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`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.
`___________________
`
`Case IPR2018-00681
`Patent No. 7,061,997
`___________________
`
`
`PATENT OWNER’S SUR-REPLY
`TO PETITIONER’S REPLY TO PATENT OWNER’S
`PRELIMINARY RESPONSE
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`
`
`
`
`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
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`10541315
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`UPDATED EXHIBIT LIST
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`Case IPR2018-00681
`Patent 7,061,997
`
`Fraunhofer Ex.
`2001
`Fraunhofer Ex.
`2002
`Fraunhofer Ex.
`2003
`Fraunhofer Ex.
`2004
`Fraunhofer Ex.
`2005
`Fraunhofer Ex.
`2006
`Fraunhofer Ex.
`2007
`Fraunhofer Ex.
`2008
`Fraunhofer Ex.
`2009
`
`Fraunhofer Ex.
`2010
`Fraunhofer Ex.
`2011
`Fraunhofer Ex.
`2012
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`Fraunhofer Ex.
`2013
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`Fraunhofer Ex.
`2014
`Fraunhofer Ex.
`2015
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`Sirius XM Holdings Inc., SEC Form 10-K for the year
`ended December 31, 2017, Filed January 31, 2018
`Sirius XM Holdings Inc., SEC Form 8-K, November 14,
`2013
`Pandora Media, Inc., SEC Schedule 13D, September 22,
`2017
`Pandora Media, Inc., SEC Joint Filing Agreement (Exhibit
`A) to Schedule 13D, September 22, 2017
`Sirius XM Holdings Inc., SEC Form 8-K, January 10, 2018
`
`Sirius XM Holdings Inc., Exhibit 10.1 to SEC Form 8-K,
`January 10, 2018 (Meyer Employment Agreement)
`Sirius XM Holdings Inc., SEC Form 8-K, January 14, 2014
`
`Sirius XM Holdings Inc., Exhibit 10.1 to SEC Form 8-K,
`January 14, 2014 (Donnelly Employment Agreement)
`Executed Summons to Sirius XM Radio Inc., attaching
`Complaint for Patent Infringement, Dated February 22,
`2017
`Fruanhofer Complaint for Patent Infringement against
`Defendant Sirius XM Radio Inc., Filed February 22, 2017
`Sirius XM Holdings Inc., SEC Form 10-K for the year
`ended December 31, 2016, Filed February 2, 2017
`Defendant Sirius XM Radio Inc.’s Corporate Disclosure
`Statement Pursuant to Rule 7.1 of the Federal Rules of
`Civil Procedure, April 25, 2017
`Erik Knutson v. Sirius XM Radio Inc., No. 12-cv-0418-
`AJB-NLS (S.D. Cal.), First Amended Class Action
`Complaint for Damages
`Francis W. Hooker v. Sirius XM Radio Inc., No. 4:13-cv-3
`(E.D. Va.), Class Complaint
`Yefim Elikman v. Sirius XM Radio Inc. and Career
`Horizons, Inc., No. 1:15-cv-02093 (N.D. Ill.), Second
`Amended Class Action Complaint
`- i -
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`Case IPR2018-00681
`Patent 7,061,997
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`Anthony Parker v. Sirius XM Radio Inc., No. 8:15-cv-
`01710-JSM-EAJ (M.D. Fla), Class Action Complaint
`Francis W. Hooker et al. v. Sirius XM Radio Inc., No. 4:13-
`cv-3 (E.D. Va.), Final Order Approving Settlement and
`Certifying the Settlement Class, December 22, 2016
`File History of U.S. 7,061,997 (excerpted)
`
`Corporate Overview for Sirius XM Satellite Radio,
`retrieved from https://www.siriusxm.com/corporate?
`intcmp=GN_FOOTER_NEW_AboutSiriusXM_Corp on
`June 29, 2018
`SIRI – Sirius XM Holdings Inc. Company Profile –
`CNNMoney.com, retrieved from https://money.cnn.com/
`quote/profile/profile.html?symb=SIRI on July 2, 2018
`Sirius XM Holdings Inc. (SIRI) Company Profile, Reuters,
`retrieved from https://www.reuters.com/finance/
`stocks/company-profile/SIRI.OQ on July 5, 2018
`LinkedIn Profile for Sirius XM Holdings Inc., retrieved
`from https://www.linkedin.com/company/sirius-xm-radio-
`inc./ on July 5, 2018
`Written Statement of David J. Frear, Chief Financial
`Officer, Sirius XM Holdings Inc. Before the U.S. House of
`Representatives Committee on the Judiciary Subcommittee
`on Courts, Intellectual Property, and the Internet, Hearing
`on Music Licensing Under Title 17, June 25, 2014
`
`Fraunhofer Ex.
`2016
`Fraunhofer Ex.
`2017
`
`Fraunhofer Ex.
`2018
`Fraunhofer Ex.
`2019
`
`Fraunhofer Ex.
`2020
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`Fraunhofer Ex.
`2021
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`Fraunhofer Ex.
`2022
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`Fraunhofer Ex.
`2023
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`I.
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`Case IPR2018-00681
`Patent No. 7,061,997
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`SIRIUS XM FAILED TO PROPERLY IDENTIFY ALL RPIS
`A petitioner must satisfy its burden “to establish that it has … identif[ied] all
`
`the [RPIs].” Galderma S.A. v. Allergan Industrie, SAS, IPR2014-01422, Paper No.
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`14, at 5 (Mar. 5, 2015). “[U]ncorroborated testimonial evidence” is insufficient to
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`satisfy this burden, in part because a petitioner “is far more likely to be in
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`possession of … relevant evidence than is a patent owner.” Radware, Inc. v. F5
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`Networks, Inc., IPR2017-01185, Paper No. 9, at 17-19 (Oct. 11, 2017).
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`The Petitioner has failed to satisfy this burden of persuasion. Despite its
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`reply, Petitioner fails to present any meaningful evidence establishing that it is
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`sufficiently distinct from SXM Holdings and Liberty that it can truly be deemed
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`the only party capable of controlling these proceedings. Instead, Petitioner relies
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`entirely on the uncorroborated testimony of its (and SXM Holdings’) general
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`counsel, which is plainly inadequate. See id. at 18-19 (RPI burden not met by party
`
`testimony without documentary support); Atlanta Gas Light Co. v. Bennett
`
`Regulator Guards, Inc., IPR2013-00453, Paper No. 88, at 11 (Jan. 6, 2015) (same);
`
`Aceto Corp. v. Gowan Co., IPR2015-01016, Paper No. 15, at 9-11 (Oct. 2, 2015).
`
`In this case, Petitioner asserts but fails to prove that SXM Holdings is
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`merely a “non-operational holding company.” Reply at 1. To the contrary, there is
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`ample evidence that SXM Holdings is so “intertwined” with Petitioner that the two
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`“effectively operate as a single entity,” which the Board has consistently found
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`reflects “an actual measure of control or opportunity to control the filing of and
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`Case IPR2018-00681
`Patent No. 7,061,997
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`participation in an IPR.” Zerto, IPR2014-01254, Paper No. 35, at 14; Radware,
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`IPR2017-01185, Paper No. 9, at 7; Galderma, IPR2014-01422, Paper No. 14, at 5;
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`Zoll Lifecor, IPR2013-00606, Paper No. 13, at 10, 15 (parent and subsidiary both
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`RPIs where they “repeatedly held themselves out … as a single entity”); Reflectix,
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`Inc. v. Promethean Tech, IPR2015-00039, Paper No. 18, at 11-12 (Apr. 24, 2015).
`
`For example, SXM Holdings submits SEC filings describing its satellite
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`radio business, conflating parent and subsidiary as “we,” and indicating that SXM
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`Holdings conducts real-world operations like “transmit[ting] music,” “acquir[ing]
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`subscribers through marketing,” and entering “agreements” with automakers. Ex.
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`2001-4. SXM Holdings and Petitioner are jointly involved in legal matters,
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`including lawsuits that name only Petitioner but for which SXM Holdings
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`participates in settlement negotiations and makes payments. Ex. 2011-19. SXM
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`Holdings and Petitioner also share the exact same nine-person top-level executive
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`team, including the same CEO and President. See Ex. 2004-2 to -3. The Board
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`has emphasized that the “presence at the helm” of a single individual as “CEO of
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`both parent and subsidiary,” “strongly implies an involved and controlling parent
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`corporation representing the unified interests of itself and Petitioner.” Galderma,
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`IPR2014-01422, Paper No. 14, at 12. Importantly, several of the high-level
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`positions at SXM Holdings involve specific operational responsibilities, such as
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`“Operations, Product and Connected Vehicle,” “Sales and Automotive,”
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`Case IPR2018-00681
`Patent No. 7,061,997
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`“Emerging Business,” and “Marketing.” Ex. 2004-3; POPR at 7. None of this
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`would be necessary if SXM Holdings were truly a “non-operational holding
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`company.” Rather, by its own admission, all operations of SXM Holdings are
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`intermingled with Petitioner—they are effectively a single entity. Ex. 2001-4.
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`The available evidence also fails to support Petitioner’s conclusory claims
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`about corporate separation. Ex. 1024, ¶¶ 2-15. The Sirius XM website itself refers
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`to “Sirius XM Holdings,” which it describes as “the largest radio company
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`[with] more than 32.7 million subscribers.” Ex. 2019. Public filings and
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`websites recognize SXM Holdings has customer-oriented services and capabilities
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`implicated by the asserted patents (e.g., FCC licenses, satellites, repeaters). Exs.
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`2001-6, 2001-17, 2020, 2021, and 2022. SXM Holdings has even offered
`
`testimony to Congress on licensing issues, holding itself out as a fully operational
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`company with millions of customers and thousands of employees. Ex. 2023-1.
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`Petitioner’s reliance on Daifuku is inapposite. In Daifuku, the petitioner
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`properly identified both itself and a corporate parent as RPIs (not the case here);
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`the only question was whether an additional intermediate company should have
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`been named as well. Daifuku, IPR2015-01538, Paper No. 11, at 5. Because there
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`was no evidence that this intermediate company shared high-ranking officers with
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`the other petitioners, the Board in Daifuku distinguished cases such as Galderma
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`where an additional RPI was found. Id. at 12. Unlike Daifuku, the companies in
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`Case IPR2018-00681
`Patent No. 7,061,997
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`this case share exactly the same nine highest level executives, and evidence
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`strongly shows SXM Holdings holds itself out as essentially the same as Petitioner.
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`Even Daifuku distinguishes a situation where a party has “control of litigation
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`brought against the [petitioner]” (id. at 11)—exactly the situation here.
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`Petitioner’s failure to disclose all RPIs is not curable. Petitioner has not
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`moved for correction, effectively admitting that the omission was intentional as the
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`undisclosed entities would avoid any “§ 315(e) estoppel concerns.” Reply at 4. In
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`other words, Petitioner appears to have deliberately and improperly withheld the
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`RPIs so that those entities could file subsequent petitions as needed. Radware, Inc.,
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`IPR2017-01185, Paper No. 9, at 17 (disclosure requirement protects patent owners
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`“from harassment via successive petition[s] by the same or related parties”).
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`Moreover, unlike Petitioner’s cited cases (Reply at 3-4), this is not a situation of an
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`honest “mistake” or a petition that could simply be refiled because the petitioner
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`was diligent in filing well in advance of the one-year bar date. The Board does not
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`hesitate to deny amendment in circumstances such as these. See, e.g., Reflectix,
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`IPR2015-00039, Paper No. 18, at 13-18 (denying request to correct RPI
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`identification after statutory bar date); Corning Optical Comm. RF, LLC v. PPC
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`Broadband, Inc., IPR2014-00440, Paper No. 70, at 10-13 (Dec. 9, 2015) (same);
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`Galderma, IPR2014-01422, Paper No. 14, at 13.
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`II.
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`Case IPR2018-00681
`Patent No. 7,061,997
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`PETITIONER FAILS TO OVERCOME STRONG INTRINSIC
`EVIDENCE THAT PREAMBLE LANGUAGE IS LIMITING
`Petitioner mistakenly argues that there is no dispute that the “frequency
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`axis” preamble phrase “has no effect on and is unrelated to the body of the claim.”
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`Reply at 4. But as shown in the POPR, the intrinsic evidence strongly demonstrates
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`this preamble phrase is an integral part of the ’997 patent invention and is therefore
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`limiting. POPR at 33-37. Petitioner ignores this and (incorrectly) points to its
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`conclusory expert testimony as the “only evidence” bearing on this issue. Reply at
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`5. This approach would turn the law of claim construction on its head, as the
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`Federal Circuit has held “it is improper to rely on extrinsic evidence” when
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`construction can be performed from “an analysis of the intrinsic evidence alone.”
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`Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1583-85 (Fed. Cir. 1996).
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`Petitioner also disregards PO’s reliance on the preamble to distinguish prior
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`art during prosecution because the claims were not allowed until other amendments
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`were made. Reply at 5. But an applicant’s statement “made to overcome [a] prior
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`rejection” is still binding even if prosecution later “shift[s] to a different focus.”
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`Springs Window v. Novo Indus., 323 F. 3d 989, 995 (Fed. Cir. 2003); JobDiva, Inc.
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`v. Monster, Inc., 2014 WL 5034674, *11 (S.D.N.Y. 2014). This also explains why
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`Arthrex is inapposite (see Reply at 5), as that applicant added the preamble
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`limitation after allowance, and did not attempt to rely on it to overcome prior art.
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`Date: July 6, 2018
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`Case IPR2018-00681
`Patent No. 7,061,997
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`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
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`CERTIFICATE OF SERVICE
`
`Pursuant to 37 C.F.R. § 42.6, the undersigned certifies that on July 6, 2018,
`
`a copy of the foregoing document PATENT OWNER’S SUR-REPLY TO
`
`PETITIONER’S REPLY TO PATENT OWNER’S PRELIMINARY
`
`RESPONSE and EXHIBITS 2019-2023 were 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
`
`Jeffrey H. Price (Reg. 69,141)
`jprice@kramerlevin.com
`
`
`
`
`
`
` /s/ Susan Langworthy
`By:
` Susan Langworthy
`
`
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`10541315
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