shively
` terms those collectively as impaired parts of the
` frequency.
` And looking at Slide 30, patent owner's
` expert, Dr. Short, agreed that Shively's technique
` could be used in general on other kinds of impaired
` tones, that Shively's technique was not limited to
` tones that are impaired because of high attenuation,
` but Shively's technique could also be used where the
` line or where specific tones or carriers within the
` frequency spectrum have significant noise.
` For that reason they have a very low
` signal-to-noise ratio. The signal might be strong,
` but the noise is high as well. So the
` signal-to-noise ratio is still low. Those impaired
` tones can still make use of Shively's technique.
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` Dr. Short agreed.
` And then a final point on that, looking at
` Slide 31, Dr. Tellado further explained that modem
` designers, engineers working the space, wouldn't be
` designing a modem that operates only at 18,000 feet.
` They would design a modem that works at a variety of
` different line lengths, not just 18,000 feet. They
` would be looking at a variety of scenarios and a
` variety of potential issues that a modem might
` encounter.
` If there are no questions, I will reserve
` the remainder of my time for rebuttal.
` JUDGE CLEMENTS: I have a question about
` Point 2, so back to Slide -- Slide 16 illustrates
` it. It's an increase in PAR is undesirable, and I
` think you characterized it as undisputed. But the
` way I understand patent owner's argument is that
` it's undesirable only if it results in clipping and
` that Shively doesn't necessarily result in clipping.
` So assuming that's the case, that Shively has
` a very low probability of clipping, is there some
` other reason, some other evidence of record of why
` a person skilled in the art would want to reduce
` PAR if it's not going to result in clipping
` anyway?
` MR. FOSTER: Yes, there is. I would
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` direct you, to begin with, on Slide 13, the portion
` of Dr. Tellado's first declaration, where he
` references that some of the problems associated with
` a high PAR signal include components that are
` expensive and inefficient. And so if a system is
` being designed where it is known that it could use
` techniques that would increase PAR that's going to
` lead to an increase in expense and inefficiency of
` those components that make up the transmitter, that
` obviously would not be very desirable.
` As I also uncovered, looking at slide
` 14, Dr. Short generally agreed with that as well,
` that the high PAR signal or increase in the bar
` would result in components that are expensive and
` power hungry, impractical even.
` You could also look at Exhibit 1027,
` which was the deposition of Dr. Short. On page 46
` between lines 13 and 19 Dr. Short also referenced
` that an increase in PAR associated with components
` that are larger. So not only are they more
` inefficient, more expensive, more power hungry,
` they are just physically larger, which could have
` negative effects.
` JUDGE CLEMENTS: Okay. Thank you.
` One other question on construing
` scrambling of plurality of carrier phases. Patent
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` owner proposes adjusting the phases on a plurality
` of carriers in a single multicarrier symbol by
` psuedo-randomly varying amounts. And I think in
` the reply petitioner says no construction's
` necessary because Stopler teaches phase scrambling
` explicitly.
` I think we need to construe it because
` Stopler may have some idiosyncratic definition of
` phase scrambling. That's a
` possibility. So I think we'll have to construe it
` and then determine whether Stopler teaches it.
` My question is, does
` petitioner have an issue with patent owner's
` proposal? Because both parties -- neither party
` seems to dispute that we are talking about
` adjusting phases of carriers within a single DMT
` symbol. The dispute really seems to be about
` whether Stopler does that or whether it's
` scrambling phases from symbol to symbol over time.
` So what's petitioner's position on the
` proper construction of scrambling plurality of
` carrier phases?
` MR. FOSTER: Yes, Your Honor.
` Since we didn't put it in the
` petitioner's reply, we don't think construction is
` necessary. I understand that you disagree with
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`Case IPR2016-01020 (Patent 9,014,243)
`Case IPR2016-01021 (Patent 8,718,158)
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` that.
` Regarding patent owner's proposal of the
` construction, we believe that is exactly how
` Stopler is describing his phase scrambler as
` operating.
` JUDGE CLEMENTS: Okay. Thank you.
` MR. MCANDREWS: Good afternoon, Your
` Honors, and may it please the board. I'd like to
` start with the question that Judge Clements asked of
` petitioner's counsel because I don't think it quite
` got to the heart of what the issue is there.
` So the question related to whether to
` the extent that Stopler -- I'm sorry -- to the
` extent that Shively -- this goes to Shively -- to
` the extent the that actually doesn't have a
` problem in the sensitive clips, and if the board
` were to take that as true, what other evidence can
` the petitioner point to to show that one to be
` motivated to go try to solve an alleged increase
` in PAR problem. But I think that the petitioner
` and its experts misapprehend what it means to have
` an increase in the PAR. And this is particularly
` so given the high level of skill in the art the
` petitioner would have ascribed to the person of
` ordinary skill in the art. They would not see
` words like high PAR and increased PAR and say
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`Case IPR2016-01021 (Patent 8,718,158)
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` that's enough for me to know that there's a
` problem. Instead, they would want to look at what
` those are relative to.
` So what are those relative to? They are
` relative to the design criteria that the modem is
` designed with respect to. So the modem only will
` have a particular dynamic range given the
` anticipated signal, and they typically would use a
` Gaussian estimation of the anticipated signal
` transmitting on all 250 carriers in the
` (undiscernible) system of Shively. And they would
` determine what is the dynamic range that we want
` our amplifiers to have to ensure that we achieve
` the clipping rate that the scanner refers to of 10
` to the minus 7, or 1 in about 10 million samples.
` Petitioner is alleging that simply if
` you have a signal that somehow increases PAR, you
` are going to have to change your amplifiers.
` Well, no, you're not. If it doesn't increase it
` beyond where those amplifiers would have a
` problem, the clipping rate is higher than the
` standard allows, then there is no problem.
` It's a discussion of dynamic range where
` if you are left unbounded with your signal and you
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` are only attempting to correct for a high part
` that goes beyond the dynamic range of design
` amplifiers, yes, that might require bigger
` amplifiers and more expensive amplifiers.
` But the context of Shively and the
` context of DSL is that you have fixed dynamic
` range for your amplifiers. You know what it is
` going in. And then you look at high -- you know,
` it's relative terms -- high increased PAR are
` viewed with respect to whether you have a clipping
` problem.
` But the alleged problems that
` petitioner's counsel pointed to have nothing to do
` with once you set your design criteria, and I'll
` get into that in a little bit.
` So Your Honor, Judge Clements, do you
` have any follow-up to that. Did that address the
` issue?
` JUDGE CLEMENTS: What about the other
` factors that the petitioner pointed to? The -- you
` know, the expense, power consumption, physical
` size. Why wouldn't those have been factors that a
` person of ordinary skill in the art would take into
` consideration in incorporating -- you know, if they
` could incorporate this phase scrambling technique
` and reduce PAR, and it allows them to use cheaper,
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` smaller, less power-hungry components, why wouldn't
` they have done so?
` MR. MCANDREWS: Well, the baseline for the
` components again is going to be full power on all
` 250 carriers using the Gaussian estimation. So the
` question is, if there is a PAR that exceeds -- that
` is high enough to exceed that dynamic range at a
` rate that's higher than 1 in 10 million samples,
` then you might have a problem. But our position, as
` we laid out, is that Shively's technique, because
` it's used for severely impaired loops, it's directed
` to the severely impaired loops, those loops are
` going to use substantially less transmit power.
` There's going to be substantially less transmit
` power so it actually reduces the PAR while
` duplicating carriers, yes, will contribute an uptick
` that is fully negated many times over, many fold, by
` the reduction on a Shively loop -- you know, an
` 18,000-foot loop or longer -- where you would be
` transmitting less than half of the power you
` ordinarily would.
` And I've got a slide here that shows a
` reduction of total transmit power will also
` prevent clipping. So while the signal appears to
` have peaks, those peaks fall far below the
` clipping threshold, the dynamic range of the
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` amplifiers. So this idea that you have to
` increase the size of your amplifiers doesn't
` apply.
` There's also the concept that -- the
` flip side of that is if you phase scramble --
` let's say you take Shively, and even if it doesn't
` have a clippings problem, you decide that you want
` to phase scramble to produce PAR, you can't do
` that. You can't reduce PAR any lower than what
` it's designed for. There wouldn't be any
` motivation to do that because you're
` presumptively, when it's operating in ordinary
` mode on an unimpaired loop, you're going to have
` all 250 carriers transmitting fully on all – at
` their full power spectrum mass. And so you're not
` going to have that issue. And so the amplifiers
` will be designed to take that into consideration.
` JUDGE CLEMENTS: Did I understand you to
` say that the standard requires amplifiers of a
` certain minimum dynamic range?
` MR. MCANDREWS: That would be
` implementation specific, but the standard does
` require that the device will clip at a rate that's
` less than 1 in 10 million samples.
` And so what that means, given the power
` spectrum mass of a given standard -- of the ADSL
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`Case IPR2016-01021 (Patent 8,718,158)
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` standard that Shively's directed to, that would
` dictate a particular dynamic range.
` You design the amplifier to achieve the
` clipping rate and that dynamic range happens to
` be -- and both parties appear to agree on this --
` that the dynamic range that the amplifiers would
` be designed to for the ADSL standard is -- the
` patent talks about 14.5 dB. Petitioner's expert
` uses a slightly lower one. They use 14.2 dB. But
` it appears that the parties are in full agreement
` that that's approximately the design criteria that
` you arrive at is somewhere in the 14.2 or 14.5
` range.
` So I'd like to go to my Slide 2, where
` we summarize these arguments, and I just want to
` point out that petitioner characterized at least
` two of these issues as not in dispute, and they
` fully are in dispute. I mean Shively does not
` have a power problem. There's no doubt we
` presented evidence of that. And the parties spent
` quite a bit of time and energy debating that
` issue.
` So we absolutely do debate that Shively
` has a power problem. It does not cause clipping
` at a rate that's greater than the standard allows.
` And