UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT &
`BMW OF NORTH AMERICA, LLC,
`Petitioners
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`v.
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`PAICE LLC & THE ABELL FOUNDATION, INC.
`Patent Owners
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`Inter Partes Review No.: IPR2020-00994
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`U.S. Patent No. 7,104,347 K2
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`PETITIONERS’ REPLY TO
`PATENT OWNERS’ PRELIMINARY RESPONSE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT &
`BMW OF NORTH AMERICA, LLC,
`Petitioners
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`v.
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`PAICE LLC & THE ABELL FOUNDATION, INC.
`Patent Owners
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`Inter Partes Review No.: IPR2020-00994
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`U.S. Patent No. 7,104,347 K2
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`___________________
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`PETITIONERS’ REPLY TO
`PATENT OWNERS’ PRELIMINARY RESPONSE
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`Reply to Preliminary Response
`U.S. Patent No. 7,104,347
`This is not a serial IPR petition, and Petitioners (“BMW”) did not bring this
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`action after gaining any strategic advantage from co-defendants or other similarly
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`situated companies filing IPR petitions around the same time. Rather, BMW
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`quickly filed this petition once Patent Owners finally identified the allegedly
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`infringing claims on March 25, 2020—several years after earlier IPRs on mostly
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`different claims, against different parties, had concluded.1 BMW challenges six
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`dependent claims (2, 11, 17, 24, 33, and 38) of the ’347 Patent asserted by Patent
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`Owners. Only Claims 2 and 24 had previously been litigated and subject to IPRs,
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`but Claim 2 only reached Institution Decision and Claim 24 reached Final Decision
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`on completely different prior art grounds.2 Contrary to Patent Owners’ argument,
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`none of the combinations of art asserted against those dependent claims have been
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`1 Patent Owners also sued BMW on two other family patents with overlapping
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`claim features. BMW’s IPR2020-01299 is the first challenge on the ’761 Patent,
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`and BMW’s IPR2020-01386 challenges many claims of the ‘634 patent never
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`before subject to IPR.
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`2 Claim 2 institution denied in IPR2015-00795. Claim 24 institution denied in
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`IPR2015-00794, and not found unpatentable in IPR2014-00884 over different prior
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`art than that presented by BMW here. Claim 24 challenges in IPR2017-00226 and
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`IPR2017-00227 never reached institution decision due to settlement.
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`1
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`Reply to Preliminary Response
`U.S. Patent No. 7,104,347
`previously considered by the Board in an Institution or Final Written Decision.
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`This Petition presents an unusually straightforward task for the Board.
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`Because all challenged claims are dependent claims stemming from canceled
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`independent claims (Claims 1 and 23), the Petition uses the same art (notably,
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`Severinsky, Ehsani, and Bumby) that already rendered Claims 1 and 23
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`unpatentable. BMW’s Petition does not “ureservedly rel[y] on Ford’s prior art …
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`to challenge independent claims 1 and 23,” as Patent Owners argue (POPR at 11-
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`12), because BMW is not challenging Claims 1 and 23 at all. The Federal Circuit
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`has already affirmed their unpatentability over that prior art. See, e.g., Paice LLC
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`v. Ford Motor Co., 681 F. App’x 904 (Fed. Cir. 2017). BMW uses this art because
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`the Board is already familiar with it and because of its preclusive effect on Patent
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`Owners. Notably, the Preliminary Response does not dispute the art’s applicability
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`to those independent claims. Not using the same art for the same features would be
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`inefficient, could potentially result in inconsistent findings regarding previously
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`canceled claims, and would likely elicit cries of unfairness from Patent Owners
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`having to analyze it anew. The Petition also relies on a declaration from Dr.
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`Gregory Davis, whose testimony the Board already credited in finding Claims 1
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`and 23 unpatentable. Dr. Davis incorporates that same testimony here. BMW’s
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`approach to this Petition promotes efficiency so that the Board need not re-analyze
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`the myriad limitations in independent Claims 1 and 23 to rule on the challenged
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`2
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`Reply to Preliminary Response
`U.S. Patent No. 7,104,347
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`dependent claims.
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`Additionally, Patent Owners do not raise the six so-called Fintiv factors for
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`discretionary denial “due to the advanced state of a parallel district court
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`litigation.” See Apple Inc. v. Fintiv, Inc., Case IPR2020-00019, Paper 15, at 2, 7-8
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`(PTAB May 13, 2020). BMW agrees with this concession. The District Court’s
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`review is not at an advanced stage, and this IPR proceeding would be more
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`efficient and less burdensome. Here, two of the three judges are intimately
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`familiar with the ’347 Patent and the primary prior art used by BMW, while the
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`District Court has not even held a claim construction hearing let alone scheduled
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`anything beyond basic discovery. Here, the Board’s review has a statutory end
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`date, while the possibility of any jury trial happening during COVID is far from
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`certain, and subject to a backlog of cases to be tried. Potential jurors need not be
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`exposed to a novel virus at a full District Court trial when the Board can render its
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`decision through wholly remote proceedings, as it has for the past six months.
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`A.
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`The General Plastic Factors Favor Institution
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`Patent Owners argue that the General Plastic factors favor discretionary
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`denial, but that test is ill-suited here. The General Plastic test, as expanded by
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`Valve I, Valve II and other decisions, is to prevent petitioners from gaining an
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`unfair advantage by lying in wait with known art and coordinating with co-
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`defendants to file follow-on petitions after seeing a patent owner’s preliminary
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`3
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`Reply to Preliminary Response
`U.S. Patent No. 7,104,347
`response. That is far from the case here, as discussed above. Nevertheless, the
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`General Plastic factors favor institution.
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`Under “Factor One,” BMW is not the same as or related to the previous
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`petitioners and is not co-defendants in the same litigation charged with
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`infringement based on the same product or shared technology among the
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`defendants, like in Valve Corp. v. Elec. Scripting Prods., Inc., Case IPR2019-
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`00062, Paper 11, at 9-10 (PTAB Apr. 2, 2019) (“Valve I”) and Valve Corp. v. Elec.
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`Scripting Prods., Inc., Case IPR2019-00064, Paper 10, at 10-11 (PTAB May 1,
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`2019) (“Valve II”). Nor has BMW coordinated or intends to coordinate this
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`challenge with the previous ones filed against the ’347 Patent, like in Fresenius
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`Kabi USA, LLC v. Amgen, Inc., Case IPR2019-00971, Paper 13 at 7 (PTAB Oct.
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`19, 2019). BMW and the previous petitioners are all competitor auto
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`manufacturers that sell hybrid vehicles in the U.S., and their only commonality is
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`having been sued by Patent Owners (albeit on different sets of claims).
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`Factor One supports institution because the Petition “challenge[s] claims
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`that were not previously challenged.” Ericsson Inc. v. Uniloc 2017, LLC, Case
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`IPR2019-01550, Paper 8 at 11-12 (PTAB March 17, 2020) (denying institution
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`because every claim was previously challenged). Patent Owners do not cite a
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`single case where that was true and the Board still applied its discretionary denial.
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`Patent Owners’ “Factor Two,” “Factor Four,” and “Factor Five” analyses do
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`4
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`Reply to Preliminary Response
`U.S. Patent No. 7,104,347
`not make any sense here, but those factors nonetheless favor institution. Patent
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`Owners boldly complain about the “five-year time gap” since the previous
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`challenges to the ’347 Patent, POPR at 15, but that delay is solely of Patent
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`Owners’ making. BMW had no reason to challenge the ’347 Patent until Patent
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`Owners sued in November 2019. Nevertheless, BMW filed its petition quickly:
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`approximately two months after Patent Owners identified their asserted claims and
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`still six months before the statutory bar. If Patent Owners were concerned about
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`timing of parallel proceedings, they could have identified their asserted claims with
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`their lawsuit or sued BMW years earlier when they sued others in the industry.
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`BMW should not be punished for Patent Owners’ lack of diligence or denied
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`access to the efficiencies of IPR.
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`“Factor Three” does not apply to four of the six challenged claims, because
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`Claims 11, 17, 33, and 38 have never been subject to IPR, and thus could not have
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`been part of a preliminary response or Board decision. Patent Owners’ argument
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`that BMW’s “reli[ance] on Severinsky + Ehsani and Bumby + Ehsani to challenge
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`claims 17 and 38” was previously applied “on multiple occasions” by Ford, for
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`example, has no basis in fact. See POPR at 11; BMW1003; BMW1004.
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`This factor also does not weigh against institution for Claims 2 and 24
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`5
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`Reply to Preliminary Response
`U.S. Patent No. 7,104,347
`because the previous challenges to reach decisions cited completely different art:3
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`Claim
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`Previously Rejected Grounds
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`BMW’s Grounds
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`2
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`Ibaraki ‘882 + Koide (IPR2015-00795)
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`(1) Severinsky + Ehsani +Graf
`(2) Severinsky + Ehsani + Nii
`(3) Bumby + Graf
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`24
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`(1) Tabata ‘201 + Tabata ‘541 (IPR2014-
`00884)
`(2) Ibaraki ‘882 (IPR2015-00794)
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`(1) Severinsky + Graf
`(2) Severinsky + Nii
`(3) Bumby + Graf
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`Moreover, Patent Owners’ complaints about BMW’s citations to prior Final
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`Written Decisions (POPR at 13-14) all relate to claim construction and issue
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`preclusion. Yet Patent Owners do not—and cannot—contest either. See, e.g.,
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`POPR at 27 (agreeing to constructions adopted by the Board/Federal Circuit).
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`The remaining “Factor Six” and “Factor Seven” efficiency analysis weighs
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`heavily in favor of institution, as discussed above. The District Court would be a
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`much less efficient venue for determining the issues raised by the Petition. To the
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`extent there are any concerns related to overlap if a stay is not granted, BMW will
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`stipulate not to offer an expert report in the District Court on any grounds instituted
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`by the Board.
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`3 As discussed in footnote 2 above, the Volkswagen petitions that relied on Graf’s
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`UK counterpart settled before an institution decision.
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`6
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`Reply to Preliminary Response
`U.S. Patent No. 7,104,347
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`B.
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`Public Policy Favors Institution
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`Patent Owners “play” victim by characterizing the Petition as a “serial IPR
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`challenge designed to harass the Patent Owners and abuse the IPR process.”
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`POPR at 8. The opposite is true. Patent Owners’ lawsuit against BMW comes
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`more than five years after it sued others in the industry and asserts different claims,
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`the majority of which were never asserted before. Discretionary denial here would
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`encourage patent litigants to assert different sets of essentially the same claims
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`against various defendants in order to build “immunity” from IPR—as Patent
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`Owners argue here—in later assertions of essentially the same, yet previously
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`unchallenged, claims. This devious strategy will have wide-ranging consequences
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`in patent drafting and litigation strategy if the Board allows it to happen.
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`BMW was not party to the prior IPRs or litigations on the ’347 Patent, nor
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`was it sued for infringement of the same set of claims asserted against and
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`challenged in earlier IPRs. BMW cannot be punished for that fact, nor should
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`Patent Owners be rewarded for it. It is “important” that BMW, or any petitioner
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`sued on a set of claims not litigated before, “have an avenue to request the PTO to
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`take another look at the patent in order to better inform the district court of the
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`patent’s validity.” 157 CONG. REC. 90, H4425 (2011). Congress created that
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`avenue to “help screen out bad patents,” id., but it is not open when the Board uses
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`discretionary denial to leave the validity question solely in the hands of the courts.
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`7
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`Dated: October 7, 2020
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`Reply to Preliminary Response
`U.S. Patent No. 7,104,347
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`Respectfully submitted,
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`/Vincent J. Galluzzo/
`Jeffrey D. Sanok (Reg. No. 32,169)
`Vincent J. Galluzzo (Reg. No. 67,830)
`Crowell & Moring LLP
`1001 Pennsylvania Avenue NW
`Washington, DC 20004-2595
`Tel.: (202) 624-2500
`Fax.: (202) 628-8844
`jsanok@crowell.com
`vgalluzzo@crowell.com
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`Scott L. Bittman (Reg. No. 55,007)
`Jacob Z. Zambrzycki (pro hac vice pending)
`Crowell & Moring LLP
`590 Madison Avenue, 20th Floor
`New York, NY 10022-2544
`Telephone No.: (212) 223-4000
`Facsimile No.: (212) 223-4134
`sbittman@crowell.com
`jzambrzycki@crowell.com
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`Counsel for Petitioners
`Bayerische Motoren Werke Aktiengesellschaft
`and BMW of North America, LLC
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`8
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`Reply to Preliminary Response
`U.S. Patent No. 7,104,347
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`Certificate of Service
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`Pursuant
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`to 37 C.F.R. § 42.6(e)(4), I certify
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`that
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`the foregoing
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`PETITIONERS’ REPLY TO PATENT OWNERS’ PRELIMINARY RESPONSE
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`was served electronically by filing this document through the PTAB E2E system,
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`as well as by e-mailing copies to the following address for counsel of record for
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`Patent Owners:
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`Dated: October 7, 2020
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`Ruffin B. Cordell
`Indranil Mukerji
`Brian J. Livedalen
`Timothy W. Riffe
`FISH & RICHARDSON P.C.
`3200 RBC Plaza
`60 South Sixth Street
`IPR36351-0004IP1@fr.com
`PTABInbound@fr.com
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`Respectfully submitted,
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`/Vincent J. Galluzzo/
`Vincent J. Galluzzo
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`9
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