UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`
`APPLE INC. & MICROSOFT CORPORATION
`Petitioners
`
`v.
`
`NEODRON LTD.
`Patent Owner
`
`____________
`
`Case No. IPR2020-00778
`U.S. Patent No. 7,821,425
`____________
`
`
`PATENT OWNER’S PRELIMINARY
`RESPONSE SUR-REPLY
`
`
`
`
`
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`
`APPLE INC. & MICROSOFT CORPORATION
`Petitioners
`
`v.
`
`NEODRON LTD.
`Patent Owner
`
`____________
`
`Case No. IPR2020-00778
`U.S. Patent No. 7,821,425
`____________
`
`
`PATENT OWNER’S PRELIMINARY
`RESPONSE SUR-REPLY
`
`
`
`
`
`
`
`Table of Contents
`
`
`
`I. Fintiv Expressly Includes Parallel ITC Investigations as “Parallel Proceedings” .................. 1
`
`II. Denial Under the Fintiv Factors is Warranted ........................................................................ 2
`
`A. Factor 1 Weighs Against Institution: There Is No Stay of the ITC Case ........................... 2
`
`B. Factor 2 Weighs Strongly Against Institution: A Five-Day Hearing is Scheduled Eight
`Months Before the FWD ............................................................................................................. 2
`
`C. Factor 3 Weighs Against Institution: Substantial Investments Have Been and Will Be
`Made in the ITC Case ................................................................................................................. 3
`
`D. Factor 4 Weighs Against Institution: There is Likely Overlap Between This IPR and the
`ITC Case ..................................................................................................................................... 4
`
`E. Factor 5 Weighs Against Institution as Petitioners are Respondents in the Parallel ITC
`Proceedings. ................................................................................................................................ 4
`
`F. Factor 6 Weighs Against Institution: The Petition Suffers from Weaknesses Applying to All
`Grounds and Claims .................................................................................................................... 5
`
`III. Conclusion .............................................................................................................................. 5
`
`
`
`
`
`i
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`
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`IPR2020-00778
`POPR Sur-reply
`
`The Petition should be denied because a parallel proceeding involving the
`
`same claims, theories, and prior art, is slated for an ITC hearing eight months before
`
`the expected date of issuance for the Final Written Decision (“FWD”) in this Inter
`
`Partes Review. Petitioners cannot dispute that regardless of this IPR, the ITC in the
`
`1193 Investigation will incur tremendous costs adjudicating issues in discovery,
`
`Markman, and trial. That ALJ Elliot already has experience with the litigation of a
`
`patent from the same family as the ’425 Patent further confirms that the ITC has
`
`invested substantial time and effort into this technology. There is nothing novel
`
`about denying institution in these circumstances, as the efficiency considerations of
`
`Fintiv and NHK Spring apply with full force. Indeed, Fintiv expressly invites
`
`denying institution in cases where the parallel proceeding is an ITC Investigation.
`
`Rather than conduct a proper Fintiv analysis, Petitioners hew to outdated legal
`
`principles rejected by Fintiv and invite error. Petitioners’ primary argument is that
`
`the ITC Investigation should not be considered a “parallel proceeding.” But this is
`
`wrong under Fintiv itself and contrary to sound policy. The Board should decline
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`Petitioners’ request to create a new rule limiting Fintiv to district court cases.
`
`I.
`
`Fintiv Expressly Includes Parallel ITC Investigations as “Parallel
`Proceedings”
`
`Petitioners argue that the parallel ITC investigations should not be considered
`
`as parallel proceedings under Fintiv. But Petitioners’ ignore Fintiv’s express
`
`guidance that “even though the Office and the district court would not be bound by
`
`
`
`1
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`
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`IPR2020-00778
`POPR Sur-reply
`
`the ITC’s decision, an earlier ITC trial date may favor exercising authority to deny
`
`institution under NHK if the ITC is going to decide the same or substantially similar
`
`issues to those presented in the petition.” See Fintiv Order at 8.1
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`Petitioners also emphasize that ITC rulings do not have preclusive effect,
`
`citing three pre-Fintiv cases: Nichia, Renesas, and Samsung. But Fintiv already
`
`recognized this. Nevertheless, it held that “as a practical matter, it is difficult to
`
`maintain a district court proceeding on patent claims determined to be invalid at
`
`the ITC.” See Fintiv Order at 8-9. This is correct. As a practical matter, an ITC
`
`ruling can and do preclude issues in district court. Thus, treating an ITC investigation
`
`as a parallel proceeding is sound policy. Finally, the 3Shape A/S case Petitioners cite
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`is non-precedential and distinguishable for the reasons explained below.
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`II. Denial Under the Fintiv Factors is Warranted
`
`A.
`
`Factor 1 Weighs Against Institution: There Is No Stay of the ITC
`Case
`
`Petitioners do not dispute that the 1193 Investigation is in full swing and admit
`
`that “it is unlikely the ITC investigation will be stayed.” Reply 4. Petitioners even
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`admit that the stays of co-pending district court actions have been in deference to the
`
`ITC case, and not in deference to a PTAB action.
`
`B.
`
`Factor 2 Weighs Strongly Against Institution: A Five-Day
`Hearing is Scheduled Eight Months Before the FWD
`
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`1 All emphasis added unless otherwise noted.
`
`
`
`2
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`
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`IPR2020-00778
`POPR Sur-reply
`
`The relevant analysis is the difference between the 1193 Investigation’s trial
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`date vis-à-vis the FWD. Indeed, the Court is to look at the “proximity of the court’s
`
`trial date to the Board’s projected statutory deadline.” Fintiv Order at 9. Petitioners
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`do not dispute that this difference amounts to eight months. Significantly, Petitioners
`
`cannot dispute that in Fintiv, a hearing scheduled to begin two months before the
`
`FWD weighed only somewhat in favor of discretionary denial. ID at 13. Thus, the
`
`eight-month difference here should weigh substantially in favor of denial.
`
`Further, under a plain reading of the Fintiv Order, the date that the ITC initial
`
`or final determination issues is irrelevant. Nor should those dates be relevant, since
`
`it is the hearing that consumes the most resources of the Court and the parties
`
`combined. These considerations are given heavy weight by NHK Spring and Fintiv.
`
`Contrary to Petitioners’ arguments, Factor 2 weighs strongly against institution.
`
`C.
`
`Factor 3 Weighs Against Institution: Substantial Investments
`Have Been and Will Be Made in the ITC Case
`
`Here, a two-day Markman hearing would have been conducted by the time
`
`the institution decision is expected. Substantial resources have been and will
`
`continue to be invested in the ITC case.
`
`Further, the fact that ALJ Elliot has adjudicated issues pertaining to a related
`
`patent means that substantial judicial resources have been expended for the ITC to
`
`be acquainted with this technology. Petitioners’ gamesmanship argument is
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`
`
`3
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`
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`IPR2020-00778
`POPR Sur-reply
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`unsupported. Indeed, Fintiv did not issue until after the 1193 Investigation was
`
`instituted.
`
`D.
`
`Factor 4 Weighs Against Institution: There is Likely Overlap
`Between This IPR and the ITC Case
`
`The same claims and claim construction standard are at issue in both
`
`proceedings, and there is likely to be substantial overlap of invalidity theories and
`
`prior art. Petitioners seem to concede that most claims will be directly addressed by
`
`the ITC case. Tellingly, they have no response to the fact that the same combinations
`
`of references were identified in a similar ITC case’s invalidity contentions. They
`
`further fail to articulate how there are unique issues with respect to claims 1-24, that
`
`wouldn’t otherwise be resolved by the ITC case as well. To the extent there are
`
`unique issues, the Petitioners articulate no unique grounds of unpatentability with
`
`respect to those claims. Further, that the ITC would apply a standard of clear and
`
`convincing evidence standard is of no moment, if anything, any determination would
`
`apply an evidentiary standard that is consistent with the one that the district courts
`
`apply and thus would at least be equally informative to any district court case.
`
`Indeed, Petitioners could have easily agreed to not assert duplicative prior art
`
`and invalidity theories between the ITC investigation and this IPR. That Petitioners
`
`did not, only confirms Patent Owner’s point. Factor 4 weighs against institution.
`
`E.
`
`Factor 5 Weighs Against Institution as Petitioners are
`Respondents in the Parallel ITC Proceedings.
`
`
`
`4
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`
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`IPR2020-00778
`POPR Sur-reply
`
`There is no dispute that all Petitioners are respondents in the ITC case, such
`
`that under a plain reading of Fintiv, this factor weighs against institution, given the
`
`similarities of the issues. See Fintiv Order at 13-14. Petitioners citation to APJ
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`Crumbley’s dissent in Cisco is unavailing because the majority there held otherwise.
`
`F.
`
`Factor 6 Weighs Against Institution: The Petition Suffers from
`Weaknesses Applying to All Grounds and Claims
`
`Specifically, Jahier fails to disclose the claimed “bias” limitation found in
`
`each of the independent claims. Petitioners’ mischaracterization of the “bias”
`
`limitation and what Jahier actually teaches was addressed in the POPR; for example,
`
`Jahier’s disclosure of “thresholds” is not a bias because the second key in Jahier is
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`always selected whenever it exceeds the high threshold. POPR 13. This is why the
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`Board denied institution of the ’286 IPR Petition.2 Petitioners’ out-of-context quote
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`from the ’286 ID does not support their contention that the Board recognized
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`Jahier’s disclosure of “thresholds” as a bias. Finally, contrary to Petitioners’
`
`assertion, the Board’s statement in the ’790 ID3 that Jahier discloses all of the
`
`limitations of the petitioned claims is only preliminary, taking into consideration that
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`the Board did not have the benefit of Patent Owner’s counterarguments as Patent
`
`Owner did not file a preliminary response to the ’790 IPR Petition.
`
`
`2 Samsung Elec. Co., Ltd. et al v. Neodron Ltd., IPR2020-00259, Paper 8, *12
`(PTAB May 26, 2020) (denying institution).
`3 Samsung Elec. Co., Ltd. et al v. Neodron Ltd., IPR2020-00515, Paper 8, *14-15
`(PTAB Jul. 1, 2020) (granting institution).
`
`
`
`5
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`
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`IPR2020-00778
`POPR Sur-reply
`
`III. Conclusion
`
`This Court should deny institution for all the reasons given above.
`
`
`
`
`
`Dated: August 12, 2020
`
`
`
`
`
`/s/ Kent N. Shum
`
`Respectfully submitted,
`
`Kent N. Shum (Reg. No. 61,117)
`Neil A. Rubin (Reg. No. 67,030)
`Russ August & Kabat
`12424 Wilshire Blvd., 12th Fl.
`Los Angeles, CA 90025
`Phone: (310) 826-7474
`Fax: (310) 826-6991
`Email: kshum@raklaw.com
` nrubin@raklaw.com
` rak_neodron@raklaw.com
`
`
`
`
`6
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`IPR2020-00778
`POPR Sur-reply
`
`CERTIFICATE OF SERVICE (37 C.F.R. § 42.6(e)(1))
`
`
`The undersigned hereby certifies that the above document was served on
`
`August 12, 2020, by filing this document through the Patent Trial and Appeal Board
`
`End to End system as well as delivering a copy via email upon the following
`
`attorneys of record for the Petitioner:
`
`Lead Counsel
`Adam P. Seitz (Reg. No. 52,206)
`Postal and Hand-Delivery Address:
`ERISE IP, P.A.
`7015 College Blvd., Ste. 700
`Overland Park, Kansas 66211
`Telephone: (913) 777-5600
`Fax: (913) 777-5601
`Email: Adam.Seitz@eriseip.com
`
`Back-Up Counsel
`Paul R. Hart (Reg. No. 59,646)
`ERISE IP, P.A.
`5299 DTC Blvd., Ste. 1340
`Greenwood Village, Colorado 80111
`Telephone: (913) 777-5600
`Fax: (913) 777-5601
`Email: jim.heintz@dlapiper.com
`
`
`
`
`Dated: August 12, 2020
`
`
`
`
`
`/s/ Kent Shum
`
`Kent Shum (Reg. No. 61,117)
`Russ August & Kabat
`
`
`
`
`
`
`
`
`
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