8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 1
` UNITED STATES PATENT AND TRADEMARK OFFICE
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
`APPLE INC., ) IPR2017-00315
` ) IPR2017-00321
` Petitioner, )
` )
` v. )
` )
`VALENCELL, INC. )
` )
` Patent Owner. )
`_______________________)
`
`
` REPORTER'S TRANSCRIPT OF PROCEEDINGS
` MONDAY, AUGUST 28, 2017
` 11:00 a.m.
` REPORTER: ARIELA PASTEL, CSR 13167
`____________________________________________________
` DIGITAL EVIDENCE GROUP
` 1730 M Street, NW, Suite 812
` Washington, D.C. 20036
` (202) 232-0646
`
`www.DigitalEvidenceGroup.com
`
`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`Apple 1068
`Apple v. Valencell
`IPR2017-00321
`
`
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 1
` UNITED STATES PATENT AND TRADEMARK OFFICE
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
`APPLE INC., ) IPR2017-00315
` ) IPR2017-00321
` Petitioner, )
` )
` v. )
` )
`VALENCELL, INC. )
` )
` Patent Owner. )
`_______________________)
`
`
` REPORTER'S TRANSCRIPT OF PROCEEDINGS
` MONDAY, AUGUST 28, 2017
` 11:00 a.m.
` REPORTER: ARIELA PASTEL, CSR 13167
`____________________________________________________
` DIGITAL EVIDENCE GROUP
` 1730 M Street, NW, Suite 812
` Washington, D.C. 20036
` (202) 232-0646
`
`www.DigitalEvidenceGroup.com
`
`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`Apple 1068
`Apple v. Valencell
`IPR2017-00321
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 2
`
`JUDGES PRESIDING:
`BRIAN J. MCNAMARA
`SHEILA F. MCSHANE
`JAMES B. ARPIN
`(TELEPHONICALLY)
`
`
`APPEARANCES OF COUNSEL:
`
`For Petitioner:
`
` STERNE, KESSLER, GOLDSTEIN & FOX, P.L.L.C.
` BY: MICHAEL D. SPECHT, ESQ.
` MICHELLE K. HOLOUBEK, ESQ.
` 1100 New York Avenue
` NW Suite 600
` Washington, D.C. 20005
` 202.772.8756
` 202.772.8855
` (TELEPHONICALLY)
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`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 3
`
`For Patent Owner:
`
` WARREN RHOADES
` BY: SCOTT RHOADES, ESQ.
` NATHAN LEVENSON, ESQ.
` 1212 Corporate Drive
` Suite 250
` Irving, Texas 75038
` 972.550.2997
` srhoades@wriplaw.com
` nlevenson@wriplaw.com
` (TELEPHONICALLY)
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`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 4
`
` Monday, August 28, 2017
` 11:00 a.m.
` JUDGE MCNAMARA: This is Judge McNamara.
` MR. SPECHT: Judge McNamara, this is Mike Specht,
`for petitioner.
` JUDGE MCNAMARA: Has anyone joined for the patent
`owner yet?
` I guess not.
` MS. HOLOUBEK: Michelle Holoubek, counsel for
`petitioner.
` MR. RHOADES: Hello?
` JUDGE MCNAMARA: Hello. This is Judge McNamara.
` MR. RHOADES: Scott Rhoades, representing patent
`owner.
` JUDGE MCNAMARA: Okay. Mr. Rhoades, is anyone
`else going to be joining you this morning?
` MR. RHOADES: Nathan Levenson is in the office
`with me.
` JUDGE MCNAMARA: All right. We have Mr. Specht
`and Ms. Holoubek from the petitioner and Mr. Rhoades and
`-- I'm sorry. Who was that again? Nathan what?
` MR. RHOADES: Levenson.
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`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 5
`
` JUDGE MCNAMARA: Okay. Mr. Levenson.
` All right. And then just so you know, Judges
`McShane and Arpin are also on the line. All right. I
`understand we have a court reporter on the line as well;
`is that right?
` MR. SPECHT: That is correct.
` JUDGE MCNAMARA: All right. So this is a
`conference to discuss a motion to amend. Let me at the
`outset first ask if there are specific issues that you
`want to address this morning.
` Are there any specific questions with respect to
`the motion to amend? I'm going to talk generally about
`them, but the question is -- that I have to you is whether
`or not there are any specific issues that you want to
`address.
` MR. RHOADES: This is patent owner, Scott
`Rhoades. No, sir.
` JUDGE MCNAMARA: Okay. Then let me address the
`-- at the outset as well, everything I am telling you this
`morning is the -- our current practice. Should there be a
`decision in the Aqua Products case in the interim, before
`you file, you should read the Aqua Products case and
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`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 6
`follow the appropriate guidance from the Federal Circuit.
` But there has not been a decision in that case.
`So this is the current -- how we currently operate with
`respect to motions to amend. I'll talk about a couple of
`things procedurally, and we can go from there.
` Okay. So keep in mind that a motion to amend is
`just that. It's a motion. And unlike what you might do
`in patent prosecution, it's not entered as a matter of
`right.
` If you're used to filing amendments, for example,
`in patent prosecution cases, the examiner files -- the
`examiner issues a rejection of some kind, and then you
`file an amendment, but that's not the case with respect to
`a motion to amend. It is indeed a motion.
` And because it's a motion, the burden of proof is
`always going to be on the movant, so the person who is
`making the motion, which, in this case, is the patent
`owner.
` A couple of things to think about. With respect
`to an IPR, you can do either -- a patent owner can do only
`do two things. You can either cancel a challenged claim,
`or you can suppose a reasonable number of substitute
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`
`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 7
`
`claims.
` And the presumption is that one substitute claim
`would be needed to replace a challenge claim, so it's sort
`of a one-to-one kind of correspondence. This is not the
`kind of proceeding in which you can add a whole series of
`claims or you can change the claim hierarchy or that sort
`of thing.
` You would then -- that's something that you would
`-- that would require examination, and, perhaps, you want
`to go for some kind of re-exam or re-issue proceeding or
`something like that, whatever might be appropriate.
` That's not the kind of thing that you can do in
`this -- in an IPR. So it's pretty much a question of
`substituting claims, and it's sort of a one-to-one
`correspondence. If the claims are going to be of a
`different hierarchy, then you need to do something else.
` A couple of other things to keep in mind. The
`motion to amend must respond to a ground of
`unpatentability involved in the trial. So this is not an
`opportunity to amend your claims in some other way that
`doesn't relate to the issues that are pending before this
`panel.
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`www.DigitalEvidenceGroup.com
`
`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 8
` And the amendment cannot seek to enlarge the
`scope of the claims or introduce any new subject matter.
`So a substitute claim can't be broader than the broadest
`original patent claim.
` And you can only narrow the scope of the
`challenge claim. You can't enlarge the scope of the
`challenge claim by eliminating the feature or limitation,
`for example.
` As I said before, the movant has to show that the
`claims are patentable, and that means patentable in the --
`over -- that they have to be patentable over 112, and they
`have to be patentable over 102 and 103, in the context of
`102 and 103.
` And the burden of proof is not on the petitioner
`to show unpatentability as it was in the initial part of
`the case. The burden of proof is on the patent owner as
`the moving party to show some kind of a patentable
`distinction over the prior art of record.
` So let me tell you about what the prior art of
`record is, because the prior art of record should be
`understood as material prior art in the prosecution
`history, any material art of record in the current
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`
`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 9
`proceeding, and any material art of record in any other
`proceeding before the patent office, so, for example, if
`there's a co-pending re-exam or something like that.
` The focus is going to be on the added limitation,
`so that's what it is that you are trying to assert, is the
`patentable subject matter.
` So as a patent owner, you should be considering
`that, and keep in mind that the duty of candor and good
`faith remains. So if there are -- if there is some
`material information that should be disclosed, then you
`need to disclose it.
` You can show patentable distinction. To do that,
`you can rely on declaration testimony of a technical
`expert about the level of ordinary skill, so look to the
`"Idle Free" case to address that kind of issue.
` But keep in mind that a conclusory statement
`based that the argumentative conclusory statements about
`the one or more features that are not described in the art
`may not be -- the conclusory statement is facially
`inadequate, just saying, "Well, I added this limitation;
`therefore, it's patentable over the art," that's pretty
`much -- that's not going to get you where you want to go
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`
`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 10
`
`for the patent owner.
` So focus your arguments on what makes the amended
`claim patentably distinct over the -- over the original
`claim that was -- that were -- that's been challenged.
`Keep in mind, also, that you have to comply with the
`requirements of 35 U.S.C. 112.
` And to do that, you need to demonstrate how the
`subject matter that you're adding is supported by the
`original disclosure or the disclosure -- the earliest --
`the earliest disclosure which you want to rely.
` And so you can -- you know, you can do that, but
`it's easy if it's the same words. If it's not, you still
`need to point to something that will support the
`disclosure, the disclosure that will support the claim
`amendment.
` The claim listing is -- originally, we used to
`include the claim listing as part of the amendment. Now
`that can be an appendix to the motion. So you should read
`the most recent rules with respect to the motion to amend
`and recognize the claim limitations and the word
`limitations and the -- file the amended claims as a -- as
`an appendix.
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`
`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 11
` Also, keep in mind that, again, as in any case,
`you're trying to deal with what the level of ordinary
`skill is, so you may want to rely on testimony as to what
`one of ordinary skill would know or not know as opposed to
`attorney argument.
` Once the patent owner has set forth a prima facie
`case of patentability, the petitioner gets to file an
`opposition that will -- that can explain why the patent
`owner did not make out such a case or attempts to rebut
`that case.
` And then -- but they also have burden of
`persuasion that remains with the patent owner, because the
`patent owner is the movant.
` Okay. Are there any questions about our
`procedures and filing a motion to amend?
` MR. RHOADES: None from patent owner.
` MR. SPECHT: Your Honor, this is Mike Specht on
`behalf of petitioner. I did have a couple questions.
`First is just wanted to make sure I understood. Who is
`Nathan Levenson? Patent owner indicated there is a Nathan
`Levenson on.
` MR. RHOADES: He's an associate in our law firm.
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`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 12
` MR. SPECHT: Is he a backup counsel here? I
`don't have the record in front of me.
` MR. RHOADES: I would have to double check. I am
`not sure. I do apologize if he is not. He's -- I would
`have to -- I don't have the record in front of me either.
` MR. SPECHT: Okay. The next question I had, Your
`Honor, is a procedural question. The request for this
`conference call specified as, just looking at it, a
`conference call with respect to IPR2017-315 and IPR2017-
`321.
` Now, the IPR2017-321 deals with U.S. Patent
`8923941. There is another proceeding pending, another
`IPR, IPR2017-00319, which also relates to the 8923941
`Patent. And I just want to clarify whether this
`conference call is dealing with motions to amend just to
`the 315 and 321 proceeding or to the 315, 319, and 321
`proceedings.
` JUDGE MCNAMARA: Yeah. I wouldn't -- the
`information I have given today is pretty general in
`nature. Since there were no specific questions concerning
`the specific -- in the specific context of either one of
`these particular cases, I would not require a separate
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`
`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 13
`call for a motion to amend in a related case or case
`involving the same patent.
` MR. SPECHT: Thank you, Your Honor. I'm just
`seeking clarification. As I understand, the rules require
`that there's a two-week notice before due date one for a
`party to request the conference call regarding whether or
`not they're going to file a motion to amend in a
`proceeding.
` And I just want to clarify, for my client's
`benefit, which proceedings we can expect, pursuant to the
`rules, see a motion to amend or whether they're authorized
`to file a motion to amend.
` Is it all three of these proceedings or just the
`315 and 321 proceeding, which the e-mail requests for
`conference call suggested?
` JUDGE MCNAMARA: I'll leave the patent owner to
`answer what his intentions are.
` MR. RHOADES: The intentions are to seek
`permission to file motions to aleve for just the 315 and
`the 321 and not the 3- -- 321, yeah, and not the 319.
` MR. SPECHT: Okay. Thank you. Your Honor, just
`one more question. In the e-mail exchange that was
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`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 14
`transmitted to set up this call, the board clarified that
`Mr. Kimble, as lead counsel, was responsible for all
`matters in his 8-25 e-mail.
` In the 8-24 e-mail, Mr. Kimble indicated that his
`firm, presumably him as well, would be not involved or
`advising on the amendment.
` From a procedural perspective, do we, as
`petitioner, continue to correspond or coordinate with all
`attorneys of record at -- attorneys that are representing
`Valencell here, or is there a different way we're supposed
`to proceed?
` JUDGE MCNAMARA: You just do what's on our
`record. So, you know, you correspond. In fact, I don't
`believe that there -- if I remember correctly, looking at
`the powers of attorney and the notices -- and the
`mandatory notices, there was no difference in who you were
`supposed to correspond with.
` But in any case, you correspond with the --
`according to what's already been filed in the mandatory
`notices.
` MR. SPECHT: Thank you, Your Honor. And then the
`final question related to that is it's my understanding
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`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 15
`there is a protective order in the underlying litigation
`and that at least some of the attorneys at Bragalone are
`subject to that protective order.
` Does that impact my -- the way I'm supposed to
`proceed or my client is supposed to proceed in this
`proceeding at all, or is there any guidance the board can
`give us?
` JUDGE MCNAMARA: I wish there were, but there
`isn't, because I don't know what that protective order
`says, number one. And number two, it's really in the
`jurisdiction of the District Court at this point.
` There's no -- I don't believe there's any
`protective order in this proceeding, in these proceedings,
`is there?
` MR. RHOADES: There is not, Your Honor.
` JUDGE MCNAMARA: There is not. Okay. So there
`really is nothing that -- for us to say. If there is
`indeed a protective order in the District Court, then
`compliance with that is a matter of, you know,
`responsibilities to the District Court.
` MR. SPECHT: Thank you, Your Honor.
` JUDGE MCNAMARA: All right. Are there any other
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`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`8/28/2017
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page 16
`questions? Hearing none, we are adjourned. Thank you all
`very much.
` (Whereupon, at the hour of
` 11:16 a.m., the proceedings
` were concluded.)
` -o0o-
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`www.DigitalEvidenceGroup.com
`
`Digital Evidence Group C'rt 2017
`
`202-232-0646
`
`
`
`812812077
`
`Apple Inc., v. Valencell, Inc.
`
`Telephonic Hearing
`
`Page Ll
`
`) )
`
` ss County of
`
`State of California
`
`Los Angeles)
`It ARIELA PASTEL, Certified Shorthand Reporter,
`Certificate Number 13161, for the State of California,
`hereby certify:
`The foregoing proceedings r¡Iere taken before me
`telephonically;
`The proceedings i^/ere recorded sLenographically by
`me and were thereafter transcribed;
`is a true and correct
`The foregoing transcript
`transcrlpt of my shorthand notes so taken;
`that I am neither counsel- for nor
`I further certify
`refated to any party to said action, nor in any way
`interested in the outcome thereof.
`IN VüITNESS VùHEREOF/ f have hereunto subscribed my
`name this 2BLh day of August, 20L1 .
`
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`19
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`2I
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`22
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`www.DigitalEvidenceGroup.com Digital Evidence Group C'rt2017
`
`202-232-0646
`
`
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