`571-272-7822
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`Entered: January 25, 2018
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`NETAPP INC.,
`Petitioner,
`
`v.
`
`REALTIME DATA LLC,
`Patent Owner.
`_______________
`
`Case IPR2017-01660
`Patent 7,161,506 C2
`_______________
`
`
`
`Before JASON J. CHUNG, SCOTT C. MOORE, and
`SHEILA F. MCSHANE, Administrative Patent Judges.
`
`CHUNG, Administrative Patent Judge.
`
`
`
`DECISION
`Denying Institution of Inter Partes Review
`35 U.S.C. § 314(a); 37 C.F.R. § 42.108(a)
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`IPR2017-01660
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`I.
`INTRODUCTION
`Petitioner NetApp Inc. (“NetApp”) filed a Petition (Paper 3; “Pet.”) to
`institute an inter partes review of claim 105 (the “Challenged Claim”) of
`U.S. Patent No. 7,161,506 C2 (Ex. 1001, “the ’506 patent”). Patent Owner
`Realtime Data LLC (“Realtime”) filed a Preliminary Response (Paper 13;
`“Prelim. Resp.”).
`Our authority to institute an inter partes review is derived ultimately
`from 35 U.S.C. § 314, which provides that an inter partes review may not be
`instituted unless the information presented in the Petition shows “there is a
`reasonable likelihood that the petitioner would prevail with respect to at least
`1 of the claims challenged in the petition.” As discussed below, institution
`of an inter partes review is discretionary.
`Upon consideration of the Petition and Preliminary Response, we
`exercise our discretion under 35 U.S.C. § 314(a) and 37 C.F.R. § 42.108(a)
`and deny institution of an inter partes review.
`
`II.
`BACKGROUND
`Related Proceedings in the USPTO
`A.
`The ’506 patent was challenged in four inter partes review petitions,
`of which the instant Petition is the third:
`(a) Dell, Inc., et al., v. Realtime Data LLC, case IPR2017-00176
`(the “’176 IPR”) (filed Nov. 14, 2016, challenging claims 104
`and 105; instituted grounds on claims 104 and 105 on May 30,
`2017; consolidated with IPR2017-00806 on Sept. 8, 2017)1;
`
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`1 See IPR2017-00176 Papers 1, 20, 28.
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`(b) Teradata Operations, Inc., et al., v. Realtime Data LLC, case
`IPR2017-00806 (the “’806 IPR”) (filed Jan. 30, 2017,
`challenging claims 104 and 105; instituted grounds on claims
`104 and 105 on Aug. 14, 2017; consolidated with IPR2017-
`00176 on Sept. 8, 2017)2;
`(c) NetApp, Inc. v. Realtime Data LLC, case
`IPR2017-01660 (filed June 22, 2017, challenging claim 105).3
`(d) Veritas Techs. LLC v. Realtime Data LLC, case
`IPR2017-01688 (the “’1688 IPR”) (filed June 28, 2017,
`challenging claims 104 and 105; instituted grounds on claims
`104 and 105 and joined with IPR2017-00176 on Nov. 21,
`2017).4
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`Related Proceedings in District Court
`B.
`The parties indicate that ’506 patent has been asserted in numerous
`district court litigations. Pet. 3; Paper 5, 5–8.
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`2 See IPR2017-00806 Papers 1, 17, 19.
`3 See Pet. 13–14.
`4 See IPR2017-01688 Papers 1, 11.
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`Asserted Grounds of Unpatentability
`C.
`NetApp asserts the following grounds of unpatentability:
`References5
`Basis
`Challenged Claim
`105
`Hsu6 in view of Franaszek7
`§ 103(a)8
`105
`Hsu in view of Sebastian9
`§ 103(a)
`105
`Franaszek in view of Hsu
`§ 103(a)
`105
`Franaszek in view of Chu10
`§ 103(a)
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`Pet. 13–14.
`
`III. ANALYSIS
`Procedural History
`A.
`Patent Owner asserted the ’506 patent against NetApp on June 29,
`2016, in the U.S. District Court for the Eastern District of Texas. Realtime
`Data LLC v. Rackspace US, Inc., 6-16-cv-00961 (EDTX, filed June 29,
`2016) Docket (the “EDTX Docket”), D.I. 1. On November 11, 2016,
`NetApp moved for a stay of the proceedings against it in district court, citing
`IPR petitions in related matters. EDTX Docket, D.I. 51.
`
`
`5 Petitioner also relies upon the Declaration of Dr. Daniel Hirschberg, Ph.D.
`Ex. 1005.
`6 Hsu and Zwarico, “Automatic Synthesis of Compression Techniques for
`Heterogeneous Files,” Software-Practice and Experience, Vol. 25(10),
`1097–1116 (October 1995) (Ex. 1002, “Hsu”).
`7 U.S. Patent No. 5,870,036, issued Feb. 9, 1999 (Ex. 1003, “Franaszek”).
`8 The Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112-29,
`125 Stat. 284, 287–88 (2011), revised 35 U.S.C. § 103, effective March 16,
`2013. The ’506 patent was issued prior to the effective date of the AIA.
`Thus, we apply the pre-AIA version of § 103.
`9 U.S. Patent No. 6,253,264 B1, issued June 26, 2001 (Ex. 1012,
`“Sebastian”).
`10 U.S. Patent No. 5,467,087, issued Nov. 14, 1995 (Ex. 1013, “Chu”).
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`On November 14, 2016 (i.e., three days later and approximately seven
`months prior to NetApp filing the instant Petition), Dell, Inc., et al. (“Dell”),
`filed the petition in the ’176 IPR. ’176 IPR, Paper 1. Like NetApp, Dell
`was a defendant to an assertion of the ’506 patent in the U.S. District Court
`for the Eastern District of Texas. Realtime Data LLC d/b/a IXO v. Dell, Inc.,
`6-16-cv-00089 (EDTX, filed February 26, 2016). In the instant Petition,
`NetApp challenges claim 105, which Dell challenged in the ’176 IPR along
`with claim 104. Compare ’176 IPR, Paper 1, 7 with Pet. 13–14. NetApp
`relies on one of the same combinations of references that Dell relied upon,
`specifically, Franaszek in view of Hsu. Compare ’176 IPR, Paper 1, 7 with
`Pet. 13–14. Furthermore, the allegedly invalidating prior art references in
`the ’176 IPR included Franaszek, Hsu, and Sebastian—three of the four
`references cited by NetApp in this proceeding. Compare ’176 IPR, Paper 1,
`7 with Pet. 13–14.
`On November 18, 2016, four days after the ’176 IPR was filed and
`one week after NetApp moved to stay the infringement suit against it, Patent
`Owner served NetApp with infringement contentions asserting the
`Challenged Claim in addition to claim 104 of the ’506 patent. Paper 14, 3
`n.3; EDTX Docket, D.I. 117-3, 1. At this time, the Challenged Claim was
`the subject of the ’176 IPR.
`NetApp served its invalidity contentions on January 24, 2017.
`Ex. 2006. All four of the prior art references NetApp asserts in the Petition
`are included in its district court invalidity contentions. Ex. 2006, 11–12, 14,
`27, 30. Six days later (i.e., January 30, 2017) and approximately five
`months prior to NetApp filing the instant Petition, Teradata Operations, Inc.
`(“Teradata”) filed its petition in the ’806 IPR. ’806 IPR, Paper 1. In that
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`second challenge to the ’506 patent, Teradata challenged the claim at issue
`in this proceeding, along with claim 104. Compare id. at 7–8 with Pet. 13–
`14.
`
`In the instant Petition, NetApp challenges claim 105 by relying on
`Franaszek and Hsu, one of the same combinations of references asserted
`against the claim in the ’806 IPR. Pet. 11; ’806 IPR, Paper 1, 7.
`Furthermore, the allegedly invalidating prior art references in the ’806 IPR
`included Franaszek, Hsu, and Sebastian—three of the four references cited
`by NetApp in this proceeding. Compare ’806 IPR, Paper 1, 7–8 with Pet.
`13–14.
`The district court denied NetApp’s motion to stay on February 28,
`2016. EDTX Docket, D.I. 105, 12. The next day, on March 1, 2017, the
`patent owner filed its preliminary response in the ’176 IPR (i.e.,
`approximately four months prior to NetApp filing the instant Petition). ’176
`IPR, Paper 15. Approximately one month later, on March 30, 2017, NetApp
`filed a petition against a related patent, and on April 5, 2017, NetApp
`renewed its motion to stay the district court litigation. EDTX Docket, D.I.
`130.
`
`The district court denied NetApp’s renewed stay motion on April 24,
`2017. EDTX Docket, D.I. 151. On May 22, 2017 (i.e., one month prior to
`NetApp filing the instant Petition), the patent owner filed its preliminary
`response in the ’806 IPR. ’806 IPR, Paper 11. The Board instituted the ’176
`IPR on May 30, 2017 (i.e., approximately one month prior to NetApp filing
`the instant Petition). ’176 IPR, Paper 19.
`On June 22, 2017, NetApp filed the instant Petition. Pet. 50–
`51. NetApp then submitted a second renewed motion to stay the
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`district court litigation on June 27, 2017, citing the instant Petition.
`ETDX Docket, D.I. 196.
`On June 28, 2017, Veritas Technologies LLC (“Veritas”), also a co-
`defendant in the Eastern District of Texas, filed its petition in IPR2017-
`01688. ’1688 IPR Paper 1. That petition asserted the same grounds of
`unpatentability based on the same references as the ’176 IPR and ’806 IPR,
`and was accompanied by a motion for joinder to join the ’176 IPR. ’1688
`IPR Paper 1, 7–8; Paper 3.
`The district court denied NetApp’s second renewed motion to
`stay on July 25, 2017. ETDX Docket, D.I. 212. On August 14, 2017,
`the Board instituted the ’806 IPR and on September 8, 2017
`consolidated the ’806 IPR with the ’176 IPR. ’806 IPR, Papers 17,
`19. The Board instituted the ’1688 IPR and joined that proceeding
`with the ’176 IPR on November 21, 2017. ’1688 IPR Paper 11.
`The district court litigation is scheduled for trial on January 22, 2018.
`Id., D.I. 211. Oral hearing of the ’176 and ’806 IPRs, if requested by the
`parties, is scheduled for February 26, 2018. ’176 IPR, Paper 20; ’806 IPR,
`Paper 20.
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`B. Discretionary Denial of Institution
`The Petition is before us pursuant to 35 U.S.C. § 314(a), which
`provides that the “Director[11] may not authorize an inter partes review to be
`instituted unless . . . the information presented in the petition . . . shows that
`
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`11 “The Board institutes the trial on behalf of the Director.” 37 C.F.R.
`§ 42.4(a).
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`there is a reasonable likelihood that the petitioner would prevail with respect
`to at least 1 of the claims challenged in the petition.” “Congress did not
`mandate that an inter partes review must be instituted under certain
`conditions. Rather, by stating that the Director—and by extension, the
`Board—may not institute review unless certain conditions are met, Congress
`made institution discretionary.” Intelligent Bio-Syst., Inc. v. Illumina
`Cambridge Ltd., Case IPR2013-00324, slip op. 4 (PTAB Nov. 21, 2013)
`(Paper 19); see also Cuozzo Speed Techs., LLC v. Lee, 136 S.Ct. 2131, 2140
`(2016) (“[T]he agency’s decision to deny a petition is a matter committed to
`the Patent Office’s discretion. See [5 U.S.C.] § 701(a)(2); 35 U.S.C.
`§ 314(a) (no mandate to institute review).”) (remainder of citation omitted);
`37 C.F.R. § 42.108(a) (“When instituting inter partes review, the Board may
`authorize the review to proceed on all or some of the challenged claims and
`on all or some of the grounds of unpatentability asserted for each claim.”)
`(emphasis added).
`In General Plastic Indus. Co., Ltd. v. Canon Kabushiki Kaisha, Case
`IPR2016-01357 (PTAB Sept. 6, 2017), Paper 19 (precedential), an expanded
`panel of the Board set forth a non-exclusive list of seven factors that bear on
`the issue of whether we should invoke our discretion to deny institution
`under 35 U.S.C. § 314(a) and 37 C.F.R. § 42.108(a)12:
`1. whether the same petitioner previously filed a petition directed
`to the same claims of the same patent;
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`12 See also NVIDIA Corp. v. Samsung Elec. Co., Case IPR2016-00134, slip
`op. 7 (PTAB May 4, 2016) (Paper 9) (cited by General Plastic).
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`2. whether at the time of filing of the first petition the petitioner
`knew of the prior art asserted in the second petition or should
`have known of it;
`3. whether at the time of filing of the second petition the petitioner
`already received the patent owner’s preliminary response to the
`first petition or received the Board’s decision on whether to
`institute review in the first petition;
`the length of time that elapsed between the time the petitioner
`learned of the prior art asserted in the second petition and the
`filing of the second petition;
`5. whether the petitioner provides adequate explanation for the
`time elapsed between the filings of multiple petitions directed
`to the same claims of the same patent;
`the finite resources of the Board; and
`the requirement under 35 U.S.C. § 316(a)(11) to issue a final
`determination not later than 1 year after the date on which the
`Director notices institution of review.
`IPR2016-01357 Paper 19, 9–10 (citations omitted). We recognize that in
`General Plastic the factors were used to analyze a situation in which the
`same party files multiple petitions challenging the same patent. However,
`our discretion under 35 U.S.C. § 314(a) and 37 C.F.R. § 42.108(a) is not
`limited to situations where the same party files multiple petitions, and we
`find that the General Plastic factors provide a useful framework for
`analyzing the facts and circumstances present in this case, in which a
`different petitioner filed a petition challenging a patent that had been
`challenged already by previous petitions. Applying the General Plastic
`factors to the present Petition, we conclude that the circumstances present
`here warrant discretionary denial of institution.
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`6.
`7.
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`Factor 1 weighs in favor of considering NetApp’s petition on the
`merits because NetApp has not filed previously a petition challenging the
`’506 patent. NetApp contends that “[w]hile some of the prior art is
`overlapping, the actual grounds rely on different portions of the prior art
`references, different combinations of prior art references, different
`motivations to combine the prior art references, and different expert
`testimony,” which “should be dispositive, and that the rest of the General
`Plastics factors should not outweigh this factor to deny institution of a first
`petition filed by a party.” Paper 14, 1–2. NetApp cites no authority in
`support of its position that the first factor is dispositive. See id. Moreover,
`in General Plastic each of the seven non-exclusive factors was to be
`considered and weighed according the facts of the particular case. See
`IPR2016-01357 Paper 18. On this record, we are not persuaded by
`NetApp’s argument and proceed with our analysis under the remaining six
`General Plastics factors.
`As for factor 2, NetApp alleges “[a]t the time []the first petition for
`the ’506 patent was filed on November 14, 2016, NetApp did not know what
`claims Realtime would assert against NetApp or what prior art would be
`relevant. NetApp had no opportunity to participate in drafting the first
`petition.” Paper 14, 3. In this instance, with different parties filing the
`respective petitions, factor 2 is neutral.
`Regarding factor 3, Realtime filed its preliminary response in the ’176
`IPR on March 1, 2017 and filed its preliminary response in the ’806 IPR on
`May 22, 2017; we instituted the ’176 IPR on May 30, 2017, but NetApp
`delayed filing the instant Petition for approximately one month thereafter,
`despite having served its invalidity contentions on January 24, 2017 setting
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`forth all the grounds NetApp ultimately asserted in the Petition.13 ’176 IPR
`Papers 15, 20; ’806 IPR, Paper 11. The preliminary responses in the ’176
`and ’806 IPRs each address the Challenged Claim and apply three of the
`four combinations of references asserted in the Petition. NetApp argues,
`[w]hile NetApp knew of the prior art relied on in the Petition
`earlier in 2017, this is not a situation where a party filed a follow-
`on petition to address arguments or issues highlighted in a patent
`owner preliminary response or the Board’s institution decision.
`Rather, NetApp determined that the existing IPR did not address
`all of the grounds of unpatentability that it had identified and
`relied on an expert that did not address all of the grounds.
`Paper 14, 3–4.
`NetApp’s argument is refuted by its second and third attempts to stay
`the district court litigation, both of which suggest that NetApp was
`monitoring the arguments in the ’176 and ’806 IPRs and was awaiting the
`Decision to Institute in the ’176 IPR. EDTX Docket D.I. 130, 7; id., D.I.
`196, 2. Factor 3, therefore, weighs in favor of applying our discretion to
`deny institution.
`Factor 4 also weighs in favor of denying institution. NetApp’s
`argument that the gap of several months between when it learned of the prior
`art to the filing of the instant Petition was a “reasonable amount of time
`under the circumstances” is not persuasive for at least the following reasons.
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`13 Factor 3 is directed to situations in which a petitioner delays filing a
`subsequent petition so that it can tailor its arguments to address issues
`identified by the patent owner and/or the Board during a prior proceeding.
`Although the formulation of factor 3 in General Plastic only refers to the
`patent owner’s preliminary response and the Board’s institution decision in
`the earlier proceeding, we find that the filing date of the patent owner’s
`response in the earlier proceeding is equally relevant to this factor.
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`Paper 14, 4. When, on November 18, 2017, Patent Owner served NetApp
`with infringement contentions for the Challenged Claim, the Challenged
`Claim was already the subject of the petitions pending in the ’176 IPR.
`NetApp’s original motion to stay acknowledges “although one patent
`asserted against the NetApp Defendants––the ’506 patent––is not part of an
`instituted IPR or pending IPR petition, it is related to the patents for which
`IPR proceedings are already instituted and will be impacted [by] those
`proceedings” (emphasis added). EDTX Docket, D.I. 51. Moreover,
`NetApp’s original motion to stay cites IPR2016-00373, which relies on three
`of the four prior art references NetApp cites in the instant Petition and the
`record contains no evidence that NetApp could not have located the fourth
`reference, Chu (a U.S. patent), at that time. Id., D.I. 51, 4; IPR2016-00373
`Paper 7, 6. Similarly, the previously filed petitions in the ’176 and ’806
`IPRs rely on three of the four prior art references NetApp cites in the instant
`Petition and the record contains no evidence that NetApp could not have
`located the fourth reference, Chu (a U.S. patent), at the time of the filing of
`those petitions. Accordingly, NetApp should have known of the prior art
`references it cites on or around when it received Patent Owner’s November
`18, 2016 infringement contentions. At the latest, NetApp must have known
`of all four prior art references cited in the Petition in advance of preparing its
`January 24, 2017 invalidity contentions that rely on all four references.
`Regarding factor 5, NetApp argues Realtime fails to provide any
`evidence or examples that “NetApp sat back and tracked key events in the
`filed IPRs.” Paper 14, 4. NetApp alleges that it instead delayed filing
`additional petitions to avoid wasting resources on patents that were being
`challenged already. Id. at 5. NetApp argues when the district court required
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`NetApp have its own IPRs for a stay, it filed four IPR petitions in less than
`two months. Ex. 1019. NetApp’s arguments fail to provide adequate
`reasons why it waited for the district court’s order pertaining to the motion
`to stay instead of filing the instant Petition. In fact, NetApp waited until
`June 22, 2017 (i.e., one week before the statutory deadline) to file the instant
`Petition. As stated supra, NetApp knew, or should have known of the
`references it cites by November 18, 2016, and NetApp had known of all four
`prior art references cited in the Petition in advance of preparing its January
`24, 2017 invalidity contentions. Factor 5, therefore, weighs in favor of
`invoking our discretion to deny institution.
`Factors 6 and 7 also weigh against institution. NetApp argues its
`Petition challenges only claim 105 and if the earlier filed proceedings result
`in invalidity to claim 105, then NetApp would move to terminate any
`proceeding based on the instant Petition. Paper 14, 5. NetApp also argues
`that there is no reason why a final determination would take more than one
`year. Id. NetApp, however, had ample opportunity to file a petition for
`inter partes review during the fall and winter of 2016 and spring of 2017.
`Indeed, Teradata filed its substantially similar petition in the ’806 IPR on
`January 30, 2017. ’806 IPR, Paper 1. But instead, NetApp waited until June
`22, 2017, after its attempts to stay the litigation in the Eastern District of
`Texas were twice denied.
`Instituting now the inter partes review NetApp seeks would require
`the Board to conduct an entirely separate proceeding involving the same
`claim of the same patent and three of the four same prior art references at
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`issue in the consolidated and joined ’176, ’806, and ’1688 IPRs.14 This
`result would be a significant waste of the Board’s resources. All of the
`grounds NetApp asserts in the Petition are included in the district court
`litigation set for trial this month from now. There clearly can be no
`offsetting conservation of the Eastern District of Texas’ judicial resources
`because the January 2018 trial will occur almost a year ahead of an expected
`date for a final written decision in this proceeding. Instituting a separate
`inter partes review now also would result in significant prejudice to Patent
`Owner, who already has spent approximately one year defending the
`patentability of the ’506 patent in earlier-filed proceedings.
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`IV. CONCLUSION
`Because the analysis is fact-driven, no single factor is determinative
`of whether we exercise our discretion and deny institution under 35 U.S.C.
`§ 314(a) and 37 C.F.R. § 42.108(a). Nonetheless, five of the factors
`considered in this case weigh against institution, one is neutral, and one
`favors institution. On this record, we elect to invoke our discretion under
`35 U.S.C. § 314(a) and 37 C.F.R. § 42.108(a) to deny institution of an inter
`partes review.
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`V. ORDER
`Accordingly, it is ORDERED that the Petition is denied as to the
`challenged claim of the ’506 patent.
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`14 NetApp did not seek joinder to the still pending ’176, ’806, and ’1688
`IPRs and does not request consolidation or coordination. Paper 14.
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`For PETITIONER:
`Diek O. Van Nort
`Jonathan Bockman
`MORRISON & FOERSTER LLP
`DVanNort@mofo.com
`JBockman@mofo.com
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`For PATENT OWNER:
`
`William P. Rothwell
`Kayvan B. Noroozi
`NOROOZI PC
`william@noroozipc.com
`kayvan@noroozipc.com
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