Paper No. 13
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`____________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________________
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`APPLE INC.,
`Petitioner,
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`v.
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`OMNI MEDSCI, INC.,
`Patent Owner.
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`____________________
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`Inter Partes Review No. IPR2019-00916
`__________________________________________________________________
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`Petitioner Apple Inc.’s Reply to Board Order (Paper No. 12)
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`____________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________________
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`APPLE INC.,
`Petitioner,
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`v.
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`OMNI MEDSCI, INC.,
`Patent Owner.
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`____________________
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`Inter Partes Review No. IPR2019-00916
`__________________________________________________________________
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`Petitioner Apple Inc.’s Reply to Board Order (Paper No. 12)
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`IPR2019-00916
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`Table of Contents
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`C.
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`E.
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`Introduction ................................................................................................ 1
`I.
`The Board’s Finding of Facts ..................................................................... 2
`II.
`III. Analysis of the First Set of Factors Identified by the Board..................... 2
`A.
`The merits of Petitioner’s challenge ................................................. 3
`B.
`Differences between the claims challenged in the District Court
`and the Petition ................................................................................. 3
`The time between the District Court’s expected findings on
`validity and any expected Board findings on patentability ............ 3
`D. Differences between the grounds raised in the District Court and
`the Petition, where a ground challenges the validity/patentability
`of an identified claim over identified prior art ................................ 4
`Any delay between the filing of Petitioner’s invalidity contentions
`in the District Court and the filing of the Petition. ......................... 4
`F. Whether, and to what extent, Petitioner had sufficient notice that
`the Petition could be denied under 35 U.S.C. § 314(a) .................... 6
`G. Whether, and to what extent, Petitioner’s District Court invalidity
`contentions are the same as or substantially similar to the
`unpatentability grounds raised in the Petition ................................ 6
`H. Whether Petitioner has filed any dispositive invalidity motions in
`the District Court, the grounds raised in any such motions, and
`Patent Owner’s response to the same .............................................. 6
`Any issue preclusive effect of the claims challenged in the cases
`before the Board ............................................................................... 7
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`I.
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`ii
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`IPR2019-00916
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`I.
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`Introduction
`In the Board’s Order (Paper No. 12) (the “Order”), the Board requested
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`Apple to submit a brief on whether the Board should exercise its discretion under
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`§ 314 to deny the petition because the trial in the Eastern District of Texas
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`involving the challenged patent would occur in February 2020 but and the Board’s
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`final written decision (“FWD”) would not issue until October 2020.
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`This issue is now moot because there will not be a trial in the Eastern
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`District of Texas in February 2020. On August 14, 2019, the Eastern District of
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`Texas granted Apple’s motion to transfer the district court case to the Northern
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`District of California.1 Ex. 1058, 9. As a result, all pending deadlines in the Texas
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`action were suspended and the February 2020 trial date was vacated. Ex. 1057.
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`The transfer of this case is still pending. Once it is docketed in the Northern
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`District, the assigned judge will hold a status conference and request the parties to
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`propose a schedule.2 These steps alone will likely take several months.
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`Consequently, while it is not possible to predict when a trial might occur, it will
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`not be in February of 2020.
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`1 Apple informed the Board of the transfer in Updated Mandatory Notices, filed on
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`August 23, 2019. Paper No. 11, 1.
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`2 A related action was transferred and assigned to Judge Gonzalez Rogers.
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`1
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`IPR2019-00916
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`The Board’s final written decision in this IPR thus will resolve issues that
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`otherwise would need to be litigated in district court. If the Board finds the claims
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`unpatentable, it may be dispositive or will serve to simplify the issues to be
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`addressed by a jury if any claims remain.
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`II. The Board’s Finding of Facts
`In addition to the 11 facts identified by the Board in the Order (Paper No.
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`12) at 3-5, the following facts are also relevant.
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`1. Apple filed a Motion to Transfer on October 24, 2018.
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`2. On March 15, 2019, Omni amended its infringement contentions to
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`add claim 3 of the ’040 Patent and claim 15 of the ’533 Patent.
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`3. Both parties fully briefed the Motion to Transfer and a hearing was
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`held on April 18, 2019.
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`4. The Eastern District of Texas granted Apple’s Motion to Transfer to
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`the Northern District of California on August 14, 2019.
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`5. The Eastern District of Texas granted a Joint Motion to Stay pending
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`transfer to the Northern District of California on August 16, 2019.
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`6. The Northern District of California has not yet docketed the case.
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`III. Analysis of the First Set of Factors Identified by the Board
`In its Order, the Board sought additional information about several factors
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`relating to whether it should institute. Most factors focus on whether a decision by
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`2
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`IPR2019-00916
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`the District Court will resolve unpatentability issues before the Board issues its
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`final written decision. That will not occur. Accordingly, all relevant factors weigh
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`against the Board denying institution under § 314(a) as further explained below.
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`A. The merits of Petitioner’s challenge
`The Board should only consider whether Petitioner met its burden to
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`establish “a reasonable likelihood of success in prevailing with respect to at least
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`1” challenged claim. 35 U.S.C. § 314 (a). Petitioner met this burden as shown in
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`its Petition, see Paper 1. This factor weighs against the Board denying institution.
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`B. Differences between the claims challenged in the District Court
`and the Petition
`Every claim being asserted in the litigation has been challenged in the
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`petition. This factor weighs against denying institution because a final written
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`decision finding the challenged claims unpatentable could resolve the dispute
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`between the parties and obviate a need for a trial.
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`C. The time between the District Court’s expected findings on
`validity and any expected Board findings on patentability
`If the Board decides to institute, Petitioner plans to move to stay the district
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`court proceedings until the IPRs are completed. The Northern District of
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`California stays litigation after institution of an IPR about 62% of the time. Ex.
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`1059, 1. Consequently, the Board likely would be the first to determine if the
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`challenged claims are unpatentable. This factor weighs against the Board denying
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`institution.
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`3
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`IPR2019-00916
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`D. Differences between the grounds raised in the District Court and
`the Petition, where a ground challenges the validity/patentability
`of an identified claim over identified prior art
`Petitioner’s challenges in the district court action include, but are not limited
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`to, the prior art used in the grounds of the Petition. For example, Petitioner has
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`asserted invalidity based on public use and public knowledge of pre-existing
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`systems and devices, which cannot be used to support grounds in an IPR. The AIA
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`was “designed to establish a more efficient and streamlined patent system that
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`will…limit unnecessary and counterproductive litigation costs.” H.R. Rep. No.
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`112–98, pt. 1, at 40 (2011). If the Board institutes, it will address the prior art in
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`the grounds of the Petition, which would simplify and narrow the dispute in district
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`court. This factor therefore weighs against the Board denying institution.
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`E. Any delay between the filing of Petitioner’s invalidity contentions
`in the District Court and the filing of the Petition.
`Petitioner filed its Petition on April 10, 2019, within the statutory time
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`period. See 35 U.S.C §315 (b). Petitioner first identified Lisogurski, Carlson, and
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`Mannheimer as prior art in its initial invalidity contentions served on August 28,
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`2018. Accordingly, only eight months elapsed between these initial invalidity
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`contentions and the filing of the Petitions. The timing of the identification of
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`references did not affect the Petition’s timeliness or the District Court’s decision to
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`grant the motion to transfer the case. This factor should thus weigh against
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`denying Institution.
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`4
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`IPR2019-00916
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`The Petition’s filing date also was objectively reasonable in view of events
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`in the district court action. For example, on March 15, 2019, Omni served
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`amended infringement contentions that added claim 3 of the ’040 patent and claim
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`15 of the ’533 patent.3 Apple filed its Petition less than a month later. Petitioner
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`should not be penalized for ensuring that its Petition challenged all asserted claims.
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`Similarly, the parties had fully briefed claim construction by January 30,
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`2019, and the Court held a Markman hearing on February 6, 2016. Petitioner
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`reasonably expected the Court to issue its order on claim construction shortly
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`thereafter.4 Given that the Board uses the same claim construction standard as the
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`district courts, the Court’s order on claim construction is relevant to the issues
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`before the Board, and it was reasonable for Petitioner to defer filing by two months
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`in the hopes of having that order issue.5
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`3 Though Omni did not add claims for the ’286, Omni’s amended contentions show
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`that the relevant claims had the potential to shift.
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`4 Unfortunately, the district court did not issue its claim construction order until
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`June 24, 2019—a few months after the filing of the Petitions.
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`5 Petitioner addressed multiple constructions of the claims in each petition in the
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`absence of a ruling from the Texas Court.
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`5
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`IPR2019-00916
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`F. Whether, and to what extent, Petitioner had sufficient notice that
`the Petition could be denied under 35 U.S.C. § 314(a)
`As relevant to this factor, the Board identified NHK, a case where a panel
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`considered the advanced stage of a related district court proceeding relevant to its
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`determination to deny institution under § 314 (a). Notably, NHK was not binding
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`when the petitions were filed; it designated a precedential PTAB decision on May
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`7, 2019—almost a month after the Petition was filed. NHK involved a jury trial
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`scheduled to end almost six months before the Board’s proceedings would have
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`ended. NHK Spring Co., Ltd. V. Intri-Plex Techs., Inc., IPR2018-00752, Paper No.
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`8 at 20 (PTAB Sept. 12, 2018) (Precedential). This case is unlike NHK because
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`the District Court proceedings are stayed and there is no scheduled jury trial.
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`G. Whether, and to what extent, Petitioner’s District Court invalidity
`contentions are the same as or substantially similar to the
`unpatentability grounds raised in the Petition
`For the same reason as discussed in § III.D above, this factor weighs against
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`the Board denying institution.
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`H. Whether Petitioner has filed any dispositive invalidity motions in
`the District Court, the grounds raised in any such motions, and
`Patent Owner’s response to the same
`No dispositive motions involve invalidity based on prior art. Omni
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`challenged the prior art status of references unrelated to those in the Petition.
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`Petitioner filed a dispositive motion for invalidity for lack of written description
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`6
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`IPR2019-00916
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`for all asserted claims in the ’533 patent. The case was stayed before Omni
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`responded to this motion. This factor thus weighs against denying institution.
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`I.
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`Any issue preclusive effect of the claims challenged in the cases
`before the Board
`If the District Court makes a finding on validity, that decision is not binding
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`on the Board. In re Baxter Intern., Inc. 678 F.3d 1357, 1364 (Fed. Cir. 2012). In
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`District Court, Patent Owner is entitled to the presumption of validity and
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`defendant must prove invalidity by clear and convincing evidence. Microsoft v. i4i
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`Limited Partnership, 131 S. Ct. 2238 (2011). In contrast, the Board requires
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`Petitioner to prove unpatentability by a preponderance of evidence. 35 U.S.C. §
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`316 (e). Consequently, the Board may reach its own conclusions based on the
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`evidence in this proceeding. Baxter, 678 F.3d at 1364.
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`Dated: September 30, 2019
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`Respectfully Submitted,
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`/Jeffrey P. Kushan/
`Jeffrey P. Kushan
`Registration No. 43,401
`Sidley Austin LLP
`1501 K Street NW
`Washington, DC 20005
`jkushan@sidley.com
`(202) 736-8914
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`Lead Counsel for Petitioner
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`7
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`IPR2019-00916
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`CERTIFICATE OF SERVICE
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`I hereby certify that on this 30th day of September, 2019, copies of this
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`Petitioner’s Response to Board Order 12 have been served in its entirety by email
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`on the following counsel of record for Patent Owner:
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`Thomas A. Lewry
`John S. LeRoy
`Robert C. J. Tuttle
`John M. Halan
`Christopher C. Smith
`BROOKS KUSHMAN P.C.
`OMSC0110IPR2@brookskushman.com
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`Respectfully submitted,
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`/Jeffrey P. Kushan/
`Jeffrey P. Kushan
`Reg. No. 43,401
`Attorney for Petitioner
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`Dated:
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`September 30, 2019
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