UNITED STATES PATENT AND TRADEMARK OFFICE
`
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`Page 1
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` APPLE, INC.,
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` PETITIONER
`
` VS.
`
` VALENCELL, INC.
`
` PATENT OWNER
`
` CASE IPR2017-00317 (Patent 8,989,830 B2)
`
` CASE IPR2017-00318 (Patent 8,886,296 B2)
`
` BEFORE SHEILA F. McSHANE, BRIAN J. McNAMARA and
`
` JAMES B. ARPIN, Administrative Patent Judges
`
` McSHANE, Administrative Patent Judge.
`
`TELEPHONIC PROCEEDING TAKEN IN AFOREMENTIONED MATTER
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` DECEMBER 12, 2017
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`0001
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`APL1118
`Apple v. Valencell
`IPR2017-00318
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`

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` I N D E X
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` E X A M I N A T I O N P A G E
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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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`Page 3
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` APPLE, INC.,
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` PETITIONER,
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` vs.
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` VALENCELL, INC.,
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` PATENT OWNER.
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` Proceeding held in the above matter on the 12th
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` day of December, 2017, between the hours of
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` o'clock in the forenoon and 3:00 o'clock in the
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` afternoon before Pamela K. Needham, CCR, CSR (MO,
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`11
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` IL), in a certain cause now pending before the
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` UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE
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`12
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` PATENT TRIAL AND APPEAL BOARD wherein APPLE, INC. is
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` the Petitioner, and VALENCELL, INC. is the Patent
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` Owner.
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`Page 4
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` APPEARANCES:
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` FOR THE PETITIONER:
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` Mr. Michael D. Specht
` Mr. Jason A. Fitzsimmons
` Sterne, Kessler, Goldstein & Fox, P.L.L.C.
` 1100 New York Avenue, N.W.
` Washington, D.C. 20005
` mspecht-ptab@skgf.com
`
` FOR THE PATENT OWNER:
`
` Mr. William Kennedy
` Mr. Jeff Bragalone
` Mr. Justin Kimble
` Bragalone Conroy, PC
` 2200 Ross Avenue, Suite 4500 - West
` Dallas, TX 75201
` wkennedy-iprbcpc-law.com
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` ALSO PRESENT: Harper Batts
` Baker Botts, LLP
`
` The Court Reporter:
` Pamela K. Needham, RPR, IL CSR, MO CCR
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` TRANSCRIPT OF PROCEEDINGS
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` * * * * *
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` (On the record at 1:01 p.m. CST)
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` JUDGE McSHANE: Who's on the line for
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` Petitioner?
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` MR. SPECHT: For Petitioner, this is
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` Michael Specht, lead counsel, and also with me is
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` Jason Fitzsimmons, back-up counsel on these matters.
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` JUDGE McSHANE: Thank you. Anybody
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` else?
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` MR. SPECHT: Your Honor, we also
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` arranged for a court reporter who is on the line, as
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` well.
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` JUDGE McSHANE: Okay. So before I turn
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` to the other parties, could you get -- when you get
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` a final copy of the transcript could you get that
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` docketed in the cases?
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` MR. SPECHT: Yes, Your Honor.
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` JUDGE McSHANE: Thank you. All right,
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` and who's on the line for Patent Owner?
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` MR. BATTS: Your Honor, just one more,
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` this is also Petitioner FitBit, we're in an
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` understudy role here, but we're listening into the
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` proceeding, this is Harper Batts from Baker Botts.
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` JUDGE McSHANE: All right, who's going
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`Page 6
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` to be taking for Petitioner?
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` MR. SPECHT: Your Honor, I will, this is
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` Michael Specht.
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` JUDGE McSHANE: Thank you. All right,
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` now for patent owner, please?
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` MR. KENNEDY: Yes, Bill Kennedy, which
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` is a back-up counsel for patent owner, and Jeff
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` Bragalone, back-up counsel for patent owner, and I
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` believe also Justin Kimble, who is lead counsel for
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` Patent Owner is on the line.
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` MR. KIMBLE: That's correct, this is
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` Justin Kimble, Your Honor.
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` JUDGE McSHANE: Okay, and who's going to
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` be speaking on behalf of Patent Owner, please?
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` MR. KENNEDY: That would be me, Bill
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` Kennedy.
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` JUDGE McSHANE: All right, thank you,
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` Mr. Kennedy. Let's see. So Patent Owner here sent
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` an email requesting this call and wants to be
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` granted authorization to file the sur-reply, and
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` Petitioner here opposes this request. So what we're
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` going to do here, since it's Patent Owner's request,
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` we're going to have Mr. Kennedy go first, then
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` Petitioner can respond, and then Patent Owner will
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` have a brief final word on the request, specific to
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`Page 7
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` the request. Then the way that we're going to do
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` this is the judges, we're going to meet and confer
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` and get back to you hopefully in short order, we'll
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` ask you to hold, and we'll either be able to come
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` back with the decision, or we're going to take the
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` request under advisement and then issue an order
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` later.
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` So Mr. Kennedy, how many issues do you
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` have, first of all? Generally.
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` MR. KENNEDY: I think, I have three
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` broad categories, about five total issues.
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` JUDGE McSHANE: All right. That's quite
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` a few. Okay, so if we could just stick to the high
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` points and delve into the details as much as
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` required, that would be appreciated.
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` MR. KENNEDY: Okay.
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` JUDGE McSHANE: But let's try to keep it
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` brief, and if you could please proceed.
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` MR. KENNEDY: Sure. So I'd like to
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` first by starting off, so this is for the -317 and
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` -318 IPR's, and almost all of these issues overlap
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` because, or in both of those IPR's, because of the
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` overlap in the art between the two. So to start,
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` there's an issue with Petitioner's reply and in fear
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` with the Goodman reference, and Petitioner uses the
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` Goodman reference for meaning a certain embodiment
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` and for meeting a certain claim limitation, and they
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` use an embodiment in Figure 2, and in the reply they
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` switch embodiments to Figure 7A, so we would want a
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` reply to address the switching of embodiments there
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` where the embodiment of Figure 7A was not addressed
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` during the petition.
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` JUDGE McSHANE: Could you give me a
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` citing in the reply on that? Do you happen to have
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` that?
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` MR. KENNEDY: Sure. If you're looking
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` at the -318, it would be papers 32 at 11 through 12.
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` JUDGE McSHANE: All right, you know
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` what, I'm going to say something that's sort of
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` different than what I said at the beginning. If you
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` don't mind, Mr. Kennedy, what I'm going to do is as
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` we deal with these issues one by one, if I could
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` just have, let's get the, let's get the Petitioner
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` to chime in on this one, okay?
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` MR. SPECHT: Yes, this is Mike Specht,
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` just to clarify, in terms of the pages, Bill, you're
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` citing to, what pages were those again?
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` MR. KENNEDY: That would be 11 and 12 of
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` the -318 file.
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` JUDGE McSHANE: Okay, well, let me ask
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` another just real quick, if I may. Did you meet and
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` confer with others before this call.
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` MR. KENNEDY: So Patent Owner sent a
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` request and said do you oppose, they opposed, and
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` then Petitioner last night asked for what would be
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` speaking about, and we sent them a list of things
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` this morning. And they still oppose that after the
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` list.
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` MR. SPECHT: Shall I proceed, Your
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` Honor?
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` JUDGE McSHANE: Yes, please.
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` MR. SPECHT: Sure. With respect to the
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` Goodman issue and the list that Mr. Kennedy just
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` referred to, on the list that he sent us there are
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` two, two Goodman arguments, if you will, on why they
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` believe a sur-reply is appropriate, one referring to
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` new arguments about the conformance to the thickness
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` of the strip, in that we reference Figure 7A.
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` JUDGE McSHANE: Yes.
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` MR. SPECHT: And similarly, another
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` argument about the light source extending through
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` the aperture where we referred to figure 7A in our
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` reply. We are not changing our position from the
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` petition in terms of the embodiments we rely on,
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` what we did in the reply, and this is, starting on
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` Page 9, is we do, indeed, talk about Figure 7A, but
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` only to the extent that it gives us guidance in
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` terms of the teaching of Figure 2, which is the
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` position from this petition, and we are responding
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` to their arguments in their Patent Owner response in
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` terms of the shortcomings of our initial arguments.
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` We're not relying on Figure 7A to support, or the
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` embodiments in Figure 7A to support our arguments or
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` make our prima facia case, that's not the case,
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` we're just simply responding to their arguments in
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` the Patent Owner response, and 7A sheds light on why
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` their arguments were incorrect.
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` JUDGE McSHANE: Okay, all right. Thank
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` you on that issue. Okay, now Patent Owner, please,
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` Mr. Kennedy, if you could proceed.
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` MR. KENNEDY: So the next, the next two
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` arguments that I'd like to address is just for the
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` -318 IPR, so not to the -317, and it's involved, it
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` starts at Page 18 of the -318 IPR reply, and in that
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` instance, Petitioner is talking about several
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` different prototypes in the Asada reference, and in
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` the petition, Petitioner relied on one prototype,
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` and now in reply, Petitioner is relying on a
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` different prototype and saying that a person, our
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` understanding is that that prototype also includes
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` what it had previously argued was in a different
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` prototype, so it was another, another instance of
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` switching embodiments, which is something that we
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` could not have anticipated in, after the petition
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` was filed.
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` JUDGE McSHANE: Okay, thank you. And
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` Petitioner's reply on that one?
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` MR. SPECHT: Yes, Your Honor, once
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` again, we believe we are responding to arguments
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` that they make in their Patent Owner response,
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` arguments that appeared on I believe Page 38 and 39
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` in their Patent Owner response, and we're just
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` showing the Asada reference which include -- it
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` does, indeed, include multiple embodiments in that
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` reference. We're not changing our use of Asada,
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` we're just looking at other portions of the Asada
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` reference to demonstrate again why their arguments
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` are flawed in their Patent Owner response. We're
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` not changing our initial position.
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` JUDGE McSHANE: Okay, thank you. Now
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` Mr. Kennedy, next issue?
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` MR. KENNEDY: Can I -- so I do believe
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` that they, that they are now arguing that -- a
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` different thing, it implicitly says in their
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` response, in their reply: Petitioner would have
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` understood that prototype B included the signal
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` processer like the earlier Prototype, and that a
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` further description of Prototype B focuses on
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` improvement and modifications, so they're actively
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` now talking about what Prototype B discloses instead
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` of Prototype A, so they switched focuses there. I
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` don't see how that's not a new argument.
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` JUDGE McSHANE: All right, thank you,
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` we'll consider that.
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` MR. KENNEDY: And so the next category
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` is, of items is a new claim construction structure
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` position. There's a term that appears in both of
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` the IPR's, light guiding interface, Patent Owner
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` proposed the construction of this term, in its
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` petition Petitioner did not offer any construction
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` for this term. And then now in their reply
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` Petitioner is offering a construction for the term,
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` so we'd like an opportunity to respond to that new
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` construction they're offering for the first time in
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` the reply.
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` JUDGE McSHANE: All right. And
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` Petitioner?
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` MR. SPECHT: Certainly, Your Honor.
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` These arguments appear on Page 5 and 6 of our
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` Petitioner's reply, and referring to that I mean
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` we're specifically responding to the fact that they
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` did propose a construction. We start out that
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` section by noting that Valencell proposes
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` considering light guiding interface as an interface
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` that delivers light along the path. We go on to
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` discuss why that -- why their proposed construction
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` was wrong, and we offer one that's consistent to the
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` position that we took in our petition in terms of
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` our use in our arguments. We're not presenting new
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` arguments other than to respond to their proposed
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` claim construction in their patent owner response.
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` MR. KENNEDY: But I think the issue
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` there is that in the, in the petition, Apple argued
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` that those terms did not need to be construed, and
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` now they are offering a construction, so that's not
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` something that we could have anticipated.
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` JUDGE McSHANE: Okay, well -- okay.
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` MR. KENNEDY: If they had this
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` construction to start with, they should have offered
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` it in their petition, not now.
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` MR. SPECHT: And Your Honor, if I may
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` respond, we don't believe a construction of the term
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` is necessary, we believe our petition and the
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` positions we took with respect to light guiding
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` interface, that it is the plain and ordinary meaning
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` and then as we applied it is appropriate. Again,
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` here we're responding to their proposed construction
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` with arguments why they were wrong, and countering
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` that with a construction that's consistent with the
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` plain and ordinary meaning.
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` MR. BRAGALONE: Your Honor, this is Mr.
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` Bragalone. Petitioner had an option to either stand
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` by their prior position that no construction was
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` necessary, or to offer a new construction, and even
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` if they'd done it in the alternative, they've
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` offered a new construction, we could not have
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` anticipated that, and we should be entitled to
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` respond to the new construction. They're making new
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` arguments as to why their newly proposed
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` construction is correct, and we haven't had any
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` opportunity to respond to those, and we, we believe
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` that we could point out to the Board why their new
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` construction has additional problems that we did
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` not, of course, know about and could not have
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` addressed and did not address in our response.
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` JUDGE McSHANE: All right. So what
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` we're talking about here is the issue of the
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` interface at, let's see, it's in the 318 case at the
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` reply at Pages 5 through 8. I believe that's right.
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` MR. KENNEDY: I believe that's correct,
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` Your Honor.
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` JUDGE McSHANE: All right. Next issue,
`
` please?
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` MR. KENNEDY: So the, this is the last
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` issue I had, I want to discuss on this call. This
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` is more overarching, so in those IPR matters,
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` Petitioner has submitted an extra declaration from
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` their technical expert, Dr. Anthony, and a large
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` part of that declaration involved responding to
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` Patent Owner's argument about why certain prior art
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` references should not be combined, and during the
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` previous deposition of Dr. Anthony, Apple's expert,
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` Dr. Anthony stated that he was aware of those
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` reasons why not to combine detriments, but he did
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` not include them in his original declaration. If
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` you look at his new declaration, for example,
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` Exhibit 1102 at Page 28, paragraph 46, Dr. Anthony
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` states: This is evident in Valencell's reiteration
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` of alleged detrimental implications of adding
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` components to the Goodman's device like the ones
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` discussed above for combination of other elements of
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` Goodman, and the detriments are adding mass reduced
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` disposability, reduced skin conformance, and added
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` skin pressure. And then Dr. Anthony states: Again,
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` I was aware of these types of alleged detriments in
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` forming my opinion. A person of ordinary skill
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` would have understood and considered these, as well,
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` in my opinion, so let's combine the references.
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` And then later on in the same exhibit,
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` Page 20, paragraph 35 page: As I previously stated
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` in forming the opinion for my declaration submitted
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` with the petition, I was aware of these types of
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` alleged detriments.
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` So he's admitted and then Apple again
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` admits during their reply that Dr. Anthony was aware
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` of these reasons why the references shouldn't have
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` been combined, but there's nothing in the original
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` declaration that actually discusses those reasons.
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` Now fast forward to the reply, he's submitted a
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` couple of near 30-page declarations where he spends
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` a lot of time talking about the reasons why he
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` should combine those references above the detriments
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` that we described. He already admitted he was aware
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` of these detriments, he did not include them in his
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` original declaration, he shouldn't be allowed to now
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` include them in his -- in a reply declaration
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` essentially holding those reasons back in hopes that
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` we wouldn't come across them, he would never have to
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` address them. Now he's finally addressed them in
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` his recent declaration, and we are now only getting
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` our first shot at responding to those now.
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` JUDGE McSHANE: Okay.
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` MR. KENNEDY: And he should have put
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` those in his original declaration.
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` JUDGE McSHANE: Yeah, excuse me, here's
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` a quick question. Have you deposed Dr. Anthony on,
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` you know, as to his supplemental declaration yet?
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` MR. KENNEDY: No, we haven't, we're, we
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` are going to, we are planning on deposing him, and
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` we're working out the schedule with Petitioner right
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` now.
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` JUDGE McSHANE: Okay, all right.
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` Anything else on that point, Mr. Kennedy?
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` MR. KENNEDY: No.
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` JUDGE McSHANE: Okay. And Petitioner,
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` please?
`
` MR. SPECHT: Sure, I mean I think if I
`
` heard correctly when Mr. Kennedy was just speaking
`
` he indicated that Dr. Anthony's arguments here were
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` responsive to positions they took in their Patent
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` Owner response. That's exactly what we're supposed
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` to do in a Petitioner's reply, and we felt it was
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` both appropriate and necessary to now consider these
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` detriments, the specific the detriments that they
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` raised in their Patent Owner response. Dr. Anthony
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` felt that wasn't necessary in our Petitioner's -- in
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` our petition, because he weighed these things, he
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` made arguments, or we made arguments on why a person
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` of ordinary skill in the art would combine these
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` references, we met that burden. Valencell attempted
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` to show some reasons why you wouldn't combine the
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` references, we don't believe those have any merit,
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` Dr. Anthony puts together arguments in his
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` declaration that show that these were technically
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` either inaccurate positions, or a person of ordinary
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` skill in the art would not have considered the
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` detriments in the way in which Patent Owner was
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` contending. I think that's perfectly appropriate
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` and consistent with the Board's rules. I think here
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` what we have is, is we have the notion going back
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` from the very first PTAB decision, you know, that
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` the Petitioner in this instance gets the last word.
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` And the problem is Valencell doesn't like that,
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` they've made some arguments, we provided counter
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` arguments. That's the ebb and flow of the
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` proceeding, and now, you know, they want another
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` chance to be the one that has the last word. That's
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` not how the process is set up.
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` MR. KENNEDY: So I think the issue is,
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` though, that Dr. Anthony and Apple have both
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` admitted that Dr. Anthony was aware of the
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` detriments of combining these things at the time he
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` filed the petition, but he did not include any
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` specific opinions about those until he filed the
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` second, his supplemental declaration. He shouldn't
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` be able to say he was aware of those things and not
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` speak about them in the petition and hold those back
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` for the reply.
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` JUDGE McSHANE: Yeah, okay. Thank you.
`
` Thank you. Any more issues?
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` MR. KENNEDY: I think that, I guess if
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` the Board is considering what to do about, if we can
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` file a sur-reply here, if the Board rules that we
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` cannot, that Valencell cannot file a sur-reply, that
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` we would be able to, in the alternative, file a
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` motion to strike the new, the portions that we
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` believe are new in the, in Apple's reply and in its
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` declaration.
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` JUDGE McSHANE: All right, Mr. Kennedy,
`
` on all of these issues, if we were to authorize,
`
` allow a sur-reply, would you be submitting any new
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` evidence?
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` MR. KENNEDY: I don't believe so, Your
`
` Honor, no.
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` JUDGE McSHANE: Okay. And again, if we
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` were to authorize a sur-reply, Mr. Specht, I'm going
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` to ask a question I probably know the answer to, but
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` would you request a sur sur-reply then, as well?
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` MR. SPECHT: Your Honor, we would.
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` JUDGE McSHANE: All right. Anything
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` else?
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` MR. KENNEDY: Your Honor, I think that
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` we just suggest if we could have a seven-page page
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` limit if you rule in our favor, so I think we would
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` get our sur-reply in under that page limit.
`
` JUDGE McSHANE: All right. So I'm going
`
` to confer with the other judges, could you please
`
` hold for a second? And if we're conferring for too
`
` long, we'll get back to you and let you know, okay?
`
` (Off the record.)
`
` JUDGE McSHANE: Hello, this is Sheila
`
` McShane back on the line again. We are not going to
`
` authorize the filing of a sur-reply, you've given us
`
` information about alleged, you know, new materials
`
` that should have been in the prima facia case of
`
` Petitioner in the first place, we can discern
`
` whether something is new or is being provided in
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` response to an argument and whether the prima facia
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` case was existing in the first place. So we can do
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` all that, and so we don't see any need for a
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` sur-reply. Anything else?
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` MR. KENNEDY: Is that also a ruling on
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` the move to strike?
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` JUDGE McSHANE: Yes. It is. We, that
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` is denied, as well. Now again, you know, we, you
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` will have the opportunity to do the deposition of
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` Dr. Anthony, and there is the hearing that is still
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` coming up, so any issues that come up, you know, you
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` can always raise them to us, to the Panel, and we
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` will consider them. So you will have more
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` opportunities, okay? Anything else, parties?
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` MR. SPECHT: Nothing for the Petitioner,
`
` thank you, Your Honors.
`
` JUDGE McSHANE: Okay, thank you.
`
` MR. KENNEDY: Thank you.
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` CERTIFICATE OF REPORTER
`
` I, Pamela K. Needham, Certified Court Reporter
`
` within and for the State of Missouri, do certify
`
` that the witness whose testimony appears in the
`
` foregoing deposition was duly sworn by me; the
`
` testimony of said witness was taken by me to the
`
` best of my ability and thereafter reduced to
`
` typewriting under my direction; that I am neither
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` counsel for, related to, nor employed by any of the
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` parties to the action in which this deposition was
`
` taken, and further, that I am not a relative or
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` employee of any attorney or counsel employed by the
`
` parties thereto, nor financially or otherwise
`
` interested in the outcome of the action.
`
` <%Signature%>
`
` --------------------------------------
`
` Pamela K. Needham, CSR, CCR
`
` Illinois CSR No. 084-002247
`
` Missouri CCR No. 505
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`[& - burden]
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`&
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`& 4:4
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`0
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`a
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`allowed 16:20
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`appear 12:24
`appearances 4:1
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`apple 1:4 3:3,12
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`b
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`

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`hopes 16:22
`hours 3:9
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