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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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`RUBICON COMMUNICATIONS, LP
`Petitioner,
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`v.
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`LEGO A/S
`Patent Owner.
`____________
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`Case IPR2016-01187
`Patent 8,894,066
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`PATENT OWNER’S MOTION TO VACATE INSTITUTION
`DECISION AND TERMINATE PROCEEDING
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`Pursuant to the Board’s February 24, 2017 authorization (Paper 48), Patent
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`Owner respectfully submits this Motion to Vacate Institution Decision and
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`Terminate Proceeding, for Petitioners’ failure to identify Rubicon
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`Communications, LLC, Jamie Thompson, and James Thompson as real parties-in-
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`interest (“RPIs”) in the Petition requesting an inter partes review (Paper 1)
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`(“Petition”).
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`I.
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`INTRODUCTION
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`Exactly one-year to the day after Patent Owner served a complaint in the
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`U.S. District Court for the District of Connecticut, Rubicon Communications, LP
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`filed the Petition as the sole petitioner and challenged the validity of U.S. Patent
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`No. 8,894,066. Approximately a month later, Rubicon Communications, LP
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`sought permission to correct the Petition and retroactively add SmallWorks, LLC
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`as an RPI. In response, Patent Owner requested dismissal of the Petition in its
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`Preliminary Response (Paper 20), and in its Opposition to Motion to Correct
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`Clerical Mistake under 37 CFR § 42.104(C) (Paper 32). Furthermore, Patent
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`Owner noted that not only SmallWorks, LLC, but also Rubicon Communications,
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`LLC, Jamie Thompson, and James Thompson should have been identified in the
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`Petition as RPIs. Opp’n to Mot. to Correct at 12–14. Ruling on the specific relief
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`requested submission of a corrected petition listing SmallWorks, LLC as an RPI,
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`the Board granted the Motion to Correct on December 16, 2016 and noted,
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`At the same time, we reiterate that listing all real parties-in-interest
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`constitutes a significant issue. Accordingly, neither this Decision nor
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`our concurrent institution of a trial forecloses further consideration of
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`whether the Petitioner has correctly identified all real parties-in-
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`interest. To the extent that further correction of the listed real parties-
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`in-interest may be required, Petitioner is encouraged to pursue such
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`correction promptly. The more promptly and proactively Petitioner
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`acts to correct any further errors in the listed real parties-in-interest,
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`the more favorably we may treat any requests for further correction.
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`Decision - Granting Motion to Correct RPI at 5–6 (Paper 40). Despite the Board’s
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`urging, Petitioners did not take any action to correct their errors in omitting
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`Rubicon Communications, LLC, Jamie Thompson, and James Thompson as RPIs.
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`Indeed, they continue to deny that any of these missing parties should have been
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`identified as RPIs. Accordingly, Patent Owner moves for relief based on
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`Petitioners’ failure to satisfy the statutory and regulatory burden and respectfully
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`requests the Board vacate the decision instituting trial and terminate the instant
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`proceeding.
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`II.
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`FACTUAL BACKGROUND
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`Patent Owner served Rubicon Communications, LP dba SmallWorks on
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`June 10, 2015 with a complaint alleging infringement of U.S. Patent Nos.
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`7,731,191; 8,091,862; 8,628,085; and 8,894,066 before the District Court for the
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`District of Connecticut. (Ex. 1024.) Rubicon Communications, LLC and
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`SmallWorks, LLC answered on July 31, 2015, claiming that Rubicon
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`Communications, LP no longer existed and that “[t]here are now two separate
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`companies: Rubicon Communications, LLC and SmallWorks, LLC. . . .
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`SmallWorks[, LLC] should be the only defendant entity in this lawsuit.”
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`(Ex. 2011 ¶ 2.) Based on these statements, Patent Owner amended the complaint
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`to add SmallWorks, LLC as a defendant. (Ex. 2004.) Since then, the parties have
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`been engaged in extensive discovery and disputes regarding, inter alia, the
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`Petitioners’ corporate structure and transactions. Consistent with their
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`misdirection in this proceeding,1 Petitioners have represented in at least four
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`pleadings in the related litigation and in numerous discovery documents that
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`1 Petitioners continue to play hide-the-ball, even as recently as the conference call
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`ordered by the Board to discuss this very Motion. At the beginning of the call,
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`counsel for Petitioners represented that Rubicon Communications, LLC is not an
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`RPI and that Petitioners did not seek to add it as an RPI. Reluctantly, and only
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`after being asked directly by Judge Powell, did Petitioners for the first time
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`indicate that they would seek to add Rubicon Communications, LLC. The
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`requirement to identify all RPIs is not a sliding scale requirement to identify RPIs
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`only after the petitioner is caught hiding one or two; instead, Petitioners have a
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`duty of candor to identify all RPIs at the outset, which they have unquestionably
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`failed to do in this case.
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`Rubicon Communications, LLC is not a necessary party in the related litigation.
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`See Ex. 2003 ¶ 2; Ex. 2013 ¶ 2; Defs.’ Resp. to Pl.’s Second Mot. for Leave to
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`Amend Its Compl. to Add Additional Defs. (Ex. 2021); see also infra pp. 12–13.
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`In December of 2016, Patent Owner deposed Jamie and James Thompson on
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`various topics including the Petitioners’ corporate structure and transactions. They
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`testified that, as sole owners and officers of at least Rubicon Communications, LP,
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`Rubicon Communications, LLC, and SmallWorks, LLC, they have made, offered
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`for sale, and sold products accused of infringing Patent Owner’s patents in the
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`related litigation. Starting in 2011, they directed Rubicon Communications, LP to
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`engage in conduct accused of infringing Patent Owner’s patents. James Thompson
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`Dep. (Ex. 2022) 43:15–23, 83:12–16, Dec. 5, 2016. Then, Jamie and James
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`Thompson “re-formed Rubicon Communications as an LLC” after an IRS audit in
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`either 2013 or 2014. Id. at 58:19–59:15; Jamie Thompson Dep. (Ex. 2023) 22:4–
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`8, Dec. 6, 2016. Following the conversion, they directed Rubicon
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`Communications, LLC to engage in conduct accused of infringing Patent Owner’s
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`patents. James Thompson Dep. at 83:7–25.
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`On June 5, 2015 — approximately a year after the conversion and few days
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`after commencement of the related litigation, Jamie and James Thompson created
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`SmallWorks, LLC. Id. at 68:11–16. On the same day, they executed an agreement
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`(“Agreement”). In addition to the curious timing, the Agreement was also a
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` Jamie and James Thompson have operated
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`SmallWorks, LLC without any employees and, instead, directed Rubicon
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`Communications, LLC’s employees to fill orders for the “SmallWorks” products.
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`Id. at 80:9–16, 178:20–23. They also arranged Rubicon Communications, LLC to
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`pay the legal fees for creating and transferring assets to SmallWorks, LLC. Id. at
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`Despite such blurring of corporate
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`79:13–16.
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`boundaries, James Thompson testified that SmallWorks, LLC is the only entity
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`liable for any potential judgment in the related litigation. Id. at 82:24–83:6.
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`After learning of these facts, Patent Owner moved in the related litigation to
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`add Rubicon Communications, LLC, Jamie Thompson, and James Thompson as
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`additional defendants. In response, Petitioners oppose the addition of Jamie and
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`James Thompson but take a nuanced approach with regards to Rubicon
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`Communications, LLC: “Defendants believe that it is not necessary to add
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`Rubicon Communications LLC as a party defendant, but in light of recent
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`discovery, Defendants will not object to Plaintiff’s Motion to Amend as it pertains
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`to adding Rubicon Communications, LLC as an additional defendant.” (Ex. 2021.)
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`The motion is currently pending before the District Court.
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`In summary, Jamie and James Thompson have directed at least three
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`corporate entities over six years to make, offer for sale, and sell the “SmallWorks”
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`products accused of infringing Patent Owner’s patents. They did not maintain
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`well-defined corporate boundaries and, in fact, staged questionable corporate
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`transactions after the commencement of the related litigation. Yet, they continue
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`to argue in bad-faith that Rubicon Communications, LLC, Jamie Thompson, and
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`James Thompson are not RPIs of this proceeding or necessary defendants in the
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`related litigation. Only after Patent Owner brought the issue to the Board’s
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`attention, do Petitioners belatedly attempt to trivialize the burden to identify RPIs
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`as “procedural” and try to mask their failure with yet another retroactive
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`amendment. See Pet’rs’ Mot. to List Additional Parties as Real Parties-in-Interest,
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`Paper 53. Petitioners’ pattern of ignoring their burden should not be tolerated. For
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`the reasons discussed below, Patent Owner respectfully requests the Board grant
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`this Motion.
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`III. ARGUMENT
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`A. Legal Standard
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` 35 U.S.C. § 312(a)(2) and 37 C.F.R. § 42.8(b)(1) mandate that a petition
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`requesting an inter partes review must identify all RPIs. Required in both statute
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`and regulation, the identification of all RPIs is a “significant” and “threshold” issue,
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`rather than a procedural one. Zoll Lifecor Corp. v. Philips Elecs. N. Am. Corp.,
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`Case IPR2013-00606, slip op. at 9 (PTAB. Mar. 20, 2014) (Paper 13). In Office
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`Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,759 (Aug. 14, 2012), the
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`Office wrote the RPI issue is governed by “the common law principles” of
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`nonparty preclusion discussed in Taylor v. Sturgell, 553 U.S. 880 (2008). The
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`Office emphasized that a common focus of inquiry is “whether the non-party
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`exercised or could have exercised control over a party’s participation in a
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`proceeding,” and thus, “a party that funds and directs and controls an IPR or PGR
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`petition or proceeding constitutes a ‘real party-in-interest.’” Id. at 48,759–48,760.
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`The Office noted it will also consider on a case-by-case basis other factors such as,
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`the non-party’s relationship with the petitioner and to the petition, including the
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`nature and/or degree of involvement in the filing; and the nature of the entity filing
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`the petition. Id. When a patent owner provides evidence that “reasonably brings
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`into question the accuracy of a petitioner’s identification of the real parties in
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`interest, the burden remains with the petitioner to establish that it has complied
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`with the statutory requirement to identify all real parties in interest.” Atlanta Gas
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`Light Co. v. Bennett Regulator Guards, Inc., Case IPR2013-00453, slip op. at 7–8
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`(PTAB Jan. 6, 2015) (Paper 88).
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`In Atlanta Gas Light Company, the patent owner presented evidence
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`showing that a non-party holding company had acted on behalf of the petitioner
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`through shared officers and employees, and that a non-party sister company may
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`have funded the inter partes review proceeding. Id. at 9–12. The Board
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`considered the totality of circumstances and ruled the holding company and the
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`sister company were RPIs with the petitioner, because they were “so intertwined
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`that it [was] difficult for both insiders and outsiders to determine precisely where
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`one ends and another begins.” Id. at 11. Accordingly, the Board found the petition
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`to be incomplete under 35 U.S.C. 312(a)(2), denied a request for its correction,
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`vacated the decision to institute, and terminated the proceeding. Id. at 13–15.
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`Likewise, the Board terminated an inter partes review proceeding, when the
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`petitioner’s non-party sister company was found to have provided funding. GEA
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`Process Engineering, Inc. v. Steuben Foods, Inc., Case IPR2014-00041, slip op. at
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`14–15, 20–21 (PTAB. Dec. 23, 2014) (Paper 140). The Board rejected the
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`petitioner’s request to retroactively correct its “good-faith” mistake in identifying
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`all RPIs, because the facts of the case did not warrant a correction as an equitable
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`remedy. Id. at 23–25. Among others reasons, the Board criticized that the
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`petitioner had initially attributed its failure to identify an RPI to a clerical error, it
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`then resisted discovery long after the patent owner raised the RPI issue, and it
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`continued to assert that the sister company was not an RPI despite overwhelming
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`evidence. Id. at 25–26.
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`The Board has terminated proceedings and dismissed petitions in similar
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`circumstances, where an unnamed RPI was found to have actually or potentially
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`funded the inter partes review proceeding. See Corning Optical Communications
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`RF, LLC v. PPC Broadband, Inc., Case IPR2014-00440, slip op. at 1720 (PTAB
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`Aug. 18, 2015) (Paper 68) (finding a parent and a sister company to be unnamed
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`RPIs, when they had controlled the petitioner through funding and shared officers);
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`see also Zerto, Inc. v. EMC Corp., Case IPR2014-01254 (PTAB Feb. 12, 2015)
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`(Paper 32); Askeladden LLC v. Sean I. McGhie and Brian Buchheit, Case
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`IPR2015-00122 (PTAB Mar. 6, 2015) (Paper 38). The Board also dismissed
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`petitions when corporate boundaries were blurred to allow for overt or covert
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`control by an unnamed RPI. See Zhejiang Yankon Group, Ltd. v. Cordelia
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`Lighting, Inc., Case IPR2015-01420, slip op. at 14–18 (PTAB Nov. 25, 2015)
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`(Paper 9) (finding a subsidiary to be an unnamed RPI, when it had acted on behalf
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`of the petitioner in negotiations and had ownership, operational, and personnel
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`overlap); Galderma S.A. v. Allergan Industrie, Case IPR2014-01422, slip op. at
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`12–13 (PTAB Mar. 5, 2015) (Paper 14) (finding a parent to be an unnamed RPI,
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`when it had a pattern of control over the petitioner with overlapping leadership);
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`see also Zoll, Case IPR2013-00606, slip op. at 7–8 (Paper 13); Amazon.com, Inc. v.
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`Appistry, Inc., Case IPR2015-00480, slip op. at 6 (PTAB July 13, 2015) (Paper 18).
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`Here, Petitioners violated all of these canons — and more — by actively
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`misdirecting Patent Owner, the District Court, and the Board away from RPIs.
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`B. Application
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`Petitioners cannot dispute that Jamie and James Thompson, perhaps through
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`Rubicon Communications, LLC, have
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`exercised overt control over Petitioners.
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`Because the Petition failed to identify each and all of these missing parties as RPIs,
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`Patent Owner respectfully requests that the Board find it incomplete and vacate the
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`decision to institute. Furthermore, because a corrected petition would receive a
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`new filing date that would be time-barred under 35 U.S.C. § 315(b), Patent Owner
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`additionally requests the instant proceeding be terminated.
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`Similar to the omission of SmallWorks, LLC, which the Board rejected as a
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`merely clerical error as argued by Petitioners (Paper 40 at 4), the failure to identify
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`Rubicon Communications, LLC, Jamie Thompson, and James Thompson as RPIs
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`was not a good-faith mistake. Petitioners have continuously attempted to conceal
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`Rubicon Communications, LLC and its owners from this proceeding and the
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`related litigation. Petitioners ignored the Board’s urging to address the RPI issue
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`promptly and proactively, and continue to assert that the missing parties are not
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`RPIs. Petitioners also averred at least in three pleadings in the related litigation
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`that “SmallWorks, [LLC] should be the only defendant entity.” Petitioners
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`misleadingly responded to Patent Owner’s request in the related litigation to:
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`Describe in detail [Rubicon Communications, LP’s]
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`relationship with
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`the following persons and
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`their
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`involvement, if any, with Rubicon Communications, LP
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`dba SmallWorks and the development, sale or licensing
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`of
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`the BrickCase Products . . . SmallWorks, LLC,
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`Rubicon Communications, LLC . . . Jamie L. Thompson,
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`James W. Thompson . . . .
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`Pl.’s Interrog. to Def. No. 4 (Ex. 1034). Petitioners wrote “SmallWorks, LLC is a
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`company owned by Jim and Jamie Thompson and this is the company that has
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`engaged in the accused conduct for this case. Rubicon Communications, LLC is a
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`company owned by Jim and Jamie Thompson, and sells products other than the
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`accused products in this case.” Defs.’ Resp. to Pl.’s Interrog. No. 4 (Ex. 2014)
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`(emphases added). While perhaps passable as half-truths, wholly absent in that
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`response was the fact that Rubicon Communications, LLC had engaged in the
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`accused conduct of the related litigation between 2014 and 2015. James
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`Thompson attempted to justify this semi-factual response in the following manner:
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`Q.
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`Is that accurate?
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`A. Yes.
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`Q. Didn’t you just tell me that in the past other entities engaged in
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`the accused conduct for this case?
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`A.
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`The statement is that [SmallWorks, LLC] is the company that
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`has engaged in the accused conduct.
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`“Has engaged” is in the past. Right?
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`That’s not what the statement says.
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`So when —
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`Q.
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`A.
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`Q.
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`A. You asked me —
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`Q.
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`Sorry.
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`A. You asked me if the statement was correct, and I said it was.
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`Q.
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`It was correct as of the date you signed the verification?
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`A. Yes.
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`Q. And because of the definition of “is”?
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`A. Let’s not go there.
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`Q.
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`Is it because it’s in the present tense?
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`A. Yes.
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`Q.
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`But — so
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`this answer doesn’t mention
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`that Rubicon
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`Communications LLC had engaged in the accused conduct for
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`this case.
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`A. No.
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`Q. And it doesn’t mention that Rubicon Communications LP had
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`engaged in the accused conduct for this case.
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`A. No.
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`Q. But both of those statements are true?
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`A. Yes.
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`James Thompson Dep. 87:14–88:18.
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`Petitioners’ bad-faith attempt to conceal Rubicon Communications, LLC,
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`Jamie Thompson, and James Thompson is similar to (and indeed worse than) the
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`behavior of the petitioner in GEA Process Engineering, Inc. In that proceeding
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`and here, the petitioner(s) failed to identify its RPI(s), initially attributed the failure
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`to a clerical error, resisted discovery, and continued to assert the missing party was
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`not an RPI despite overwhelming evidence. The Board accordingly denied the
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`petitioner’s request to correct the petition and terminated the proceeding. In
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`contrast, the Board allowed retroactive correction in Aerospace Commc’ns
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`Holdings Co. v. Armor All/Step Prods. Co., because the non-parties there did not
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`control nor have the opportunity to control the proceeding. Case IPR2016-00441,
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`slip op. at 5, 9–11 (June 28, 2016) (Paper 12). The petitioner in Aerospace also did
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`not engage in gamesmanship and, instead, agreed to add the non-parties as soon as
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`the RPI issue was raised. Here, Rubicon Communications, LLC, Jamie Thompson,
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`and James Thompson are RPIs with actual control over this proceeding, and
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`Petitioners continue to conceal their status as such, despite the Board’s urging
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`more than two months ago to promptly and proactively recognize the RPI
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`requirement as a significant issue.
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`Jamie and James Thompson have had exclusive ownership over Petitioners
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`and Rubicon Communications, LLC. James Thompson Dep. at 83:12–84:5. As
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`sole directors and officers, they also have exercised complete control over
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`Petitioners and Rubicon Communications, LLC. Id. at 172:13–173:23.
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` They have additionally blurred the lines of corporate separation
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`by channeling Rubicon Communications, LLC’s resources to SmallWorks, LLC.
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`In fact, SmallWorks, LLC appears to be nothing more than a corporate shell
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`without any employees or sufficient funding.
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`The totality of evidence here indicates
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`that Jamie and James Thompson have exercised actual control over this proceeding,
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`while
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` making misrepresentations to the Board, the
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`District Court and Patent Owner, directing them away from the RPIs. Through
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`blurred corporate boundaries, Rubicon Communications, LLC also has exercised
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`control over this proceeding, and indisputably has engaged in infringing activities.
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`These missing parties should have been listed as RPIs in the Petition, but
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`Petitioners failed to identify or discuss them despite their duty to do so, and even
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`the Board’s urging.
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`Because it fails to identify RPIs, the Petition is incomplete under 35 U.S.C.
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`§ 312(a)(2) and 37 C.F.R. § 42.8(b)(1). As an incomplete petition, it should not be
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`accorded a filing date until all RPIs are identified. 37 C.F.R. § 42.106. A new
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`filing date here would be more than a year after the service of the related
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`litigation’s complaint on June 10, 2015. As a result, the new petition would be
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`time-barred under 35 U.S.C. § 315(b). Because a correction would be futile, the
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`instant proceeding must be terminated. See, e.g., Atlanta Gas Light Company,
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`Case IPR2013-00453, slip op. at 13–15 (Paper 88); GEA, Case IPR2014-00041,
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`slip op. at 21–26 (Paper 140).
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`IV. CONCLUSION
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`For the foregoing reasons, Patent Owner respectfully requests that the Board
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`find the Petition incomplete, vacate the decision instituting trial, and terminate the
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`proceeding.
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`/ Elizabeth A. Alquist/
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`Andrew M. Riddles
`Registration No. 31,657
`ariddles@daypitney.com
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`Elizabeth A. Alquist
`Admitted Pro Hac Vice
`eaalquist@daypitney.com
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`Day Pitney LLP
`7 Times Square
`New York, NY 10036
`Tel: (212) 297-5855
`Fax: (203) 202-3896
`Counsel for Patent Owner
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`CERTIFICATE OF SERVICE
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`Pursuant to 37 C.F.R. § 42.6(e), the undersigned certifies that on March 3,
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`2017, a true and correct copy of the foregoing, via UPS Overnight, was served on
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`the following counsel of record:
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`Dean M. Munyon
`Anthony M. Petro
`Ryan T. Beard
`Geoffrey W. Heaven
`1120 S. Capital of Texas Hwy.
`Building 2, Suite 300
`Austin, Texas 78746
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`/ Elizabeth A. Alquist/
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`Andrew M. Riddles
`Registration No. 31,657
`ariddles@daypitney.com
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`Elizabeth A. Alquist
`Admitted Pro Hac Vice
`eaalquist@daypitney.com
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`Day Pitney LLP
`7 Times Square
`New York, NY 10036
`Tel: (212) 297-5855
`Fax: (203) 202-3896
`Counsel for Patent Owner
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