Case No. IPR2019-00500
`Patent No. 9,737,154
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
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`AMERICAN NATIONAL MANUFACTURING INC.,
`Petitioner,
`
`v.
`
`SLEEP NUMBER CORPORATION
`f/k/a SELECT COMFORT CORPORATION,
`Patent Owner.
`____________
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`Case No. IPR2019-00500
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`Patent No. 9,737,154
`____________
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`
`
`PETITIONER’S REQUEST FOR REHEARING
`OF FINAL WRITTEN DECISION UNDER 37 C.F.R. § 42.71(d)
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`WA 15373722.2
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`Patent No. 9,737,154
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
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`AMERICAN NATIONAL MANUFACTURING INC.,
`Petitioner,
`
`v.
`
`SLEEP NUMBER CORPORATION
`f/k/a SELECT COMFORT CORPORATION,
`Patent Owner.
`____________
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`Case No. IPR2019-00500
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`Patent No. 9,737,154
`____________
`
`
`
`
`PETITIONER’S REQUEST FOR REHEARING
`OF FINAL WRITTEN DECISION UNDER 37 C.F.R. § 42.71(d)
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`Case No. IPR2019-00500
`Patent No. 9,737,154
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`TABLE OF CONTENTS
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`INTRODUCTION ...................................................................................... 1
`I.
`II. LEGAL STANDARD ................................................................................. 2
`III. ARGUMENT .............................................................................................. 3
`A. PTAB is not Authorized to make express or implied Statements about
`Contested Infringement Matters ..................................................................... 3
`B. The Written Passage is without Support in the Record ........................... 6
`C. The Board’s Statement Also Ignores its own Rules Regarding
`Incorporation by Reference ............................................................................. 7
`D. To the Extent the Board’s Decision is a Statement on Infringement, it is
`in Violation of Petitioner’s Constitutional Rights ........................................... 9
`IV. CONCLUSION ..........................................................................................10
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`Patent No. 9,737,154
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`TABLE OF AUTHORITIES
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` Page(s)
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`Federal Cases
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`Arthrex, Inc. v. Smith & Nephew, Inc.,
`880 F.3d 1345 (Fed. Cir. 2018) .......................................................................... 3
`
`Seadrill Amer. Inc. v. Transocean Offshore Deepwater Drilling, Inc.,
`IPR2015-01929, Paper 31 .................................................................................. 3
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`Star Fruits S.N.C. v. U.S.,
`393 F.3d 1277 (Fed. Cir. 2005) .......................................................................... 2
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`Federal Statutes
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`5 U.S.C. § 706 ................................................................................................ 3, 5, 9
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`35 U.S.C. § 311 .................................................................................................. 1, 3
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`Regulations
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`37 C.F.R. § 42.71(c) ............................................................................................... 2
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`37 C.F.R. § 42.71(d) ............................................................................................... 2
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`37 C.F.R. § 42.6(a)(3) ......................................................................................... 7, 8
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`Constitutional Provisions
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`U.S. Const. Amendment VII ................................................................................... 9
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`Other Authorities
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`U.S. Patent No. 8,769,747 B2 ......................................................................... 1, 5, 9
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`Case No. IPR2019-00500
`Patent No. 9,737,154
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`I.
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`
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`INTRODUCTION
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`On July 23, 2020, the Patent and Trademark Board (“PTAB” or “the Board”)
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`handed-down its final written decision in the above captioned matter finding various
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`claims of U.S. Patent No. 9,737,154 B2 (the “154 Patent”) unpatentable, patentable,
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`and patentable as amended. On page 92 of the Final Written Decision (“FWD”) the
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`Board writes:
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`ANM does not refute the testimonies of Dr. Abraham and Dr.
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`Edwards that these versions of the source code fall within the claims
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`of ‘154 patent such that ANM’s products using these versions infringe
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`the claims (Ex. 2027 ¶ 29; Ex. 2029 ¶ 41)
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`In this passage, which in fairness may be dicta, the Board appears to make a
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`statement about patent infringement, a matter outside the Board’s statutory
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`jurisdiction under 35 U.S.C. §311. Beyond the issue of statutory authority, the
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`statement is not in accord with either the facts presented in the record or the posture
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`and conduct of this proceeding. It is not accurate to imply that AMN did “not refute”
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`or otherwise conceded Dr. Abraham’s and Dr. Edwards’ testimony—AMN
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`contested the weight and admissibility of both expert opinions. Finally, there is no
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`evidentiary basis to state that Dr. Abraham or Dr. Edward communicated any
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`opinion about infringement in their written testimony, as both expressly disclaimed
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`any opinions about infringement, stating that they were only speaking to copying
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`and nexus.
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`The Board should modify the opinion to either strike this sentence or modify
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`it so that it does not prejudice Petitioner’s statutory and constitutional rights to have
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`any issue of infringement heard before a jury in the United States district court. 1 In
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`the alternative, the Board should grant rehearing for Petitioner to fully present its
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`positions on non-infringement.
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`II. LEGAL STANDARD
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`The rule that governs the legal standard for a request for rehearing is 37 C.F.R.
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`§ 42.71(d), which provides that “[t]he burden of showing a decision should be
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`modified lies with the party challenging the decision.” The Board evaluates a request
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`for rehearing under an abuse of discretion standard. 37 C.F.R. § 42.71(c). The
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`Federal Circuit has made clear that:
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`“[a]n abuse of discretion occurs where the decision is based on
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`an erroneous interpretation of the law, on factual findings that
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`are not supported by substantial evidence, or represents an
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`unreasonable judgment in weighing relevant factors.”
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`Star Fruits S.N.C. v. U.S., 393 F.3d 1277, 1281 (Fed. Cir. 2005).
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`1 By enumerating these issues for rehearing, Petitioner does not concede or waive any ground that it may have for
`appeal beyond that outlined in this request for rehearing.
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`Additionally, PTAB decisions, like all federal agency actions, are subject to
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`independent review under Administrative Procedures Act. Arthrex, Inc. v. Smith &
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`Nephew, Inc., 880 F.3d 1345, 1348, 1348 n.1 (Fed. Cir. 2018). Under the APA, an
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`agency action is unlawful if it “in excess of statutory jurisdiction, authority, or
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`limitations, or short of statutory right.” 5 U.S.C. §706(2)(C). This request was filed
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`on the first business day occurring 30 days of the Board’s final written decision.
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`III.
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` ARGUMENT
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`A.
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`PTAB is not Authorized to make express or implied Statements
`about Contested Infringement Matters
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`Congress set forth the jurisdiction of PTAB with respect to Inter Partes
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`Review in 35 U.S.C. §311, finding that the only matters that may be considered by
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`PTAB are invalidity “ground[s] that could be raised under section 102 or 103 and
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`only on the basis of prior art consisting of patents or printed publications.” As such,
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`the Board has recognized that it has no statutory authority to resolve matters of
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`infringement as part of the IPR process. Id.; Seadrill Amer. Inc. v. Transocean
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`Offshore Deepwater Drilling, Inc., IPR2015-01929, Paper 31 at 5 (denying
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`discovery noting “the scope of [IPR] does not extend to determinations of
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`infringement.”). To the extent that the statement talks in terms of infringement, it is
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`outside the statutory authority of the Board to render and thus violates the
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`Administrative Procedures Act. 5 U.S.C. § 706.
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`Additionally, the Board should recognize the fundamental procedural
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`unfairness of the statement given the Board’s other rulings. In its order regarding
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`the first round of discovery sought by Patent Owner (“PO”), the Board advised the
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`parties that:
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`With respect to the second Garmin factor, litigation positions, we do
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`not determine Patent Owner to be seeking any admission of
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`infringement or any other litigation position. Petitioner is not, at least
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`at the moment, being asked to compare product features to claims but
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`rather simply list, and identify by SKU or product name, those products
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`that include the allegedly infringing source code, and those that do not.
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`Paper 34, at 10.
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`Later in disallowing additional discovery, the Board realized that PO may be
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`attempting to have the Board surreptiously weigh on infringement issues writing:
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`Patent Owner’s Requests would broaden the scope of the instant
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`proceedings significantly
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`into
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`infringement
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`issues, which are
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`inappropriate in this proceeding, and also delay the trial schedule. The
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`discovery could result in a trial within a trial on the issue of
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`infringement, with associated evidence, arguments, and (potentially)
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`declarants from Patent Owner, and then the same from Petitioner in
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`response. This is contrary to the goal of inter partes review to be an
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`efficient, streamlined alternative to litigation, completed within one
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`year of institution. See 35 U.S.C. § 316 (a)(11).
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`Paper 67, at 12. (emphasis added)
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`The Board’s guidance in its previous order could only be interpreted as a
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`cautionary prohibition, advising Petitioner not to file counter-declarants on
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`infringement and engaging in the “trial within a trial.” But after expressing this
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`sentiment, the Board’s final written decision appears to speak to infringement, by
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`relying on Petitioner’s silence as to the testimony of Dr. Abraham and Dr. Edwards
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`on infringement to find persuasively that the ANM products fall within the clams of
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`the ‘154 Patent, thus punishing Petitioner for following the Board’s direction. Paper
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`105 at 92. Petitioner forwent submission of counter declarants, because the Board
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`had made it clear that doing so would be in contravention of the “efficient,
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`streamlined alternative to litigation, completed within one year of institution”
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`envisioned by Congress. Paper 67, at 12. This abrupt change does not comport with
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`fundamental procedural fairness and the APA as it is “without observance of
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`procedure required by law.” 5 U.S.C. §706.
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`B.
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`The Written Passage is without Support in the Record
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`Putting aside the issues of statutory jurisdiction and fairness, the statement
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`about “infringement” is also without any factual support in the record. PO, in order
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`to smuggle in their attorney infringement contentions into this matter, were careful
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`with their words. PO stated repeatedly and affirmatively that they were not seeking
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`rulings or discovery on infringement. (Paper 18 at 7). Both Dr. Abraham and Dr.
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`Edwards further expressly stated that they did “do not provide any opinions on
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`infringement in this declaration[s].” Ex. 2029, ¶21; Ex. 2027, ¶16. While these
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`might be word games, they are nonetheless the record as made by Patent Owner and
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`the record before the Board. The Board’s statement regarding infringement has no
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`factual support because patent owner and its declarants, by their own statements, did
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`not submit any information regarding “infringement.”
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`Second, the other part of the statement, that Petitioner did not contest Dr.
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`Abraham and Dr. Edwards testimony is not within the factual record. Petitioner
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`pointed out contradictions and weakness in their testimony, and moved to exclude
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`their testimony as being unreliable. Paper 71 at 22-23; Paper 94 at 1-6. Further, in
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`at least one instance in live hearing, lead counsel informed the Board that
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`infringement is a hotly contested issue in the district court.
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`While the Board may feel that Petitioners opposition was not sufficient to
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`overcome the weight the Board elected to accord to their testimony, the Board’s
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`current statement implies that Petitioner surrendered the issue of infringement
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`without any protest. That is not true on this record.
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`C. The Board’s Statement Also Ignores its own Rules Regarding
`Incorporation by Reference
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`An abuse of discretion may be found if the Board does not consistently follow
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`its own procedural rules. As pointed out in their motion to exclude, Patent Owner
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`air dropped 300+ pages of infringement contents and then incorporated them by
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`reference in a single line in their Response. Paper 94 at 15. The Board has strict rules
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`about incorporating arguments by reference under 37 CFR § 42.6(a)(3). But that is
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`what the Board allowed Patent Owner to do. The Board’s decision, in contravention
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`of its own rules, allowed Patent Owner to incorporate pending attorney infringement
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`contentions with the now-communicated expectation that Petitioner, whose petition
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`was instituted prior to being required to circulate its non-infringement contentions
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`in the underlying District Court action, would refute each and every argument in that
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`contention chart.
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`As the Board can appreciate, PO’s insistence on conducting a secondary
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`indicia trial solely on Petitioner’s products caused this proceeding to have an
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`inordinate amount of declarants, depositions, papers, and motion practice. This
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`proceeding was not the “efficient, streamlined alternative to litigation” that Congress
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`envisioned creating Inter Partes Review. The genesis of that problem occurred
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`because the Board allowed Patent Owner to incorporate hundreds of pages of
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`infringement contentions by referenced.
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`The Board should understand exactly what precedent it is setting for future
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`IPRs by blessing Patent Owner’s tactics. By allowing pending infringement
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`contentions to be incorporated by reference, and forcing petitioners to respond to
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`presumably hundreds of pages of referenced attorney argument, the Board is not
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`maintaining “an alternative to litigation,” it is instead inviting a parallel track of de
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`facto infringement litigation in every IPR. Indeed, Patent Owner’s tactics trace a
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`path for every future patent owner to maintain the oppressive march of patent
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`infringement litigation even if, as was the case here, PTAB voices concerns about
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`patentability and a district court stays an infringement proceeding in deference to
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`PTAB.
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`The Board can avoid inviting that burden on itself or future petitioners by
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`simply enforcing its own rules about incorporation by reference. 37 CFR §
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`42.6(a)(3). The page limits and prohibitions on incorporation by reference force
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`both parties to select the best attorney arguments to occupy a limited space. But
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`allowing one party to drop 300 pages of attorney argument into a proceeding, allows
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`them to assert all of their infringement contentions (in this case Patent Owner alleged
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`that each and every product made by Petitioner infringed each and every claim of
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`their patents) and see what sticks. The Board should revisit their opinion, reject
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`Patent Owner’s incorporation by reference, and consistently apply 37 CFR §
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`42.6(a)(3). Doing so will ensure that the instant decision is not “arbitrary,
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`capricious, an abuse of discretion” or “without observance of procedure required by”
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`the Board’s own regulations in violation of the APA. 5 U.S.C. § 706.
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`D. To the Extent the Board’s Decision is a Statement on Infringement,
`it is in Violation of Petitioner’s Constitutional Rights
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`Finally, while it does not expressly appear that the Board determined
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`infringement, to the extent the identified passage makes a substantive statement of
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`infringement, it would also be “contrary to constitutional right, power, privilege, or
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`immunity” of Petitioner. 5 U.S.C. § 706. Petitioner has a constitutional and statutory
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`right to have infringement considered by a jury. U.S. Const. Amend. VII. Petitioner
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`does intend to have a jury determine infringement given its demand for a jury trial
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`in the underlying District Court Action. Indeed, what opportunity did the Board
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`have or allow for review of the actual accused products in a trial setting as afforded
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`before a jury.
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`Patent No. 9,737,154
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`IV. CONCLUSION
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`The Board should modify its Final Written Decision on page 92 to either strike
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`this sentence, modify it so that it neither speaks about infringement nor implies that
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`there was a concession of the issue by Petitioner, or grant a rehearing on the matter
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`of whether Petitioner’s product practice a specific claim of the ‘154 Patent along
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`with leave to file non-infringement contentions.
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`Date: August 24, 2020
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`Respectfully Submitted,
`SPENCER FANE LLP
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`By /s/Kyle L. Elliott .
`Kyle L. Elliott, Reg. No. 39,485
`Kevin S. Tuttle, Reg. No. 52,307
`Brian T. Bear (pro hac vice)
`Mark A. Thornhill (pending pro hac vice)
`Spencer Fane LLP
`1000 Walnut Street, Suite 1400
`Kansas City, Missouri 64106-2140
`Telephone: (816) 474-8100
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`Jaspal S. Hare, Reg. No. 66,988
`jhare@spencerfane.com
`Spencer Fane LLP
`5700 Granite Pkwy, Suite 650
`Plano, TX 75024
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`Case No. IPR2019-00500
`Patent No. 9,737,154
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`CERTIFICATE OF SERVICE
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`Pursuant to 37 C.F.R. § 42.6(e), the undersigned hereby certifies that a copy
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`of the foregoing PETITIONER’S REQUEST FOR REHEARING OF FINAL
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`WRITTEN DECISION UNDER 37 C.F.R. § 42.71(d) is served in its entirety on
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`August 24, 2020, by electronic mail, as authorized by Patent Owner’s Updated
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`Mandatory Notices, directed to the attorneys of record for Patent Owner at the
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`following correspondence address of record:
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` Kecia J. Reynolds
`kecia.reynolds@pillsburylaw.com
`PILLSBURY WINTHORP SHAW
`PITTMAN LLP
`1200 Seventeenth Street, NW
`Washington, DC 20036
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`
`
`
`Steven A. Moore
`stevemoore@zhonglun.com
`ZHONG LUN
`4322 Wilshire Boulevard, Suite 200
`Los Angeles, CA 90010
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`Luke Toft
`ltoft@foxrothschild.com
`Andrew Hansen (pro hac vice)
`ahansen@foxrothschild.com
`Archana Nath (pro hac vice)
`anath@foxrothschild.com
`Elizabeth A. Patton (pro hac vice)
`epatton@foxrothschild.com
`FOX ROTHSCHILD LLP
`222 South Ninth Street, Suite 2000
`Minneapolis, MN 55402
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`Case No. IPR2019-00500
`Patent No. 9,737,154
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`Date: August 24, 2020
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` /s/Kyle L. Elliott .
`Kyle L. Elliott (Reg. No. 39,485)
`.
`Attorney for Petitioner
`American National Manufacturing, Inc.
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