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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`APPLE INC.,
`Petitioner,
`
`v.
`
`VALENCELL, INC.,
`Patent Owner.
`____________
`
`Case IPR2017-00317 (Patent 8,989,830 B2)
`Case IPR2017-00318 (Patent 8,886,269 B2)
`____________
`
`Record of Oral Hearing
`Held: February 27, 2018
`____________
`
`
`
`
`Before BRIAN J. McNAMARA, JAMES B. ARPIN, and SHEILA F.
`McSHANE, Administrative Patent Judges.
`
`
`
`
`
`
`Case IPR2017-00317 (Patent 8,989,830 B2)
`Case IPR2017-00318 (Patent 8,886,269 B2)
`
`
`
`APPEARANCES:
`
`ON BEHALF OF THE PETITIONER:
`
`
`BYRON L. PICKARD, ESQUIRE
`MICHELLE K. HOLOUBEK, ESQUIRE
`MICHAEL D. SPECHT, ESQUIRE
`MARK CONSILVIO, ESQUIRE
`Sterne, Kessler, Goldstein & Fox
`1100 New York Avenue, N.W.
`Washington, D.C. 20005
`
`
`
`ON BEHALF OF THE PATENT OWNER:
`
`
`JUSTIN B. KIMBLE, ESQUIRE
`JEFFREY BRAGALONE, ESQUIRE
`Bragalone Conroy, P.C.
`2200 Ross Avenue, Suite 4500W
`Dallas, Texas 75201-7924
`
`and
`
`R. SCOTT RHOADES, ESQUIRE
`Warren Rhoades
`1212 Corporate Drive, Suite 250
`Irving, Texas 75038
`
`
`
`
`The above-entitled matter came on for hearing on Tuesday, February
`
`27, 2018, commencing at 2:15 p.m., at the U.S. Patent and Trademark
`Office, 600 Dulany Street, Alexandria, Virginia.
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`Case IPR2017-00318 (Patent 8,886,269 B2)
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`P R O C E E D I N G S
`- - - - -
`JUDGE McSHANE: Good afternoon. This is the final hearing in
`the Apple v. Valencell case. It's going to be the combined hearing for the
`IPR2017, it's the 317 case and the 318 case. I will also note for the record
`that the Fitbit v. Valencell cases, the 2017-1553 and 1554 cases have been
`joined to these cases.
`I think this morning we entered appearances, so we can just repeat
`the appearances. Are they the same appearances this afternoon? Actually,
`I'll seeing different counsel at different tables. So let's have appearances,
`please. Petitioner.
`MR. SPECHT: Yes, Your Honor. Michael Specht for petitioner,
`lead counsel. With me is Jason Fitzsimmons as well as Michelle Holoubek.
`All of us are with Sterne, Kessler, Goldstein and & Fox here on behalf of
`petitioner, Apple, Inc.
`MR. KIMBLE: Thank you, Your Honor. Justin Kimble for the
`patent owner. The same backup counsel are with me, Jeff Bragalone, Bill
`Kennedy, Jon Rastegar, Scott Rhoades, and the client representatives, Dr.
`Steven LeBoeuf and Mr. Todd Ackman from Valencell.
`JUDGE McSHANE: So Judge McNamara provided guidance this
`morning on how we are going to proceed. Here we are going to have an
`hour per side. So it's going to go petitioner, patent owner, and if petitioner
`has reserved time, then we are going to have rebuttal.
`One question, are there still standing objections to demonstratives?
`There was a joint motion filed on that as of, I think, Friday night.
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`MR. SPECHT: There are, Your Honor. As you know, we have a
`significant number of objections to their numerous slides. And I believe
`they have continuing objections as well.
`MR. BRAGALONE: Yes, Your Honor, both sides have objections
`they have submitted.
`JUDGE McSHANE: So on this issue, let me make a few
`comments. First of all, the demonstratives that we have here are
`voluminous. In particular, patent owner has demonstratives exceeding
`150 pages of slides for one hour of argument. This is excessive. So I'll note
`that, number one.
`Number two, as to the other objections, patent owner's objections
`to petitioner's demonstratives are directed to the reliance on the petitioner's
`reply. Patent owner here may present additional arguments regarding any
`allegations of unacceptable scope of the reply, but we are declining to strike
`any portions of petitioner's demonstratives.
`As to the objections to the patent owner's demonstratives, any
`figures -- now, everybody knows here that demonstratives are used as a
`visual aid. So they are not evidence. That said, if there are figures in the set
`of slides that are not in the record, we are going to be disregarding those
`today.
`
`And petitioner also objected to new arguments and misleading
`statements that are alleged to be in the demonstratives as well as exhibits and
`figures that were not previously cited. We are going to discern the
`appropriateness of the arguments and the references and determine
`whether -- we can figure out whether they have been in the papers before
`and the citations and the like. So we don't have a jury here. They are used
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`as your aid and they are not going to be serving as evidence. So we'll just
`deal with it as it comes. And that's about the extent of it. Okay. Any
`questions on that?
`MR. BRAGALONE: No, Your Honor. Thank you, Your Honor.
`JUDGE McSHANE: One other comment, and this goes to Judge
`Arpin's comment this morning, we are mixing up two cases here. And to the
`extent -- you did a great job this morning where you were differentiating
`between the cases. Here there is more overlap, perhaps. With that said, if
`you are talking about one particular case versus another, if you could try to
`flag that, please.
`So we'll put an hour on the clock for you. And I assume you want
`to reserve some time, counsel?
`MR. SPECHT: We do, Your Honor. I would like to reserve
`25 minutes for rebuttal.
`JUDGE McSHANE: So what we are going to do here is I'm going
`to put the full hour on here and then you can figure out, you know, how
`much time. We'll look and see how much time it is. So you got the full hour
`that's going to start here whenever you are ready.
`MR. SPECHT: Again, good afternoon, Your Honors. In both of
`these proceedings, we have demonstrated in our petitions for each matter
`that all of the challenged claims are obvious and unpatentable. Patent owner
`has failed to rebut our showing that all claims are nonpatentable. Rather,
`what we find here is that patent owner has repeatedly mischaracterized the
`prior art and presented arguments that are inconsistent or contradicted by
`their own expert and the prior art. In general, with respect to our
`obviousness grounds that rely on combinations of references, they have
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`presented a shotgun approach to try to demonstrate that we didn't show that
`those references should be combined.
`As you know, the '830 patent is a continuation of the '269 patent
`with claims that are very similar to those of the '830 patent. In particular,
`independent claims address the same embodiment represented primarily by
`Figures 22A and B of the '830 patent and includes the same well-known
`structural elements with minor variations. The dependent claims primarily
`add the same well-known structural elements in both patents such as a lens,
`processor, transmitter and light-reflective materials.
`I am now putting slide 2, and this is from the '830 patent IPR on
`the ELMO. In my comments today, I will address the '830 patent IPR first,
`which includes one set of grounds based on the primary reference of
`Goodman in combination with a number of secondary references for the
`dependent claims as shown there, Hicks, Hannula, Asada and Delonzor.
`Each of these references is also used, as you're well aware, in the 318 IPR
`proceeding that addresses the '269 patent. In the '269 patent IPR you know
`that we have two sets of grounds, one which includes the Goodman
`reference as the primary reference, and the other which includes the Asada
`reference as the primary reference. I will principally address the Asada
`reference, the Asada grounds after going through the '830 IPR proceeding.
`To get us back into the flow of the technology, I want to now put
`up demonstrative slide number 5 from the '830 patent IPR. What that is is
`this is Figure 22B, 22A and 23 of the '830 patent. And if we focus our
`attention on Figure 22B, I just wanted to walk through and give a context for
`our discussion and what elements we believe are in dispute and why we
`think that we have demonstrated that they are shown by the prior art.
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`So if you notice at the top you have an emitter 24, a light emitter.
`It emits light. It goes through the light transmissive material 19, that
`chamber. It enters into a window 74W there on the left. It goes through the
`finger. So this device is wrapped around your finger in this embodiment. It
`goes through the finger, comes out the other side of the device through what
`is also labeled as 74W, enters in another light transmissive material and
`makes its way back to the detector, which detector 26. That's the basic
`principle of operation of the device in the '830 and '269 patent. And as I
`said, the claims claim this rather broadly.
`Now I would like to turn to Goodman. This is on petitioner's slide
`6. This is two figures from the Goodman reference. At the bottom you see
`Figure 4 which is showing the device for the sensor of Goodman wrapped
`around a finger. At the top you see a planar image of the device. I wanted
`to walk through the device, explain its operation. So if you look to the
`left-hand side of Figure 2C at the top, you again see an LED and emitter 24.
`That emitter emits light represented by the arrows. That goes through
`apertures 40 which we've labeled there annotated as a window. And that
`window is through the cladding material. Atop of that cladding material you
`have a light transmissive film 45.
`And then keep in mind this is wrapped around the finger. It would
`be up against the finger at this point. The light goes through that light
`transmissive material into the finger. It travels through the finger, exits on
`the other side of the finger, goes back through the light transmissive material
`45. Then as you see the arrows, the light goes through aperture 41 which
`we've annotated as a window there in the cladding material, back into the
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`photodetector 14. That's the basic operation. It operates very, very similarly
`to the operation of the '292, the Figure 22B description.
`Now, with that background in mind in terms of the technology,
`there really are three with respect to -- let me back up. The issues here only
`relate to independent claim 1 in terms of patent owner rebutting whether or
`not the references disclose these elements. All of the other issues with
`respect to the dependent claims all hinge on their arguments that they claim
`we haven't shown a motivation to combine.
`So I wanted to talk about these three issues in particular and focus
`on these. And really the second two bullets are related. The first bullet is
`whether or not Goodman discloses a window formed in the layer of cladding
`material that serves as a light-guiding interface to the body of the subject.
`So this is a limitation in the independent claim. Our position, obviously, is
`that it's disclosed by Goodman, and we think that's very clear. I'm now
`putting back up Figure 6 -- or slide 6. And you can see here that you have
`the light emitting diode sending light through a window and you have that
`light coming back through the window.
`With respect to the second two bullets, these relate to the
`limitation, the wherein clause limitation where you have a first and second
`direction of light that are substantially parallel in the limitation. And then
`the third bullet is the light transmissive material is configured such that it
`supports or allows the light to meet those first and second direction
`limitations.
`So let's talk about those in a little bit more detail. So I'm now
`going to our slide 10. And this is dealing with whether or not Goodman
`discloses a window formed in the layer of cladding material that serves as a
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`light-guiding interface of the body of the subject, the first bullet that I
`identified for you. It is our position that it certainly does. We have an
`excerpt from our petition. Goodman discloses that opaque tape layer 37 is
`apertured, respective apertures 40 and 41, which I just highlighted to you.
`These apertures allow the light to pass. We think that's very clear.
`Now, in patent owner's attempt to rebut this, they have created an
`assembly of Goodman that simply does not make sense when you look at --
`it's inconsistent with -- putting back up here, sorry Judge Arpin for going
`back and forth, but slide 6. You put slide 6 back up, what we saw in slide 10
`was what they did was they pushed the LED and the emitter all the way up
`through the cladding material. Why did they do that? Because then they
`could make an argument that says, well, the light is not actually going
`through those windows. It's the LED and the detector that are pushed
`through. Therefore, light doesn't go through the window. We think that is
`false and it's inconsistent with the diagrams and inconsistent with the
`disclosures in Goodman.
`So with respect to the diagram on why we believe our
`interpretation is correct, a couple of reasons. You see those arrows, they
`show light actually going through the windows. They show light LED 24,
`the light is going through and emitter or detector 14, you see the arrows, it's
`receiving the light. It's clearly indicative of the light going through the
`windows.
`Now I'm putting up demonstrative slide 11. And patent owner's
`declarant essentially admits this. So we talked to him. Contrary to
`Valencell's position, Valencell's declarant, Dr. Titus, agreed with Apple
`stating that my understanding is that the apertures, referring to the apertures
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`in Goodman, would allow light to pass through them. This is consistent
`with the figure. This is consistent with our expert's testimony. And their
`own expert made the same admission.
`So now I want to turn to the next bullet, the second bullet on the
`slide which deals with the first and second directions, whether or not --
`JUDGE McSHANE: Counsel, can we just back up. There is a
`dispute about claim construction for this light guide term, light-guiding
`interface term. And the patent owner is proposing that it would be an
`interface that delivers light along the path. Is it your position that Goodman
`meets that construction?
`MR. SPECHT: It is our position. It is our position that that's an
`incorrect construction. But if the Board adopts it, we believe Goodman still
`meets that. We believe our construction -- and actually, I shouldn't call it a
`construction. Our response to their construction, if you recall in our petition,
`we said that light-guiding interface, a plain and ordinary meaning. And then
`in our petitioner reply in response to their proposed construction, we argued
`that it simply should be a window that allows light to pass through. And
`either construction Goodman teaches this element or discloses this element.
`JUDGE McNAMARA: Does our construction of light guide in the
`case we discussed this morning, IPR2017-315, have any impact on light
`guide interface here?
`MR. SPECHT: It does not.
`JUDGE McNAMARA: And why not?
`MR. SPECHT: Because what's key is we are focused on the light
`guide interface, the complete term. And interface is the key here in
`distinguishing from light guide in and of itself.
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`JUDGE McNAMARA: If we were to construe the light guide in
`any particular way -- I think there was some discussion it really isn't a lot of
`dispute as to what the light guide means in the 315 case. So assuming we
`adopt that construction, is it just, does the interface portion with the rest of
`the light guide construction apply?
`MR. SPECHT: I believe that's the case, Your Honor. I would
`have to go back and look at the notes from the transcript this morning, but I
`believe that's the case. And the key is that this is the interface that allows
`light to pass through.
`JUDGE McNAMARA: That's fine. But it doesn't change
`anything? In terms of the light guide itself, that's all water under the bridge?
`MR. SPECHT: That's correct.
`JUDGE McNAMARA: Thank you.
`MR. SPECHT: Now I want to turn back to petitioner's slide 12.
`And this is focusing on the limitation --
`JUDGE ARPIN: Counselor, before you go to petitioner's slide 12,
`could you go back to slide 10 for a moment, please. Now, am I to
`understand that the disagreement here between the two drawings at the
`bottom of this slide, one labeled PO's assembly of Goodman and petitioner's
`annotated figure of Goodman, that the difference here is the extent to which
`a portion of the emitter or detector extends beyond the layer 37?
`MR. SPECHT: That's correct, Your Honor. I think when you are
`referring to the figures at the bottom, you are referring to Figure 7A in our
`petitioner reply. We used Figure 7A to further support our position that the
`light emitter and the light detector would not be fully pushed through the
`substrate 37 even if they were pushed in there somewhat. And this is
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`another embodiment from Goodman that highlights how when you push the
`emitter into that area, it's still not fully pushed through. It's going to be
`recessed, and in which case the aperture still is providing or serving as a
`light-guiding interface.
`JUDGE ARPIN: Apart from 7A, is there any disclosure in
`Goodman that talks about how far the emitter and detector are pushed
`through layer 37?
`MR. SPECHT: So we refer to the figure -- what is the figure
`number now -- Figure 2C which shows that they are not pushed through and
`really highlight the fact that shows the light passing through the cladding
`material interface in both cases, going into the finger and then returning
`from the finger. Also Goodman is concerned with conformance to the skin,
`which would be another reason why you won't want to have essentially
`pushing these devices all the way through and creating essentially bumps on
`the skin not being conformal to the skin.
`JUDGE ARPIN: Well, 2C is identified in column 8, line 15 as an
`exploded view. That's column 8, line 15 of Goodman. So I don't know how
`much 2C really tells us about how far these go through. Can you explain
`why this is so significant?
`MR. SPECHT: I think it's significant for one reason for sure is if
`you look at the rays of light that are shown there, if indeed it was an
`exploded view where the light was not at all going through those apertures
`or windows, it would not show the light going and the emitter going all the
`way through the window. It would have those arrows higher up.
`Actually, let me put it back on the screen, slide 6, so that it wasn't
`showing a light actually going through the windows, because under their
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`proposed assembly, the light wouldn't be doing that. That's the whole
`difference in our opinions. And likewise on the detector side, it's showing
`the light going through in an opposite direction. So I think that makes it
`clear that there is not an intent that you are going to push these devices all
`the way through that layer just merely looking at this figure even as an
`exploded view.
`JUDGE ARPIN: But unlike the embodiment of 7A which is a
`different embodiment of the invention, we don't have a similar drawing
`showing the unexploded Figure 2C embodiment; is that correct?
`MR. SPECHT: That's correct. And that's why we referred you to
`7A. So in a situation where they would sit in there and be recessed, they are
`still not pushed all the way through to further support our position.
`JUDGE ARPIN: Thank you, counsel. Please continue.
`MR. SPECHT: Now, returning to slide 12, this is going to the first
`and second directions, again, being substantially parallel. And here we
`believe it's really straightforward. In our petition we talk about in Goodman
`how you have the emitter and the detector. They are disposed on the
`opposite sides of the body part. They are opposite from one another. So in
`general, you would have light that is going in substantially parallel
`directions. That's further explained in the petition where Dr. Anthony talks
`about how the emitted light is reflected and refracted within the patient's
`body, often multiple times. So what you'll have is a ray of light coming out
`of the LED. It bumps around in there. There's many different directions,
`and in some of those directions, a second direction as it hits the emitter
`would be parallel to the original or substantially parallel to the original
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`direction of the light. And that's what Dr. Anthony has testified to here and
`what we've highlighted in our petition.
`With respect to the notion that the light is reflecting and refracting
`and going in multiple directions through the finger, I've put up slide 13.
`This was also confirmed by patent owner's declarant, who admitted that the
`light would be impinging in multiple directions from the emitter and
`traveling in those different directions as it hits the detector.
`With respect to the light transmissive material, I'm now on
`demonstrative slide 14, the light transmissive material is configured to meet
`the first and second directions. So here again from our petition we highlight
`from page 31 is delivered through the corresponding window 40 in the
`cladding layer and then through the clear polyester layer. So Goodman we
`are talking about the light traveling through the clear polyester layer 45
`which is that light transmissive material, and it's acting in a very similar way
`as the transmissive material in Figure 22A of the '830 patent. And we
`reached the conclusion in our petition Goodman discloses that material.
`That is configured to deliver light from the emitter to the body and collect
`light from the body of the subject back into the detector.
`We also provide in our reply, this is on slide 15 now, as I indicated
`that Goodman's light transmissive material, that clear polyester layer 45, it
`functions in the same way as the light transmissive material in the '830
`patent which is also supported there by our expert's declaration.
`Now I want to move to slide 16. As I indicated in my opening
`comments, there was a shotgun approach to all sorts of potential issues,
`detriments, reasons why these motivations for combination wouldn't work
`that we presented. It's our position that we did more than what was
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`necessary to demonstrate a motivation to combine in each of these. This
`slide, slide 16 highlights for each of the combinations where in our petition
`we talk about those. I'm not going to go through all of our arguments on
`these. I have a couple that I want to highlight.
`But I will emphasize the point that each of these applied references
`is from the field of noninvasive optical biosensors. They all have that
`common subject matter and focus as a starting point. When we went
`through our discussion on each these, we made clear to identify what the
`motivation was. We had a very solid background section in our petition and
`presented by Dr. Anthony given the state of the art the kinds of issues that
`individuals working on biosensors would be concerned with. And that
`formed the foundation for a lot of these combinations.
`So now I'm focused on slide 17. So slide 17, there's the issue of in
`their patent owner response they identified some detriments with the various
`combinations. Dr. Anthony was aware of those. He talked about tradeoffs
`generally. We made our showing that there was a motivation to combine
`and that he was aware of those tradeoffs. And despite those tradeoffs, they
`still would lead a person of ordinary skill in the art to combine these
`references.
`I just want to highlight one issue with respect to the motivation to
`combine. It's sort of representative of a lot of the arguments in a sense. This
`is our slide 18. At the top this relates to the ground 2, Goodman in view of
`Hicks rendering claims 5 and 15 obvious. Claim 5 and 15 add a lens to the
`system. And here at the top is Hicks Figure 6 which we have annotated in
`red what are the elements of that figure. And you can see there's apertures
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`92 and 88, and you have a clear substrate that sits above that, clear substrate
`80.
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`Now, what patent owner's inaccurately annotated figure does is
`they contend that there is this significant buffer in the Hicks reference shown
`there in the red. And in doing so, they indicate, well, that's why in Hicks
`you needed a lens. You don't have that kind of a buffer in Goodman, so
`therefore, there would be no motivation to combine these. We think that's
`certainly flawed because that buffer doesn't really exist. And we
`demonstrated that in our papers. But that is sort of representative of the
`types of motivation to combine arguments they have made.
`I now am going to move forward to the motion to amend in this
`case. This is demonstrative slide 22. Again, three bullets here. Patent
`owner failed to meet its burden of responding to the instituted grounds. Our
`opposition, again, we provided significant and extensive rationales for why
`we would combine the references. And Han very clearly discloses reducing
`footstep motion artifacts during running.
`The primary -- this is slide 24. The primary amendment, if you
`will, to the substitute claims is this clause, herein the base comprises a signal
`processor configured to receive and process signals, dot, dot, dot, to reduce
`footstep motion artifacts. That's what has been added here.
`Moving to slide 25, so with respect to slide 25, our position is they
`haven't met their threshold burden. Even after Aqua Products, there are
`certain things that they must do, threshold burdens. And that was in chief
`judge -- his memo on the impacts of Aqua Products identified this issue.
`Motions to amend must still address the notion. The motion to amend did
`not address how the proposed amendments overcome the instituted grounds
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`and thus do not respond to a ground of unpatentability involved in the trial
`as required by 37 CFR 42.121(a)(2). They simply never address any of the
`references, Goodman, Hicks, Hannula, Delonzor in their motion to amend.
`And we could stop there and deny this motion to amend, but we
`also think that our combination renders the proposed claim unpatentable.
`This is demonstrative slide 26. There were a lot of reasons that we cited in
`our opposition to combine Goodman and Han. Highlighted here in yellow, a
`person of ordinary skill would have understood that Goodman's technique of
`a low mass sensor that conforms to the skin would not have been effective at
`reducing inertia-based motion artifacts and therefore, they would look to
`Han to do that.
`The arguments that they did make, this is on slide 27, are really
`conclusory and unsupported by the evidence. There's two parts to that. First
`they talk about complexity, size or mass. We've refuted these in our papers.
`But they are just sort of a random shotgun approach to various things,
`detriments, if you will. But then also they make the argument that you want
`to incorporate Han's large, sturdy, solid ring into Goodman. Well, that's a
`red herring. We are not looking to incorporate all of the ring of Han into
`Goodman. What we are looking at is the sensor and the algorithm for
`processing data. That's not a large amount of additional elements that we are
`adding.
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`And then lastly, they dispute the fact that Han discloses reducing
`footstep motion artifacts during running. This is our slide 28. It's explicit.
`Han absolutely does disclose, as the first portion is, from our opposition
`where we highlight that Han talks about all the way up to walking or running
`and recognizing that impacts the sensor. And then there's an excerpt there at
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`the bottom that very clearly shows that the Han reference is concerned or the
`Han device is concerned with hand motion from running, walking, et cetera.
`So we think it's pretty clear that it's disclosed.
`Now I want to move to switching gears now to the '269
`proceeding. '269, slide 2, and this is just a summary of the grounds focused
`here on grounds 1 through 5 which deal with the Asada reference as the
`primary reference.
`And I want to put up slide 7. Now, these are the '269
`demonstratives, Your Honors. Slide 7 is an annotated Figure 11. The
`annotations show how the Asada device works. Again, you have emitter 4.
`It emits light through this light transmissive material which has -- and then
`on top of that is the cladding where it shows two windows. Again, this is
`wrapped around the finger. The light goes into the finger and the light
`comes back through the window, through the light transmissive material
`back into the photodetector working essentially very similar to Goodman
`and -- were you going to ask -- Goodman and the '269 and '830 Figure 22A
`disclosures.
`Now, with respect -- I'll leave that there for a minute. With respect
`to this, there are a couple of issues. One, patent owner takes issue with the
`annotations that we have added here that did not occur in Asada. These
`were provided by our expert. Our expert believed that this was the way a
`person of ordinary skill in the art would interpret this diagram. Furthermore,
`to corroborate that, he referred to the Swedlow reference that teaches a very
`similar device which did have labeling for each of these features, and based
`on that it was his opinion that a person of ordinary skill in the art would
`interpret this diagram this way.
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`The other issue with respect to Asada is, frankly, whether or not in
`the light transmissive materials those dashed lines mean that you cut out the
`material or the material stays. It's our position that those dashed lines, you
`don't -- the mat