`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`PHILIP MORRIS PRODUCTS, S.A.,
`Petitioner
`
`v.
`
`RAI STRATEGIC HOLDINGS, INC.,
`Patent Owner
`
`Patent No. 9,901,123
`
`
`
`
`Inter Partes Review No. IPR2020-00919
`
`
`
`PATENT OWNER’S SUR-REPLY TO PETITIONER’S REPLY TO
`PATENT OWNER’S PRELIMINARY RESPONSE
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`
`
`
`TABLE OF CONTENTS
`
`
`Patent Owner Sur-Reply
`IPR2020-00919
`
`Page
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`
`TABLE OF AUTHORITIES ................................................................................... ii
`LIST OF PATENT OWNER EXHIBITS ............................................................... iii
`I.
`The Board Should Deny Institution Under Section 325(d) ............................ 1
`II.
`The Board Should Deny Institution In View Of The Parallel ITC
`Proceeding ...................................................................................................... 3
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`
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`
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`-i-
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`
`
`TABLE OF AUTHORITIES
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`
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`Patent Owner Sur-Reply
`IPR2020-00919
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`Page
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`Cases
`Advanced Bionics, LLC v. Med-El Elektromedizinische Gerate GMBH, IPR2019-
`01469, Paper No. 6 (PTAB Feb. 13, 2020) ........................................................1, 2
`
`Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper No. 11
`(PTAB Mar. 20, 2020) ............................................................................................... 6
`
`Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper No. 15
`(PTAB May 13, 2020) ................................................................................... 3, 4, 5
`
`Edge Endo, LLC v. Scianamblo, IPR2018-01320, Paper No. 15
`(PTAB Jan. 14, 2019).............................................................................................. 2
`
`Husky Injection Molding Sys., Ltd. v. Plastipak Packaging, Inc., IPR2020-00435,
`Paper No. 23 (PTAB July 28, 2020) ...................................................................... 1
`
`In re Princo Corp., 478 F.3d 1345 (Fed. Cir. 2007) ..............................................5, 6
`
`NHK Spring Co., Ltd. v. Intri- Plex Techs., Inc., IPR2018-00752, Paper No. 8
`(PTAB Sept. 12, 2018) ........................................................................................... 5
`
`Tex. Instruments, Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558 (Fed. Cir.
`1996) ....................................................................................................................... 6
`
`
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`-ii-
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`
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`Ex. 2001
`
`LIST OF PATENT OWNER EXHIBITS
`Tobacco Tactics, “Heated Tobacco Products,”
`https://tobaccotactics.org/wiki/heated-tobacco-products/
`
`Patent Owner Sur-Reply
`IPR2020-00919
`
`
`Invalidity Claim Chart C3 from ITC Investigation No. 337-TA-1199
`
`
`Ex. 2002
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`Ex. 2003 U.S. Patent No. 5,954,979
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`Ex. 2004 U.S. Patent No. 5,730,158
`
`Ex. 2005 U.S. Patent No. 5,093,894
`
`Ex. 2006 U.S. Patent No. 5,228,460
`
`Ex. 2007 U.S. Patent No. 5,322,075
`
`Ex. 2008 U.S. Patent No. 5,498,855
`
`Ex. 2009 U.S. Patent No. 5,665,262
`
`Ex. 2010 U.S. Patent No. 5,530,225
`
`Ex. 2011 U.S. Patent No. 5,591,368
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`Ex. 2012 U.S. Patent No. 5,692,291
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`Ex. 2013 U.S. Patent No 5,708,258
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`Ex. 2014 U.S. Patent No. 5,750,964
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`Ex. 2015 U.S. Patent No. 5,880,439
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`Ex. 2016 U.S. Patent No. 5,902,501
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`Ex. 2017 U.S. Patent No. 6,040,560
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`Ex. 2018 U.S. Patent No. 5,865,185
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`-iii-
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`European Patent Publication No. EP0917830A1
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`Patent Owner Sur-Reply
`IPR2020-00919
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`European Patent Publication No. EP0703734A1
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`PCT Patent Publication No. WO9632854A2
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`PCT Patent Publication No. WO9406314A1
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`PCT Patent Publication No. WO9527412A1
`
`Ex. 2019
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`Ex. 2020
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`Ex. 2021
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`Ex. 2022
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`Ex. 2023
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`Ex. 2024 Accord 2001 Update,
`https://www.industrydocuments.uscf.edu/docs/jxlx0179
`(PM3001487472-PM3001487482)
`
`
`Ex. 2025 Glenn Collins, “Analysts Mixed on Philip Morris’s Smoking System,”
`The New York Times (Oct. 24, 1997)
`
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`Ex. 2026 Complaint from ITC Investigation No. 337-TA-1199
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`Ex. 2027 Notice of Institution of Investigation from ITC Investigation No. 337-
`TA-1199
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`Ex. 2028
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`Excerpt of Respondents’ invalidity contentions from ITC
`Investigation No. 337-TA-1199
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`Procedural Schedule from ITC Investigation No. 337-TA-1199
`
`
`Ex. 2029
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`Ex. 2030 Order Granting Defendants’ Unopposed Motion to Invoke the
`Statutory Stay of Plaintiffs’ Claims Relating to U.S. Patent Nos.
`9,839,238, 9,901,123, and 9,930,915 Pursuant to 28 U.S.C. § 1659
`from E.D. Virginia Case No. 1:20-cv-00393-LO-TCB dated June 18,
`2020
`
`
`Ex. 2031 Reply of Philip Morris Products, SA to Withers & Rogers LLP’s
`Opposition to the Grant of EP2800486 dated November 6, 2017
`
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`Ex. 2032 Reply of Philip Morris Products, SA to Withers & Rogers LLP’s
`Opposition to EP2782463 dated September 15, 2017
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`-iv-
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`Ex. 2033 Response of Philip Morris Products, SA to Third Party Observations
`as to European Patent Application No. 17187283.1 dated May 4, 2020
`
`Patent Owner Sur-Reply
`IPR2020-00919
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`Ex. 2034 Office Action issued on April 5, 2016 as to U.S. Serial No.
`14/370,410
`
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`Ex. 2035 Applicant’s Request for Reconsideration in Response to Office Action
`issued on April 5, 2016 as to U.S. Serial No. 14/370,410 dated
`August 4, 2016
`
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`Ex. 2036 Applicant’s Amendment and Reply in Response to Office Action
`issued on June 28, 2012 as to U.S. Serial No. 12/954,701 dated
`October 31, 2012
`
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`Ex. 2037 U.S. Patent No. 5,613,504
`
`Ex. 2038 U.S. Patent No. 5,353,813
`
`Ex. 2039
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`Field Names for Truth Tobacco Industry Documents,
`https://www.industrydocuments.ucsf.edu/tobacco/help/field-names/
`
`
`Ex. 2040 Document Information for Method of Making a Heater with Bullet
`Shape (Exhibit 1016),
`https://www.industrydocuments.ucsf.edu/tobacco/docs/#id=mhpp021
`7
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`
`Ex. 2041
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`Invalidity Contention Exhibit C1 - Petition for Inter Partes Review of
`U.S Patent No. 9,901,123 from ITC Investigation No. 337-TA-1199
`
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`Ex. 2042 Office Action issued on June 28, 2012 as to U.S. Serial No.
`12/954,701
`
`
`
`-v-
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`
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`The Board Should Deny Institution Under Section 325(d)
`Petitioner’s Reply fails to rebut RAI’s showing that denial of the Petition is
`
`Patent Owner Sur-Reply
`IPR2020-00919
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`I.
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`warranted under the two-part framework of Advanced Bionics. With respect to
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`part one of the framework, Applicants presented all four of Petitioner’s prior-art
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`references to the PTO in an IDS during prosecution of the ’123 patent. Ex. 1002 at
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`149-151, 155. That alone satisfies the first part of the framework. Husky Injection
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`Molding Sys., Ltd. v. Plastipak Packaging, Inc., IPR2020-00435, Paper No. 23 at
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`13 (PTAB July 28, 2020) (reference was presented to the Office in an IDS and “the
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`first part of the Advanced Bionics framework is satisfied for this reason alone.”).1
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`Instead of rebutting RAI’s showing, Petitioner asserts that Applicants “hid”
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`the relevant prior art from the Examiner, effectively accusing Applicants of
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`inequitable conduct. See Reply at 1. But in making such accusations, Petitioner
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`misstates the Examiner’s statement. Petitioner asserts that Applicants “ignored the
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`Examiner’s plea to ‘specifically’ identify ‘any particular reference or portion of a
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`reference’ in this ‘extremely large number of references.’” Id. at 1. But the
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`Examiner actually requested that “[i]f the applicant and/or applicant’s
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`representative are aware of any particular reference or portion of a reference in the
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`list which the examiner should take pay particular attention to,” then “it is
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`1 All emphasis is added throughout unless otherwise indicated.
`1
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`requested that it be specifically pointed out in response to this Office action.” Ex.
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`Patent Owner Sur-Reply
`IPR2020-00919
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`1002 at 142. In other words, the Examiner asked Applicants to respond only if
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`they were aware of any references of particular relevance to the pending claims,
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`and Petitioner has not shown that Applicants were aware of any such references.
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`Elsewhere, Petitioner quibbles about whether “the Office was ... presented
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`with the arguments in the Petition.” Reply at 1. But part one of the Advanced
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`Bionics framework considers whether the same or substantially the same “art or
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`arguments” were previously presented to the Office. See Advanced Bionics, LLC
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`v. Med-El Elektromedizinische Gerate GMBH, IPR2019-01469, Paper No. 6 at 8
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`(PTAB Feb. 13, 2020). “Section 325(d) does not require previous presentation of
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`the same art and arguments.” Edge Endo, LLC v. Scianamblo, IPR2018-01320,
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`Paper No. 15 at 12 (PTAB Jan. 14, 2019) (emphasis in original).
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`With respect to part two of the Advanced Bionics framework, Petitioner
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`alleges that the Examiner committed a host of errors material to the patentability of
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`the challenged claims. Reply at 1-2. But none of Petitioner’s arguments show that
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`the Office materially erred. Petitioner argues while referring to “wicking”
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`language that “the Examiner compared the art to the wrong claim language when
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`ostensibly finding the challenged claims contained allowable subject matter.”
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`Reply at 1. But the issue raised by Petitioner appears to be little more than a
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`typographical error on the Examiner’s part, i.e., a failure to accurately reproduce
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`2
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`the claim language at issue. It is not a showing of material error but rather a single
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`Patent Owner Sur-Reply
`IPR2020-00919
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`stray misstatement found nowhere else in the record. Indeed, nothing else suggests
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`the Examiner believed that the “wick[ing]” language was required by the pending
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`claims. The Examiner’s single misstatement does not amount to a showing that the
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`Office materially erred in evaluating the art or arguments.
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`Petitioner further argues that “the Examiner erred by failing to identify the
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`teachings in Morgan, Adams, and Counts-962 regarding heaters positioned
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`proximal to the center.” Reply at 2. But Petitioner cannot point to any affirmative
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`evidence that the Examiner did not evaluate the teachings of these references. To
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`the contrary, the Examiner stated that he considered each and every one of
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`Petitioner’s references during the prosecution of the ’123 patent, and the Examiner
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`was also familiar with the references from the prosecutions of other patent
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`applications in the ’123 patent family. POPR at 53-54. The fact that the Examiner
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`did not expressly discuss Petitioner’s references is not affirmative evidence that he
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`failed to consider them.
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`II. The Board Should Deny Institution In View Of The Parallel ITC
`Proceeding
`Petitioner also fails to justify why the Board should not exercise its
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`discretion and deny institution under §314(a). As detailed in RAI’s POPR and
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`further below, the Fintiv factors favor denial because a co-pending ITC
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`3
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`investigation is at an advanced stage, involves the same parties, the same patent,
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`Patent Owner Sur-Reply
`IPR2020-00919
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`and substantially the same issues, and will outpace a proceeding on Petitioner’s
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`meritless Petition by more than two months. See Apple Inc. v. Fintiv, Inc.,
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`IPR2020-00019, Paper No. 15 (PTAB May 13, 2020) (informative).
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`The ITC investigation is moving quickly: The claim construction hearing is
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`completed, fact discovery concluded on September 25, 2020, and expert discovery
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`will end shortly. A five-day merits hearing is scheduled for January 25-29, 2021.
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`The ITC’s presiding Administrative Law Judge (ALJ), Clark S. Cheney, will issue
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`an Initial Determination by May 14, 2021, and the Commission will provide a
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`Final Determination by September 15, 2021—more than two months before the
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`Board’s projected Final Written Decision on November 18, 2021:
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`
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`Petitioner’s Reply ignores that a trial date has been set and is not expected to
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`change. The Board “generally take[s] courts’ trial schedules at face value absent
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`some strong evidence to the contrary.” Fintiv at 13. Here, Petitioner presented no
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`such strong evidence in the Petition or Reply. And the present case compares
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`4
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`favorably to Fintiv, where the Board ultimately denied institution. The Fintiv
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`Patent Owner Sur-Reply
`IPR2020-00919
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`panel concluded that a trial scheduled two months before the Board’s projected
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`decision weighed in favor of denial. Id.
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`The Reply also ignores that the parties and ALJ will have invested
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`substantial resources in the ITC proceeding by the time the Institution Decision is
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`due. As noted above, all aspects of the case except for the final merits hearing will
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`be completed by the time of institution. Despite all this, Petitioner suggests that
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`the Board should ignore the parallel proceedings in the ITC. Reply at 2-4. But the
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`Board’s Trial Practice Guide makes clear that denial may be appropriate given
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`“events in other proceedings related to the same patent, either at the Office, in
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`district courts, or the ITC.” Consolidated Trial Practice Guide (“Practice Guide”)
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`at 58 (citing NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc., IPR2018-00752, Paper
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`No. 8 at 11-21 (PTAB Sept. 12, 2018) (precedential)).
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`Moreover, Petitioner requested a §1659 compulsory stay in the Eastern
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`District of Virginia case pending resolution of the ITC investigation. See Ex.
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`2030. The purpose of a §1659 stay is to “avoid[] litigation in two forums at once.”
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`In re Princo Corp., 478 F.3d 1345, 1355 (Fed. Cir. 2007). But parallel litigation is
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`exactly what Petitioner is attempting to instigate with its IPR Petition. Despite
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`seeking protection from duplicative litigation on infringement, Petitioner now
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`seeks to impose it on invalidity. Petitioner should not have it both ways—it should
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`5
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`be held to its initial choice to avoid parallel litigation. That means allowing both
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`Patent Owner Sur-Reply
`IPR2020-00919
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`infringement and validity to play out in the ITC investigation, where fact discovery
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`is complete and expert discovery is now underway in preparation for a hearing in
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`January 2021.
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`As explained by the Board, “ITC final invalidity determinations do not have
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`preclusive effect, but, as a practical matter, it is difficult to maintain a district court
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`proceeding on patent claims determined to be invalid at the ITC.” Apple Inc. v.
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`Fintiv, Inc., IPR2020-00019, Paper No. 11 at 8-9 (PTAB Mar. 20, 2020). ITC
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`validity determinations can and often do carry weight in district court litigation
`
`once affirmed by the Federal Circuit. After all, “[d]istrict courts are not free to
`
`ignore holdings of [the Federal Circuit] that bear on cases before them.” Tex.
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`Instruments, Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558, 1569 (Fed. Cir.
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`1996). And sequential ITC and District Court proceedings are structured more
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`efficiently than parallel ITC and PTAB proceedings, especially when the ITC
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`investigation is so far advanced. Unlike the Board, the District Court will, as a
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`matter of statutory law, receive the full ITC record and benefit from any Federal
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`Circuit review. In re Princo, 478 F.3d at 1355. The just and reasonable course is
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`for the parties to litigate Petitioner’s invalidity allegations at the ITC, and then
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`leverage the ITC record in the Eastern District of Virginia. Institution of another
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`proceeding at the PTAB would result in duplicative efforts and wasted resources.
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`6
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`In a desperate attempt to avoid denial of institution, Petitioner amended its
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`Patent Owner Sur-Reply
`IPR2020-00919
`
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`invalidity contentions in the ITC after seeing the POPR such that there is no longer
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`perfect overlap between the invalidity grounds being pursued in both forums.
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`Reply at 4-5. Petitioner suggests that with its amended invalidity contentions,
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`Fintiv factor 4 now weighs against denial of the Petition. Id. But many of the
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`same prior-art patents are still at issue in both forums:
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`
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`Petitioner’s attempt to eliminate inefficiency is little more than a “shell game”—it
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`merely mixes up the art being pursued in the respective forums. This does not hide
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`the fact that there is still significant overlap, which would cause duplication of
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`efforts. More generally, Petitioner is pursuing invalidity under §§ 102 or 103 on
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`the basis of prior art patents or printed publications in both forums, which causes
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`inefficiency and prevents IPR from functioning as a true alternative to litigation in
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`relation to grounds that could be at issue in an IPR.
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`For the foregoing reasons, the Board should deny institution.
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`7
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`Date: September 29, 2020
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`Patent Owner Sur-Reply
`IPR2020-00919
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`Respectfully submitted,
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`By: /David M. Maiorana/
`David M. Maiorana, Reg. No. 41,449
`Kenneth S. Luchesi, Reg. No. 58,673
`JONES DAY
`North Point, 901 Lakeside Avenue
`Cleveland, OH 44114
`(216) 586-7499
`
`Anthony M. Insogna, Reg. No. 35,203
`JONES DAY
`4655 Executive Drive, Suite 1500
`San Diego, CA 92121
`
`Geoffrey K. Gavin, Reg. No. 47,591
`JONES DAY
`1420 Peachtree Street, N.E., Suite 800
`Atlanta, GA 30309
`
`Joshua R. Nightingale, Reg. No. 67,865
`JONES DAY
`500 Grant Street, Suite 4500
`Pittsburgh, PA 15219
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`George N. Phillips, Reg. No. 68,001
`JONES DAY
`250 Vesey Street
`New York, NY 10281
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`Patent Owner Sur-Reply
`IPR2020-00919
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that the foregoing Patent Owner’s Sur Reply
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`To Petitioner’s Reply To Patent Owner’s Preliminary Response was served via email
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`on the date below, upon the following:
`
`Jonathan Strang
`jonathan.strang@lw.com
`
`Matthew Moore
`matthew.moore@lw.com
`
`Inge Osman
`inge.osman@lw.com
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`Christopher Henry
`christopher.henry@lw.com
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`
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`Dated: September 29, 2020
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`/Joshua R. Nightingale/
`Counsel for Patent Owner
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`9
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