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`Paper No. ___
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`Filed on behalf of Petitioners
`By: Elisabeth H. Hunt
`Richard F. Giunta
`Randy Pritzker
`WOLF, GREENFIELD & SACKS, P.C.
`600 Atlantic Ave
`Boston, MA 02210
`Tel:
`(617) 646-8000
`Fax: (617) 646-8646
`EHunt-PTAB@wolfgreenfield.com
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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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`
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`RPX CORPORATION,
`Petitioner
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`v.
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`DIGITAL AUDIO ENCODING SYSTEMS, LLC,
`Patent Owner
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`_________________
`
`Case IPR2017-00208
`Patent No. 7,490,037
`________________
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`PETITIONER’S BRIEF IN SUPPORT OF ADVERSE JUDGMENT
`AGAINST PATENT OWNER
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`CONTENTS
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`I. DAE EXPRESSLY REQUESTED ADVERSE JUDGMENT ......................... 1
`II. THE DEFINITION IN RULE 42.2 APPLIES TO RULE 42.73 ...................... 1
`III. STATUTORY AUTHORITY ........................................................................... 4
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`The Board authorized this briefing to address “whether we have the power to
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`enter adverse judgment in these proceedings, where no instituted review of the
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`patent exists.” Paper 7 at 3. The Board asked that this Brief “elaborate as to why
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`the definition set forth in §42.2 applies in §42.73” and “identify the statutory
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`source of our power to enter adverse judgement when no review is instituted.” Id.
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`I.
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`DAE EXPRESSLY REQUESTED ADVERSE JUDGMENT
`Rule 42.73(b) states that “[a] party may request judgment against itself at
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`any time during a proceeding.” 37 C.F.R. § 42.73(b). Prior Board decisions have
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`addressed whether to enter adverse judgment under Rule 42.73(b)(2) when the
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`patent owner merely disclaims all challenged claims pre-institution, and different
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`panels have ruled differently. See Smith & Nephew v. Athrex, IPR2016-00917,
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`Paper 12 and the cases cited therein. The Board had discretion in those cases,
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`because the Patent Owners did not expressly request entry of adverse judgment,
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`but took other action (e.g., cancellation of all challenged claims) that Rule 42.73(b)
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`provides “may” be construed as requesting adverse judgment.
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`The facts here are more straightforward. DAE expressly requested entry of
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`adverse judgment, and that request can be acted upon irrespective of whether DAE
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`disclaims all claims. The discretion addressed by other panels does not apply.
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`II. THE DEFINITION IN RULE 42.2 APPLIES TO RULE 42.73
`37 C.F.R. § 42.2 states that it provides “Definitions” that “apply to this part”
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`1
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`42 of C.F.R. Title 37. Rule 42.2 includes definitions for numerous terms in Rule
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`42.73: “Proceeding means a trial or preliminary proceeding”; “Preliminary
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`Proceeding begins with the filing of a petition for instituting a trial and ends with a
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`written decision as to whether a trial will be instituted;” “Trial” is “a contested
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`case instituted by the Board based upon a petition. A trial begins with a written
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`decision notifying the petitioner and patent owner of the institution of the trial;”
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`“Judgment means a final written decision by the Board, or a termination of a
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`proceeding.” Smith & Nephew, IPR2016-00917, Paper 12 at 3.
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`Given that “proceeding” and other terms in Rule 42.73 are expressly defined
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`in Rule 42.2, and that Rule 42.2 states that its definitions apply to all sections of
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`“this part [42],” the definition of “proceeding” in Rule 42.2 applies to Rule 42.73.
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`The Federal Circuit’s decision in Intellectual Ventures v. JP Morgan Chase,
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`781 F. 3d 1375 (Fed. Cir. 2015) (“IV”) is not to the contrary. There, the court
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`interpreted “proceeding” as used in the statute (not the Rules), for the purpose of
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`deciding whether the court had Article III jurisdiction to hear an interlocutory
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`appeal on a stay of litigation prior to institution of a CBM review. Id. at 1376
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`(citing AIA § 18(a)). The court only considered the Rules among a number of
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`“non-statutory arguments” were found not to affect the meaning of “proceeding” in
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`the statute. Id. at 1378. The court’s holding did not turn on the meaning of
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`“proceeding” as defined in Part 42 of 37 C.F.R., and any statement in IV about the
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`2
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`meaning of “proceeding” in the Rules (rather than the statute) is not binding on the
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`Board. What is binding on the Board are the PTO’s Rules, which expressly define
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`“proceeding” (Rule 42.2) within Part 42 as including a preliminary proceeding like
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`this one, and authorize adverse judgment at any time during a “proceeding” so
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`defined (Rule 42.73). Torrington Co. v. United States, 82 F.3d 1039, 1049 (Fed.
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`Cir. 1996) (“agencies are required to follow their own regulations.”).
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` IV proposed that “the PTO’s own regulations are inconsistent on [the
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`meaning of ‘proceeding’].” A closer look reveals no inconsistency in 37 C.F.R.
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`42. The court cited the TPG (quoting “[T]he Director may institute a proceeding
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`where a petitioner meets the threshold standards,” 77 Fed. Reg. 48756 at 48765)
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`and 37 C.F.R. § 42.101(b) (quoting “The petition requesting the proceeding…”) as
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`potentially inconsistent with Rule 42.2’s definition of “proceeding.” The quoted
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`statement in the TPG references “Statutory Threshold Standards,” thus dealing
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`with the use of “proceeding” in the statute, and not in 37 C.F.R. 42. Similarly
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`Rule 42.101(b)’s reference to a “petition requesting the proceeding” is not
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`inconsistent with Rule 42.2’s definition that a “Preliminary Proceeding begins with
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`the filing of a petition,” as the petition requests both the trial and the preliminary
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`proceeding that are both part of the “proceeding” under Rule 42.2.
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`This panel is empowered to follow the PTO’s Rules and apply the express
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`definitions in Rule 42.2 to Rule 42.73. Nothing in IV compels a different result or
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`3
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`warrants the Board not applying the express definitions Rule 42.2 requires.
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`III. STATUTORY AUTHORITY
`Congress directed that the PTO “shall prescribe regulations” for
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`“establishing and governing inter partes review under this chapter and the
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`relationship of such review to other proceedings under this title.” 35 U.S.C. §
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`316(a)(4). Congress required the PTO to “consider the effect of any such
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`regulation on … the integrity of the patent system, [and] the efficient
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`administration of the Office.” 35 U.S.C. §316(b). The PTO did so in 37 C.F.R. 42.
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`First, the PTO, complying with its Congressional directive
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`to “prescribe regulations,” defined two types of “judgments” the PTAB may
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`enter during an IPR proceeding. 37 C.F.R. §42.2 (defining “Judgment” as “a final
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`written decision by the Board, or a termination of a proceeding.”).
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`Second, the PTO provided for one type of “termination of the proceeding,”
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`by adopting regulations providing that “[a] party may request judgment against
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`itself at any time during a proceeding” (37 C.F.R. § 42.73), and defining a
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`“proceeding” in that Rule as including a preliminary proceeding pre-institution (37
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`C.F.R § 42.2). The PTO further provided that a patent owner “is precluded from
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`taking action inconsistent with the adverse judgment, including obtaining in any
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`patent: (i) [a] claim that is not patentably distinct from a … canceled claim.” 37
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`C.F.R. § 42.73(d)(3). These regulations are consistent with Congress’s directive to
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`4
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`prescribe regulations “establishing and governing” the relationship between inter
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`partes review and other proceedings under Title 35, as they establish an estoppel
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`relationship with patent prosecution proceedings. 35 U.S.C. § 316(a)(4).
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`As the Board has found, an IPR petition involves expenditure of significant
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`resources, and it would be inequitable and inconsistent with “policies of finality
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`and repose” to terminate an IPR proceeding on admittedly unpatentable claims in a
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`manner that allows the Patent Owner to pursue patentably indistinct claims. Smith
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`& Nephew, IPR2016-00917, Paper 12 at 8-9. Prosecution of patentably indistinct
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`claims would also result in inefficient administration of the Office. Whether DAE
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`has current plans to pursue patentably indistinct claims is immaterial to the
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`Board’s question about the statutory authority behind the Rules the PTO has
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`promulgated. The PTO was well within its Congressionally-delegated authority in
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`determining that entering adverse judgment during a preliminary proceeding is
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`appropriate, and in enacting regulations to that end, as those regulations govern
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`“the relationship of [inter partes] review to other proceedings [including patent
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`prosecution] under this title” and have an “effect” on “the integrity of the patent
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`system, [and] the efficient administration of the Office.” 35 U.S.C. § 316 (a)-(b).
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`Dated: February 8, 2017
`
`
`By: /Elisabeth Hunt/
`Richard F. Giunta, Reg. No. 36,149
`Elisabeth H. Hunt, Reg. No. 67,336
`WOLF GREENFIELD & SACKS, P.C.
`600 Atlantic Ave., Boston, MA 02210-2206
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`5
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`CERTIFICATE OF SERVICE UNDER 37 C.F.R. § 42.6(e)(4)
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`I certify that on February 8, 2017, I will cause a copy of the foregoing
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`document to be served via electronic mail, as previously consented to by Patent
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`Owner, upon the following:
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`Devlin Law Firm LLC
`1306 N. Broom Street, 1st Floor
`Wilmington, DE 19806
`Phone: (302) 449-9010
`Fax: (302) 353-4251
`tdevlin@devlinlawfirm.com
`dwu@devlinlawfirm.com
`mmcclain@devlinlawfirm.com
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`
`
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`
`
`/Virginia L. Weeks/
`Virginia L. Weeks, Paralegal
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`Date: February 8, 2017
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`6
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