UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`APPLE INC.
`Petitioner
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`v.
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`VOIP-PAL.COM, INC.
`Patent Owner
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`
`
`Case No. IPR2016-01201
`Patent 8,542,815
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`
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`PETITIONER’S REPLY IN SUPPORT OF
`ITS MOTION FOR ENTRY OF JUDGMENT IN FAVOR OF PETITIONER
`AS A SANCTION FOR IMPROPER EX PARTE COMMUNICATIONS
`BY PATENT OWNER, OR, ALTERNATIVELY, FOR NEW AND
`CONSTITUTIONALLY CORRECT PROCEEDINGS
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`APPLE INC.
`Petitioner
`
`v.
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`
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`VOIP-PAL.COM, INC.
`Patent Owner
`
`
`
`Case No. IPR2016-01201
`Patent 8,542,815
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`
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`
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`PETITIONER’S REPLY IN SUPPORT OF
`ITS MOTION FOR ENTRY OF JUDGMENT IN FAVOR OF PETITIONER
`AS A SANCTION FOR IMPROPER EX PARTE COMMUNICATIONS
`BY PATENT OWNER, OR, ALTERNATIVELY, FOR NEW AND
`CONSTITUTIONALLY CORRECT PROCEEDINGS
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`
`
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`I.
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`
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`Voip-Pal Engaged In A Systematic Scheme To Hide Its Involvement
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`After representing to the Board, Apple, and the public at large that
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`Dr. Sawyer acted “independently” of Voip-Pal, Voip-Pal now admits that it
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`“participat[ed] in the preparation of the Sawyer letters.” Opp. at 2, n.1. Voip-Pal
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`would never have come clean had Apple not filed this motion for sanctions. Yet
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`Voip-Pal persists in maintaining that it should suffer no consequence for its
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`extended course of misconduct. Apple, in contrast, respectfully submits that when
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`a party to a Board proceeding participates in the creation of ex parte submissions
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`that demand specific results in a particular proceeding, sanctions are not just
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`warranted but required.1
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`Here, the Board is confronted with a nearly unimaginable situation—a party
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`admits to covertly sending threatening ex parte letters to the panel (and the Chief
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`Judge) under cover of a purportedly independent third party. Voip-Pal’s
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`September 18 press
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`release proclaimed, “The
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`letters were written by
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`Dr. Sawyer independent of Voip-Pal management between May and August of
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`this year. . . .” Ex. 1019 (emphasis added). By contrast, after Apple moved for
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`sanctions, Voip-Pal “corrected” its position on January 12, stating, “The letters
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`1 The variety of ethical concerns implicated may explain the abrupt attempted
`departure of Voip-Pal’s original counsel, Knobbe, and attempted substitution of
`new counsel who has no independent historical knowledge of events. Ex. 1022 at
`3:6–16. Dr. Sawyer admits he worked with Voip-Pal attorneys. Ex. 3008 at 1.
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`
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`1
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`
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`were written by Dr. Sawyer in consultation with Voip-Pal management between
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`May and August of this year….” Ex. 1023 (emphasis added).
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`In other words, Voip-Pal now admits that its September press release was
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`false. It repeatedly emphasized in the letters that Dr. Sawyer was a former
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`executive of Voip-Pal and omitted any mention of its involvement. Exs. 3003–
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`3007. Voip-Pal, both actively and by omission, hid from the Board that it was
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`ghost-writing Dr. Sawyer’s
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`letters.
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` This conduct
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`threatens
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`the Board’s
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`foundational integrity and is alone sufficient to warrant sanctions against Voip-Pal.
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`II. Voip-Pal Cannot Blame Apple For Believing Voip-Pal’s Deception
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`
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`Voip-Pal’s deception fooled everyone into believing that Dr. Sawyer acted
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`on his own. Yet Voip-Pal attempts to avoid the consequences of its own
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`misconduct by suggesting that Apple waived objection to the ex parte campaign by
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`not taking action as soon as it learned of the May 1 and October 23 letters. Apple
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`was in good company—the Board also did not recognize the letters were from
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`Voip-Pal and took no subsequent action, even though Voip-Pal sending ex parte
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`letters was a clear violation of the Board’s own rules. 37 C.F.R. § 42.5(d). Nobody
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`took action earlier than now because Voip-Pal successfully hid its involvement.
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`
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`In the May 1 letter—which Apple received on May 8 only because a District
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`of Nevada clerk decided to file it on that court’s docket—Voip-Pal intentionally
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`implied that Sawyer acted alone. Ex. 3003 at 1 (Dr. Sawyer claimed to “no longer
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`2
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`have a formal role with Voip-Pal”). The letter provided no suggestion of Voip-
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`Pal’s involvement, as evidenced by the District of Nevada attributing the letter to
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`an “interested party,” rather than to Voip-Pal, and by the Board taking no action.
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`Ex. 2057, at Ex. A, p. 5 (doc. 28). Apple did not receive a copy of the October 23
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`letter until November 1—again, only via a clerk who, on their own accord, filed it
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`in the District of Nevada. While the October 23 letter suggested that Voip-Pal
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`might be involved, it was far from clear, as again evidenced by neither the district
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`court nor the Board attributing the letter to Voip-Pal. Id. (doc. 32). In fact, Voip-
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`Pal’s substitute attorney, Mr. Malek, argued the October 23 letter was not evidence
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`of Voip-Pal’s role: “Dr. Sawyer does meet with the principals of the company as a
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`shareholder. But that is not – that is not evidence that the company was
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`[complicit] in this campaign or this kind of advocacy.” Ex. 1021 at 12:16-20.
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`
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`As Apple explained in its sanctions motion, it investigated Voip-Pal’s letters
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`after receiving a Final Written Decision based on grounds that were expressly
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`rejected twice earlier in the proceeding by the original panel. Motion at 7. Apple
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`then discovered that Voip-Pal published six letters (four of which Apple had not
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`previously known about), boasting about their content and their potential impact.
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`After seeing all of this, Apple became convinced that Voip-Pal was behind the
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`letter campaign. Apple diligently investigated the issues raised in its motion and
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`promptly brought Voip-Pal’s actions and the associated impacts to the Board’s
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`3
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`attention. There is neither waiver nor bar where the key fact (Voip-Pal’s
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`involvement) was actively hidden by the party seeking to invoke waiver. Voip-Pal
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`hid the truth, and it cannot pass the blame for its deception to Apple.
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`III. Voip-Pal’s Letters Are Prohibited Ex Parte Communications That
`Deprive Apple of Due Process
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`
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`Having now admitted it orchestrated an ex parte campaign, Voip-Pal
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`advances three arguments attempting to excuse its actions. First, Voip-Pal argues
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`its letters were permissible because they avoided the merits of the proceeding.
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`Opp. at 2–7. Second, it argues that its letters did not contain “new and material”
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`information. Id. at 14–15. Finally, Voip-Pal suggests that its letters were harmless
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`absent evidence that the Board acted on its letters. Id. at 8–9. Each of these three
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`arguments fails.
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`A. Voip-Pal’s Letters Are Ex Parte Communications That Violate 37
`C.F.R. § 42.5(d)
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`The Board’s rules are clear: “Communication regarding a specific
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`proceeding with a Board member defined in 35 U.S.C. 6(a) is not permitted unless
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`both parties have an opportunity to be involved in the communication.” 37 C.F.R.
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`§ 42.5(d). Voip-Pal seeks to avoid liability by arguing that the Board’s Rules of
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`Practice permit “reference to a pending case in support of a general proposition
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`(for instance, citing a published opinion from a pending case or referring to a
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`pending case to illustrate a systemic concern).” Opp. at 2. This comment clearly
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`4
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`does not permit a party to communicate ex parte with the Board in a pending
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`proceeding regarding specific relief sought in that proceeding. Otherwise, the
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`exception would swallow the rule. The rule also prohibits “communicating with
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`any member of a panel acting in the proceeding or seeking supervisory review in a
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`proceeding by contacting the judge’s supervisor, without including the opposing
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`party in the communication.” 77 Fed. Reg. 48612-01 at 48616-17.
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`None of the letters address only a “general proposition.” All six letters
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`unambiguously address the substance of the instant proceeding and ask for specific
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`relief in violation of § 42.5(d). For example, the first letter, sent on May 1,
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`identified this proceeding in the Re line, identified the three judges on the Original
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`Panel by name, accused all three of bias in favor of Apple, and demanded specific
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`relief in the named proceeding. Ex. 3003 at 1–3. The remaining letters demanded
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`even further relief specific to this proceeding. Following the panel replacement,
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`both the June 21 and July 11 letters identified this proceeding in their Subject lines
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`and speculated that the panel replacement must have been the result of bias and/or
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`misconduct. Ex. 3004 at 1–2; Ex. 3005 at 1–3. Both letters again asked for
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`specific relief (not a general proposition): “only a judgment in the patent owner’s
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`favor or a dismissal of the action would make the patent owner whole.” Ex. 3004
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`at 3; Ex. 3005 at 4. Similar demands were included in Voip-Pal’s July 27 and
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`August 31 letters. Ex. 3006 at 5 (“for the required due process to be followed, the
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`5
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`PTAB must dismiss the two Apple petitions”); Ex. 3007 at 4 (“the only equitable
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`and acceptable resolution would be an immediate dismissal of the seven pending
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`IPR petitions against Voip-Pal.”). The October 23 letter identified this proceeding,
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`rehashed the allegations of bias, accused the Director of replacing the panel as an
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`improper means of promoting a “Policy Position,” and threatened the Substitute
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`Panel with “criminal liability.” Ex. 3008 at 7–8. A party cannot raise demands for
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`specific substantive actions to be taken by the panel overseeing its own active
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`proceeding in an ex parte fashion. The six letters violate § 42.5(d).
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`B.
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`The Letters Introduced New And Material Information
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`Voip-Pal next argues that its letters did not “introduce new and material
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`information.” Opp. at 15. Voip-Pal contends that because the letters did not
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`address the merits of this proceeding, their content was not “new and material.”
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`This is an unduly narrow view of what constitutes “new and material” information.
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`Under Voip-Pal’s
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`interpretation, clearly coercive communications
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`to an
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`adjudicator, no matter how extreme, would not implicate due process concerns
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`simply because the coercion did not address the merits of the pending arguments.
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`One could threaten a judge’s job, finances, family, or freedom, and it would not
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`create any due process concerns at all. Voip-Pal’s interpretation defies common
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`sense and is not the law.
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`The Federal Circuit has provided clear guidance as to what constitutes “new
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`6
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`and material information” that raises due process concerns:
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`information has been
`In deciding whether new and material
`introduced by means of ex parte contacts, the Board should consider
`the facts and circumstances of each particular case. Among the factors
`that will be useful for the Board to weigh are: whether the ex parte
`communication merely introduces “cumulative” information or new
`information; whether the employee knew of the error and had a
`chance to respond to it; and whether the ex parte communications
`were of the type likely to result in undue pressure upon the
`deciding official to rule in a particular manner.
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`Stone v. FDIC, 179 F.3d 1368, 1377 (Fed. Cir. 1999) (emphasis added). The only
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`logical conclusion is that Voip-Pal’s ex parte communications are new—none of
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`its arguments or demands were part of the record. Nor is there any real doubt that
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`they are “material,” because they are “likely to result in undue pressure.” Id. The
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`demands and threats in Voip-Pal’s letter campaign were, on their face, designed to
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`exert “undue pressure.” From alleging that the proceeding violated Voip-Pal’s due
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`process rights (Ex. 3006 at 5) to threatening “RICO violations and its potentially
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`criminal liability implications” (Ex. 3008 at 8), Voip-Pal’s letters are of the type
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`likely to result in undue pressure on the Board.
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`
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`The recipient list further confirms this conclusion. A practical reason for
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`including the Panel’s direct superiors and a multitude of high-ranking individuals
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`(including those responsible for funding the PTAB), is to apply pressure to the
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`Panel. The severity of the allegations and demands, coupled with the distribution
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`list, leads to an inescapable conclusion that the letters were of the type likely to
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`7
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`exert undue pressure. The letters included “new and material” information.
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`C.
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`Petitioner Need Not Show The PTAB Was Actually Influenced By
`Voip-Pal’s Letters To Establish A Due Process Violation
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`Voip-Pal additionally argues that Apple was not harmed by its conduct,
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`advancing the false premise that Apple must prove the Board was actually
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`influenced by the letters. Opp. at 8–9. The Federal Circuit has rejected such a
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`subjective test. See Stone, 179 F.3d at 1373–77 (rejecting the government
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`proposed “subjective test” that requires evidence “that the deciding official was
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`influenced” and adopting an objective test that instead considers the nature of the
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`communications). When ex parte communications satisfy the objective Stone
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`criteria, the communications constitute a due process violation, and such a
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`“violation is not subject to the harmless error test.” Id. at 1377. This is because the
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`fundamental harm of ex parte communications is that the potentially prejudiced
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`party does not know “whether the incidents that may have occurred were harmful
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`or harmless.” Remmer v. United States, 347 U.S. 227, 229 (1954).
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`Even if proof of harm were required (it is not), the indicia of influence are
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`present here. Voip-Pal demanded a new panel, and a new panel was provided.
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`Voip-Pal demanded reversal of the Original Panel’s Institution Decision, dismissal
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`of the proceeding, and denial of institution of all pending Petitions. That is
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`effectively what occurred. Voip-Pal’s covert ex parte campaign has created a
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`situation where it is impossible to know the full impact of Voip-Pal’s coercive
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`8
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`tactics, and that, in and of itself, is an unjust harm that the Board must redress.
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`Whether or not the panel was actually influenced, the appearance is inescapable.
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`Finally, Voip-Pal references a handful of cases, trying to suggest that if a
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`decision-maker is not subjectively influenced, ex parte communications are
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`acceptable. See Opp. at 8–9 & n.3. None of the cited cases involve a situation
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`where the ex parte communications were covertly orchestrated by a party, and
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`none involve aggressive threats of criminal liability or pressure applied to the
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`decision-maker’s superiors. In Knop v. Johnson, 977 F.2d 996, 1011 (6th Cir.
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`1992), the party sending the letters in question “was consistently scrupulous about
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`sending counsel copies of her letters” such that “the court was furnished nothing
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`that counsel did not know about.” Id. In Aiken County v. BSP Division of
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`Envirotech Corp., 866 F.2d 661, 679 (4th Cir. 1989), the Fourth Circuit denied a
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`new trial on the basis of an ex parte memorandum addressing pre-judgment
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`interest that was submitted after trial and could not have impacted the trial itself.
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`Id. In AIG Baker Shopping Center Properties, LLC v. Deptford Township
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`Planning Board, No. 04–CV–5849(FLW), 2006 WL 83107, at *12 (D.N.J. Jan. 10,
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`2006), the court’s clerk received a single call on a routine administrative matter
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`that occurred after all judgments had already been entered. Finally, in Kaufman v.
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`American Family Mutual Insurance Co., No. 05-CV-02311-WDM-MEH, 2009
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`WL 924442, at *1 (D. Colo. Apr. 3, 2009), a single ex parte communication
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`9
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`occurred with the magistrate judge, which had no impact on the reliability of the
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`district judge’s challenged orders. Id. None of these cases bear any resemblance
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`to this situation. Indeed, the facts of Voip-Pal’s conduct are so outlandish as to
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`find no precedential corollary.
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`IV. The Board Should Police and Deter Voip-Pal’s Conduct
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`Voip-Pal’s conduct must not be swept under the rug. If the Board were to
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`tacitly endorse Voip-Pal’s ex parte ghost-writing campaign, it would open a
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`recurring back channel for advocacy that simply cannot be allowed to exist in
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`adversarial proceedings. Voip-Pal cites two cases suggesting that a warning to
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`cease ex parte communications may suffice in some circumstances. Opp. at 7–8.
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`Here, the Board did not know to warn Voip-Pal to stop its campaign because Voip-
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`Pal knowingly and deliberately hid its involvement. Voip-Pal has plumbed new
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`depths with its choice to conceal its ghost-writing campaign and it should not be
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`surprised by sanctions that match the severity of the conduct.2 Judgment against
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`Voip-Pal is an appropriate sanction for Voip-Pal’s conduct. Alternatively, Apple
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`requests new, constitutionally correct proceedings that provide a timeframe in
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`which Apple may file new petitions.
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`2 The sanctions being sought by Apple align with those requested by Voip-Pal.
`Voip-Pal’s June 21 and July 11 letters both note, “only a judgment in the patent
`owner’s favor or a dismissal of the action would make the patent owner whole.”
`Ex. 3004, 3005; see also Ex. 3006 (requesting “dismissal”); Ex. 3007 (same).
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`10
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`Respectfully submitted,
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`Date: January 26, 2018
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`
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`/s/ Adam P. Seitz
`Adam P. Seitz, Reg. No. 52,206
`Eric A. Buresh, Reg. No. 50,394
`ERISE IP, P.A.
`7015 College Blvd., Suite 700
`Overland Park, KS 66211
`(913) 777-5600 Phone
`(913) 777-5601 Fax
`
`eric.buresh@eriseip.com
`adam.seitz@eriseip.com
`
`Paul R. Hart, Reg. No. 59,646
`ERISE IP, P.A.
`5600 Greenwood Plaza Blvd., Suite 200
`Greenwood Village, CO 80111
`(913) 777-5600 Phone
`(913) 777-5601 Fax
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`paul.hart@eriseip.com
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`ATTORNEYS FOR PETITIONER
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`11
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`CERTIFICATE OF SERVICE
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`The undersigned certifies that on January 26, 2018, a true and correct copy of
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`this Reply In Support of Motion for Entry of Judgment in Favor of Petitioner as a
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`Sanction for Improper Ex Parte Communications by Patent Owner or, Alternatively,
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`for New and Constitutionally Correct Proceedings was served upon the following
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`counsel for Patent Owner, via the email correspondence address of record:
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`Kerry Taylor, Reg. No. 43,947
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`2kst@knobbe.com
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`
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`John M. Carson, Reg. No. 34,303
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`2jmc@knobbe.com
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`
`Knobbe, Martens, Olson & Bear, LLP
`2040 Main Street, 14th Floor
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`
`Irvine, CA 92614
`858-707-4000 Phone
`858-707-4001 Fax
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`Stephen Melvin
`melvin@zytek.com
`Zytek Communications Corporation
`114 W. Magnolia Street, Suite 400-113
`Bellingham, WA 98225
`360-543-5611 Phone
`
`Kevin M. Malek
`Malek Moss Legal Group
`340 Madison Ave., 19th Floor
`New York, NY 10173
`212-812-1491 Phone
`kevin.malek@malekmoss.com
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`Respectfully submitted,
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`BY:
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`/s/ Adam P. Seitz
`Adam P. Seitz, Reg. No. 52,206
`
`ATTORNEY FOR PETITIONER
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`12
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