UNITED STATES PATENT AND TRADEMARK OFFICE
`
`______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`______________
`
`
`APPLE INC.,
`Petitioner,
`
`v.
`
`OMNI MEDSCI, INC.,
`Patent Owner.
`
`______________
`
`
`U.S. Patent No. 9,651,533
`
`IPR Case No.: IPR2019-00916
`
`
`______________
`
`
`
`
`
`
`PATENT OWNER’S REQUEST FOR REHEARING
`UNDER 37 C.F.R. § 42.108
`
`
`
`
`
`
`______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`______________
`
`
`APPLE INC.,
`Petitioner,
`
`v.
`
`OMNI MEDSCI, INC.,
`Patent Owner.
`
`______________
`
`
`U.S. Patent No. 9,651,533
`
`IPR Case No.: IPR2019-00916
`
`
`______________
`
`
`
`
`
`
`PATENT OWNER’S REQUEST FOR REHEARING
`UNDER 37 C.F.R. § 42.108
`
`
`
`
`
`
`Case No.: IPR2019-00916
`Patent No.: 9,651,533
`
`
`
`
`
`Atty. Dkt. No.: OMSC0110IPR2
`
`TABLE OF CONTENTS
`
`TABLE OF AUTHORITIES .................................................................................... ii
`
`I.
`
`II.
`
`Introduction ...................................................................................................... 1
`
`Background ...................................................................................................... 2
`
`III. Analysis ........................................................................................................... 3
`
`A. Due to the substantial overlap between Apple’s IPR
`combinations and its district court combinations, instituting the
`IPR will lead to duplicate and wasted effort ......................................... 3
`
`B.
`
`Apple misrepresented its intention to stay the district court
`litigation and plans to proceed with parallel district court
`litigation further duplicating effort and wasting resources ................... 9
`
`IV. Precedential opinion panel review is appropriate in this case .......................10
`
`V.
`
`Conclusion .....................................................................................................11
`
`Certificate of Service ...............................................................................................13
`
`
`
`
`
`
`i
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`
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`Case No.: IPR2019-00916
`Patent No.: 9,651,533
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`
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`Atty. Dkt. No.: OMSC0110IPR2
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`TABLE OF AUTHORITIES
`
`Cases
`
`Arnold P’ship v. Dudas,
`
`362 F.3d 1338 (Fed. Cir. 2004) ....................................................................... 4
`
`Cuozzo Speed Techs., LLC v. Lee,
`
`136 S.Ct. 2131 (2016) ...................................................................................... 3
`
`Finjan, Inc. v. Blue Coat Sys., LLC,
`
`283 F.Supp.3d 839 (N.D. Cal. 2017) ...........................................................7, 8
`
`
`
`Statutes
`
`35 U.S.C. § 314 ................................................................................................. 1, 3, 4
`35 U.S.C. § 315 ......................................................................................................7, 8
`37 C.F.R. § 42.71 ....................................................................................................... 4
`
`
`
`Other Authorities
`
`Jennifer Esch, Paula Miller, Stacy Lewis & Tom Irving, Petitioner Estoppel from
`Patent Trial and Appeal Board Proceedings after SAS Institute Inc. v. Iancu,
`
`18 Chi. -Kent J. Intell. Prop. 10 (2019) .......................................................7, 9
`
`Office Patent Trial Practice Guide Update,
`
`83 Fed. Reg. 39989 (Aug. 13, 2018) ............................................................... 3
`
`PTAB Standard Operating Procedure 2,
`
`Rev. 10 at Section II(A) .............................................................................2, 10
`
`ii
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`
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`Case No.: IPR2019-00916
`Patent No.: 9,651,533
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`I.
`
`Introduction
`
`Atty. Dkt. No.: OMSC0110IPR2
`
`Patent Owner, Omni MedSci, Inc., (“Omni MedSci”) requests rehearing of
`
`the Board’s decision (Paper 16) instituting inter partes review of claims 5, 7–10,
`
`13, and 15–17 (“the challenged claims”) of U.S. Patent No. 9,651,533 B2 (Ex.
`
`1001, “the ’533 patent”). Omni MedSci submits that the Board’s decision
`
`represents an unreasonable judgement in weighing the relevant factors with regard
`
`to the Board’s discretion to deny institution under 35 U.S.C. § 314(a).
`
`Specifically, Omni MedSci submits that the Board did not address, and therefore
`
`does not appear to have considered, a critical factor relevant to its discretion,
`
`namely 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. (Paper 12 at 5-6.) Properly weighed, this factor would
`
`militate against the Board granting institution of the Petition. As explained below,
`
`granting institution will result in significant overlap with the district court
`
`invalidity arguments resulting in a substantial and unnecessary duplication of
`
`effort. Further, contrary to Apple’s promise to stay the litigation upon institution,
`
`Apple recently filed a substantive motion showing its intention to proceed with the
`
`district court litigation – resulting in further duplication of effort and wasted
`
`resources in parallel proceedings.
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`1
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`Atty. Dkt. No.: OMSC0110IPR2
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`Omni MedSci further requests that this rehearing be heard by the
`
`Precedential Opinion Panel (“POP”), because the Board’s decision deals with the
`
`following “issue[] of exceptional
`
`importance”: When
`
`the obviousness
`
`combinations asserted in the district court substantially overlap the combinations
`
`asserted in the IPR, and estoppel would not apply to the district court
`
`combinations, should the Board exercise its discretion to deny institution to avoid
`
`duplicative analysis and promote efficiency? See PTAB Standard Operating
`
`Procedure 2, Rev. 10 at Section II(A).
`
`II. Background
`
`Omni MedSci filed suit against Petitioner (“Apple”) in April 2018 in the
`
`Eastern District of Texas. Apple filed its IPR Petition exactly one year after being
`
`served with the complaint. After Apple filed its Petition, but before the Board’s
`
`institution decision, the E.D. Tex. court transferred the lawsuit to the Northern
`
`District of California. By that time, the parties had completed all fact and expert
`
`discovery and were in the process of briefing summary judgment motions.
`
`In the lawsuit, Apple asserted obviousness based on prior art that included
`
`patents, printed publications, and alleged public use/knowledge of preexisting
`
`systems and devices. (Ex. 2101, p. 2; Paper 13 at 4.)
`
`2
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`
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`Patent No.: 9,651,533
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`III. Analysis
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`Atty. Dkt. No.: OMSC0110IPR2
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`A. Due to the substantial overlap between Apple’s IPR
`combinations and its district court combinations, instituting
`the IPR will lead to duplicate and wasted effort
`
`The Board has discretion to deny institution. 35 U.S.C. § 314(a); see
`
`Cuozzo Speed Techs., LLC v. Lee, 136 S.Ct. 2131, 2140 (2016). In its exercise of
`
`that discretion, the Board considers “events in other proceedings related to the
`
`same patent . . . in district courts . . . .” See Office Patent Trial Practice Guide
`
`Update, 83 Fed. Reg. 39989 (Aug. 13, 2018), p. 101; Paper 10 at 3. Factors that the
`
`Board considers include “(a) whether, and to what extent, Petitioner had sufficient
`
`notice that the Petition could be denied under 35 U.S.C. § 314(a), (b) 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, (c)
`
`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,
`
`and (d) whether, and to what extent, any finding on the validity or invalidity of the
`
`claims challenged in the District Court proceeding would have an issue preclusive
`
`effect on the patentability or unpatentability of the claims challenged in the cases
`
`
`1 All emphasis added unless otherwise stated.
`
`3
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`Patent No.: 9,651,533
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`before the Board, should the Board institute inter partes review.” (Paper 12 at 5-
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`Atty. Dkt. No.: OMSC0110IPR2
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`6.)
`
`Under 37 C.F.R. § 42.71(c), “[w]hen rehearing a decision on petition, a
`
`panel will review the decision for an abuse of discretion.” “An abuse of discretion
`
`occurs if a decision is based on an erroneous interpretation of law, if a factual
`
`finding is not supported by substantial evidence, or if the decision represents an
`
`unreasonable judgment in weighing relevant factors.” Arnold P’ship v. Dudas,
`
`362 F.3d 1338, 1340 (Fed. Cir. 2004) (citation omitted).
`
`In its Patent Owner Preliminary Response (“POPR”), Omni MedSci raised
`
`that the Board had discretion to deny institution under § 314(a). (Paper 10 at 2-3.)
`
`Omni MedSci pointed out that IPRs are “designed to be an efficient alternative to
`
`challenging patent validity in district court.” (Id. at 3, citations omitted.) Omni
`
`MedSci noted that “the Board can exercise its discretion to decline to institute
`
`review based on scope considerations.” (Id., citations omitted.) Omni MedSci
`
`explained, “Maintaining three proceedings challenging the validity of the ‘533
`
`Patent, two before the Board and one in district court, would weigh against the
`
`‘efficient administration of the Office;’ . . . .” (Id. at 4.)
`
`The Board recognized that Omni MedSci had raised these issues: “In its
`
`Preliminary Response, Patent Owner contends that the Board should exercise its
`
`discretion and deny the Petition on procedural grounds.” (Paper 12 at 2.) The
`
`4
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`Patent No.: 9,651,533
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`Board sought “additional input from the parties on the facts and factors the Board
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`Atty. Dkt. No.: OMSC0110IPR2
`
`should consider when deciding whether to exercise its discretion to deny institution
`
`under 35 U.S.C. § 314(a).” (Id. at 3.) Among the factors the Board identified that
`
`may “weigh in favor of or against denying the Petition,” the Board listed “(d) any
`
`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.” (Id. at 5.) The Board “further invited [the parties] to address … (b)
`
`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.” (Id. at 5-6.)
`
`In Apple’s Reply to the Board’s Order, Apple admitted that it “has asserted
`
`invalidity based on public use and public knowledge of pre-existing systems and
`
`devices, which cannot be used to support grounds in an IPR.” (Paper 13 at 4.)
`
`Omni MedSci expanded on that point in its Sur-Reply:
`
`Patent Owner admits that the grounds raised in the District Court
`
`overlap with the grounds raised in the Petition. (See Reply at 4.)
`
`Petitioner is challenging the validity of the patents with several
`
`additional grounds in litigation, including grounds that cannot be
`
`used in IPRs. (Ex. 2101 at 2; Reply at 4.) Granting the Petitions will
`
`create inefficiencies because, even with respect to the alleged “pre-
`
`existing systems and devices” (Reply at 4), the art overlaps
`
`significantly—Apple combines the “pre-existing system” prior art
`
`5
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`Atty. Dkt. No.: OMSC0110IPR2
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`with the same references that it uses in the IPR combinations, as
`
`confirmed by Apple’s Final Election of Prior Art (Ex. 2101). This
`
`factor weighs in favor of denying institution.
`
`(Paper 15 at 4-5.)
`
`Exhibit 2101, cited both in Omni MedSci’s POPR and its Sur-Reply, is
`
`Apple’s “Final Election of Asserted Prior Art” in the lawsuit. With respect to the
`
`‘533 patent at issue in this proceeding, Apple
`
`identified the following
`
`combinations of obviousness references:
`
`1. Valencell + Carlson + Mannheimer
`
`2. Lisogurski + Carlson + Mannheimer
`
`3. Park + Fitbit + Carlson + Mannheimer
`
`4. Masimo Radical-7 + Carlson + Webster
`
`5. Masimo iSpO2 + Carlson + Webster
`
`6. Nellcor + Carlson + Webster
`
`7. Nonin + Carlson + Webster
`
`8. Asada + Valencell + Carlson + Mannheimer
`
`(Ex. 2101, p. 2.)
`
`In the list above, the yellow highlighting identifies the references that Apple
`
`contends are public use/knowledge prior art. (See Ex. 2101, pp. 3-4.) The blue
`
`highlighting identifies the references asserted in this IPR. The yellow highlighting
`
`emphasizes what the document conveys—that the bulk of Apple’s prior art-based
`
`6
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`
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`Case No.: IPR2019-00916
`Patent No.: 9,651,533
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`invalidity defense rely on alleged public use/knowledge.
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`Atty. Dkt. No.: OMSC0110IPR2
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` The various
`
`combinations also include the prior art references Apple relies on in its Petition,
`
`namely, Lisogurski, Carlson, and Mannheimer.
`
`Despite seeking input on several factors relevant to the Board’s discretion,
`
`the Board’s institution decision focused on the time to trial and did not address the
`
`enormous inefficiencies created by Apple’s assertion of public use/knowledge
`
`prior art in court. Apple’s Final Election of Asserted Prior Art confirms that, if the
`
`Board institutes the IPR and confirms the patentability of any challenged claim, the
`
`district court will need to revisit much the same issues and arguments (while
`
`applying a different burden-of-proof standard).
`
`This is because estoppel will not apply to seven of the eight combinations
`
`asserted in the lawsuit. The N.D. Cal. courts narrowly interpret 35 U.S.C.
`
`§ 315(e)(2) and permit Petitioners to relitigate obviousness combinations asserted
`
`in an IPR proceeding so long as the combinations include an additional reference
`
`not used in the IPR, i.e., as Apple does here. See Finjan, Inc. v. Blue Coat Sys.,
`
`LLC, 283 F.Supp.3d 839, 856 (N.D. Cal. 2017). See also, Jennifer Esch, Paula
`
`Miller, Stacy Lewis & Tom Irving, Petitioner Estoppel from Patent Trial and
`
`Appeal Board Proceedings after SAS Institute Inc. v. Iancu, 18 Chi. -Kent J. Intell.
`
`Prop. 10 (“Petitioner Estoppel”), pp. 13-14 (2019). In Finjan, the district court
`
`held Ҥ315(e)(2) estoppel applies only to grounds that were both raised in the IPR
`
`7
`
`
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`Case No.: IPR2019-00916
`Patent No.: 9,651,533
`
`petition and instituted in the IPR proceeding.” The court found no estoppel despite
`
`Atty. Dkt. No.: OMSC0110IPR2
`
`substantial overlap between the obviousness combinations upon which the IPR was
`
`instituted, and the obviousness combinations presented in the district court.
`
`The following table illustrates the overlap with respect to one of the asserted
`
`patents2 in Finjan. Id. at 855.
`
`Combinations subject of Final Decision
`in the IPR
`
`No Estoppel
`in N.D. Cal.
`
`Chandnani + Kolawa
`
`Chandnani + Kolawa + Walls
`
`Kolawa + Li+ Chandnani
`
`Chandnani + Kolawa + Huang
`
`
`Despite this overlap, the district court found no estoppel because “[n]one of
`
`the IPRs were instituted on these precise combinations.” Id. at 856-57. Blue Coat
`
`was allowed to assert the same “Chandnani + Kolawa” combination in the district
`
`court that it asserted in the IPR by adding one new reference. As a result, the
`
`PTAB’s efforts were wasted.
`
`Far from promoting efficiency, instituting an IPR in cases where the
`
`combinations overlap significantly leads to duplication of and wasted effort.
`
`Instituting an IPR with such overlap also promotes a strategy of “reference
`
`swapping” as an end-around the statutory estoppel provisions of § 315(e)(2).
`
`
`2 U.S. Patent No. 8,225,408.
`
`8
`
`
`
`Case No.: IPR2019-00916
`Patent No.: 9,651,533
`
`
`Atty. Dkt. No.: OMSC0110IPR2
`
`In addition, in this case, most of Apple’s obviousness arguments are based
`
`on alleged public use/knowledge, which means that estoppel will not apply. See
`
`Petitioner Estoppel at 21. Given that fact, together with the significant overlap
`
`with the prior art presented in its Petition, the Board should exercise its discretion
`
`and allow the district court to address the obviousness issues instead of forcing the
`
`Board, the court, and the parties to duplicate effort and arguments.
`
`B. Apple misrepresented its intention to stay the district court
`litigation and plans to proceed with parallel district court
`litigation further duplicating effort and wasting resources
`
` In its Reply to the Board Order (Paper No. 12), Apple stated “[i]f the Board
`
`decides to institute, Petitioner plans to move to stay the district court proceedings
`
`until the IPRs are completed.” (Paper No. 13, p. 3.) Omni MedSci disputed this
`
`assertion explaining “Petitioner has not sought a stay pending the IPRs in the six
`
`months that have passed since the filing of the Petitions.” (Paper No. 15, p. 4.)
`
`Following the Board’s institution decision, Apple did not file a motion to
`
`stay as promised. On the contrary, on October 31, 2019, Apple filed a “Motion to
`
`Dismiss Or, Alternatively, for Leave to File Motion for Reconsideration,” set for
`
`hearing on December 10, 2019 at 2:00 p.m. (Dkt. #202 in N.D. Cal. Case No.
`
`Case 4:19-cv-05673-YGR.) The following day, Apple withdrew its motion due to
`
`9
`
`
`
`Case No.: IPR2019-00916
`Patent No.: 9,651,533
`
`its violation of N.D. Cal. Local Rule 7-9(a).3 (Id., Dkt. #203.) In a November 1,
`
`Atty. Dkt. No.: OMSC0110IPR2
`
`2019 email accompanying its withdrawal, Apple’s counsel stated “Apple will be
`
`re-filing the motions next week.” (Ex. 2119.)4 Thus, contrary to its promise to the
`
`Board, Apple did not “move to stay the district court proceedings until the IPRs are
`
`completed.” This is indication that Apple, in reality, seeks to improperly benefit
`
`from parallel proceedings leading to duplication of effort and wasted resources –
`
`the antithesis of the efficiency the IPR procedure was intended to generate.
`
`IV. Precedential opinion panel review is appropriate in this case
`
`The POP may be convened to address issues of exceptional importance
`
`regarding statutes or issues of broad applicability to the Board. PTAB Standard
`
`Operating Procedure 2, Rev. 10 at Section II(A). The issue presented in this case
`
`is: When the obviousness combinations asserted in the district court substantially
`
`overlap the combinations asserted in the IPR, and estoppel would not apply to the
`
`
`3 Local Rule 7-9(a) requires leave of court before seeking a request for
`
`reconsideration: “No party may notice a motion for reconsideration without first
`
`obtaining leave of Court to file the motion.”
`
`4 Omni MedSci is concurrently requesting permission from the Board to file Ex.
`
`2119, an email Omni MedSci received today from Apple’s Counsel.
`
`10
`
`
`
`Case No.: IPR2019-00916
`Patent No.: 9,651,533
`
`district court combinations, should the Board exercise its discretion to deny
`
`Atty. Dkt. No.: OMSC0110IPR2
`
`institution to avoid duplicative analysis and promote efficiency?
`
`The question above is appropriate for POP review because it focuses on the
`
`factors the PTAB should consider when exercising its discretion to deny institution
`
`of an IPR for efficiency reasons. To the Patent Owner’s knowledge, the question
`
`has never before been addressed and a precedential resolution would be important
`
`to help the public and the Board know (1) what factors should be considered to
`
`determine whether an IPR is inefficient, and (2) how the factors should be
`
`weighed.
`
`It makes no sense to institute an IPR where, if the patentability of any claim
`
`is confirmed by the PTAB, the vast majority of Petitioner’s prior art invalidity
`
`arguments will remain in the litigation after the IPR ends.
`
`V. Conclusion
`
`For these reasons, the Board should reconsider its decision to institute this
`
`IPR and, instead, exercise its discretion to deny institution, which strongly
`
`promotes efficiency.
`
`
`
`
`
`
`Dated: November 1, 2019
`
`
`
`Respectfully submitted,
`
`
` /John S. LeRoy/
`Thomas A. Lewry (Reg. No. 30,770)
`John S. LeRoy (Reg. No. 48,158)
`Robert C. J. Tuttle (Reg. No. 27,962)
`John M. Halan (Reg. No. 35,534)
`Christopher C. Smith (Reg. No. 59,669)
`
`11
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`
`
`Case No.: IPR2019-00916
`Patent No.: 9,651,533
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`
`
`
`
`
`Atty. Dkt. No.: OMSC0110IPR2
`
`Andrew B. Turner (Reg. No. 63,121)
`BROOKS KUSHMAN P.C.
`1000 Town Center, Twenty-Second Floor
`Southfield, Michigan 48075
`Telephone: (248) 358-4400
`
`Attorneys for Omni MedSci, Inc.
`
`
`12
`
`
`
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`Patent No.: 9,651,533
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`Atty. Dkt. No.: OMSC0110IPR2
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`Certificate of Service
`
`The undersigned hereby certifies that on November 1, 2019, a complete and
`
`entire copy of Patent Owner’s Request for Rehearing, was served via electronic
`mail by serving the correspondence email address of IPRnotices@sidley.com,
`which delivers to the following lead and back-up counsel:
`
`
`LEAD COUNSEL
`Jeffrey P. Kushan (Reg. No. 43,401)
`SIDLEY AUSTIN LLP
`1501 K Street NW
`Washington, DC 20005
`(202) 736-8914
`
`
`
`BACK-UP COUNSEL
`Ching-Lee Fukuda (Reg. No. 44,334)
`Sidley Austin LLP
`787 Seventh Avenue
`New York, NY 10019
`(212) 839-7364
`
`Thomas A. Broughan III (Reg. No. 66,001)
`Sidley Austin LLP
`1501 K Street NW
`Washington, DC 20005
`(202) 736-8314
`
`
`Respectfully submitted,
`
`
` /John S. LeRoy/
`Thomas A. Lewry (Reg. No. 30,770)
`John S. LeRoy (Reg. No. 48,158)
`Robert C. J. Tuttle (Reg. No. 27,962)
`John M. Halan (Reg. No. 35,534)
`Christopher C. Smith (Reg. No. 59,669)
`Andrew B. Turner (Reg. No. 63,121)
`BROOKS KUSHMAN P.C.
`1000 Town Center, Twenty-Second Floor
`Southfield, Michigan 48075
`Telephone: (248) 358-4400
`
`Attorneys for Omni MedSci, Inc.
`
`13
`
`
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