·1· · · · · ·UNITED STATES PATENT AND TRADEMARK OFFICE
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`·2· · · · · · BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`·3· · · · · · · · · · · · · · ·- - -
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`·4
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`·5· ·ZTE (USA) INC.,· · · · · · · · ) Case Nos.
`· · · · · · · · · · ·Petitioner,· · ) IPR2018-00111
`·6· · · · · · vs.· · · · · · · · · ·) Patent 8,624,550
`· · ·FUNDAMENTAL INNOVATION SYSTEMS ) IPR2018-00215
`·7· ·INTERNATIONAL LLC,· · · · · · ·) Patent 8,232,766 B2
`· · · · · · · · · · ·Patent Owner.· ) IPR2018-01076
`·8· ·-· -· -· -· -· -· -· -· -· -· -) Patent 7,893,655
`· · ·ZTE (USA) INC., SAMSUNG· · · · ) Case No.
`·9· ·ELECTRONICS CO., LTD., and· · ·) IPR2018-00425
`· · ·SAMSUNG ELECTRONICS AMERICA,· ·) Patent 7,893,655 B2
`10· ·INC.,· · · · · · · · · · · · · )
`· · · · · · · · · · ·Petitioner,· · )
`11· · · · · · vs.· · · · · · · · · ·)
`· · ·FUNDAMENTAL INNOVATION SYSTEMS )
`12· ·INTERNATIONAL LLC,· · · · · · ·)
`· · · · · · · · · · ·Patent Owner.· )
`13· ·-· -· -· -· -· -· -· -· -· -· -)
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`14
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`15· · · · · · · · TRANSCRIPT OF TELEPHONIC HEARING
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`16· · · · · BEFORE PAUL J. KORNICZKY, JON B. TORNQUIST,
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`17· · · · · ·RAE LYNN P. GEST, JO-ANNE M. KOKOSKI AND
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`18· · · ·LYNNE E. PETTIGREW, ADMINISTRATIVE PATENT JUDGES
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`19· · · · · · · · · WEDNESDAY, NOVEMBER 28, 2018
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`20· · · · · · · · · · · · · 10:59 A.M.
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`21
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`22
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`23· ·Reported by:
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`24· · · · · · TERI J. NELSON
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`25· · · · · · CSR NO. 7682, RPR
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`·2· · · · · · BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`·3· · · · · · · · · · · · · · ·- - -
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`·4
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`·5· ·ZTE (USA) INC.,· · · · · · · · ) Case Nos.
`· · · · · · · · · · ·Petitioner,· · ) IPR2018-00111
`·6· · · · · · vs.· · · · · · · · · ·) Patent 8,624,550
`· · ·FUNDAMENTAL INNOVATION SYSTEMS ) IPR2018-00215
`·7· ·INTERNATIONAL LLC,· · · · · · ·) Patent 8,232,766 B2
`· · · · · · · · · · ·Patent Owner.· ) IPR2018-01076
`·8· ·-· -· -· -· -· -· -· -· -· -· -) Patent 7,893,655
`· · ·ZTE (USA) INC., SAMSUNG· · · · ) Case No.
`·9· ·ELECTRONICS CO., LTD., and· · ·) IPR2018-00425
`· · ·SAMSUNG ELECTRONICS AMERICA,· ·) Patent 7,893,655 B2
`10· ·INC.,· · · · · · · · · · · · · )
`· · · · · · · · · · ·Petitioner,· · )
`11· · · · · · vs.· · · · · · · · · ·)
`· · ·FUNDAMENTAL INNOVATION SYSTEMS )
`12· ·INTERNATIONAL LLC,· · · · · · ·)
`· · · · · · · · · · ·Patent Owner.· )
`13· ·-· -· -· -· -· -· -· -· -· -· -)
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`14
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`15· · · · · · · · TRANSCRIPT OF TELEPHONIC HEARING
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`16· · · · · BEFORE PAUL J. KORNICZKY, JON B. TORNQUIST,
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`17· · · · · ·RAE LYNN P. GEST, JO-ANNE M. KOKOSKI AND
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`18· · · ·LYNNE E. PETTIGREW, ADMINISTRATIVE PATENT JUDGES
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`19· · · · · · · · · WEDNESDAY, NOVEMBER 28, 2018
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`20· · · · · · · · · · · · · 10:59 A.M.
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`21
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`22
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`23· ·Reported by:
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`24· · · · · · TERI J. NELSON
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`25· · · · · · CSR NO. 7682, RPR
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`·1· · · · · · Reporter's Transcript of Telephonic Hearing,
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`·2· ·Wednesday, November 28, 2018, 10:59 A.M., before
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`·3· ·Paul J. Korniczky, Jon B. Tornquist, Rae Lynn P. Gest,
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`·4· ·Jo-Anne M. Kokoski and Lynne E. Pettigrew, Administrative
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`·5· ·Patent Judges, before Teri J. Nelson, CSR No. 7682, RPR.
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`·6
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`·7· ·APPEARANCES (All Telephonic):
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`·8
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`·9· ·ADMINISTRATIVE PATENT JUDGES:
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`10· · · · · · JUDGE PAUL J. KORNICZKY
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`11· · · · · · JUDGE JON B. TORNQUIST
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`12· · · · · · JUDGE RAE LYNN P. GEST
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`13· · · · · · JUDGE JO-ANNE M. KOKOSKI
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`14· · · · · · JUDGE LYNNE E. PETTIGREW
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`15
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`16· ·FOR PETITIONER ZTE (USA) INC.:
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`17· · · · · · McDERMOTT WILL & EMERY
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`18· · · · · · BY:· CHARLES M. McMAHON, ESQ.
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`19· · · · · · 444 West Lake Street
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`20· · · · · · Chicago, Illinois 60606-0029
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`21· · · · · · 312-372-2000
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`22· · · · · · cmcmahon@mwe.com
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`23
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`24
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`25
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`·1· ·APPEARANCES (Continued)(All Telephonic):
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`·2
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`·3· ·FOR PATENT OWNER FUNDAMENTAL INNOVATION SYSTEMS
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`·4· ·INTERNATIONAL LLC:
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`·5· · · · · · IRELL & MANELLA LLP
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`·6· · · · · · BY:· H. ANNITA ZHONG, Ph.D., ESQ., OF COUNSEL
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`·7· · · · · · · · ·JASON G. SHEASBY, ESQ.
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`·8· · · · · · · · ·MICHAEL R. FLEMING, ESQ., OF COUNSEL
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`·9· · · · · · 1800 Avenue of the Stars
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`10· · · · · · Suite 900
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`11· · · · · · Los Angeles, California 90067-4276
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`12· · · · · · 310-277-1010
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`13· · · · · · hzhong@irell.com
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`14· · · · · · mfleming@irell.com
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`15· · · · · · jsheasby@irell.com
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`16
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`17
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`18
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`19
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`20
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`21
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`22
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`23
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`24
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`25
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`·1· · · · · · · · WEDNESDAY, NOVEMBER 28, 2018
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`·2· · · · · · · · · · · · 10:59 A.M.
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`·3
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`·4· · · · · · JUDGE KORNICZKY:· Good afternoon.
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`·5· · · · · · This is Judge Paul Korniczky.
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`·6· · · · · · Is -- are -- are the parties on the line?
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`·7· · · · · · DR. ZHONG:· Hi.
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`·8· · · · · · Good afternoon, Your Honors.
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`·9· · · · · · This is Annita Zhong representing Fundamental
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`10· ·Innovation Systems International, the Patent Owner.
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`11· · · · · · And I believe Mr. Jason Sheasby is also on the
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`12· ·line, and I also expect my colleague, Mr. Michael
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`13· ·Fleming, to join as well.
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`14· · · · · · MR. SHEASBY:· Good morning, Your Honor -- or
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`15· ·good afternoon.
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`16· · · · · · I apologize.
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`17· · · · · · JUDGE KORNICZKY:· And who is this speaking?
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`18· · · · · · MR. SHEASBY:· This is Jason Sheasby.
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`19· · · · · · JUDGE KORNICZKY:· Okay.· So --
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`20· · · · · · MR. McMAHON:· And Your Honor, just -- sorry.
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`21· · · · · · Good afternoon.
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`22· · · · · · This is Charles McMahon for the Petitioner ZTE
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`23· ·in all four proceedings.
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`24· · · · · · JUDGE KORNICZKY:· Okay.· Mr. McMahon, is this
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`25· ·conference being -- conference call being -- do you have
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`·1· ·a court reporter?
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`·2· · · · · · MR. McMAHON:· We do not have a court reporter,
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`·3· ·Your Honor.
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`·4· · · · · · JUDGE KORNICZKY:· Okay.· So --
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`·5· · · · · · DR. ZHONG:· Patent Owner did order a court
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`·6· ·reporter, and she is on the line.
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`·7· · · · · · JUDGE KORNICZKY:· Okay.· Very good.
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`·8· · · · · · So this conference call relates to three IPRs.
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`·9· · · · · · The first one --
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`10· · · · · · DR. ZHONG:· Actually, four IPRs.
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`11· · · · · · JUDGE KORNICZKY:· Four IPRs.
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`12· · · · · · DR. ZHONG:· Yes.
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`13· · · · · · JUDGE KORNICZKY:· 2018-0011, then IPR2018-00110
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`14· ·and --
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`15· · · · · · DR. ZHONG:· No, Your Honor.
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`16· · · · · · I believe it's IPR2018-00111, IPR2018-00215,
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`17· ·IPR2018-01076 and IPR2018-00425.
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`18· · · · · · JUDGE KORNICZKY:· That's correct.
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`19· · · · · · DR. ZHONG:· Among those -- yeah.
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`20· · · · · · JUDGE KORNICZKY:· So --
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`21· · · · · · DR. ZHONG:· Among those four -- sorry.
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`22· · · · · · JUDGE KORNICZKY:· So I have on the line Judge --
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`23· ·myself, obviously, Judge Jon Tornquist, Judge Rae Lynn
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`24· ·Gest, Judge Jo-Anne Kokoski and Judge Lynne Pettigrew.
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`25· · · · · · Would the counsel for Petitioner please identify
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`·1· ·themselves for the record?
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`·2· · · · · · MR. McMAHON:· Yes, Your Honor.
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`·3· · · · · · Again, Charles McMahon from McDermott Will &
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`·4· ·Emery for Petitioners ZTE Corporation and ZTE USA.
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`·5· · · · · · JUDGE KORNICZKY:· And would the counsel for
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`·6· ·Patent Owner please identify themselves again?
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`·7· · · · · · DR. ZHONG:· This is Annita Zhong, and Mr. Jason
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`·8· ·Sheasby is also on the line, and I believe Mr. Michael
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`·9· ·Fleming will be joining or has already joined.
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`10· · · · · · MR. FLEMING:· Hi.
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`11· · · · · · JUDGE KORNICZKY:· Thank you.
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`12· · · · · · MR. FLEMING:· Your Honor, this is Mike Fleming.
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`13· · · · · · I am on the line.
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`14· · · · · · JUDGE KORNICZKY:· Good.
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`15· · · · · · So in order to keep this organized for the court
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`16· ·reporter, before you speak, would you please identify
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`17· ·who's speaking and we'll, you know, keep the record
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`18· ·clear.
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`19· · · · · · Okay?
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`20· · · · · · So Mr. McMahon, I guess you requested this
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`21· ·conference call.
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`22· · · · · · Why don't you tell us what your -- what your
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`23· ·issues are.
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`24· · · · · · MR. McMAHON:· That's correct, Your Honor.
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`25· · · · · · Thank you.
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`·1· · · · · · The issue, which is common to all four
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`·2· ·proceedings, relates to a question that has arisen
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`·3· ·regarding the identification of real parties in interest.
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`·4· · · · · · The Petitioners in all four of these proceedings
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`·5· ·are ZTE Corporation and ZTE USA.· Those are the entities
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`·6· ·that collectively make, import and sell the accused
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`·7· ·products in a related District Court litigation between
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`·8· ·Fundamental and those entities.
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`·9· · · · · · I should note these four proceedings are in
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`10· ·different stages.
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`11· · · · · · The 00111 proceeding and the 00425 proceeding
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`12· ·are instituted and pending and in the -- the middle of
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`13· ·briefing.
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`14· · · · · · The 00215 proceeding was -- was denied
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`15· ·institution, and there is pending a petition for
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`16· ·rehearing.
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`17· · · · · · And the 01076 petition I believe remains
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`18· ·awaiting an institution decision.
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`19· · · · · · The issue that has arisen is whether or not the
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`20· ·Petitioners should have identified a third entity called
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`21· ·"ZTE Texas" as a real party in interest in the
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`22· ·proceedings.
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`23· · · · · · Petitioners did not originally name ZTE Texas as
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`24· ·a real party in interest in any of these proceedings
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`25· ·because at the time they were filed, ZTE -- we didn't
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`·1· ·consider ZTE Texas to be a real party in interest,
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`·2· ·focusing on the controller funding standard that's, in
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`·3· ·fact, in place.
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`·4· · · · · · To give a little bit more information, ZTE Texas
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`·5· ·does not make, sell, offer for sale, import any of the
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`·6· ·accused products.
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`·7· · · · · · To the extent that ZTE Texas could be accused of
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`·8· ·doing anything that -- that remotely approaches
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`·9· ·infringement, it would be some incidental use of prod- --
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`10· ·of accused products in the course of its ordinary
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`11· ·business, but ZTE Texas has been named as a Defendant in
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`12· ·the parallel District Court case.
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`13· · · · · · And so in at least two of the pending
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`14· ·proceedings, three, actually, the Patent Owner has argued
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`15· ·that ZTE Texas should have been identified as a real
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`16· ·party in interest in the original proceedings in the wake
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`17· ·of recent decisions from the Federal Circuit and from the
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`18· ·Board regarding the standard for identifying a real party
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`19· ·in interest, and specifically they have argued that
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`20· ·the -- ZTE Texas is a related entity, which it is, and
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`21· ·that it would benefit from this proceeding, and that may
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`22· ·be subject to debate, but they have some argument that to
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`23· ·the extent there's some incidental infringement through
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`24· ·the use of products in the ordinary course of business,
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`25· ·ZTE Texas could be considered to be a beneficiary of this
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`·1· ·proceeding, and so under the new law that has come out
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`·2· ·just in the last year, ZTE Texas should have been named
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`·3· ·as a real party in interest.
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`·4· · · · · · And in one of those proceedings, in the
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`·5· ·00111 proceeding, Patent Owner has argued that the
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`·6· ·proceedings should be terminated because it never should
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`·7· ·have been instituted because ZTE -- because the
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`·8· ·Petitioners failed to identify ZTE Texas as a real party
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`·9· ·in interest.
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`10· · · · · · So against that backdrop, we requested this call
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`11· ·to discuss the issue and to request the opportunity to
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`12· ·file a motion to add ZTE Texas as a real party in
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`13· ·interest in all four proceedings.
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`14· · · · · · Of course for that to have any practical effect,
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`15· ·it would need to be retroactive to the date of the
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`16· ·petition.
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`17· · · · · · And I know in some cases the Board has permitted
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`18· ·parties to add a real party in interest after the
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`19· ·petition has filed, but in -- at that -- when they do so,
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`20· ·they assign the petition a new filing date because of the
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`21· ·addition of the real party in interest.
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`22· · · · · · In this case, that would effectively kill the
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`23· ·petitions because the bar date for all four of these
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`24· ·proceedings has passed.· It's been more than one year
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`25· ·since the three Defendants were served with the complaint
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`·1· ·in the District Court case.
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`·2· · · · · · So that's -- the first part of our request is
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`·3· ·the ability to file a motion seeking to retroactively
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`·4· ·name ZTE Texas as a real party in interest in these four
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`·5· ·proceedings.
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`·6· · · · · · And if the Board is going to deny that, then we
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`·7· ·would request -- I guess request termination, request the
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`·8· ·opportunity to file a motion to terminate the proceedings
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`·9· ·because as Patent Owner has argued, at this stage,
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`10· ·they're -- they should not have been instituted based on
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`11· ·the new law identifying real parties in interest.
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`12· · · · · · And I should note I think the intervening law
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`13· ·is -- is the main basis for seeking the right to go back
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`14· ·and change the petitions to add ZTE Texas retroactively
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`15· ·as a real party in interest.
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`16· · · · · · JUDGE KORNICZKY:· Counsel, when was ZTE Texas
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`17· ·named as a Defendant in the litigations?
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`18· · · · · · MR. McMAHON:· More than one year ago.· The exact
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`19· ·date I don't have in hand, but I believe it was in
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`20· ·February of 2017.
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`21· · · · · · JUDGE KORNICZKY:· Okay.· And then I guess let's
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`22· ·hear from the Patent Owner.
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`23· · · · · · What's -- what's your position?
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`24· · · · · · DR. ZHONG:· Okay.· This is Annita -- Annita
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`25· ·Zhong speaking for the Patent Owner.
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`·1· · · · · · So there are two issues here.
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`·2· · · · · · One is whether the Board should grant a motion
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`·3· ·for amendment retroactively to the petition date to allow
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`·4· ·ZTE to name ZTE TX as a real party in interest.
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`·5· · · · · · Patent Owner's position is that there is no
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`·6· ·ground to allow such extraordinary relief.
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`·7· · · · · · The only rule Patent Owner is aware of that
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`·8· ·allows someone to amend the petition and retaining the
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`·9· ·original filing date is Rule 42.104(c), but the plain
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`10· ·language for that rule only allows amendment for
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`11· ·typographical and clerical error, and adding an RPI
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`12· ·definitely falls out that narrow scope of amendment, and
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`13· ·Petitioners' counsel has pretty much conceded that is a
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`14· ·fact.
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`15· · · · · · And another rule the Board might have discretion
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`16· ·of allowing a motion is under Rule 42.5, but Rule 42.5
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`17· ·only allows such extraordinary relief under very I would
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`18· ·say extenuating circumstances, and we -- we don't think
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`19· ·that ZTE's failure to conduct a proper investigation in
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`20· ·the first instance is a good cause, and effectively ZTE,
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`21· ·to avoid its statutory bar, is not in the interest of
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`22· ·justice to justify such extraordinary relief under
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`23· ·Rule 42.5.
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`24· · · · · · And I would also like to point out even though
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`25· ·Petitioners' counsel argued that there's an intervening
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`·1· ·change of law that's justified its belatedly naming ZTE
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`·2· ·TX as a real party in interest, it does in other Z -- IPR
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`·3· ·proceedings from as far back as 2016.· ZTE USA, as a
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`·4· ·Petitioner in many of the other IPR proceedings involving
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`·5· ·the same technology and the same type of accused
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`·6· ·products, has consistently named ZTE TX as a real party
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`·7· ·in interest, and we do not know why, in this instance, it
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`·8· ·believes that ZTE TX would not be a real party in
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`·9· ·interest under the old rule.
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`10· · · · · · And in fact, it's Patent Owner's position that
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`11· ·the rule determining whether someone is a real party in
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`12· ·interest, that substantive rule really has not changed
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`13· ·since August 2018 when the AIT versus RPX decision came
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`14· ·out.
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`15· · · · · · For example, in the one side, if we want to go
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`16· ·there, the Board mentioned the Taylor -- the Superior
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`17· ·Court Taylor decision, and if you look at the Taylor
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`18· ·factors, at least I would say four out of the six factors
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`19· ·listed would be certainly applied to the ZT -- ZTE TX
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`20· ·situation, which includes a preexisting substantive
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`21· ·relationship between the petitioner, the -- and the
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`22· ·missing party, whether Petitioner adequately represents
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`23· ·the missing party's interests, which they do because they
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`24· ·use the same counsel, and ZTE Corporation is directing
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`25· ·the whole thing as a parent of both the Petitioner and
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`·1· ·ZTE TX, and whether ZTE TX is going to be bound by the
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`·2· ·decision, they will be, if they're -- at least go privity
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`·3· ·with the Petitioner, and -- and whether they are
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`·4· ·litigating full proxy, which they do, again through the
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`·5· ·chain of the command.
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`·6· · · · · · So in all those circumstances, we really don't
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`·7· ·think there was an intervening law change that allows ZTE
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`·8· ·to belatedly name ZTE TX as a real party in interest and
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`·9· ·still retain the petition -- the old petition date.
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`10· · · · · · Now, regarding the second path, which is to
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`11· ·terminate the -- all four proceedings if they cannot
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`12· ·amend the petition and retain the -- the filing date,
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`13· ·Patent Owner's position is that given that Petitioner has
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`14· ·basically conceded they did not name the RPI -- ZTE did
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`15· ·not name all the real parties in interest and that it's
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`16· ·also our position that amendment is improper, Patent
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`17· ·Owner's position is that the IPRs should end for the
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`18· ·failure to name all the real parties in interest, but we
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`19· ·don't think termination is the right procedural vehicle
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`20· ·to end this procedure.
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`21· · · · · · My understanding is that termination under
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`22· ·35 USC 317 as well as under the pro- -- the corresponding
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`23· ·rules require there was a settlement agreement and a
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`24· ·joint motion.
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`25· · · · · · There was no settlement agreement, so the
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`
`·1· ·termination provision simply does not apply.
`
`·2· · · · · · And we also believe that procedurally, to allow
`
`·3· ·ZTE to unilaterally terminate, is prejudicial to the
`
`·4· ·Patent Owner since we have already spent considerable
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`·5· ·resources defending the patents.
`
`·6· · · · · · At this stage, Patent Owner does not object to
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`·7· ·ZTE filing a motion for adverse judgment because it just
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`·8· ·appears that it's effectively abandoning its contest on
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`·9· ·the patentability.
`
`10· · · · · · And I would like to point out in the
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`11· ·IPR2018-00111 where they filed a reply recently, they did
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`12· ·not even contest the RPI issue, so the Board has just
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`13· ·ended the proceeding with a final written decision
`
`14· ·finding in favor of Patent Owner.
`
`15· · · · · · So just to summarize, the proper procedure at
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`16· ·this point for the failure to name all the real parties
`
`17· ·in interest is for the Board to issue a final written
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`18· ·decision solely on the issue of real party in interest
`
`19· ·because ZTE has the burden, it has failed to prove that
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`20· ·all the real parties in interest has been named, and a
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`21· ·final written decision is the proper procedure to end the
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`22· ·IPR2018-00111 and 00425, the two already instituted
`
`23· ·proceedings.
`
`24· · · · · · With respect to IPR2018-00215, I think the
`
`25· ·proper procedure is for the Board just to deny the -- the
`
`Fundamental Ex 2028-p. 14
`ZTE v Fundamental
`IPR2018-00111
`
`
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`·1· ·hearing request.
`
`·2· · · · · · For IPR2018-01076, again, the proper procedure
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`·3· ·is to deny institution for failure to name all the real
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`·4· ·parties in interest in addition to other procedural
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`·5· ·grounds that Patent Owner has raised in its POPR.
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`·6· · · · · · JUDGE KORNICZKY:· Ms. Zhong, this is
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`·7· ·Judge Korniczky.
`
`·8· · · · · · So you know, two -- two purposes of the real
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`·9· ·party in interest requirements is -- well, one is --
`
`10· ·well, conflicts of interest, so if -- if Petitioner were
`
`11· ·to identify the ZTE Texas as a real party in interest, it
`
`12· ·lessens you with conflicts.
`
`13· · · · · · The second issue, I guess, is -- has to do with
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`14· ·estoppel.
`
`15· · · · · · If -- if the Petitioner were to identify ZTE
`
`16· ·Texas, wouldn't that protect Patent Owner from -- or
`
`17· ·limit their -- ZTE's future ability to contest the
`
`18· ·patent?
`
`19· · · · · · How -- how will that affect -- affect you?
`
`20· · · · · · How -- how would that prejudice the Patent
`
`21· ·Owner?
`
`22· · · · · · MR. SHEASBY:· Your Honor, this is Jason Sheasby.
`
`23· · · · · · This is something that I've been discussing.
`
`24· · · · · · With your permission, may I respond?
`
`25· · · · · · JUDGE KORNICZKY:· Yes.
`
`Fundamental Ex 2028-p. 15
`ZTE v Fundamental
`IPR2018-00111
`
`
`
`·1· · · · · · MR. SHEASBY:· Your Honor, I think the major
`
`·2· ·concern we have is that we don't believe that this was
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`·3· ·respectfully unintentional, which is that -- that ZTE has
`
`·4· ·consistently been naming ZTX as a real party in interest.
`
`·5· · · · · · ZTX was sued from the beginning of this case for
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`·6· ·infringement in the parallel United States District Court
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`·7· ·case, and then ZTX was -- was absent from the -- from the
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`·8· ·real party in interest list in our petitions -- on the
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`·9· ·petitions that were filed against us, then long after
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`10· ·this intervening event, at this last moment, they now say
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`11· ·"We should be able to add them back and do over."
`
`12· · · · · · And so the problem that we have is that allowing
`
`13· ·retroactive amendment strikes me as incentivizing and
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`14· ·vitiating, which we believe was -- was not an inadvertent
`
`15· ·act, but was an intent -- an intent -- instead an intent
`
`16· ·to keep ZTX separate from these proceedings.
`
`17· · · · · · MR. McMAHON:· Your Honor, this is Charles
`
`18· ·McMahon.
`
`19· · · · · · I don't want to interrupt if you have further
`
`20· ·questions based on those comments, but I -- I would like
`
`21· ·a chance to respond, if possible.
`
`22· · · · · · JUDGE KORNICZKY:· Yes.
`
`23· · · · · · Please go ahead.
`
`24· · · · · · MR. McMAHON:· So I guess taking things in
`
`25· ·reverse order, I -- I want to address what Mr. Sheasby
`
`Fundamental Ex 2028-p. 16
`ZTE v Fundamental
`IPR2018-00111
`
`
`
`·1· ·just said.
`
`·2· · · · · · This certainly was not intentional, and I can
`
`·3· ·tell you that they have represented that ZTE has
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`·4· ·consistently named ZTE Texas as an RPI in other
`
`·5· ·proceedings.
`
`·6· · · · · · I can tell you there certainly are some I have
`
`·7· ·found looking back.· I was not aware of them at the time.
`
`·8· · · · · · Our firm has never identified ZTE Texas as an
`
`·9· ·RPI.
`
`10· · · · · · It seems other firms representing ZTE on
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`11· ·occasion have.· It has not been in every proceeding, but
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`12· ·it has been in some.
`
`13· · · · · · As far as the intent, it certainly was not
`
`14· ·intentional.
`
`15· · · · · · It was a conscious decision not to name ZTE
`
`16· ·Texas because we did not believe them to be an RPI, but
`
`17· ·it was not an intention to somehow game the system.
`
`18· · · · · · And with respect, the argument that this somehow
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`19· ·games the system rings hollow.
`
`20· · · · · · To the extent that there was a disadvantage or
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`21· ·to the extent that there was somehow an intent by ZTE to
`
`22· ·game the system by not naming ZTE Texas, that unfair
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`23· ·advantage would have been gained would be completely
`
`24· ·undone by retroactively naming ZTE Texas as an RPI at
`
`25· ·this stage.
`
`Fundamental Ex 2028-p. 17
`ZTE v Fundamental
`IPR2018-00111
`
`
`
`·1· · · · · · In other words, to the extent -- we would
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`·2· ·basically return the situation to exactly what it would
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`·3· ·have been had ZTE Texas been named as an RPI from the
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`·4· ·very beginning with no advantage or disadvantage to
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`·5· ·either party.
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`·6· · · · · · So the idea that somehow the Patent Owner would
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`·7· ·be prejudiced by permitting us to do this, they basically
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`·8· ·argue that we should have done this in the first place
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`·9· ·and that we have prejudiced them by not doing it in the
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`10· ·first place, adding ZTE Texas as an RPI today would
`
`11· ·eliminate that prejudice.
`
`12· · · · · · MR. SHEASBY:· So Your Honor, if I may speak.
`
`13· · · · · · I think there are two inaccuracies --
`
`14· · · · · · JUDGE KORNICZKY:· Who's speaking?
`
`15· · · · · · Mr. Fleming?
`
`16· · · · · · MR. SHEASBY:· It's Mr. Sheasby, Your Honor.
`
`17· · · · · · JUDGE KORNICZKY:· Okay.
`
`18· · · · · · MR. SHEASBY:· And I apologize for not listing
`
`19· ·myself.
`
`20· · · · · · I think there are two inaccuracies there.
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`21· · · · · · One is that there has been a real and concrete
`
`22· ·prejudice to us because we have spent pages of our
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`23· ·substantive briefing dealing with this issue of POR --
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`24· ·of -- of RPI, and for example, in the reply that was just
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`25· ·filed, they simply ignore it.
`
`Fundamental Ex 2028-p. 18
`ZTE v Fundamental
`IPR2018-00111
`
`
`
`·1· · · · · · So after making us substantively argue that
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`·2· ·they've done it wrong, after we have a request to
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`·3· ·substantively terminate the proceedings because of their
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`·4· ·failure to name RPI, which they were obligated to do so
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`·5· ·under the rules and -- and then having now finally
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`·6· ·realized that they're going to lose this issue, to ask
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`·7· ·for a do-over strikes us as not just -- not only is it
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`·8· ·substantively improper, but there's no rule that would
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`·9· ·allow it to occur.
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`10· · · · · · And the second issue is I do believe that there
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`11· ·was a very significant strategic advantage to them by
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`12· ·attempting to keep ZTX out of the RPI, and the reason for
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`13· ·that is that any estoppel would not apply to R -- to ZTE
`
`14· ·Texas if we would have prevailed on the IPR, and so
`
`15· ·they --
`
`16· · · · · · JUDGE KORNICZKY:· But let me interrupt --
`
`17· · · · · · MR. SHEASBY:· -- with -- yes, Your Honor.
`
`18· · · · · · JUDGE KORNICZKY:· -- for a second.
`
`19· · · · · · If -- if they're added as the RPI in an updated
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`20· ·notice, wouldn't you be protected, then, from the
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`21· ·estoppel --
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`22· · · · · · MR. SHEASBY:· So --
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`23· · · · · · JUDGE KORNICZKY:· -- wouldn't the estoppel issue
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`24· ·protect you?
`
`25· · · · · · MR. SHEASBY:· Yes, you are correct, Your Honor.
`
`Fundamental Ex 2028-p. 19
`ZTE v Fundamental
`IPR2018-00111
`
`
`
`·1· · · · · · We would now be protected, and then what the
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`·2· ·issue would have been is that they would have had --
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`·3· ·well, they would have tried to implement a strategy that
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`·4· ·would block the estoppel from applying to ZTX, the --
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`·5· ·which would have given them a significant advantage in
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`·6· ·the District Court litigation, and so what the Board
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`·7· ·would be doing is -- would have been essentially
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`·8· ·rewarding them for having made a very conscious, very
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`·9· ·conscious strategic choice to try to gain the estoppel
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`10· ·system, and now that the Federal Circuit has come down
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`11· ·and made clear that their -- their -- their judgment call
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`12· ·that ZTX is not an RPI is wrong, they're trying to get
`
`13· ·the Board to give them an out.
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`14· · · · · · JUDGE KORNICZKY:· Okay.
`
`15· · · · · · MR. SHEASBY:· And so --
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`16· · · · · · JUDGE KORNICZKY:· Sorry.
`
`17· · · · · · Go ahead.
`
`18· · · · · · Finish.
`
`19· · · · · · I thought you were finished.
`
`20· · · · · · MR. SHEASBY:· No.
`
`21· · · · · · Your Honor, so I separate out two things.
`
`22· · · · · · I believe that unintentional errors are not
`
`23· ·something that should result in substantive consequences.
`
`24· · · · · · This was not an unintentional error.
`
`25· · · · · · This was an absolute, 100 percent conscious
`
`Fundamental Ex 2028-p. 20
`ZTE v Fundamental
`IPR2018-00111
`
`
`
`·1· ·decision to try to shield ZTX from the estoppel.
`
`·2· · · · · · When we pointed this out to them -- when we
`
`·3· ·pointed this out to them, they did nothing to -- to
`
`·4· ·remedy it --
`
`·5· · · · · · JUDGE KORNICZKY:· Okay.
`
`·6· · · · · · MR. SHEASBY:· -- in their re- --
`
`·7· · · · · · JUDGE KORNICZKY:· So -- so no.
`
`·8· · · · · · I understand.· I understand, I think.
`
`·9· · · · · · So as I understand it, the Petitioner -- well,
`
`10· ·is asking for -- wants to file a contingent motion, they
`
`11· ·want to add the RPI, and if that's unsuccessful --
`
`12· ·unsuccessful, then they want to terminate the cases;
`
`13· ·is -- is that correct?
`
`14· · · · · · MR. McMAHON:· That is correct.· That is correct,
`
`15· ·Your Honor.
`
`16· · · · · · This is Mr. McMahon.
`
`17· · · · · · And if I could just respond to that last point
`
`18· ·from Mr. Sheasby.
`
`19· · · · · · I'd like to point out that there is no evidence
`
`20· ·in the record other than his stated belief that we were
`
`21· ·somehow trying to shield ZTE Texas from estoppel, and
`
`22· ·that is absolutely, 100 percent not true.· I'd be happy
`
`23· ·to swear that in a declaration to the extent that it
`
`24· ·matters, but I don't think it does matter for exactly the
`
`25· ·reason that Your Honor pointed out, which is that we are
`
`Fundamental Ex 2028-p. 21
`ZTE v Fundamental
`IPR2018-00111
`
`
`
`·1· ·trying to remedy the issue right now, that's the purpose
`
`·2· ·of this call and request for the motion, and granting us
`
`·3· ·the motion and -- and permitting us to retroactively name
`
`·4· ·ZTE Texas would provide the estoppel effect that
`
`·5· ·Mr. Sheasby's still concerned about.
`
`·6· · · · · · JUDGE KORNICZKY:· Okay.· One thing --
`
`·7· · · · · · DR. ZHONG:· Your Honor, this is Annita Zhong --
`
`·8· · · · · · JUDGE KORNICZKY:· Hold on.
`
`·9· · · · · · One thing I'm concerned about is that the
`
`10· ·parties are asking for I guess different remedies in the
`
`11· ·different cases or -- or petitions because they're at
`
`12· ·different stages.
`
`13· · · · · · So what I would like to do is we'll -- we'll --
`
`14· ·we'll give Petitioner the opportunity to brief this
`
`15· ·issue, and obviously Patent Owner will get to respond.
`
`16· · · · · · So how -- how much -- how much time do you need?
`
`17· · · · · · MR. McMAHON:· Your Honor, I think we could
`
`18· ·provide our motion within a week.
`
`19· · · · · · JUDGE KORNICZKY:· And Patent Owner, how -- how
`
`20· ·much time do you need to respond?
`
`21· · · · · · DR. ZHONG:· Probably also a week after we are
`
`22· ·served with a motion.
`
`23· · · · · · And there is just one thing I would like to
`
`24· ·point out.
`
`25· · · · · · What they are asking for is almost a way to say
`
`Fundamental Ex 2028-p. 22
`ZTE v Fundamental
`IPR2018-00111
`
`
`
`·1· ·"We can file a deficient petition, and then once they
`
`·2· ·point it out to it, even if we passed the statutory
`
`·3· ·deadline, we can still go back and avail ourself with the
`
`·4· ·IPR proceedings."
`
`·5· · · · · · That's really not available to them anymore, and
`
`·6· ·if the Board allows such action, I think there's going to
`
`·7· ·be a lot more game playing.
`
`·8· · · · · · JUDGE KORNICZKY:· No.
`
`·9· · · · · · I understand -- I understand your position,
`
`10· ·Ms. -- Ms. Zhong.
`
`11· · · · · · I -- I think -- I -- I'm just looking at the
`
`12· ·calendar here.
`
`13· · · · · · You know, I'm going to put you on -- on hold for
`
`14· ·a second.
`
`15· · · · · · Okay?
`
`16· · · · · · Let me -- let me confer with the other members
`
`17· ·of the Panel, and I'll get back to you in a second.
`
`18· · · · · · MR. SHEASBY:· Thank you, Your Honor.
`
`19· · · · · · (Pause in proceedings.)
`
`20· · · · · · JUDGE KORNICZKY:· Counsel, this is
`
`21· ·Judge Korniczky again.
`
`22· · · · · · Is everyone still there?
`
`23· · · · · · MR. McMAHON:· Yes, Your Honor.
`
`24· · · · · · DR. ZHONG:· Yes.
`
`25· · · · · · JUDGE KORNICZKY:· Okay.
`
`Fundamental Ex 2028-p. 23
`ZTE v Fundamental
`IPR2018-00111
`
`
`
`·1· · · · · · MR. SHEASBY:· Yes, Your Honor.
`
`·2· · · · · · JUDGE KORNICZKY:· All right.· We're going to
`
`·3· ·take the request under advisement, and we'll send out an
`
`·4· ·order addressing your request in each of the cases
`
`·5· ·separately.
`
`·6· · · · · · DR. ZHONG:· Thank you.
`
`·7· · · · · · JUDGE KORNICZKY:· Okay.· Any -- any other
`
`·8· ·further issues that we need to address in any of the
`
`·9· ·cases?
`
`10· · · · · · MR. McMAHON:· Thank you, Your Honor.
`
`11· · · · · · The -- the last thing I wanted to address was
`
`12· ·something that Ms. Zhong said.
`
`13· · · · · · JUDGE KORNICZKY:· Who -- who is this speaking?
`
`14· · · · · · MR. McMAHON:· Sorry.
`
`15· · · · · · This is Mr. McMahon on behalf of ZTE.
`
`16· · · · · · I think Ms. Zhong commented that the only basis
`
`17· ·for terminating a proceeding once it has been instituted
`
`18· ·is if there's a settlement, and I just wanted to point to
`
`19· ·Rule 42.72 which provides for terminating of a trial
`
`20· ·where appropriate, and so the -- the basis for our -- our
`
`21· ·secondary request on termination, if we are not permitted
`
`22· ·to retroactively name ZTE Texas an RPI, would be under
`
`23· ·42.72 on the basis that the proceeding never should have
`
`24· ·been instituted, and of course, as you noted, that would
`
`25· ·vary from proceeding to proceeding depending on the
`
`Fundamental Ex 2028-p. 24
`ZTE v Fundamental
`IPR2018-00111
`
`
`
`·1· ·procedural status.
`
`·2· · · · · · I just wanted to bring that to Your Honors'
`
`·3· ·attention.
`
`·4· · · · · · JUDGE KORNICZKY:· All right.· Thank you.
`
`·5· · · · · · Ms. -- Ms. Zhong, when would you be able to file
`
`·6· ·the transcript from this conference call?
`
`·7· · · · · · DR. ZHONG:· Let me talk to the court reporter to
`
`·8· ·see when she can finalize the transcript, and the day we
`
`·9· ·receive it, we can file it.
`
`10· · · · · · And I expect that two to three days will be the
`
`11· ·outside boundary, so within two to three days.
`
`12· · · · · · JUDGE KORNICZKY:· All right.
`
`13· · · · · · MR. SHEASBY:· Your Honor, this is Jason Sheasby.
`
`14· · · · · · We -- we will ask her to do a rush.
`
`15· · · · · · I think sometimes, if -- if they have
`
`16· ·availability, the court reporters can do dailies, and
`
`17· ·if -- and if they're able to -- to do that, we will -- we
`
`18· ·will most certainly do it.
`
`19· · · · · · I should also want to just flag one other thing.
`
`20· · · · · · In- -- intentional
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