`Date: November 27, 2019
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`
`Filed on behalf of:
`Tela Innovations, Inc.
`By: Gunnar Leinberg (Lead Counsel)
`
`leinberg@pepperlaw.com
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`Bryan C. Smith (Back-up Counsel)
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`smithbc@pepperlaw.com
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`Edwin V. Merkel (Back-up Counsel)
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`merkele@pepperlaw.com
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`Andrew P. Zappia (Back-up Counsel)
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`zappiaa@pepperlaw.com
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`_________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_________________
`
`INTEL CORPORATION,
`Petitioner,
`
`v.
`
`TELA INNOVATIONS, INC.,
`Patent Owner.
`
`_________________
`
`Case IPR2019-01228
`Patent 7,943,966
`_________________
`
`
`PATENT OWNER’S SUR-REPLY
`
`
`#56109580
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`PACT - Ex. 2019.0001
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`TABLE OF CONTENTS
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`Page(s)
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`I.
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`THE IPRS ARE BARRED BASED ON EXPRESS INVALIDITY
`ALLEGATIONS .............................................................................................. 2
`THE NDCA ACTION SUPPORTS DISCRETIONARY DENIAL ............... 6
`II.
`III. THE ITC ACTION HAS BEEN TERMINATED .......................................... 7
`IV. CONCLUSION ................................................................................................ 7
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`i
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`PACT - Ex. 2019.0002
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`TABLE OF AUTHORITIES
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`Page(s)
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`CASES
`American Nat’l. Mfg., Inc. v. Sleep No. Corp,
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`IPR2019-00514, Paper 10 (PTAB Aug. 5, 2019) ............................................. 5, 6
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`Grimm v. Washington Mut. Bank,
` No. 02:08CV0828, 2008 WL 2858377, at *7 (W.D. Pa. July 22, 2008) ............. 4
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`LG Elecs., Inc. v. Straight Path IP Grp., Inc.,
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`IPR2015-00196, Paper 20 (PTAB May 15, 2015) ............................................... 3
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`NHK Spring Co. v. Intri-Plex Techs., Inc.,
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`IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) ................................................. 7
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`Samsung Elecs Co., Ltd. v. Bitmicro, LLC,
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`IPR2018-01410, Paper 14 (PTAB Jan. 23, 2019) ................................................ 5
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`Totes-Isotoner Corp. v. United States,
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`594 F.3d 1346 (Fed. Cir. 2010) ............................................................................ 4
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`STATUTES
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`35 U.S.C. § 282(b)(2)................................................................................................. 5
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`35 U.S.C. §314(a) .............................................................................................. 1, 6, 7
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`35 U.S.C. §315(a)(1) ...................................................................................... 2, 4, 5, 6
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`37 C.F.R. § 42.5 ......................................................................................................... 1
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`
`
`ii
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`PACT - Ex. 2019.0003
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`Pursuant to 37 C.F.R. §42.5 and the Board’s Order - Conduct of the
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`Proceeding dated November 15, 2019 (Paper 14), Patent Owner Tela Innovations,
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`Inc. (“Tela”), respectfully submits the following Patent Owner’s Sur-reply (“Sur-
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`reply”) to the Reply filed by Petitioner Intel, Inc. (“Intel”) (“Reply”) (Paper 16).1
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`Intel’s Reply goes to great lengths to assert that Tela’s Preliminary Response
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`(“POPR”) (Paper 11) misrepresented the status of ongoing litigation between the
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`parties. Tela did no such thing. Intel’s assertions are the true misrepresentations,
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`and are designed to distract from its egregious conduct. Intel fails to point to even
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`one false statement in the POPR. That is because the POPR accurately outlined
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`Intel’s burdensome, inefficient, and duplicative litigation strategy. The simple fact
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`is Intel filed these IPR petitions while Intel was asserting the same invalidity
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`theories in the U.S. District Court for the Northern District of California
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`(“NDCA”), and in the U.S. International Trade Commission (“ITC”)2 and Intel
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`intentionally did not seek to stay either action. Intel further filed a total of 16 IPR
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`petitions directed to six related Tela patents for maximum burden, inefficiency, and
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`duplication, which also supports denial under 35 U.S.C. §314(a).
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`1 The defined terms used herein have the same meaning as ascribed to them in the
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`POPR.
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`2 The POPR expressly disclosed that the ’966 Patent was terminated from the ITC
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`proceeding on October 2, 2019. Paper 11, p.15.
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`1
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`PACT - Ex. 2019.0004
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`Intel’s Reply also attacks Tela’s statutory bar argument under 35 U.S.C.
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`§315(a)(1) as “disingenuous” by pointing to a statement from counsel for Tela
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`confirming Intel’s careful efforts to obscure its challenge to validity in the NDCA
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`Action. At the same time, Intel ignores its own allegations in its complaints in the
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`NDCA Action (the “Complaints”), and its admissions in that same hearing that
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`Intel’s prior art arguments should not be disclosed in detail until the time required
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`for invalidity contentions, confirming that Intel was directly and expressly
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`challenging validity in the NDCA Action. EX2005, pp.9-10. These admissions by
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`Intel are direct evidence that Intel was pursuing an invalidity challenge under the
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`guise of non-infringement claims, as the Judge in the NDCA Action recognized:
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`[“Intel now brings this action seeking declaratory relief for noninfringement,
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`invalidity, and unenforceability with respect to six Tela patents.”] EX2004, p.1
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`(emphasis added).
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`I.
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`THE IPRS ARE BARRED BASED ON EXPRESS INVALIDITY
`ALLEGATIONS
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`Intel attempts to avoid application of the statutory bar under 35 U.S.C.
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`§315(a)(1), by maintaining that its Complaints did not include a cause of action
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`directly seeking a declaration that claims of the ’966 Patent are invalid. However,
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`Intel carefully avoids addressing its detailed allegations in the Complaints
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`expressly challenging the validity of the ’966 Patent under the guise of non-
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`infringement claims.
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`2
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`PACT - Ex. 2019.0005
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`Intel pretends that Tela’s statutory bar argument is based solely on “valid
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`claim” language in Intel’s non-infringement causes of action, relying on LG Elecs.,
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`Inc. v. Straight Path IP Grp., Inc., IPR2015-00196, Paper 20 at 7 (PTAB May 15,
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`2015). However, Tela expressly addressed LG Elecs. and demonstrated that Intel’s
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`allegations go far beyond “valid claim” statements. See Paper 11, pp.30-31.
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`Specifically, Intel’s Complaints include substantive and detailed factual allegations
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`that the ’966 Patent is invalid. EX2002, ¶¶22-38, 44; EX2003, ¶¶22-38, 44;
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`EX2007, ¶¶27-44, 50. Further, those allegations assert that:
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`[B]ecause Intel’s technology used in its commercial
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`products since at least 2007 [. . .] was developed by Intel
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`well before any of Tela’s patents were conceived, and
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`before Tela was even created, Intel’s products cannot be
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`covered by Tela’s patents. And Tela’s attempts to
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`apply those patents to Intel’s products would render
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`Tela’s patents invalid because Intel’s technology was
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`developed by Intel first.
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`EX2002, ¶44; EX2003, ¶44, EX2007, ¶50 (emphasis added).
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`Intel pretends these allegations are not part of the Complaints because they
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`were in the Background Section. However, Intel ignores that those allegations
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`were expressly incorporated into Intel’s causes of action. EX2002, ¶49; EX2003,
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`3
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`PACT - Ex. 2019.0006
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`¶50; EX2007, ¶77. Intel cites Grimm v. Washington Mut. Bank, for the
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`unremarkable proposition that incorporation of preceding paragraphs is a standard
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`practice to plead facts sufficient to establish a claim. No. 02:08CV0828, 2008 WL
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`2858377, at *7 (W.D. Pa. July 22, 2008) (evaluating Rule 8 pleading standards).
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`Grimm in fact confirms that Intel’s invalidity allegations are a basis for its cause of
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`action, which is why the statutory bar applies. Tellingly, Intel provides no other
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`explanation for why those allegations are in the Complaints, which is likely
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`because Intel does not want to admit that it was surreptitiously attempting to
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`challenge validity, while labelling its claims something else. Intel’s artful pleading
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`cannot circumvent Section 315(a)(1). The substance of Intel’s pleadings, not the
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`form, controls. Totes-Isotoner Corp. v. United States, 594 F.3d 1346, 1355 n.6
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`(Fed. Cir. 2010).
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`Further, the Section 315(a)(1) bar is not limited to “causes of action” as Intel
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`argues. Section 315(a)(1) states that: “[a]n inter partes review may not be
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`instituted if, before the date on which the petition for such a review is filed, the
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`petitioner or real party in interest filed a civil action challenging the validity of a
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`claim of the patent.” 35 U.S.C. §315(a)(1) (emphasis added). Intel did exactly
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`that, and Section 315(a)(1) nowhere states that it is limited to causes of action
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`labelled as “invalidity” claims.
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`4
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`PACT - Ex. 2019.0007
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`Intel maintains that Board decisions addressing the statutory-bar have been
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`“laser-focused” on whether the prior civil action includes a cause of action
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`expressly challenging validity, citing Samsung Elecs Co., Ltd. v. Bitmicro, LLC,
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`IPR2018-01410, Paper 14 at 20 (PTAB Jan. 23, 2019). However, Samsung refutes
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`Intel’s position. In Samsung, the Patent Owner did not allege any explicit validity
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`challenge, but instead interpreted the implicit inclusion of validity defenses in 35
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`U.S.C. § 282(b)(2) to mean that “an action involving ‘infringement,’ from a
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`statutory perspective, implicates and includes validity challenges.” Samsung,
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`IPR2018-01410, Paper 14 at 19 (citation omitted). The Board held that a
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`complaint that “‘only alleges a cause of action for noninfringement,’ not invalidity,
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`is ‘not considered a filing of a civil action for invalidity under 35 U.S.C. §
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`315(a)(1).’” Id. at 20 (citations omitted). Here, the Complaints expressly alleged
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`invalidity, so Samsung actually supports a statutory bar here.
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`Intel’s citation to American Nat’l. Mfg., Inc. v. Sleep No. Corp. is similarly
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`misplaced. IPR2019-00514, Paper 10 at 11 (PTAB Aug. 5, 2019). There the
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`Board held that an antitrust action did not implicate the statutory bar of Section
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`315(a)(1). Id. at 12-14. The Board relied on the different showings required for an
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`antitrust action for money damages under the Sherman Act, as compared to
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`invalidation of a claim of a fraudulently-procured patent, in determining that the
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`statutory bar did not apply. Id. The Board noted that “the legislative history of [35
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`5
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`PACT - Ex. 2019.0008
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`U.S.C. §315(a)(1)] confirms Congress intended ‘a civil action challenging the
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`validity of a claim of the patent’ to be limited to a declaratory judgment action for
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`invalidity, not an antitrust action.” Id. at 13. Here, Intel sought a declaratory
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`judgment based on claims that directly and expressly incorporated assertions of
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`invalidity, so American Nat’l. Mfg. also supports a statutory bar here.
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`II. THE NDCA ACTION SUPPORTS DISCRETIONARY DENIAL
`Institution under 35 U.S.C. §314(a) is discretionary. The fact that the Final
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`Written Decision will be issued on this Petition (if instituted) prior to the currently
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`scheduled NDCA Action trial is irrelevant and ignores the true status of the NDCA
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`Action. All discovery in the NDCA Action (fact and expert) will be completed by
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`May 15, 2020, at least six months before any final decision on this Petition under
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`the normal timing rules. Additionally, Intel could have sought to stay the NDCA
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`Action upon filing the IPR petitions, but opted not to in order to maximize burden,
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`inefficiency, and duplication. The Board should exercise its discretion to deter this
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`type of strategy, which is contrary to the efficiency goals of IPR proceedings.
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`Further, the NDCA Action includes all six Tela patents for which Intel has
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`filed IPR petitions. See EX2007, p.1. Thus, the NDCA Action will deal with all of
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`those patents in a single proceeding, so the issues common to those patents will be
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`resolved simultaneously. Thus, the Board should deny institution here because this
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`Petition will not provide an efficient alternative to the district court litigation. See
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`6
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`PACT - Ex. 2019.0009
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-00752, Paper 8 at 20 (PTAB
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`Sept. 12, 2018) (precedential).
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`III. THE ITC ACTION HAS BEEN TERMINATED
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`Tela’s discussion in the POPR of the ITC investigation with respect to the
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`’966 Patent was part of its complete and accurate description of Intel’s strategy to
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`litigate the same issues in multiple proceedings simultaneously.3 There is no
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`dispute that the ’966 Patent is no longer part of the ITC proceeding (the POPR
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`expressly disclosed that). The fact that Tela withdrew the ’966 Patent from the
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`ITC proceeding after this Petition was filed does not change the fact that Intel filed
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`this Petition at a time when the same invalidity theories were being challenged in
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`two additional forums. Tela accurately described Intel’s strategy to maximize
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`burden, inefficiency, and duplication, which fully supports denial of institution
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`under Section 314(a).
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`IV. CONCLUSION
`For the above reasons, Petitioner’s request for institution of inter partes
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`review of the ’966 Patent should be denied.
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`3 Regardless of who filed the ITC proceeding, it is Intel that opted to raise the same
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`validity defenses in multiple forums while not seeking any stay.
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`7
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`PACT - Ex. 2019.0010
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`Respectfully submitted,
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`
`
`
`/Bryan C. Smith/
`Bryan C. Smith (Back-up Counsel)
`Registration No. 59,767
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`Date: November 27, 2019
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`Pepper Hamilton LLP
`70 Linden Oaks, Suite 210
`Rochester, New York 14625
`Tel: (585) 270-2141
`Fax: (585) 270-2179
`E-mail: smithbc@pepperlaw.com
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`8
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`PACT - Ex. 2019.0011
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`IPR2019-01228 (Patent 7,943,966)
`Patent Owner’s Sur-reply
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`CERTIFICATE OF SERVICE
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`Pursuant to 37 C.F.R. § 42.6(e), this is to certify that on this 27th day
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`of November, 2019, I caused to be served a true and correct copy of the foregoing
`PATENT OWNER’S SUR-REPLY by e-mail (as agreed in the Service
`Information section of the Petition):
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`Todd M. Friedman (Lead Counsel)
`Registration No. 42,559
`KIRKLAND & ELLIS LLP
`601 Lexington Avenue
`New York, NY 10022
`Tel: (212) 446-4800
`Fax: (212) 446-4900
`E-mail: todd.friedman@kirkland.com
`Service email: INTEL-TELA-
`IPR@kirkland.com
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`F. Christopher Mizzo (Back-up Counsel)
`Registration No. 79,156
`KIRKLAND & ELLIS LLP
`1301 Pennsylvania Avenue N.W.
`Washington, DC 20004
`Tel: (202) 389-5000
`Fax: (202) 389-5200
`E-mail: chris.mizzo@kirkland.com
`Service email: INTEL-TELA-
`IPR@kirkland.com
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`Counsel for Petitioner
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`Gregory S. Arovas (Back-up Counsel)
`Registration No. 38,818
`KIRKLAND & ELLIS LLP
`601 Lexington Avenue
`New York, NY 10022
`Tel: (212) 446-4800
`Fax: (212) 446-4900
`E-mail: greg.arovas@kirkland.com
`Service email: INTEL-TELA-
`IPR@kirkland.com
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`Bao Nguyen (Back-up Counsel)
`Registration No. 46,062
`KIRKLAND & ELLIS LLP
`555 California Street
`San Francisco, CA 94194
`Tel: (415) 439-1400
`Fax: (415) 439-1500
`E-mail: bao.nguyen@kirkland.com
`Service email: Service email: Service
`email: INTEL-TELA-
`IPR@kirkland.com
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`Counsel for Petitioner
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`/Bryan C. Smith/
`Bryan C. Smith (Back-up Counsel)
`Registration No. 59,767
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`PACT - Ex. 2019.0012
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