Paper No. 19
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`MICROSOFT CORPORATION
`
`Petitioner,
`
`v.
`
`SAINT REGIS MOHAWK TRIBE,
`
`Patent Owner.
`
`IPR2018-01607
`Patent 7,620,800 B2
`
`PETITIONER MICROSOFT CORPORATION’S REPLY TO PATENT
`OWNER’S PRELIMINARY RESPONSE TO MICROSOFT’S PETITION
`FOR INTER PARTES REVIEW OF U.S . PATENT NO. 7,620,800
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`MICROSOFT CORPORATION
`
`Petitioner,
`
`v.
`
`SAINT REGIS MOHAWK TRIBE,
`
`Patent Owner.
`
`IPR2018-01607
`Patent 7,620,800 B2
`
`PETITIONER MICROSOFT CORPORATION’S REPLY TO PATENT
`OWNER’S PRELIMINARY RESPONSE TO MICROSOFT’S PETITION
`FOR INTER PARTES REVIEW OF U.S . PATENT NO. 7,620,800
`
`
`
`IPR2018-01607
`U.S. Patent 7,620,800
`
`
`I.
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`INTRODUCTION
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`Reply to Patent Owner’s Preliminary Response
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`
`
`In its Preliminary Response, SRMT made the unique assertion that the
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`Board should exercise its discretion under 35 U.S.C. § 314(a) to deny institution of
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`Microsoft’s IPRs due to the market activities of SMRT’s non-exclusive licensee,
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`SRC. Because SRC’s activities cannot favor the exercise of discretion under
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`§ 314(a) to deny institution, this argument should be rejected and the Board should
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`institute on all of Microsoft’s petitions.
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`II. FACTUAL BACKGROUND
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`Between August 24, 2018 and September 6, 2018, Microsoft filed the IPR
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`petitions that are the subject of these proceedings. Between January 15, 2019 and
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`February 6, 2019, Patent Owner Saint Regis Mohawk Tribe (“SRMT”) filed its
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`preliminary responses.
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`Among other things, SRMT argued that the Board should exercise its
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`discretion under 35 U.S.C. § 314(a) to deny institution due to the activities of SRC,
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`allegedly a non-exclusive licensee of the challenged patents. SRMT contends that
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`SRC is “a sole-source supplier” for the U.S. Army’s TRACER program, and
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`therefore it is in the best interests of the United States to “keep companies like
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`SRC/DirectStream healthy and unencumbered so they focus on new technology
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`development.” Prelim. Resp. at 7-8.
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`Microsoft requested authorization to reply to this argument and, after a
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`1
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`IPR2018-01607
`U.S. Patent 7,620,800
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`February 15, 2019 conference call, the Board granted Microsoft permission to file
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`Reply to Patent Owner’s Preliminary Response
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`
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`the present reply.
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`III. ARGUMENT
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`The Board Should Not Exercise Its Discretion to Deny Institution
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`Under 35 U.S.C. § 314(a), the Board has “discretion not to institute” an IPR
`
`proceeding. Arista Networks, Inc. v. Cisco Sys., Inc., 908 F.3d 792 (Fed. Cir.
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`2018); see also Cuozzo Speed Techs., LLC v. Lee, 579 U.S. __, 136 S. Ct. 2131,
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`2140 (2016). With the goal of ensuring the “efficiency of the inter partes review
`
`process and fundamental fairness of the process for all parties,” the exercise of this
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`discretion has typically been reserved for cases involving unjustified serial filings
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`of IPR petitions against the same patent. See General Plastic Indus. Co., Ltd. v.
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`Canon Kabushiki Kaisha, Case IPR2016–01357, Paper 19 at 9-10 (PTAB Sept. 6,
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`2017) (precedential). This discretion has also infrequently been used to deny
`
`institution where parallel judicial proceedings (either at the PTAB, district courts,
`
`or ITC) are so far advanced that an independent ruling on the patent’s validity
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`would likely occur before the conclusion of the IPR. See Trial Practice Guide
`
`Update (August 2018) at 10; NetApp, Inc. v. Realtime Data LLC, Case IPR2017-
`
`01195, slip op. at 12–13 (PTAB Oct. 12, 2017) (Paper 9).
`
`None of those considerations apply here. Microsoft has never before filed
`
`IPR petitions against the patents at issue in these proceedings, which were filed
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`2
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`IPR2018-01607
`U.S. Patent 7,620,800
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`only after SRMT sued Microsoft on the patents. Microsoft was therefore simply
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`Reply to Patent Owner’s Preliminary Response
`
`
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`taking advantage of proceedings that Congress created specifically as an additional
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`avenue for challenging the validity of issued patent claims. This case thus presents
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`a fact situation nearly identical to many hundreds of IPR proceedings the Board
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`has instituted in the six years since passage of the America Invents Act. Finally,
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`the district court has stayed SRMT’s case against Microsoft, which was at the time
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`many months away from trial, in favor of these IPR proceedings. See Ex. 2020.
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`Notably, SRMT has provided no cases in which discretion under § 314(a)
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`has been invoked to deny institution of an IPR based on a desire to protect the
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`market position of the Patent Owner’s non-exclusive licensee, or on any similar
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`interest. That is not surprising, since use of the Board’s discretion under § 314(a)
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`to deny institution in such a case would be inappropriate.
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`First, the Board’s decision under that statute is by its terms focused on the
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`merits of the patentability challenge contained in the petition. See 35 U.S.C. §
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`314(a) (linking institution to “a reasonable likelihood that the petitioner would
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`prevail with respect to at least 1 of the claims challenged in the petition.”) And, in
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`the past, the Board’s exercise of discretion under that statute has focused on the
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`efficient administration and efficiency of IPR proceedings. NetApp, Inc., Case
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`IPR2017-01195, slip op. at 12–13 (PTAB Oct. 12, 2017) (Paper 9); Intel Corp. v.
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`Qualcomm, Inc., IPR2018-01153, slip op. at 13–14 (PTAB Jan. 16, 2019) (Paper
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`3
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`IPR2018-01607
`U.S. Patent 7,620,800
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`Reply to Patent Owner’s Preliminary Response
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`9). The interests of one company in one government contract, which company has
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`no relationship to these proceedings beyond a non-exclusive license to the patents,
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`hardly qualifies as that type of consideration.
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`Second, SRMT has failed to demonstrate that SRC has anything to do with
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`the claims challenged here. It provides no information, for example, to
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`demonstrate that SRC actually sells a product practicing any of the challenged
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`claims, or why a finding of unpatentability might interfere with SRC’s ability to
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`make or sell such products. Nor does it provide any evidence to suggest that the
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`claimed inventions have anything to do with “national security interests,” nor even
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`identifies what such interests are supposedly at stake. SRMT also provides no
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`evidence that the United States, or Lockheed, would be unable to obtain
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`replacement products from another source should SRC stumble in the market.
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`Indeed, from SRMT’s submissions it appears that the real interest the Board
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`is being asked to protect by denying institution is that because, if it does not, SRC
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`may choose to “spend time or money” on these proceedings. See Prelim. Resp. at
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`8; Ex. 2032 at ¶23. That someone may be required to spend time or money to
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`participate in an IPR cannot, of course, be a proper basis for the Board’s
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`discretion, as it would be applicable in every case. Relying on that fact to deny
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`institution would therefore defeat the entire purpose of these proceedings.
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`And that leads to the third reason this argument should be rejected. Even if
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`4
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`IPR2018-01607
`U.S. Patent 7,620,800
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`one were to assume that the patent claims at issue here cover technology that is
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`Reply to Patent Owner’s Preliminary Response
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`
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`useful to the United States government, a finding that those claims are not
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`patentable would be squarely in the government’s interest, as it would remove any
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`monopoly pricing ability provided by SRMT’s invalid patents. The government
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`would thus be able to source its technology from multiple sources, or at least have
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`the option to, and pay no more than the market price, a result clearly in the interest
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`of the United States government, and all Americans.
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`CONCLUSION
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`
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`Accordingly, for the reasons set forth above, SRMT’s argument that the
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`Board should exercise its discretion to deny institution under § 314(a) should be
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`rejected.
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`
`Dated: February 28, 2019
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`
`
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`Respectfully Submitted,
`
`
`
`/Joseph A. Micallef/
`Joseph A. Micallef
`Reg. No. 39,772
`SIDLEY AUSTIN LLP
`1501 K Street, N.W.
`Washington, DC 20005
`jmicallef@sidley.com
`
`
`
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`5
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`IPR2018-01607
`U.S. Patent 7,620,800
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`Reply to Patent Owner’s Preliminary Response
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`CERTIFICATE OF SERVICE
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`
`
`
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`I hereby certify that on February 28, 2019, a copy of the foregoing document
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`has been served via e-mail on the following:
`
`Christopher Evans (cevans@shorechan.com)
`Alfonso Chan (achan@shorechan.com)
`Joseph DePumpo (jdepumpo@shorechan.com)
`Shore Chan DePumpo LLP
`
`
`Dated: February 28, 2019
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`Respectfully Submitted,
`
`
`
`
`
`
`
`
`
`
`
`/Joseph A. Micallef/
`Joseph A. Micallef
`Reg. No. 39,772
`SIDLEY AUSTIN LLP
`1501 K Street, N.W.
`Washington, DC 20005
`jmicallef@sidley.com
`Attorney for Petitioner
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`6
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