`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
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`CANON INC., CANON U.S.A, INC.; CANON FINANCIAL
`SERVICES, INC.; NIKON CORPORATION; NIKON, INC.;
`SAMSUNG ELECTRONICS CO., LTD.; SAMSUNG ELECTRONICS
`AMERICA, INC.; SANYO ELECTRIC CO., LTD.,
`Petitioners,
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`v.
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`PAPST LICENSING GMBH & CO., KG,
`Patent Owner.
`_______________
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`Case IPR2018-00410
`Patent 6,895,449
`_______________
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`PATENT OWNER PAPST LICENSING GMBH & CO., KG’S
`RESPONSE TO PETITIONER’S MOTION TO WAIVE OR SUSPEND
`RULE 37 C.F.R. § 42.122
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`1
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`INTRODUCTION
`I.
`Petitioner’s Motion to Waive or Suspend (“Petitioner’s Motion”) fails. IPR
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`2017-00415 (the “’415 IPR”) was terminated on January 18, 2018. See ZTE (USA)
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`Inc., v. Papst Licensing GmBH & Co. KG, Case IPR 2017-00415, Paper 32. Under
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`PTAB precedent, a terminated IPR cannot be joined, and there is simply no
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`procedural vehicle (by rule or statute) that would permit joinder of a terminated
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`IPR.
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`Even if the ’415 IPR was still active, Petitioner failed to meet its burden for
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`untimely joinder by showing that that good cause exists or that the interests of
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`justice favor joinder. Petitioner utterly fails to offer any excuse as to why it failed
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`to timely join the ’415 IPR under 35 U.S.C. § 315(b)(1) or 37 CFR § 42.122(b).
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`The reason is undoubtedly strategic—by not joining the IPR earlier, Petitioner
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`circumvented the 35 U.S.C. 315(e) estoppel that attaches with a failed IPR. Only
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`after Petitioner became aware that the final petitioner in the ’415 IPR had settled,
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`did it seek to join the ’415 IPR. That Petitioner now regrets its deliberate choice
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`not to join the ’415 IPR is no excuse. Good cause does not exist.
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`Petitioner also failed to demonstrate that the interests of justice excuse its
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`failure to abide by the PTAB’s rules for timely joining an IPR. Rather than ground
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`its Motion in facts, Petitioner instead supports it argument regarding the interests
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`of justice on the baseless allegation that Patent Owner’s settlement with Olympus
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`2
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`(and to a lesser extent ZTE and LG) is a “sweetheart deal.” Motion at 10. Despite
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`Petitioner’s admission that it has not seen the Olympus settlement agreement and
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`that it does not know the amount of the settlement, it recklessly condemns of the
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`legitimacy of the Olympus settlement. See Motion at 5 (“Although Movants have
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`not seen the settlement agreement between Papst and Olympus, Movants suspect
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`that the settlement involves a small payment by Olympus …”). Patent Owner
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`invites the Board to review the Olympus settlement to confirm that Petitioner’s
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`assumption that it was a “sweetheart deal” is simply incorrect. See ’415 IPR, Paper
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`No. 28, Ex. 2011 at 11 (showing the amount Olympus paid.) Moreover, when
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`further considered in conjunction with the ZTE and LG settlements, Petitioner
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`cannot credibly contend that these settlements were not legitimate. See ’415 IPR,
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`Paper No. 24, Ex. 2010 (showing the amount LG paid); ’415 IPR, Paper No. 31,
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`Ex. 2012 (showing the amount ZTE paid). Moreover, a “sweetheart deal” is not
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`sufficient cause for Petitioner to belatedly join the ’415 IPR after its termination.
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`Petitioner’s inaccurate and irrelevant attorney argument must be rejected.
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`Petitioner’s otherwise bellicose commentary throughout its Motion about
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`Papst (which Papst disputes) is immaterial to the issues before the Board.
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`Petitioner indisputably and deliberately allowed the deadlines under 35 U.S.C. §
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`315(b)(1) and 37 CFR § 42.122(b) to lapse. Petitioner’s disappointment with
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`Olympus’s decision to settle the ’415 IPR does not establish that the interests of
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`3
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`justice require the Board to authorize Petitioner to revive a proceeding it
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`intentionally chose to avoid (particularly here where Petitioner has not even
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`requested to file a motion to revive), so that it can join the proceeding and pursue
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`the action in Olympus’s place. See Apple Inc. v. Grobler, Case IPR 2014-00060,
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`Paper 12 (PTAB Oct. 29, 2013).
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`Petitioner’s Motion should be denied.
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`II. RESPONSE TO STATEMENT OF RELEVANT FACTS
`Patent Owner has reviewed the Statement of Relevant Facts contained in
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`Petitioner’s Motion to Waive or Suspend Rule 37 C.F.R § 42.122. Patent Owner’s
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`response and denial of purported “facts” as set forth in Petitioner’s Statement of
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`Relevant Facts is found at Exhibit 2002.
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`III. LEGAL AUTHORITY AND ARGUMENT
`Rather than timely file an IPR on the ’449 patent, Petitioner instead let the
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`one year deadline lapse. See 35 U.S.C. § 315(b) (“An inter partes review may not
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`be instituted if the petition requesting the proceeding is filed more than 1 year after
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`the date on which the petitioner, real party in interest, or privy of the petitioner is
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`served with a complaint alleging infringement of the patent.”)
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`Petitioner admits that it also let the deadline to join the ’415 IPR under 37
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`C.F.R § 42.122 (which expired one month after institution) lapse. See IPR2018-
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`00410, Paper 5 at 1 (“Petitioner acknowledges that the Instant Petition and Motion
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`4
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`for Joinder are being filed outside the one-month time period set forth in 37 C.F.R.
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`§ 42.122(b).”) See also 37 CFR § 42.122(b) (“Any request for joinder must be filed
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`[…] no later than one month after the institution date of any inter partes review for
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`which joinder is requested.”) Now, with both deadlines long since passed,
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`Petitioner seeks to join the already terminated ’415 IPR. Petitioner cites no
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`authority to support its position that it should be permitted to join a terminated (and
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`unrevived) IPR or that the PTAB has ever permitted a procedurally flawed joinder
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`such as this.
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`A. The ’415 IPR Has Been Terminated And Cannot Be Joined.
`Petitioner’s motion is premised on the factually incorrect argument that the
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`’415 IPR is still pending. It is not. On January 18, 2018, three weeks after the
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`Petitioner filed its Motion, the ’415 IPR was terminated. See ZTE (USA) Inc., v.
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`Papst Licensing GmBH & Co. KG, Case IPR 2017-00415, Paper 32. The ’415 IPR
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`cannot be joined—there is nothing to join. The commentary to the rules state:
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`The AIA, however, does not provide for the ‘‘replacement’’ of a
`party. A petitioner may settle with the patent owner and upon entering
`the joint request, the review will terminate with respect to the
`petitioner. 35 U.S.C. 317, as amended, and 35 U.S.C. 327.
`Changes to Implement Inter Partes Review Proceedings, Post-Grant Review
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`Proceedings, and Transitional Program for Covered Business Method Patents;
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`Final Rule, 77 Fed. Reg. 48680, 48707 (Aug. 14, 2012).
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`5
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`Consistent with this commentary, the PTAB has repeatedly held that a
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`terminated proceeding cannot be joined. In Apple Inc. v. Grobler, Case IPR2014-
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`00060, Paper 12 (PTAB Oct. 29, 2013), the Board refused to grant an untimely
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`joinder motion by which Apple sought to join a proceeding that was terminating
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`via settlement:
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`Apple’s disappointment with Sony’s decision to settle IPR2013-00076
`does not establish that the interests of justice require the Board to
`authorize Apple to file a motion to revive a proceeding it deliberately
`chose to avoid, so that Apple can join the revived proceeding and
`pursue the action in Sony’s stead.
`Id. at 5-6.
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`Likewise, in Google Inc. v. PersonalWeb Techs., LLC, Case IPR2014-
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`00977, Paper 10 (PTAB Oct. 30, 2014), the Board refused to grant an untimely
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`joinder motion in which Google sought to join a proceeding that was terminating
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`via settlement. The Board entered an order
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`terminating
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`the underlying
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`proceeding, Rackspace US, Inc. v. PersonalWeb Techs., LLC, Case IPR2014-
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`00059, shortly before denying Google’s joinder motion.
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` In Roche Molecular Systems, Inc. v. Illumina, Inc., Case IPR2015-01091,
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`Paper 18 (PTAB Oct. 30, 2015), the Board refused to grant an untimely joinder
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`motion in which Roche sought to join a proceeding in which Ariosa was the lead
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`petitioner. Roche purchased Ariosa during the pendency of the Ariosa IPR and
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`wanted to join a petition with new prior art to Ariosa’s original petition. But Roche
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`6
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`knew of the Ariosa IPR when it bought Ariosa, and waited more than six months to
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`file its own IPR after acquiring Ariosa, which was also more than three months
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`after the Ariosa IPR was instituted. In refusing to grant joinder, the Board
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`criticized Roche’s delay in light of Roche’s knowledge of the disputes between
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`Ariosa and Illumina, the patent owner.
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`PTAB precedent does not permit joinder of a terminated IPR. Petitioner’s
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`attempt to waive or suspend Rule 37 C.F.R § 42.122 fails.
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`B. Good Cause Does Not Exist.
`Petitioner offers no excuse for allowing the 37 C.F.R § 42.122 deadline to
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`lapse by approximately six months before belatedly seeking joinder. Petitioner’s
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`decision not to timely join the IPR was strategic. By not joining the ’415 IPR
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`within the deadline, Petitioner sought to benefit from the outcome of the IPR
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`without being bound by 35 U.S.C. 315 estoppel. Petitioner points out that Olympus
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`filed a motion for joinder with the ’415 IPR on June 16, 2017, and that motion was
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`granted. Motion at 5. But Petitioner fails to account for the fact that it could have
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`done precisely what Olympus did—timely join the ’415 IPR within the deadline
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`imposed by 37 C.F.R § 42.122. Nothing prevented Petitioner from complying with
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`the Rules. In fact, on July 20, 2017, Petitioner Samsung demonstrated its
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`knowledge and familiarity with the deadline imposed by 37 C.F.R § 42.122 by
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`seeking to join a different IPR with Olympus relating to another Papst patent. See
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`IPR 2017-01808, Paper 4 at 5 (“The Olympus/Samsung Petition and concurrently
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`filed Motion for Joinder are timely under 35 U.S.C. § 315(c) and 37 C.F.R. § 42.22
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`and 4.122(b).”) Petitioner’s strategic decision not to join the ’415 IPR with
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`Olympus cannot now be undone. Petitioner must now live with its decision. Good
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`cause does not exist.
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`C. The Interests of Justice Weigh Against Waiver or
`Suspension.
`The interests of justice weigh heavily against Petitioner’s request for waiver
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`or suspension of 37 C.F.R § 42.122.
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`1)
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`Petitioner’s Unfounded Assumption that the Papst-
`Olympus Settlement Was a So-Called “Sweetheart
`Deal” Is Incorrect.
`Without any knowledge of the amount or terms of the Papst-Olympus
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`settlement, Petitioner blindly hypothesizes that the settlement was a “‘sweetheart
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`deal’ to induce Olympus to settle.” Motion at 10. Petitioner’s hypothesis is simply
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`incorrect. Papst invites the Board to review the Papst-Olympus settlement to
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`confirm its legitimacy. See ’415 IPR, Paper No. 28, Ex. 2011 at 11 (showing the
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`amount Olympus paid.) Moreover, when further considered in conjunction with the
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`settlements of ZTE and LG (the other former petitioners for the ’415 IPR),
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`Petitioner’s argument fails. See ’415 IPR, Paper No. 24, Ex. 2010 (showing the
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`amount LG paid); ’415 IPR, Paper No. 31, Ex. 2012 (showing the amount ZTE
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`8
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`paid.) Petitioner’s central argument is demonstrably untrue. Petitioner’s Motion
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`fails.
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`In addition to being factually inaccurate, Petitioner’s argument is also
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`irrelevant. Petitioner’s baseless and inflammatory accusations of a “scheme” or
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`“gamesmanship” are nothing more than attorney argument that must be rejected.
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`Petitioner fails to cite any authority for its position that such facts would even be
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`considered as relevant to the “interests of justice” inquiry. Rather, the case law
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`teaches the opposite. See Apple Inc. v. Grobler, Case IPR2014-00060, Paper 12 at
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`5-6.
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`2)
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`The Primary Case Cited By Petitioner Is Inapposite
`and Favors Denial of Petitioner’s Motion.
`In support of its Motion, Petitioner cites only Sony Corp. v. Network-1
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`Security Solutions, IPR2013-00495, Paper 13 (PTAB Sept. 16, 2013). But Sony
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`Corp. favors denial of Petitioner’s Motion. In Sony Corp., the PTAB granted the
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`late-filed joinder but the facts were very different than those presented to this
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`Board. The Sony Corp. panel looked at both the substantive and procedural issues
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`associated with the request for late joinder. Substantively, the panel found that
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`joinder “do[es] not raise any issues that are not already before the Board.” Id. at 5.
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`Not so here. The terminated ’415 IPR is not “already before the Board” because it
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`was terminated and no longer exists. Thus, joinder would require an entirely new
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`set of issues to be determined by the Board.
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`Procedurally, the Sony Corp. panel found that the impact of joinder on the
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`existing schedule would be minimal because “joinder would require no change to
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`the existing schedule” and the movant would have a limited “understudy” role. Not
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`so here. The impact and associated prejudice could not be greater. There is no
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`active proceeding to join. As a result, the entire revived proceeding would impact
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`the existing schedule because there is no existing schedule. Also, Petitioner would
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`not simply be an “understudy” in the ’415 IPR; rather they would have the “lead”
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`role as the petitioner.
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`Also, the Sony Corp. panel evaluated other considerations that merited
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`granting of late joinder not present here. For example, in Sony Corp. the panel
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`observed that the petitioners tried multiple times to timely join other IPRs for the
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`patent at issue, but were denied by the Board. “The fact that Petitioners attempted
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`previously—within the one-month time period—to be joined to Case IPR2013-
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`00071 weighs in favor of considering Petitioners’ request outside the one-month
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`time period.” Id. at 7. Here, Petitioner made no prior attempt to initiate or join any
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`IPR related to the ’449 patent.
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`Finally, the Sony Corp. panel commented that the “replacement” of an
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`existing party that already settled with Patent Owner—which is akin to the
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`circumstance before this Board—is a far different. In Sony Corp., the panel found
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`that petitioners were “not seeking to replace an existing petitioner that settled with
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`10
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`Patent Owner, whereby the review would terminate with respect to that petitioner
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`only under 35 U.S.C. § 317, but rather to join the existing proceeding before such
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`settlement occurs.” Here, the facts are much worse for Petitioner. Petitioner’s
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`request is far more intrusive than “replacement,” as condemned by the Sony Corp.
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`panel, because there is no party to even replace. Indeed, Petitioner’s requested
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`relief would require a complete revival of the terminated proceeding. Petitioner’s
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`Motion fails.
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`3)
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`All Grounds of Patentability Asserted in the Instant
`Petition are New.
`Petitioner incorrectly claims that the “Instant Petition does not assert any
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`new grounds of patentability” because it “challenges the same claims of the ’449
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`patent based on the same arguments, evidence and grounds of unpatentability.”
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`Motion at 9. But Petitioner fails to recognize that the ’415 IPR was terminated and
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`no longer exists and therefore the Instant Petition cannot be compared to it. The
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`Instant Petition is therefore an entirely new and original work. Thus, the
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`substantive basis for the Sony Corp. panel granting joinder is not present here.
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`4)
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`The Requested Waiver or Suspension Will Unduly
`and Unfairly Impact the Schedule Because the ’415
`IPR No Longer Is Active.
`Petitioner dismissively claims that the impact on the ’415 IPR schedule
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`would result “little, if any, disruption”—not so. See Motion at 9. It is difficult to
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`envision a scenario where already the terminated ’415 IPR would proceed without
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`11
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`undue delay and major adjustments to the scheduling order. When the ’415 IPR
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`was terminated on January 18, 2018, so too was its schedule. The schedule
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`Petitioner references no longer exists. Therefore, any joinder of the terminated
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`’415 IPR proceeding will necessarily require adoption of a new, significantly
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`delayed schedule when compared to the prior (terminated) schedule.
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`Petitioner’s arguments also fail even if ’415 IPR had not been terminated
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`and the defunct schedule was still in place. The two remaining deadlines—
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`Petitioner’s Reply on January 5, 2018 and the hearing on February 13, 2018—will
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`certainly be impacted if joinder (and revival) of the ’415 IPR is permitted. The
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`January 5, 2018 deadline for Petitioner’s Reply has long since passed. Petitioner
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`now asks the Board to allow a later “appropriate” deadline—an admission that the
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`schedule will necessarily be impacted because any Reply brief filed by Petitioner
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`will necessarily require departure from the original schedule for the ’415 IPR, and
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`will prejudice Patent Owner.
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`Moreover, the originally scheduled February 13th hearing date cannot
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`realistically go forward. The ’415 IPR would first have to be revived—a motion
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`Petitioner has not even requested permission to file. Then, a new schedule would
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`have to be put in place, but that new schedule would cause a tremendous delay as
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`compared to the terminated ’415 IPR’s prior schedule. It would be indisputably
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`unfair and prejudicial to require Patent Owner to prepare for a hearing on February
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`12
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`13 (that was previously cancelled) with notice of only a few days for an IPR that
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`was not actively worked for months because all parties actually participating in the
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`IPR focused on finalizing settlement papers. Petitioner’s (revival and) joinder at
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`this late stage will be nothing but disruptive and prejudicial to Patent Owner. This
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`factor weighs heavily against suspension or waiver of Rule 42.122(b).
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`IV. Public Policy and Legislative History Compel Denial of Joinder
`A. Waiver or Suspension of the Deadline Would Have a
`Chilling Effect on Settlement.
`Granting Petitioner’s Motion would set a precedent that discourage future
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`settlements—particularly early settlements. Public policy favors allowing parties to
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`settle pending IPRs. The United States Patent and Trademark Office’s Guide
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`states:
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`N. Settlement. There are strong public policy reasons to favor
`settlement between the parties to a proceeding. The Board will be
`available to facilitate settlement discussions, and where appropriate,
`may require a settlement discussion as part of the proceeding. The
`Board expects that a proceeding will terminate after the filing of a
`settlement agreement, unless the Board has already decided the merits
`of the proceeding. The Office Patent Trial Practice Guide, 77 Fed.
`Reg. 48756, 48768 (Aug. 14 2012).
`Consistent with this policy, the Board should not grant suspension or waiver
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`of the Rule 37 C.F.R § 42.122. A contrary decision would mean far fewer
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`settlements will occur in multi-defendant cases until at least one month after
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`institution of an IPR (many months after institution if the original petitioner and
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`patent owner must wait to see if another defendant is permitted to join after that
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`defendant files a motion to join) because the patent owner will always be
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`concerned that even if it settles with the original petitioner, another defendant will
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`seek to join or be permitted to join the terminated IPR thereby depriving the patent
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`owner of much of the value of its settlement with the original petitioner. Here,
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`Petitioner only has itself to blame for not timely filing an IPR pursuant to 37 C.F.R
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`§ 42.122.
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`B.
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`Permitting Joinder of a Terminated IPR Would Encourage
`Strategic Non-Joinder Until After Termination
`to
`Circumvent Estoppel.
`Petitioner intentionally chose not to join the ’415 IPR within the statutorily
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`mandated time period which enabled it to avoid 35 U.S.C. § 315(e) estoppel that
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`attaches to failed IPRs in district court. Despite reaping the benefits of the ’415
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`IPR but not being estopped by it, Petitioner cannot now agree to accept the
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`estoppel associated with joinder of the IPR because it now realizes that is the only
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`way to maintain the IPR. An order from the Board permitting tardy joinder after
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`settlement will encourage future movants to avoid estoppel by not timely joining
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`IPRs, and then belatedly joining IPRs only after the parties settle. Thus, these late-
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`joining parties will avoid estoppel by waiting to see if the original petitioner
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`settles. If the original petitioner does not settle, the party benefits from the original
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`petitioner attempting to invalidate the patent without incurring any risk of estoppel.
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`14
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`And only if the original petitioner settles would the third party seek to join. This
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`tactic, which was employed here by the Petitioner, cannot be allowed.
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`V. Conclusion
`The Board should exercise its discretion to deny suspension or waiver.
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`Petitioner fails to show good cause for its requested suspension or waiver of Rule
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`42.122(b). In addition, the interests of justice strongly disfavor the requested
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`suspension or waiver. Petitioner simply cannot join a terminated IPR. Public policy
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`and scheduling considerations weigh against joinder. PTAB precedent and the
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`legislative history of the joinder and settlement provisions further support that
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`joinder should be denied under the present fact pattern, particularly when the
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`Petitioner attempting to join has deliberately chosen not to file an IPR petition and
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`seeks to join an IPR that has been terminated.
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`Dated: 01/26/2018
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`Respectfully submitted,
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`/Gregory S. Donahue/
`
`Gregory S. Donahue
`Reg. No. 47,531
`DiNovo Price LLP
`7000 North MoPac Expressway
`Suite 350
`Austin, Texas 78731
`Lead Counsel for Patent Owner
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`15
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`CERTIFICATE OF SERVICE
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`I hereby certify that on this 26th day of January 2018, a true and correct
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`copy of the foregoing PATENT OWNER PAPST LICENSING GMBH & CO.,
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`KG’S RESPONSE TO PETITIONER’S MOTION TO WAIVE OR SUSPEND
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`UNDER 37 C.F.R. § 42.122 was served by electronic mail upon the following
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`counsel of record for Petitioners:
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`David M. Maiorana
`Matthew W. Johnson
`David L. Witcoff
`Marc S. Blackman
`JONES DAY
`dmaiorana@jonesday.com
`mwjohnson@jonesday.com
`dlwitcoff@jonesday.com
`msblackman@jonesday.com
`
`Mark Ungerman
`UNGERMAN IP PLLC
`mungerman@ungermanip.com
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`
`
`Carrie A. Beyer
`Nikola Colic
`Brian C. Rupp
`DRINKER BIDDLE & REATH
`LLP
`carrie.beyer@dbr.com
`nick.colic@dbr.com
`brian.rupp@dbr.com
`
`
`
`
`/Gregory S. Donahue/
`Gregory S. Donahue
`Reg. No. 47,531
`DiNovo Price LLP
`7000 North MoPac Expressway
`Suite 350
`Austin, Texas 78731
`Lead Counsel for Patent Owner
`
`16
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