`
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`___________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`___________________
`
`
`
`SIRIUS XM RADIO INC.,
`Petitioner,
`
`v.
`
`FRAUNHOFER-GESELLSCHAFT ZUR FÖRDERUNG DER
`ANGEWANDTEN FORSCHUNG E.V.,
`Patent Owner.
`
`___________________
`
`IPR2018-00681
`Patent 7,061,997 B1
`___________________
`
`
`PATENT OWNER’S RESPONSE
`TO PETITIONER’S SUPPLEMENTAL BRIEF
`REGARDING REQUEST FOR REHEARING
`
`
`
`
`
`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`10681394
`
`
`
`
`
`
`
`
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`TABLE OF CONTENTS
`
`Page
`
`B.
`
`THE BOARD CORRECTLY DENIED PETITIONER’S
`UNTIMELY AND IMPROPER REQUEST TO AMEND ITS RPI
`DISCLOSURES ........................................................................................... 1
`A.
`The Board’s Decision Was Not Based On Jurisdictional
`Grounds .............................................................................................. 1
`This Case Bears No Resemblance To Adello And Proppant,
`Where The Petitioners Diligently Sought To Correct Good-
`Faith Mistakes .................................................................................... 2
`The Proppant Factors Weigh Against Allowing Untimely
`Amendment ........................................................................................ 5
`Petitioner’s Rehearing Request Is Still Procedurally Improper ......... 7
`
`C.
`
`D.
`
`I.
`
`
`
`10681394
`
`
`- i -
`
`
`
`
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`TABLE OF AUTHORITIES
`
` Page(s)
`
`Cases
`Adello Biologics LLC v. Amgen Inc.,
`Case PGR2019-00001, Paper 11 (PTAB Feb. 14, 2019) ............................passim
`Fasteners For Retail, Inc. v. RTC Ind. Inc.,
`Case IPR2018-00741, Paper No. 32 (Nov. 15, 2018) .......................................... 7
`Lumentum Holdings, Inc. v. Capella Photonics, Inc.,
`Case IPR2015-00739, Paper No. 38 (Mar. 4, 2016) ............................................. 2
`Proppant Express Investments, LLC v. Oren Technologies, LLC,
`Case IPR2017-01917, Paper 86 (PTAB Feb. 13, 2019) ..............................passim
`Statutes
`35 U.S.C. § 315(b) ..................................................................................................... 6
`35 U.S.C. § 315(e) ................................................................................................. 3, 6
`Other Authorities
`37 C.F.R. § 42.5 ..................................................................................................... 2, 4
`37 C.F.R. § 42.71(d) .................................................................................................. 8
`
`10681394
`
`
`- ii -
`
`
`
`
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`Patent Owner Fraunhofer hereby responds to the supplemental brief filed by
`
`Petitioner in support of its request for rehearing of the Board’s decision denying
`
`institution in this case. See Paper No. 19 (“Supp. Br.”); Paper No. 13 (“Reh’g Req.”);
`
`Paper No. 12 (“Decision”).
`
`Petitioner’s supplemental brief fails to present any basis for reversing the
`
`Board’s non-institution decision. Although Petitioner asserts that the Board’s recent
`
`precedential opinions in Proppant and Adello now require a different result, hose
`
`cases presented strikingly different facts involving prompt correction of genuine
`
`mistakes. Here, by contrast, Petitioner has demonstrated a clear lack of diligence and
`
`a protracted refusal to correct its disclosures indicative of gamesmanship, bad faith,
`
`and attempted circumvention of the rules. And its recent unauthorized amendment
`
`is over a year too late. Because Petitioner’s supplemental brief fails to demonstrate
`
`any error in the Board’s decision—much less an “abuse of discretion” that could
`
`possibly warrant rehearing—Petitioner’s request for rehearing should be denied.
`
`I.
`
`THE BOARD CORRECTLY DENIED PETITIONER’S UNTIMELY
`AND IMPROPER REQUEST TO AMEND ITS RPI DISCLOSURES
`A. The Board’s Decision Was Not Based On Jurisdictional Grounds
`Petitioner begins by pointing to statements in Adello and Proppant to the
`
`effect that the Board has discretion to permit correction of RPI defects in appropriate
`
`circumstances because such defects are “not jurisdictional.” Supp. Br. at 2-3. But the
`
`Board’s decision in this case never said otherwise; indeed, the decision expressly
`
`10681394
`
`
`
`- 1 -
`
`
`
`
`
`
`recognized that RPI correction is possible as a discretionary action under 37 C.F.R.
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`§ 42.5. See Decision at 7. In exercising its discretion here, the Board simply
`
`concluded (correctly) that Petitioner had failed to establish that amendment was
`
`warranted on the facts presented. This approach was fully consistent with both new
`
`and old precedent. See, e.g., Adello at 5 (amendment of RPI may be proper as
`
`“exercise of discretion” under § 42.5); Lumentum Holdings, Inc. v. Capella
`
`Photonics, Inc., Case IPR2015-00739, Paper No. 38 at 7 (Mar. 4, 2016) (same).
`
`B.
`
`This Case Bears No Resemblance To Adello And Proppant, Where
`The Petitioners Diligently Sought To Correct Good-Faith Mistakes
`Petitioner further argues that amendment should be permitted here for the
`
`same reasons as in Adello and Proppant. Yet this argument ignores the controlling
`
`facts in those decisions that distinguish this case in multiple material respects.
`
`For example, in Adello, the petitioners listed several RPIs in the original
`
`petition (including “Amneal Pharmaceuticals, Inc.”) but inadvertently failed to
`
`disclose another related RPI named “Amneal Pharmaceuticals LLC.” Adello at 2-3.
`
`When the patent owner raised this issue, the petitioners “promptly investigated the
`
`issue, and agreed that [the missing RPI] should have been listed.” Id. at 2. The
`
`petitioners then diligently sought leave to file—and actually filed—a motion to
`
`correct their mandatory notices. Id. at 2, 5. In that motion, the petitioners “expressly
`
`represent[ed]” that the omission was “accidental.” Id. at 5. The Board found this
`
`credible as the petitioners were represented by “different counsel” in the parallel
`
`10681394
`
`
`
`- 2 -
`
`
`
`
`
`
`district court action. Id. Moreover, because the petitioners had acted diligently, the
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`Board did not need to expend resources analyzing and deciding the RPI status of the
`
`missing entity. Id. at 4 (amendment was requested “before an institution decision
`
`[was] made”). The petitioners even made a further showing of good faith by
`
`voluntarily adding an additional RPI to their disclosures. Id. at 5. On these facts, the
`
`Board found that the omission was simply a “human error” that was not motivated
`
`by bad faith, gamesmanship, or an attempt to avoid estoppel rules. Id.
`
`The petitioner in the Proppant case similarly demonstrated good faith through
`
`its diligent actions. The petitioner there omitted the company “Liberty” from its
`
`original RPI disclosures and the Board initially confirmed this omission was proper.
`
`Proppant at 2. However, after the Federal Circuit issued two further decisions
`
`regarding RPI issues, the Board sua sponte raised the question of whether Liberty
`
`was in fact an RPI under the standards set forth in those cases. Id. at 4. Within six
`
`days, the petitioner sought leave to update its mandatory notices to identify Liberty
`
`as an RPI. Id. at 5. The Board granted that request and the petitioner filed updated
`
`notices the very same day, including an express representation that Liberty would
`
`be “bound by 35 U.S.C. § 315(e)’s estoppel provisions.” Id.
`
`None of the operative facts in Adello and Proppant are remotely present here.
`
`Petitioner listed only itself as RPI in its Petition, even though it was represented by
`
`the same counsel in the parallel district court action where it had disclosed SXM
`
`10681394
`
`
`
`- 3 -
`
`
`
`
`
`
`Holdings as a related party. See Ex. 2012. When Patent Owner pointed out this
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`obvious omission, Petitioner maintained that its original disclosure was proper and
`
`sought to avoid having to correct the error. See Exs. 2024-25 (arguing that “neither
`
`Sirius XM Holdings nor Liberty Media is a real party interest [sic]”); Exs. 2026-27
`
`(arguing that Board “routinely grants requests to amend RPI disclosures” but without
`
`actually seeking leave to amend). Petitioner never filed a motion to amend. Its reply
`
`brief focused almost entirely on attempting to prove SXM Holdings was not an RPI.
`
`Reply at 1-5. The single paragraph of argument on the amendment issue offered only
`
`a conditional request to amend “if the Board considers Holdings” to be an RPI. Id.
`
`at 5 (emphasis added). Petitioner’s cursory argument made little or no attempt to
`
`satisfy the § 42.5 standard. And it made clear that the omission of SXM Holdings
`
`was deliberate and intentional rather than inadvertent human error. Id.
`
`Because Petitioner refused to simply add SXM Holdings as an RPI, the Board
`
`was forced to fully analyze the RPI issue as part of its decision denying institution.
`
`Decision at 3-6. It was only after the Board confirmed that SXM Holdings was
`
`indeed an RPI that Petitioner made a belated attempt to show “good cause” to amend
`
`under § 42.5. See Reh’g Req. at 7-15. Petitioner also launched a series of emails to
`
`the Board seeking yet additional briefing and arguing that Petitioner “should have
`
`been afforded the opportunity to amend those disclosures without any effect on the
`
`filing date of the petitions.” Ex. 2028; see also Exs. 2029-30. Yet Petitioner still
`
`10681394
`
`
`
`- 4 -
`
`
`
`
`
`
`maintained that its original omission of SXM Holdings was correct and sought leave
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`to amend only “in the event the Board considers Petitioner’s original identification
`
`… inadequate.” Ex. 2029-30. Petitioner also submitted a request for Precedential
`
`Opinion Panel review, which was denied. Paper No. 15.
`
`Finally, on May 6, 2019—well over a year after it had filed its original
`
`defective RPI disclosures—Petitioner finally filed amended disclosures naming
`
`SXM Holdings as an RPI. Paper No. 21. The Board never granted Petitioner leave
`
`to file these amendments and Petitioner did not file a motion seeking leave to do so.
`
`The facts of this case are thus easily distinguished from those in Adello and Proppant
`
`where the petitioner immediately amended to add an RPI that was omitted based on
`
`human error or a change in law. By contrast, SXM Holdings was a clear RPI from
`
`the beginning, and yet Petitioner deliberately resisted correction all along the way.
`
`C. The Proppant Factors Weigh Against Allowing Untimely Amendment
`By the same token (and contrary to Petitioner’s arguments, Supp. Br. 3-7), the
`
`factors set forth in Proppant do not suggest that the Board’s non-institution decision
`
`should be reversed. Rather, the factors weigh against allowing amendment here.
`
`First, Petitioner’s intentional omission of SXM Holdings was clearly an
`
`“attempt[] to circumvent the § 315(b) bar [and] estoppel rules.” Proppant at 6.
`
`Although Petitioner now tries to explain away the key admission in its Reply with a
`
`selectively tailored quotation (Supp. Br. at 6-7), the full admission is unmistakable
`
`10681394
`
`
`
`- 5 -
`
`
`
`
`
`
`on its face: “Further, Holdings and Liberty are not involved in the related litigation,
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`and thus there are no § 315(b) time bar or § 315(e) estoppel concerns.” Reply at 5
`
`(emphasis added). In other words, SXM asserted that because SXM Holdings was
`
`not named a defendant in the parallel district court action, the one-year § 315(b) time
`
`bar had not yet started to run for SXM Holdings, nor would it be bound by any final
`
`written decision in these proceedings. This is the exact opposite of what happened
`
`in Proppant, where the petitioner promptly amended to disclose the missing RPI and
`
`confirmed the RPI would be bound by the IPR outcome. Proppant at 5.
`
`Moreover, Petitioner had ample motive to attempt to keep open the possibility
`
`of a future IPR petition by SXM Holdings. At least one of the Petitions at issue here
`
`was not actually filed with the statutorily required payment until one day after the
`
`applicable § 315(b) deadline. See Case IPR2018-00690, Paper No. 12 at 27-33.
`
`Thus, Petitioner had a strategic reason to fight strenuously to preserve SXM
`
`Holdings’ ability to file its own IPR petition, as a backup in case the Board should
`
`ultimately reject the -00690 Petition as untimely. However, this is clearly not a valid
`
`basis for refusing to timely disclose an otherwise proper RPI.
`
`Petitioner’s intentional omission and prolonged refusal to amend also
`
`demonstrate the second and third factors of “gamesmanship” and “bad faith,” as
`
`explained above. Petitioner’s counsel clearly knew about SXM Holdings. Its status
`
`as RPI was not a close call, nor did it turn on unexpected legal developments as in
`
`10681394
`
`
`
`- 6 -
`
`
`
`
`
`
`Proppant. Failing to duly disclose an RPI until after “such unnamed RPI is the cause
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`for denying institution” is classic “gamesmanship.” See Fasteners For Retail, Inc. v.
`
`RTC Ind. Inc., Case IPR2018-00741, Paper No. 32 at 5 (Nov. 15, 2018) (emphasis
`
`added). And the fact that Petitioner completely reversed its position about SXM
`
`Holdings’ ability to file its own future IPR petition only after the Board’s non-
`
`institution decision (Reh’g Req. at 5) strongly reflects bad faith.
`
`Petitioner’s protracted delay also satisfies the fourth factor of “prejudice.”
`
`Had it not been for Petitioner’s failure to timely disclose SXM Holdings, these
`
`proceedings would have been much further advanced by now (or perhaps even
`
`completed). Instead, Petitioner has continued to multiply the burden of these
`
`proceedings with countless rounds of additional briefing and attempted new issues.
`
`D.
`Petitioner’s Rehearing Request Is Still Procedurally Improper
`Finally, the Proppant and Adello cases are procedurally inapposite, as neither
`
`was decided under the stringent standard for rehearing requests. As Patent Owner
`
`previously noted in its response to the rehearing requests, Petitioner was required to
`
`specifically set forth the “matters the party believes the Board misapprehended or
`
`overlooked,” as well as “the place where each [such] matter was previously
`
`addressed in a motion, an opposition, or a reply.” 37 C.F.R. § 42.71(d). Petitioner
`
`simply failed to comply with this rule. Petitioner cannot fairly be allowed a do-over
`
`with new RPI arguments after losing on the arguments it originally chose to present.
`
`10681394
`
`
`
`- 7 -
`
`
`
`
`
`
`Date: May 16, 2019
`
`
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`Respectfully submitted,
`
`
`
`
`/s/ Ben J. Yorks
`Ben J. Yorks (Reg. No. 33,609)
`Babak Redjaian (Reg. No. 42,096)
`David McPhie (Reg. No. 56,412)
`IRELL & MANELLA LLP
`1800 Avenue of the Stars, Suite 900
`Los Angeles, CA 90067
`Tel: (310) 277-1010
`Fax: (310) 203-7199
`Email: FraunhoferIPRs@irell.com
`
`
`10681394
`
`
`
`- 8 -
`
`
`
`
`
`
`
`IPR2018-00681 (Patent 7,061,997 B1)
`
`CERTIFICATE OF SERVICE
`
`Pursuant to 37 C.F.R. § 42.6, the undersigned certifies that on May 16, 2019,
`
`a copy of the foregoing document PATENT OWNER’S RESPONSE TO
`
`PETITIONER’S SUPPLEMENTAL BRIEF REGARDING REQUEST FOR
`
`REHEARING and EXHIBITS 2024-2030 was served, by electronic mail, as
`
`agreed to by the parties, upon the following:
`
`KRAMER LEVIN NAFTALIS & FRANKEL LLP
`
`Jonathan Caplan (Reg. No. 38,094)
`JCaplan@kramerlevin.com
`
`Mark Baghdassarian (pro hac vice)
`mbaghdassarian@kramelevin.com
`
`Shannon Hedvat (Reg. No. 68,417)
`shedvat@kramerlevin.com
`
`Jeffrey H. Price (Reg. No. 69,141)
`jprice@kramerlevin.com
`
`
`
`
`
`
` /s/ Susan Langworthy
`By:
` Susan Langworthy
`
`
`
`10681394
`
`
`
`
`