IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`Inventors:
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`For:
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`In re U.S. Patent No. 6,240,376
`Application No.:
`09/127,587
` Filed:
`July 31, 1998
` Issued:
`May 29, 2001
`
`Alain Raynaud
`Luc M. Burgun
`
`Patent Owner: Mentor Graphics
`Corporation
`
`METHOD AND
`APPARATUS FOR GATE-
`LEVEL SIMULATION OF
`SYNTHESIZED
`REGISTER TRANSFER
`LEVEL DESIGNS WITH
`SOURCE-LEVEL
`DEBUGGING
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`Trial No.:
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`IPR 2012-00042
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`Atty. Dkt. No.
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`007121.00004
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`Mail Stop PATENT BOARD
`Patent Trial and Appeal Board
`United States Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
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`PATENT OWNER’S REQUEST FOR REHEARING ON DECISION TO
`INSTITUTE INTER PARTES REVIEW UNDER 37 C.F.R. § 42.71
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`PACT - Ex. 2016.0001
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`
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`
`
`
`
`Inventors:
`
`For:
`
`
`
`In re U.S. Patent No. 6,240,376
`Application No.:
`09/127,587
` Filed:
`July 31, 1998
` Issued:
`May 29, 2001
`
`Alain Raynaud
`Luc M. Burgun
`
`Patent Owner: Mentor Graphics
`Corporation
`
`METHOD AND
`APPARATUS FOR GATE-
`LEVEL SIMULATION OF
`SYNTHESIZED
`REGISTER TRANSFER
`LEVEL DESIGNS WITH
`SOURCE-LEVEL
`DEBUGGING
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`Trial No.:
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`IPR 2012-00042
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`Atty. Dkt. No.
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`007121.00004
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`Mail Stop PATENT BOARD
`Patent Trial and Appeal Board
`United States Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`
`PATENT OWNER’S REQUEST FOR REHEARING ON DECISION TO
`INSTITUTE INTER PARTES REVIEW UNDER 37 C.F.R. § 42.71
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`PACT - Ex. 2016.0001
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`
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`TABLE OF CONTENTS
`
`
`
`I.
`
`II.
`
`The Standard for Rehearing Is Met ................................................................. 1
`
`Overview of §315(b) Argument With Illustrative Hypothetical ..................... 2
`
`III. Argument ......................................................................................................... 6
`
`A. As Succesor-In-Interest to EVE’s Entire Business, Including the
`ZeBu Line of Emulators That Were Accused of Infringement in
`2006, Synposys Is In §315(b) Privity With EVE .................................. 6
`
`B.
`
`C.
`
`D.
`
`E.
`
`Because Synopsys Is a Successor-in-Interest of EVE, a §315(b)
`Bar Does Not Require That the Privity Relationship Existed at
`the Time the 2006 Complaint Was Served, Nor That Synopsys
`Have Had Any Control Over That Lawsuit ........................................ 14
`
`Inter partes Review Cannot Be Instituted Because Synopsys Is
`In Privity With EVE ............................................................................ 16
`
`Barring Privity Also Existed Between Synopsys and EVE as of
`the Filing Date of the Petition ............................................................. 19
`
`2.
`
`1.
`
`The Petition Is Entitled to A Filing Date No Earlier Than
`September 27, 2012 .................................................................. 20
`Privity Between Synopsys and EVE Also Existed On
`September 26, 2012,
`the Filing Date Incorrectly
`Accorded the Petition ................................................................ 23
`The Evidence Also Indicates that EVE Is a Real Party-In-
`Interest to the Petition Filed by Synopsys ........................................... 25
`
`IV. Conclusion ..................................................................................................... 27
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`i
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`PACT - Ex. 2016.0002
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`
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`EXHIBIT LIST
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`Previously Filed
`
`MG 2001
`
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`MG 2002
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`MG 2003
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`MG 2004
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`MG 2005
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`MG 2006
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`MG 2007
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`MG 2008
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`MG 2009
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`
`
`First Amended Complaint in Mentor Graphics Corp. v. EVE-
`USA, Inc. and Emulation and Verification Engineering, SA,
`6:06-CV-00341-AA (D. OR., filed March 13, 2006)
`
`Defendants’ Unopposed Motion By Special Appearance For
`Extension Of Time To Respond To Plaintiff’s First Amended
`Complaint in Mentor Graphics Corp. v. EVE-USA, Inc. and
`Emulation and Verification Engineering, SA, 6:06-CV-00341-
`AA (D. Or., filed May 23, 2006)
`
`Order of Dismissal in Mentor Graphics Corp. v. EVE-USA, Inc.
`and Emulation and Verification Engineering, SA, 6:06-CV-
`00341-AA (D. Or., filed November 20, 2006)
`
`Complaint for Declaratory Judgment and Injunctive Relief in
`Synopsys, Inc., EVE-USA, Inc. and Emulation and Verification
`Engineering, S.A. v. Mentor Graphics Corp., 3:12-cv-05025
`(N.D. Cal., filed September 27, 2012)
`
`Banner & Witcoff, Ltd.’s “Messenger Log”
`
`October 4, 2012 Synopsys Press Release “Synopsys Acquires
`EVE”
`
`EVE-USA’s Supplemental Corporate Disclosure Statement,
`Docket No. 7, filed October 26, 2012 in Synopsys, Inc. et al. v.
`Mentor Graphics Corp., 3:12-CV-05025 (N.D. Cal. filed
`September 27, 2012)
`
`Jansen, D., The Electronic Design Automation Handbook,
`Kluwer Academic Publishers, 2003, Chapter 2
`
`Bhatnagar, Advanced ASIC Chip Synthesis: Using Synopsys®
`Design Compiler™ and PrimeTime®, Kluwer Academic
`Publishers, 1999
`
`ii
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`PACT - Ex. 2016.0003
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`
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`Patent Owner’s Request for Rehearing
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`IPR 2012-00042
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`MG 2010
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`MG 2011
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`Currently Filed
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`MG 2012
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`MG 2013
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`MG 2014
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`MG 2015
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`MG 2016
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`MG 2017
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`Gregory et al. U.S. Patent No. 5,937,190
`
`HDL Compiler™ for VHDL User Guide, Version F-2011.09-
`SP4, March 2012, SYNOPSYS, Section 4
`
`Plaintiffs’ Opposition to Mentor Graphics Corporation’s
`Motion to Transfer, dated January 25, 2013
`
`Notice of Incomplete Petition, mailed November 30, 2012 in
`CMI Corp. v. Yoshiharu, et. al., PTAB Case IPR 2013-00066
`
`Response to Notice of Incomplete Petition Issued November
`30, 2012, filed November 30, 2012 in CMI Corp. v. Yoshiharu,
`et. al., PTAB Case IPR 2013-00066
`
`Notice of Filing Date Accorded to Petition and Time for Filing
`Patent Owner Preliminary Response, mailed December 5, 2012
`in CMI Corp. v. Yoshiharu, et. al., PTAB Case IPR 2013-00066
`
`Declaration of Allison Anderson
`
`Notice of Filing Date Accorded to Petition and Notice for
`Setting the Time Period for Filing Patent Owner Preliminary
`Response
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`
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`iii
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`PACT - Ex. 2016.0004
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`
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`
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`
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`PATENT OWNER’S REQUEST FOR REHEARING ON DECISION TO
`INSTITUTE INTER PARTES REVIEW UNDER 37 C.F.R. § 42.71
`
`Rehearing of the Board’s Decision to institute an inter partes review trial
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`over the statutory bar in 35 U.S.C. §315(b) is respectfully requested. The Patent
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`Owner’s Preliminary Response asserted that inter partes review based on
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`Petitioner Synopsys’ Petition was barred by 35 U.S.C. §315(b), because Synopsys
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`is in privity with EVE1 and EVE was served with a Complaint alleging
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`infringement of the ‘376 patent more than one year before the date on which the
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`Petition was filed. The Board disagreed, finding that Synopsys’ Petition was not
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`barred under §315(b).
`
`I.
`
`
`The Standard for Rehearing Is Met
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`This request is authorized by 37 C.F.R. § 42.71(c) and (d). The standard of
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`review is abuse of discretion, and the burden of showing that a Decision should be
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`modified lies with the party challenging the Decision. Id. Here, it is respectfully
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`submitted that the standard for rehearing on the Decision to institute a trial is met
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`on the basis of legal error because, as demonstrated below, the Decision
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`misapprehends the privity requirement of §315(b), including when the privity
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`1 EVE-USA, Inc. and Emulation and Verification Engineering, S.A., the defendants
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`in the 2006 litigation, will be referred together as “EVE.”
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`
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`1
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`PACT - Ex. 2016.0005
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`Patent Owner’s Request for Rehearing
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`IPR 2012-00042
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`relationship must arise for §315(b)
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`to apply.2
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` Likewise,
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`the Decision
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`misapprehends the statutory nature of the service error that occurred, which
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`requires the September 26, 2012, filing date to be vacated as a matter of law. “[A]
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`prejudicial error of law is never discretionary and so always a basis for reversal
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`under the abuse of discretion standard of review.” Reg'l Air Inc. v. Canal Ins. Co.,
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`639 F.3d 1229, 1234 (10th Cir.2011).
`
`II. Overview
`of
`Hypothetical
`The Decision determined that an inter partes review based on Synopsys’
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`§315(b) Argument With
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`Illustrative
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`
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`Petition was not barred because privity had not been shown to exist “in 2006 when
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`EVE was served with a Complaint alleging infringement of the ‘376 patent”
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`(Decision at 16), and because no persuasive evidence had been presented “that at
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`the time of service of the 2006 complaint Synopsys could have exercised control
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`over EVE’s participation in the proceeding, or vice versa.” Decision at 18.
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`However, as discussed further below, the instant case presents a scenario of
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`successor-in-interest privity, which does not require privity to exist at the time of
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`the legal proceedings giving rise to the bar. Nor does successor-in-interest privity
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`2 The issue of a bar under §315(b) is addressed in Patent Owner’s Preliminary
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`Response at 2-9. The Board addresses the issue in its Decision at 15-18.
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`
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`2
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`PACT - Ex. 2016.0006
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`
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`require that the non-party bound by the outcome of the prior proceeding have had
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`any control over the proceeding.
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`
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`The Board’s Decision dismissed the argument that “it is the property interest
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`in EVE’s products, the ZeBu line of emulators that were accused of infringement
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`in 2006, that leads to the alleged bar of inter partes review by §315(b),” on the
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`ground that “[a]ny potentially infringing products are irrelevant to the issues raised
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`in the Petition, all of which involve patentability.” Decision at 17.
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`The Board applied the wrong test. It is not the case that the property at issue
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`in the present inter partes review proceedings (i.e., the `376 patent) must have
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`been transferred from an alleged infringer (like EVE) to a successor-in-interest
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`(like Synopsys) for privity under §315(b) to apply. If this were the proper test, a
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`bar under §315(b) could never arise in a successor-in-interest scenario because the
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`alleged infringer in litigation never owns the asserted patent. Elimination of
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`successor-in-interest privity from the statute is plainly at odds with express
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`statements in the legislative history that privity may adhere in a successor-in-
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`interest situation.3
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`3The Decision notes (at 17) “[t]he only property right at issue in this proceeding is
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`that of the ‘376 patent owned by Patent Owner.” Decision at 17. Of course, in
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`any inter partes review, the property right at issue is the patent for which review
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`is sought. It would be a very unusual situation indeed for that property (the
`
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`3
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`PACT - Ex. 2016.0007
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`
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`Moreover, by requiring parties to have been in privity at the time of the prior
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`litigation, the Board’s interpretation would allow accused infringers to easily evade
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`the one-year bar of § 315(b) merely by creating new alter egos to file for inter
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`partes review, long after service of an infringement complaint on the original
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`company. This would effectively make § 315(b) meaningless. This result can be
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`patent) to have transferred to a successor-in-interest seeking inter partes review
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`of the patent. And an inter partes review initiated by the patent owner is not even
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`permitted under 35 U.S.C. § 311(a). Thus, under the Board’s reasoning,
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`successor-in-interest privity could never form the basis of a §315(b) bar.
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`Additionally, while it is true that the issue before the Board is the patentability of
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`the ‘376 patent, that is not the only issue for the Board to decide. The Board must
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`also determine whether the petitioner has standing to file the inter partes review
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`in the first place. § 315(b) creates a statutory bar for certain petitioners that
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`would eliminate the petitioner’s standing if satisfied. By barring petitioners or
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`privies of the petitioner who have been “served with a complaint alleging
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`infringement of the patent” more than one year before the filing of the petition,
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`§315(b) requires the Board to consider whether the property interest at stake in
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`the earlier infringement action is now part of a common interest with a privy or
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`owned by a successor-in-interest privy.
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`4
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`PACT - Ex. 2016.0008
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`illustrated with a hypothetical.
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`The Board’s interpretation would allow accused infringers to easily evade
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`the one-year bar of § 315(b) merely by creating new alter egos to file for inter
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`partes review, long after service of an infringement complaint on the original
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`company. This would effectively make § 315(b) meaningless. This is effectively
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`illustrated with a hypothetical.
`
`Consider a situation where “Original Company” is served with a complaint
`
`asserting patent infringement in 2010. Under the Board’s ruling, Original
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`Company may create a new company (“Child Company”) and file, more than a
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`year later, an inter partes review Petition to challenge the asserted patent, in the
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`name of Child Company. Child Company would be a privy (and likely also a real
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`party-in-interest) with Original Company at the time the IPR Petition is decided.
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`But, according to the Board’s reasoning, that would not present a §315(b) bar.
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`Instead, according to the Board’s interpretation, in order to be barred, Child
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`Company must have been a privy of Original Company at the time the complaint
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`was served in 2010. Because Child Company did not exist in 2010, however, it
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`cannot possibly have been a privy of Original Company in 2010 and, therefore,
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`under the Board’s reasoning, §315(b) would not apply. This is clearly not what
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`Congress intended.
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`5
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`PACT - Ex. 2016.0009
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`
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`III. Argument
`A.
`As Succesor-In-Interest to EVE’s Entire Business, Including the
`ZeBu Line of Emulators That Were Accused of Infringement in 2006,
`Synposys Is In §315(b) Privity With EVE
`Under §315(b), “[a]n inter partes review may not be instituted if the petition
`
`
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`requesting the proceeding is filed more than 1 year after the date on which the . . .
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`privy of the petitioner is served with a complaint alleging infringement of the
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`patent.” The legal question thus presented is the scope of “privy” for §315(b)
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`purposes. “Privity” is an equitable rule that takes into account the “practical
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`situation,” and extends to parties to transactions and other activities relating to the
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`property in question. OPTPG, Fed. Reg., Vol.77, No. 157 (August 14, 2012) at
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`48759) (emphasis added).
`
`
`
`The case law addressing res judicata and collateral estoppel, the Board’s
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`Office Patent Trial Practice Guide (OPTPG), and the legislative history are
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`illuminating.
`
`The word “privy” has acquired an expanded meaning. The courts, in
`the interest of justice and to prevent expensive litigation, are striving
`to give effect of judgments by extending “privies” beyond the
`classical description. The emphasis is not on the concept of identity
`of parties, but on the practical situation. Privity is essentially a
`shorthand statement that collateral estoppel is to be applied in a given
`case; there is no universally applicable definition of privity. The
`concept refers to a relationship between the party to be estopped and
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`
`
`6
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`PACT - Ex. 2016.0010
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`
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`the unsuccessful party in the prior litigation which is sufficiently close
`so as to justify application of the doctrine of collateral estoppel.
`
`
`154 Cong. Rec. S9987 (daily ed. Sept. 27, 2008) (statement of Sen. Kyl.) (citing
`
`Cal. Physicians Serv. v. Aoki Diabetes Research Inst., 163 Cal. App. 4th 1506 (Cal.
`
`App. 2008)) (quoted in OPTPG, Fed. Reg., Vol.77, No. 157 (August 14, 2012) at
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`48759).
`
`
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`The case law referenced in the legislative history of the AIA specifically
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`addresses privity and res judicata in the successor-in-interest context. And, as
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`noted in the OPTPG, “many of the same considerations that apply in the context of
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`‘res judicata’ will likely apply in the ‘real-party-in-interest’ or ‘privy’ contexts.”
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`Fed. Reg., Vol.77, No. 157 (August 14, 2012) at 48759-60.
`
`One situation in which parties have frequently been held to be in
`privity is when they hold successive interests in the same
`property. See, e.g., Litchfield v. Crane, 123 U.S. 549, 551, 8 S.Ct.
`210, 31 L.Ed. 199 (1887) (defining privity to include a “mutual or
`successive relationship to the same rights of property”). Thus, a
`judgment with respect to a particular property interest may be binding
`on a third party based on a transfer of the property in issue to the third
`party after judgment. See Restatement (Second) of Judgments Sec. 43
`(1982) (“A judgment in an action that determines interests in real or
`personal property . . . [h]as preclusive effects upon a person who
`succeeds to the interest of a party to the same extent as upon the party
`himself.”).
`
`7
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`
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`PACT - Ex. 2016.0011
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`Horphag, 220 F.3d at 1329 (quoted in 154 Cong. Rec. S9987 (daily ed. September
`
`27, 2008) (statement of Sen. Kyl) (emphasis added).
`
`
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`Here, contrary to the Board’s Decision, the “property in question” is not
`
`confined to the property in question in the present inter partes review proceeding,
`
`i.e., the patent sought to be reviewed.4 Rather, in a §315(b) context, the “property
`
`in question” necessarily encompasses the property at issue in the action initiated by
`
`the complaint alleging infringement served more than 1 year prior to the filing of
`
`the petition. Thus, the “property in question” is the alleged infringer’s business of
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`importing, making, using, and selling the products accused of infringement
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`(including all associated rights, profits, and products).
`
`The Horphag case cited in the Decision (at 17) suggests no differently. In
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`Int’l Nutrition Co. v. Horphag Research, Ltd., 220 F.3d 1325 (Fed. Cir. 2000), the
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`privity issue arose in the context of a trademark cancellation proceeding and a res
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`judicata (claim preclusion) defense. The Trademark Trial and Appeal Board
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`(TTAB) dismissed the cancellation proceeding as being barred by res judicata.
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`The petitioner was a successor-in-interest to the prior owner of a French trademark,
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`and that prior owner had previously filed an opposition to the U.S. trademark
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`4 This would only be the case when the bar under consideration is a bar to a further
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`proceeding following a final written decision in an inter partes review, as
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`mandated by 35 U.S.C. §315(e).
`
`8
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`
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`PACT - Ex. 2016.0012
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`
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`registration at issue. The Federal Circuit reversed the TTAB, holding that the
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`property transferred, the French trademark for PYCNOGENOLS, “was not the
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`subject of [the predecessor’s] opposition to the United States registration of
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`PYCNOGENOL, and it is not the subject of the instant cancellation proceeding.”
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`Id. at 1329. Hence, the successor-in-interest to the French trademark was not
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`barred by res judicata from opposing a U.S. registration of the mark.
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`In Horphag, although the claims presented in the earlier and subsequent
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`proceedings were deemed to be the same (as would be required for res judicata to
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`apply), because the property (the French trademark) that had transferred to the
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`petitioner was deemed a property distinct from the property (U.S. trademark) at
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`issue in the earlier and later proceedings, the successor-in-interest to the French
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`trademark was not deemed to be in privity with its predecessor for U.S. trademark
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`res judicata purposes.
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`In contrast to the Horphag facts, the property interest that petitioner
`
`Synopsys succeeded to, EVE’s entire business and products, including the ZeBu
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`line of emulators that were accused of infringement in 2006, are indisputably
`
`directly related to the 2006 patent infringement action. Given this successor-in-
`
`interest relationship, petitioner Synopsys must be deemed a privy of EVE for
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`§315(b) bar purposes. “What constitutes ‘privity’ varies, depending on the purpose
`
`
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`9
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`PACT - Ex. 2016.0013
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`
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`for which privity is asserted. Shamrock Techs., Inc. v. Medical Sterilization, Inc.,
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`903 F.2d 789, 793 (Fed. Cir. 1990) (cited in Decision at 17).
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`Other federal case law clearly and persuasively describes the application of
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`successor-in-interest privity in similar contexts. In particular, Brunswick Corp. v.
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`Chrysler Corp., 408 F.2d 335 (7th Cir. 1969) presents a scenario much like the
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`present in salient respects. In a patent infringement action, the patentee Brunswick
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`moved “to strike a designated defense and for judgment based on res judicata with
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`respect to an earlier decree of the same Court as to validity and infringement of
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`two of the patents in suit.” Id. at 336. The defendant Chrysler was not a party to
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`the earlier action and settlement, but rather only later acquired, from the defendant
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`The West Bend Company, the business that was responsible for making and selling
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`the products (boat motors and stern drives) decreed to be an infringement in the
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`earlier action. More specifically, after the first suit against West Bend was settled,
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`the engine division of The West Bend Company was sold and
`transferred to defendants-appellees (Chrysler). The sale included the
`manufacturing plant at Hartford, Wisconsin, and West Bend’s entire
`business relating to the manufacture and sale of outboard motors and
`stern drives.
`
`Id. The Court in Brunswick framed the issues of law before it as follows:
`
`1) Does the decree . . . in the previous suit between [the patent owner]
`and The West Bend Company give rise to res judicata in the instant
`10
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`
`
`PACT - Ex. 2016.0014
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`suit, and 2) whether on the admitted facts in this record, Chrysler
`stands in the shoes of The West Bend Company so as to be in privity
`with that Company.
`
`Id. at 337. The Court answered both questions in the affirmative.
`
`In the case at bar, Chrysler purchased from The West Bend Company
`the entire business that was devoted to the production of “Tiger Shark
`800” outboard motors and the inboard-outboard stern drives used with
`such motors. Furthermore, The West Bend Company, having ceased
`all operations in the field of outboard motors, transferred both its
`manufacturing and sales facilities and also its personnel to Chrysler.
`It follows that Chrysler does stand in the shoes of The West Bend
`Company with respect to the decree in [the prior action].
`We hold that as the proof establishes Chrysler succeeded in interest
`to the subject matter of the prior decree, it is in privity with The West
`Bend Company, and is bound by the provisions of the decree entered
`in [the prior action].
`
`Id. at 338 (emphasis added).
`
`
`
`Brunswick is cited with approval in a number of subsequent cases. See, e.g.:
`
`• American Equipment Corp. v. Wikomi Mfg. Co., 630 F.2d 544 (7th Cir. 1980)
`
`(prior consent judgment adjudicating infringement as well as validity of
`
`patent bars party that was in privity with the earlier defendant; privity arose
`
`by virtue of a post-consent judgment acquisition of the business that
`
`manufactured the equipment adjudicated to be an infringement);
`
`
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`11
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`PACT - Ex. 2016.0015
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`Patent Owner’s Request for Rehearing
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`IPR 2012-00042
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`• Crossroads Systems (Texas), Inc. v. DOT Fill Systems Corp., 82 U.S.P.Q. 2d
`
`1517, 2006 WL 1544621,*6 (W.D. Tex. 2006) (“The result in [Brunswick]
`
`seems eminently fair and sets a good policy. A party should not be able to
`
`evade an adverse judgment on the issues of validity and infringement
`
`simply by transferring its assets.”); and
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`• Arco Polymers, Inc. v. Studiengesellschaft Kohle mbH, 555 F. Sup. 547
`
`(E.D. Penn. 1982) (declaratory judgment plaintiff, that succeeded to
`
`ownership of an entire manufacturing facility and polypropylene business
`
`whose operations were earlier adjudged to be infringing a valid patent, was
`
`barred from relitigating the patent’s validity).
`
`The instant set of facts present a case at least as compelling on the privity
`
`issue as was presented in Brunswick, Wikomi, and Arco Polymers. As the Patent
`
`Owner set forth in its Preliminary Response, Synopsys is the corporate successor-
`
`in-interest to EVE, including its business engaged in:
`
`“using, importing, selling, offering for sale and/or supporting the
`ZeBu Products in the United States, which line of products was
`previously accused by Mentor Graphics of infringing the . . . [‘376
`patent] and which products share structures and functionality that
`Mentor Graphics alleged are relevant to the claims of the . . . [‘376
`patent].”
`
`
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`12
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`PACT - Ex. 2016.0016
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`Patent Owner’s Request for Rehearing
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`IPR 2012-00042
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`Preliminary Response at 6 (quoting the September 27, 2012 Declaratory Judgment
`
`Complaint (MG 2004) filed jointly by EVE and Synopsys, at ¶13).
`
`Subsequent to the Patent Owner filing its Preliminary Response, Synopsys
`
`and EVE made further filings in their declaratory judgment action (Case No. 3:12-
`
`cv-05025) that leave no doubt that petitioner Synopsys is in agreement regarding
`
`its privity with EVE. In opposing the Patent Owner’s motion to transfer the case to
`
`Oregon, plaintiffs Synopsys and EVE argued:
`
`Synopsys is not suing for breach of the 2006 Settlement Agreement. It
`seeks to shield itself from litigation threats from a party who
`dismissed the exact same claims against the exact same parties (or
`their privies, as Mentor Graphics concedes) with prejudice more than
`six years ago. . . . Synopsys’ and EVE’s position that Mentor
`Graphics cannot maintain this suit [alleging, inter alia, infringement
`of the ‘376 patent] rests on the doctrine of res judicata, because
`Mentor Graphics dismissed the same claim with prejudice more than
`six years ago.
`
`Plaintiffs’ Opposition to Mentor Graphics Corporation’s motion to transfer, dated
`
`January 25, 2013 (MG 2012) at 22-23 (original pp.17-18) (emphasis added).
`
`
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`13
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`PACT - Ex. 2016.0017
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`Patent Owner’s Request for Rehearing
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`IPR 2012-00042
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`B.
`Because Synopsys Is a Successor-in-Interest of EVE, a §315(b)
`Bar Does Not Require That the Privity Relationship Existed at the Time
`the 2006 Complaint Was Served, Nor That Synopsys Have Had Any
`Control Over That Lawsuit
`
`The Board’s Decision on the §315(b) bar issue hinged on its reading of the
`
`statute to require a privy relationship “in 2006 when EVE was served with a
`
`complaint alleging infringement of the ‘376 patent.” Decision at 15-16.
`
`The plain language of 35 U.S.C. §315(b) does not, however, set forth any
`
`such requirement. A reading of the statute to require privity at the time of service
`
`of the complaint giving rise to the bar leads to an unjust result clearly at odds with
`
`Congressional intent. Successor-in-interest privity, well recognized in the case
`
`law, and cited in the legislative history, would be substantially excluded. And as a
`
`result, a patent litigation defendant would always have a simple way to avoid a
`
`§315(b) bar and be able to have an inter partes review Petition granted.5
`
`Such an interpretation would be at odds with how privity is interpreted by
`
`the courts in the context of collateral estoppel and res judicata, especially in those
`
`instances where the privity is based on a successor-in-interest relationship.
`
`According to traditional canons of statutory interpretation, constructions that lead
`
`to an unjust result at odds with Congressional intent are to be avoided (even when
`
`5 This is effectively illustrated by the hypothetical presented in the Summary of
`
`Argument section above.
`
`
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`14
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`PACT - Ex. 2016.0018
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`the language of the statute might suggest such a result). See, e.g., Public Citizen v.
`
`Department of Justice, 491 U.S. 440 (1989).
`
`
`
`In the successor-in-interest scenario, there typically is no privity existing at
`
`the time of the earlier proceeding, nor any right to control the earlier proceeding by
`
`the party who became a privy. For example, in Horphag, the earlier proceeding
`
`was dismissed in October of 1992, and the assignment of the French trademark to
`
`the alleged privy (a company called “INK”) occurred in March of 1994. Horphag
`
`220 F.3d at 1327. As previously explained, the holding of no res judicata in that
`
`case was due to the lack of relation of the transferred French trademark to the U.S.
`
`trademark cancellation proceedings, not a lack of privity at the time of the earlier
`
`proceeding or a right to control that proceeding. To the contrary, successor-in-
`
`interest privity requires the transfer of rights to be after the earlier proceeding was
`
`filed. Addressing an allegation that successor INK obtained from its predecessor
`
`(SCERPA) its rights to the U.S. trademark, in addition to the French trademark, the
`
`Horphag Court noted:
`
`[T]he Board made no finding that any transfer of rights in the
`trademark occurred after the adverse judgment in the opposition
`proceeding or while the opposition was pending. For res judicata to
`be based on sucessorship, the Board would have to find that INK
`obtained its rights in the trademark directly or indirectly from
`
`
`
`15
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`PACT - Ex. 2016.0019
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`Patent Owner’s Request for Rehearing
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`IPR 2012-00042
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`SCERPA and that it did so after the unsuccessful opposition was
`filed.
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`Horphag, 220 F.3d at 1330 (emphasis added). In Brunswick, presented with
`
`Chrysler’s argument that “it was not a corporate successor to The West Bend
`
`Company; [and] that it had no interest or control in the prior suit,” the Court
`
`nonetheless determined that privity existed for res judicata purposes. 408 F.2d at
`
`338 (emphasis added).
`
`C. Inter partes Review Cannot Be Instituted Because Synopsys Is In
`Privity With EVE
`
`
`
`The Board’s Decision also commented (at 16): “Furthermore, Patent Owner
`
`does not provide persuasive evidence that Synopsys and EVE were in privity on
`
`the filing date of the Petition.” There is, however, no requirement in §315(b) that
`
`the relied upon privity relationship have existed as of the filing date of the petition.
`
`§315(b) states:
`
`An inter partes review may not be instituted if the petition requesting
`the proceeding is filed more than 1 year after the date on which the
`petitioner, real party in interest, or privy of the petitioner is served
`with a complaint alleging infringement of the patent.
`
`
`
`The facts of the current situation satisfy all of the statutory requirements for
`
`the bar to apply. The statute precludes institution of a review if more than one
`
`year has passed since a complaint alleging infringement was served on a privy of
`
`
`
`16
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`PACT - Ex. 2016.0020
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`the Petitioner. There is no question that this condition exists for the current
`
`Petition. Synopsys is in privity with EVE: Synopsys’s acquision of EVE was
`
`completed on October 4, 2012.6 Preliminary Response at 4; MG 2006. The
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`Petition was filed by Synopsys in 2012, more than one year after the complaint
`
`against EVE was filed in 2006. These facts were all presented to the Board prior to
`
`the Board’s Decision.
`
`
`
`Section 315(b) sets no time limit on when the statutory conditions may be
`
`satisfied. The Patent Office comments and rules that were promulgated in
`
`connection with the new inter partes review statute are consistent with the Patent
`
`Owner’s interpretation of § 315(b), not the Board’s limitation of the time that §
`
`315(b) is applied. These comments and rules were based on the plain language of
`
`§ 315(b) as well as the legislative history, further reinforcing the Patent Owner’s
`
`interpretation.
`
`For example, 37 C.F.R. §§ 42.8(a)(3) and 42.8(b)(1) require a petitioner to
`
`identify each real party in interest, and to update any changes in the real parties in
`
`interest within 21 days of the change. The updating requirement of Rule 42.8(b)(1)
`
`
`6 Privity in fact adhered before October 4, 2012, as explained in subsequent
`
`sections. Institution of an inter partes review is barred beginning with the first
`
`date on which Synopsys and EVE were in privity.
`
`
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`17
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`PACT - Ex. 2016.0021
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`Patent Owner’s Request for Rehearing
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`
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`IPR 2012-00042
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`is consistent with the Patent Owner’s interpretation of § 315(b) and shows that an
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`inter partes review may not be instituted when a party barred by § 315(b) is
`
`identified as a real party in interest, even though an update is filed after the filing
`
`date of the inter part
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