UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`APPLE INC. & MICROSOFT CORPORATION
`Petitioners
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`v.
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`Neodron, Ltd.
`Patent Owner
`____________
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`Case No. IPR2020-00778
`U.S. Patent No. 7,821,425
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`PETITIONERS’ PRELIMINARY REPLY
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`____________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`APPLE INC. & MICROSOFT CORPORATION
`Petitioners
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`v.
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`Neodron, Ltd.
`Patent Owner
`____________
`
`
`Case No. IPR2020-00778
`U.S. Patent No. 7,821,425
`____________
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`PETITIONERS’ PRELIMINARY REPLY
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`Patent Owner insists institution should be denied in view of a parallel ITC
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`Investigation. Yet
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`the Preliminary Response (“POPR”) suffers a glaring
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`deficiency—it fails to identify a single case in which institution has been denied on
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`this basis. Petitioners have similarly uncovered no such examples. Many factors
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`explain the Board’s consistency on this issue. Perhaps most importantly, unlike the
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`PTAB and a district court, the ITC has no authority to invalidate patent claims.
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`Because the district court litigation is stayed pending the ITC investigation, even if
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`the ITC concludes claims are invalid, lengthy district court litigation will be required
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`after the ITC’s work concludes in order to obtain a final judgment of invalidity.
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`Despite Patent Owner’s arguments to the contrary, serial proceedings before
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`distinct tribunals is a far less efficient than, as Congress intended, instituting IPR and
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`resolving invalidity issues in a targeted proceeding before a panel of patent
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`specialists. On this basis, and for all the reasons discussed below, this Board should
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`reject Patent Owner’s invitation to render a novel institution denial based on a
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`parallel ITC Investigation.
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`I.
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`The Fintiv-pertinent “parallel proceeding” is in the district court—
`the only proceeding with parallel authority to cancel claims
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`Insisting that the Board deny institution in view of a “parallel proceeding,”
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`Patent Owner attempts to divert the Board’s attention from the statutorily stayed1
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`1 28 U.S.C. § 1659.
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`1
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`district court litigation to the ongoing ITC Investigation. But the ITC Investigation
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`does not parallel an IPR because the ITC lacks the authority to issue a binding ruling
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`on invalidity. Indeed, the Federal Circuit has long held that rulings at the ITC carry
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`no preclusive effect on other forums. Texas Instr. Inc. v. Cypress Semiconductor
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`Corp., 90 F.3d 1558, 1569 (Fed. Cir. 1996) (citing the Senate Report accompanying
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`the Trade Act of 1974, explaining section 337’s legislative history indisputably
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`shows Congress did not intend decisions of the ITC on patent issues to have
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`preclusive effect on other forums and holding the same); Tandon Corp. v. United
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`States Int'l Trade Comm'n, 831 F.2d 1017, 1019 (Fed. Cir. 1987) (“[O]ur appellate
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`treatment of decisions of the Commission does not estop fresh consideration by other
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`tribunals”). Without the aid of res judicata, ITC determinations do not implicate the
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`efficiency concerns Fintiv targets.
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`The Board has expressly recognized this critical distinction, explaining that
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`the “ITC does not have the authority to invalidate a patent in a way that is applicable
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`to other forums, and thus ITC decisions do not preempt issues addressed in an inter
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`partes review proceeding.” Nichia Corp. v. Lighting Science Group Corp., IPR2019-
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`01259, Paper 21, *27 (PTAB Jan. 15, 2020). The lack of parallel authority is
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`particularly important when assessing efficiencies. Absent the PTAB cancelling the
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`Challenged Claims, these same invalidity issues will be litigated in the district court
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`after the ITC Investigation concludes. Id. at 27-28 (noting that, even if the ITC finds
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`2
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`the asserted claims invalid, the patent owner may continue to assert the claims at
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`issue in the district court); see also Renesas Elecs. Corp. v. Broadcom Corp.,
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`IPR2019-01040, Paper 9, *8 (PTAB Nov. 13, 2019) (noting the same and explaining
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`that the ITC decision cannot “resolve” the issues before the Board). Because a
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`district court’s authority to cancel claims—an authority that parallels the PTAB’s in
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`an IPR—may not be exercised until after the ITC Investigation concludes, the Board
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`has repeatedly held that ITC investigations do “not render [an IPR] proceeding
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`duplicative or amount to a waste of the Board’s resources.” Samsung Elecs. Co. v.
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`BitMicro, LLC, IPR2018-01410, Paper 14, *18 (PTAB Jan. 23, 2019); see also
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`3Shape A/S and 3Shape Inc., v. Align Technology, Inc., IPR2020-00223, Paper 12,
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`*34 (PTAB May 26, 2020) (noting the “ITC does not have the power to cancel a
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`patent claim” and concluding no “concerns with efficiency . . . support exercising
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`our authority to deny institution”); Wirtgen Am., Inc. v. Caterpillar Paving Prods.,
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`IPR2018-01202, Paper 10, *7–10 (PTAB Jan. 8, 2019).
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`II.
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`The Fintiv factors strongly favor institution
` Whether the court granted a stay or evidence exists that one may
`be granted if a proceeding is instituted.
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`Litigation in the Western District of Texas has been stayed pending finality of
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`the ITC investigation. Ex. 1012 (granting stay on March 31, 2020 and noting the
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`case is “administratively closed until the determination of the 337-TA-1193
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`Investigation becomes final, including any appeals and until the Commission
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`3
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`proceedings are no longer subject to judicial review”). While it is unlikely the ITC
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`investigation will be stayed, as explained herein, the efficiency and integrity of the
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`system are best served by instituting review.
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`Proximity of the court’s trial date to the Board’s projected statutory
`deadline for a final written decision.
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`No trial date has been set in the district court, and any theoretical trial date is
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`years away. Accordingly, the Board’s projected statutory deadline for a FWD will
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`long predate any trial, and this factor favors institution.
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`Even if the Board were to consider the ITC Investigation schedule, this factor
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`favors institution. The currently scheduled ITC hearing is set to conclude on
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`February 22, 2021, but an initial determination is not due until June 18, 2021 and a
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`Final Determination is not due until October 20, 2021. Ex. 2001, 4. In stark contrast
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`to district court trials that conclude with a jury verdict, ITC evidentiary hearings
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`merely provide each party the opportunity to present evidence for consideration by
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`the ALJ. An initial decision will not issue until approximately four months later.
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`Further, another four months must pass before a final determination issues. But even
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`this ruling is not appealable (i.e., not final from a procedural standpoint) until after
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`the presidential review period expires—60 days later. 19 U.S.C. § 1137(c); id. at
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`(j)(4) (“such determination shall become final on the day after the close of such
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`[presidential review] period or the day on which the President notifies the
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`Commission of his approval, as the case may be”). The stay in the district court will
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`4
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`not lift until the ITC determination becomes final, which at its earliest would be
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`December 20, 2021 in this matter. Comparatively, the Board’s projected statutory
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`deadline for its final written decision would fall on October 21, 2021—over two
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`months before the ITC determination is final.
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`Investment in the parallel proceeding by the court and the parties.
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`The parallel district court proceedings were stayed shortly after the complaint
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`was served, and the court has invested no substantive efforts into the patentability of
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`the claims at issue. Accordingly, this factor favors institution.
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`This factor also favors institution even if the ITC Investigation is
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`considered—the ITC panel has yet to hold any Markman hearing (currently
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`scheduled on September 14-15, 2020), fact discovery has just opened (set to
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`conclude on October 23, 2020), and expert reports will not be exchanged for another
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`four months. Ex. 2001, 2-3.
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`Patent Owner additionally urges the Board to consider the status of a different
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`proceeding, involving a different patent, because a more advanced ITC investigation
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`involves a continuation of the ’425 Patent. Patent Owner Preliminary Response
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`(“POPR”) (Paper 7), 26-27. Patent Owner cites no authority in support and identifies
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`no examples of prior panels expanding this factor to consider parallel proceedings
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`involving a different patent. Indeed, the staggered schedules are a product of Patent
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`Owner’s strategic decisions, having initiated an investigation involving the related
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`5
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`’790 Patent at an earlier date than the investigation involving the ’425 Patent at issue
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`here. Strategically timing lawsuits so that investment litigating the earlier-asserted
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`patents can be used to block invalidity challenges to the later-asserted patents is pure
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`gamesmanship. The Board has applied its discretion under § 314(a) to prevent
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`petitioners from strategically staggering multiple petitions to gain an unfair
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`advantage. General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha, Case
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`IPR2016-01357 (Paper 19), 17-18 (Precedential). That same rationale applies to
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`Patent Owner’s gamesmanship here. Were its strategic decision to stagger lawsuits
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`involving related patents awarded by barring inter partes review of the later-asserted
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`patent, it would open the door to significant abuse.
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`Overlap between issues raised in the petition and in the parallel
`proceeding.
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`As noted above, Petitioners have yet to present any invalidity theories before
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`the district court. Accordingly, there is no overlap, and this factor favors institution.
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`Even if the ITC Investigation were considered, there is insufficient overlap
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`because the ITC will not address the validity of over half of the Challenged Claims.
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`Only claims 25-40 were asserted in the ITC proceeding, but all 40 claims are
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`challenged in the petition. Thus, unless the Board institutes this proceeding and
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`considers the merits of claims 1-24, when the district court lifts its stay, the district
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`court will have to independently, and without guidance from the Board or the ITC,
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`consider these issues. Should the Board institute and reach a final written decision,
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`6
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`on the other hand, it would simplify or resolve entirely, the invalidity issues before
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`the district court. See, e.g., Comcast Cable Comm’ns, LLC v. Rovi Guides, Inc.,
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`IPR2019-00231, Paper 14, *11‒12 (PTAB May 20, 2019) (instituting where at least
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`one challenged claim was not asserted in the parallel ITC investigation, but asserted
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`in the parallel district court litigation).
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`Further, for claims that are at issue in both the ITC and IPR, the ITC will apply
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`a more stringent standard than the PTAB. Linear Tech. Corp. v. Int’l Trade Comm’n,
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`566 F.3d 1049, 1066 (Fed. Cir. 2009) (invalidity in the ITC must be proven by clear
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`and convincing evidence); 35 U.S.C. § 316(e) (IPR proceedings apply the
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`preponderance of the evidence standard).
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` Whether the petitioner and the defendant in the parallel proceeding
`are the same party.
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`The parties are the same in both the district court litigation and the ITC
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`Investigation. However, members of the Board have noted that the Fintiv order
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`addressed only the scenario in which the petitioner is unrelated to a defendant in a
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`parallel proceeding, finding this should weigh against denying institution, but that
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`the Fintiv order “says nothing about situations in which the petitioner is the same as,
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`or is related to, the district court defendant.” Cisco Sys., Inc. v. Ramot at Tel Aviv
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`Univ. Ltd., IPR2020-00122, Paper 15, *10 (PTAB May 15, 2020) (APJ Crumbley,
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`dissenting) (noting that favoring “denial if the parties are the same,” could “tip the
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`scales against a petitioner merely for being a defendant in the district court[,]”
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`7
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`“contrary to the goal of providing district court litigants an alternative venue to
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`resolve questions of patentability”). This rationale carries the same weight here.
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`Other circumstances that impact the Board’s exercise of discretion,
`including the merits.
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`The strength of Petitioners’ unpatentability arguments and evidence weighs
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`strongly in favor of institution. On the merits, Patent Owner raises a single critique,
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`challenging Jahier’s teaching of “biasing” a particular key when determining a user-
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`selected key (“the bias limitations”). POPR, 6-18. As set forth in the Petition, Jahier
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`unquestionably prefers one particular key in its determination. Indeed, where a first
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`preselected key’s value is between the Low Threshold and High Threshold, a second
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`key cannot obtain that preselected status by simply exceeding the first key’s signal
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`value, but instead must exceed both the first key’s signal and the High Threshold.
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`Petition for IPR (“Petition”) (Paper 1), 19-21. Forcing a second key to not only beat
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`a first key’s value, but to exceed it by some amount, biases the decision process in
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`favor of the first key.
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`Faced with this unambiguous biasing disclosure, the POPR advances two
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`legally flawed arguments. First, Patent Owner insists that “you need something
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`more—something different” than Jahier’s teachings to satisfy the bias limitations.
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`POPR, 12. Although it does not propose a specific construction, every example of
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`biasing that Patent Owner cites involves mathematically modifying signal strengths,
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`e.g., increasing the biased signal or decreasing the non-biased signal. POPR, 7, 12.
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`8
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`For a number of reasons, the Challenged Claims should not be construed so
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`narrowly. First, because the independent claims are silent as to any specific type of
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`biasing, the mathematical signal adjustment embodiments may not be imported from
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`the specification into the claims. Hill-Rom Serv., Inc. v. Stryker Corp., 755 F.3d
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`1367, 1374 (Fed. Cir. 2014). Second, dependent claims 4, 12, 13, 21, and 22 recite
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`mathematically adjusting signal strength as a means of biasing the key selection
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`process. Thus, the independent claims must not be construed so narrowly and should
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`instead capture other means of preferring one key over another. SunRace Roots
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`Enterprise Co., Ltd. v. SRAM Corp., 336 F.3d 1298, 1302–03, (Fed. Cir. 2003)
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`(finding the doctrine of claim differentiation creates “a presumption that each claim
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`in a patent has a different scope”). Finally, Patent Owner suggests that Petitioners
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`concede the claimed biasing requires “a specified non-zero ‘bias amount.’” POPR,
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`11. Patent Owner is wrong. The petition never uses the term “specified” or suggests
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`that the bias limitation requires any specific value at all. Instead, Petitioners were
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`clear that the claims merely require preferring one key over another. Petition, 19-21.
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`Second, the POPR cherry-picks factual findings from a non-institution
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`decision in a proceeding involving a continuation of the ‘425 Patent at issue here
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`that found Jahier does not prefer one key over another by “a select amount” as
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`9
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`required by those challenged claims (“the ’286 ID”).2 POPR, 16-18. Critically, the
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`independent claims at issue here do not include the “select amount” language or any
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`language that even remotely suggests one key’s signal must surpass another’s by a
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`specific amount. Tellingly, the POPR entirely ignores that the ’286 ID expressly
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`recognizes “Jahier may be viewed as preferring the status of the preselected key I
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`over the status of the new key i”—precisely the teaching relied upon by Petitioners
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`here and all that is required of the ’425 Patent’s independent claims. IPR2020-00259,
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`Paper 8, 12. The POPR also ignores that a separate Board recently instituted review
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`of another continuation of the ‘425 Patent (“the ’790 ID”)3 that found Jahier teaches
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`“the respective second signal values of the plurality of keys being biased in favor of
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`the first key.” Like the independent claims here, the claims at issue in the ’790 ID
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`are agnostic as to the specific biasing means. Accordingly, this Board should
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`similarly find that Jahier teaches the biasing required of the independent claims.
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`Because Patent Owner’s merits discussion turns entirely on a legally flawed
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`claim interpretation, this factor strongly weighs in favor of institution.
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`2 Samsung Elec. Co., Ltd. et al v. Neodron Ltd., IPR2020-00259, Paper 8, *12 (PTAB
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`May 26, 2020) (denying institution).
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`3 Samsung Elec. Co., Ltd. et al v. Neodron Ltd., IPR2020-00515, Paper 8, *14-15
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`(PTAB Jul. 1, 2020) (granting institution).
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`Respectfully submitted,
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`BY: /s/ Adam P. Seitz
`Adam P. Seitz, Reg. No. 52,206
`Paul R. Hart, Reg. No. 59,646
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`COUNSEL FOR PETITIONERS
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`CERTIFICATE OF SERVICE ON PATENT OWNER
`UNDER 37 C.F.R. § 42.105
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`Pursuant to 37 C.F.R. §§ 42.6(e) and 42.105, the undersigned certifies that on
`August 5, 2020, the foregoing Petitioners’ Preliminary Reply was served via
`electronic filing with the Board and via Electronic Mail on the following
`practitioners of record for Patent Owner:
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`Kent N. Shum
`kshum@raklaw.com
`Neil A. Rubin
`nrubin@raklaw.com
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`Russ August & Kabat
`12424 Wilshire Blvd., 12th Floor
`Los Angeles, CA 90025
`Telephone: (310) 826-7474
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`BY: /s/ Adam P. Seitz
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`Adam P. Seitz, Reg. No. 52,206
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`COUNSEL FOR PETITIONERS
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`12
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