UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`MICROSOFT CORPORATION
`Petitioner
`
`v.
`
`PROXYCONN, INC.,
`Patent Owner
`____________
`
`Case IPR2017-00261
`Patent 6,757,717 B1
`____________
`
`Filed: March 25, 2017
`
`
`
`REPLY OF PETITIONER MICROSOFT TO THE TIME BAR
`ARGUMENTS IN THE PATENT OWNER PRELIMINARY RESPONSE
`[PUBLIC REDACTED VERSION]
`
`
`
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`MICROSOFT CORPORATION
`Petitioner
`
`v.
`
`PROXYCONN, INC.,
`Patent Owner
`____________
`
`Case IPR2017-00261
`Patent 6,757,717 B1
`____________
`
`Filed: March 25, 2017
`
`
`
`REPLY OF PETITIONER MICROSOFT TO THE TIME BAR
`ARGUMENTS IN THE PATENT OWNER PRELIMINARY RESPONSE
`[PUBLIC REDACTED VERSION]
`
`
`
`
`
`IPR2017-00261
`Patent 6,757,717
`
`
`
`TABLE OF AUTHORITIES
`
`Cases
`Apple Inc. v. Rensselear Poly. Inst., Case
`IPR2014-00319, Paper 12 (PTAB June 12, 2014) ................................................. 4
`Bonneville Assoc., Ltd. Partnership v. Baram,
`165 F.3d 1360 (Fed. Cir. 1999) ..........................................................................2, 3
`CQG, Inc. v. Trading Techs. Int’l, Inc., Case
`CBM2015-00057, Paper 13 (PTAB July 10, 2015) ...........................................4, 5
`eBay, Inc. v. Advanced Auctions LLC, Case
`IPR2014-00806, Paper 14 (PTAB Sept. 25, 2014) ................................................ 5
`Histologics, LLC v. CDX Diagnostics, Inc.,
`Case IPR2014-00779, Paper 6 (PTAB Sept. 12, 2014) ......................................... 5
`In re Piper Aircraft Distrib. Sys. Antitrust Litig.,
`551 F.2d 213 (8th Cir. 1977) .................................................................................. 2
`McMillan v. Lowe's Home Centers, LLC,
`2016 WL 232319 (E.D. Cal. 2016) ....................................................................2, 3
`Microsoft Corp. v. Parallel Networks Licensing, LLC,
`IPR2015-483, Paper 10 (PTAB July 15, 2015) ...................................................... 3
`Oracle Corp. v. Click-to-Call Techs. LP, IPR2013-00312,
`Paper 26 (PTAB Oct. 30, 2013) (precedential) ............................................. 1, 3, 5
`ResMed Ltd. v. Fisher & Paykel Ltd.,
`IPR2016-01723, Paper 11 (PTAB Mar. 9, 2017) ................................................... 1
`St. Paul Fire & Marine Ins. Co. v. F.H.,
`55 F.3d 1420, 1425 (9th Cir. 1995)…………………………………………...…2
`Rules
`Fed. R. Civ. P. 41 ....................................................................................................... 2
`Statutes
`35 U.S.C. § 315 .......................................................................................................... 2
`
`Reply to Preliminary Response (REDACTED)
`
`i
`
`
`
`
`IPR2017-00261
`
`Patent 6,757,717
`Pursuant to the Board Order of March 15, 2017 (Paper 9), Petitioner
`
`Microsoft Corporation submits this Reply to the Section 315(b) time bar arguments
`
`raised in the Patent Owner Preliminary Response (“POPR”) (Paper 7).
`
`Board precedent makes clear that a dismissal without prejudice “nullifies the
`
`effect of the service of the complaint and, as a consequence, does not bar [a party]
`
`from pursuing an inter partes review.” Oracle Corp. v. Click-to-Call Techs. LP,
`
`IPR2013-00312, Paper 26 at 17 (PTAB Oct. 30, 2013) (precedential) (“The
`
`Federal Circuit consistently has interpreted the effect of such dismissals as leaving
`
`the parties as though the action had never been brought.”); see also ResMed Ltd. v.
`
`Fisher & Paykel Healthcare Ltd., IPR2016-01723, Paper 11 at 7-8 (PTAB Mar. 9,
`
`2017) (holding that a case dismissed without prejudice “cannot give rise to a
`
`statutory bar under 35 U.S.C. § 315(a)(1)” (internal quotations omitted)).
`
`Proxyconn dismissed its first action without prejudice, then waited over
`
`three years before filing a second action, asserting only patent claims not asserted
`
`in the first action. The Petition challenges those newly-asserted claims. The POPR
`
`alleges the Petition is time-barred, raising two arguments for an exception to Board
`
`precedent. Each argument fails and the time bar does not apply to this proceeding.
`
`I.
`
`The Time Bar Does Not Apply Because The Original
`Complaint Was Dismissed Without Prejudice, In Its Entirety
`The POPR first relies on an interlocutory district court order to argue that the
`
`2011 complaint “was dismissed both with prejudice and without prejudice,” thus
`
`Reply to Preliminary Response (REDACTED)
`
`1
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`
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`IPR2017-00261
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`Patent 6,757,717
`triggering the time bar. (POPR, 8 (citing interlocutory order, Exhibit 2004).)
`
`This argument fails because the dismissal without prejudice nullified the
`
`prior action, including the interlocutory order. McMillan v. Lowe’s Home Centers,
`
`LLC, 2016 WL 232319, at *5 (E.D. Cal. 2016) (“[A] voluntary dismissal under
`
`Rule 41(a) ‘carries down with it previous proceedings and orders in the action…’”)
`
`(quoting In re Piper Aircraft Distrib. Sys. Antitrust Litig., 551 F.2d 213, 219 (8th
`
`Cir. 1977)); see also Bonneville Assoc., Ltd. Partnership v. Baram, 165 F.3d 1360,
`
`1364 (Fed. Cir. 1999) (“The rule in the federal courts is that the effect of a
`
`voluntary dismissal without prejudice pursuant to Rule 41(a) is to render the
`
`proceedings a nullity and leave the parties as if the action had never been
`
`brought.”) (quotations omitted).
`
`The stipulation recites an unconditional dismissal without prejudice of the
`
`“action”: “[The Parties] hereby jointly stipulate by and through their respective
`
`attorneys to dismiss without prejudice the above-titled action, pursuant to Fed. R.
`
`Civ. P. 41(a)(1)(A)(ii).” (Id.) The dismissal does not mention the interlocutory
`
`order, purport to dismiss anything with prejudice, or incorporate any private
`
`agreement between the parties. (Ex. 1012 at 3.) Thus, just as service of the
`
`complaint is a nullity, the interlocutory order (Exhibit 2004) also is a nullity. See
`
`Bonneville, 165 F.3d at 1364; McMillan, 2016 WL 232319, at *5; cf. St. Paul Fire
`
`& Marine Ins. Co. v. F.H., 55 F.3d 1420, 1425 (9th Cir. 1995) (finding “a partial
`
`Reply to Preliminary Response (REDACTED)
`
`2
`
`
`
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`IPR2017-00261
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`Patent 6,757,717
`summary judgment” not preclusive in later action since “it could not have been
`
`appealed” and “was subject to reconsideration on proper motion”). Section 315(b)
`
`does not bar this IPR. See Oracle, IPR2013-00312, Paper 26 at 17.
`
`II. The Time Bar Does Not Apply Because The Parties’ Private Agreement
`Cannot Transform The Dismissal Without Prejudice Into A “Stay”
`The POPR also argues that a private agreement between the parties
`
`(“Agreement,” Ex. 2005) – never seen, much less endorsed by the court –
`
`somehow transformed the dismissal into a “stay.” (POPR, 8-9.) The Board has
`
`rejected near-identical arguments, holding that a private agreement between parties
`
`cannot alter the legal effect of a dismissal without prejudice. Microsoft Corp. v.
`
`Parallel Networks Lic., LLC, IPR2015-483, Paper 10 at 13 (PTAB July 15, 2015).
`
`The Board should also reject the same argument here, for at least three reasons.
`
`First, the Board should not even consider the Agreement, which the parties
`
`agreed
`
`
`
` (Ex. 2005, ¶ 15.)
`
`Second, the private Agreement cannot change the effect of the dismissal.
`
`Regardless of whether the parties sought to “achieve the effects of a stay through
`
`their tolling agreement,” as alleged by Proxyconn (POPR, 9), “the voluntary
`
`dismissal without prejudice … renders the prior action a nullity,” Parallel
`
`Networks, IPR2015-0483, Paper 10 at 13 (finding no time bar, “even if … the
`
`parties [had] intended to give ‘ongoing legal effect’ to the dismissed actions”). The
`
`Reply to Preliminary Response (REDACTED)
`
`3
`
`
`
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`IPR2017-00261
`
`Patent 6,757,717
`Agreement is not reflected in the stipulated dismissal or any court order and
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`Proxyconn identifies “no authority that holds that an agreement between private
`
`parties can alter the legal effect of a voluntary dismissal without prejudice.” Id.
`
`That legal effect is clear: the prior suit, including service of the complaint, is a
`
`nullity. Id.
`
`Third, the Board decisions cited by the POPR are factually distinct and do
`
`not support a time bar in this proceeding. Each of these decisions applied the time
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`bar after making a key factual finding not present here: uninterrupted continuation
`
`of the litigation from service of the first complaint until filing of the petition. See
`
`Apple Inc. v. RPI, IPR2014-00319, Paper 12 at 7 (PTAB June 12, 2014) (the
`
`district court dismissed an earlier-filed action at the same time it ordered
`
`consolidation with a later-filed action, “specifically stat[ing] that” the first suit’s
`
`claims, defenses, and discovery would carry over to the second suit); CQG, Inc. v.
`
`Trading Techs. Int’l, Inc., CBM2015-00057, Paper 13 at 8 (PTAB July 10, 2015)
`
`(the district court issued simultaneous orders that dismissed an earlier-filed action
`
`and allowed petitioner to add the claims from that earlier action to a co-pending
`
`later-filed action); Histologics, LLC v. CDX Diagnostics, Inc., IPR2014-00779,
`
`Paper 6 at 5 (PTAB Sept. 12, 2014) (after venue transfer, first-filed action was
`
`dismissed and second-filed action continued in its place); eBay, Inc. v. Advanced
`
`Auctions LLC, IPR2014-00806, Paper 14 at 8 (PTAB Sept. 25, 2014) (the district
`
`Reply to Preliminary Response (REDACTED)
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`4
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`
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`IPR2017-00261
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`Patent 6,757,717
`court granted the parties’ joint motion to dismiss a first-filed action and proceed
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`under a second-filed action, such “that ‘the work from the First Action should
`
`carry over to the Second Action”). In each decision, the Board found exception to
`
`the nullity rule set forth in Oracle because litigation had been pending
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`continuously since filing of a first complaint, as reflected in district court orders.
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`The present facts do not support an exception to the nullity rule. No court
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`order carried any part of the first action into the second, which was filed in June
`
`2016, over three years after the January 2013 dismissal without prejudice. Such
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`“significant period[s] of delay” are a reason why “prior cases are treated as if they
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`never existed after dismissal [without prejudice].” See CQG, CBM2015-00057,
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`Paper 13 at 7-8 (internal quotation marks omitted).
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`Proxyconn should not be allowed to ignore the impact of the nullity rule in
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`arguing for a time bar while simultaneously reaping the nullity rule’s benefit with a
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`second action that asserts only patent claims not previously asserted in the first
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`action. (See Petition at 2.) Newly-asserted claims are the target of the current
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`Petition, which does not challenge any claim asserted in the first action. (Id. at 1.)
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`For at least these reasons, the time bar does not here apply.
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`Reply to Preliminary Response (REDACTED)
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`5
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`IPR2017-00261
`Patent 6,757,717
`Dated: March 25, 2017
`
`
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`
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`Respectfully submitted,
`
`
`
`
`/John D. Vandenberg/
`John D. Vandenberg, Reg. No. 31,312
`Andrew M. Mason, Reg. No. 64,034
`Klarquist Sparkman LLP
`One World Trade Center, Suite 1600
`121 S.W. Salmon Street
`Portland, Oregon 97204
`Telephone: (503) 595-5300
`Facsimile: (503) 595-5301
`
`Reply to Preliminary Response (REDACTED)
`
`6
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`
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`IPR2017-00261
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`Patent 6,757,717
`CERTIFICATE OF SERVICE PURSUANT TO 37 C.F.R. § 42.6(e)(4)
`
`The undersigned certifies that a complete copy of Reply Of Petitioner
`
`Microsoft To The Time Bar Arguments In The Patent Owner Preliminary Response
`
`[CONFIDENTIAL VERSION] was served on March 25, 2017, by filing this
`
`document through the Patent Review Processing System as well as delivering a copy
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`via electronic mail upon the following attorneys of record for the Patent Owner:
`
`Amir Naini (Reg. No. 45,770)
`Neil A. Rubin (Reg. No. 67,030)
`Russ August & Kabat
`12424 Wilshire Blvd., 12th Fl.
`Los Angeles, CA 90025
`Phone: (310) 826-7474
`Fax: (310) 826-6991
`anaini@raklaw.com
`nrubin@raklaw.com
`proxyconn@raklaw.com
`
`
`
`Date: March 25, 2017
`
`
`
`
`
`By /John D. Vandenberg/
`
`John D. Vandenberg, Reg. No. 31,312
` Andrew M. Mason, Reg. No. 64,034
`Klarquist Sparkman, LLP
`One World Trade Center, Suite 1600
`121 S.W. Salmon Street
`Portland, Oregon 97204
`Telephone: (503) 595-5300
`Facsimile: (503) 595-5301
`
`CERTIFICATE OF SERVICE
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`
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`Page 1
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`
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