Paper No. 7
`Date Filed: October 7, 2020
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`
`PEAG LLC (d/b/a JLab Audio), AUDIO PARTNERSHIP LLC and AUDIO
`PARTNERSHIP PLC (d/b/a Cambridge Audio)
`Petitioner,
`
`v.
`
`VARTA MICROBATTERY GMBH,
`Patent Owner
`____________
`
`Case IPR 2020-01212
`Patent 9,153,835
`____________
`
`
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`UNDER 37 C.F.R. § 42.107
`
`
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`

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`Preliminary Response
`U.S. Patent No. 9,153,835
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`TABLE OF CONTENTS
`
`I. 
`II. 
`
`INSTITUTION SHOULD NOT BE GRANTED ........................................... 1 
`BACKGROUND ............................................................................................. 4 
`A. 
`The ’835 Patent ..................................................................................... 4 
`B. 
`The ’835 Patent Claims ......................................................................... 6 
`C. 
`The Parallel District Court Proceedings ................................................ 7 
`D. 
`Petitioners’ Arguments .......................................................................... 9 
`PERSON OF ORDINARY SKILL ................................................................. 9 
`III. 
`IV.  CLAIM CONSTRUCTION .......................................................................... 10 
`V. 
`THE BOARD SHOULD EXERCISE ITS DISCRETION TO DENY
`INSTITUTION .............................................................................................. 10 
`A. 
`Institution Should Be Denied Under § 314(a) .................................... 10 
`1. 
`The District Court Is Not Likely to Grant a Stay ...................... 12 
`2. 
`The District Court’s Trial Date Favors Denial ......................... 13 
`3. 
`Investment in the Parallel Proceeding Favors Denial ............... 15 
`4. 
`The Issues in the Petition Substantially Overlap with Those in
`the District Court ....................................................................... 16 
`Petitioners and Defendants in the District Court Litigation Are
`the Same .................................................................................... 20 
`Other Circumstances Impacting Discretion .............................. 20 
`6. 
`Institution Should Be Denied Under § 325(d) .................................... 21 
`B. 
`VI.  THE BOARD SHOULD NOT INSTITUTE REVIEW ON THE
`PROPOSED OBVIOUS GROUNDS (GROUNDS 1-3) .............................. 22 
`A.  Applicable Legal Standard .................................................................. 23 
`B. 
`The References Relied Upon by Petitioners ....................................... 24 
`1. 
`The Kobayashi Reference ......................................................... 24 
`2. 
`The Kaun Reference.................................................................. 27 
`3. 
`The Ryou Reference.................................................................. 30 
`
`5. 
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`C. 
`
`Ground 1 – Petitioners Have Failed to Show that a POSA Would
`Have Combined Kaun with Kobayashi to Obtain the Claimed
`Invention .............................................................................................. 31 
`D.  Ground 2 – Petitioners Have Failed to Show that a POSA Would
`Have Combined Kobayashi with Kaun to Obtain the Claimed
`Invention .............................................................................................. 35 
`Ground 3 – Petitioners Have Failed to Show that a POSA Would
`Have Combined Kobayashi with Ryou to Obtain the Claimed
`Invention .............................................................................................. 36 
`VII.  CONCLUSION .............................................................................................. 38 
`
`
`
`E. 
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`TABLE OF AUTHORITIES
`
`Cases 
`Apple Inc. v. Fintiv, Inc.,
`IPR2020-00019, Paper 11 (P.T.A.B. Mar. 20, 2020) .............................. 11, 12, 20
`Becton, Dickinson & Co. v. B. Braun Melsungen AG,
`IPR2017-01586, Paper 8 (P.T.A.B. Dec. 15, 2017) ............................................. 21
`Cuozzo Speed Techs., LLC v. Lee,
`136 S. Ct. 2131 (2016) ......................................................................................... 10
`Dr. Reddy’s Labs. S.A. v. Indivior UK Ltd.,
`IPR2019-00328, Paper 19 (P.T.A.B. June 3, 2019) ...................................... 21, 22
`Endress + Hauser, Inc. v. Hawk Measurement Sys. Pty, Ltd.,
`122 F.3d 1040 (Fed. Cir. 1997) ............................................................................ 29
`Expedia, Inc. v. IBM, Corp.,
`IPR2019-00404, Paper 8 (P.T.A.B. June 5, 2019) ........................................ 18, 19
`General Plastic Indus. Co., v. Canon Kabushiki Kaisha,
`IPR2016-01357, Paper 19 (P.T.A.B. Sept. 6, 2017) ............................... 13, 14, 19
`In re Fine,
`837 F.2d 1071 (Fed. Cir. 1988) ............................................................................ 23
`Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd.,
`IPR2013-00324, Paper 19 (P.T.A.B. Nov. 21, 2013) .......................................... 22
`KSR Int’l Co. v. Teleflex Inc.,
`550 U.S. 398 (2007) ............................................................................................. 23
`Microsoft Corp. v. Secure Web Conference Corp.,
`IPR2014-00745, Paper 12 (P.T.A.B. Sept. 29, 2014) .......................................... 24
`Mylan Pharm. Inc. v. Bayer Intellectual Prop. GmbH,
`IPR2018- 01143, Paper 13 (P.T.A.B. Dec. 3, 2018) ............................................ 14
`NetApp Inc. v. Realtime Data LLC,
`IPR2017-01195, Paper 9 (P.T.A.B. Oct. 12, 2017) ....................................... 14, 18
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`
`Next Caller v. TRUSTID,
`IPR2019-00961, Paper 10 (P.T.A.B. Oct. 16, 2019)............................................ 18
`NHK Spring Co. v. Intri-Plex Techs., Inc.,
`IPR2018-00752, Paper 8 (P.T.A.B. Sep. 12, 2018) .................................. 1, 14, 19
`Peloton Interactive, Inc. v. Flywheel Sports, Inc.,
`2:18-cv-00390, 2019 WL 3826051 (E.D. Tex. Aug. 14, 2019) ........................... 13
`Samsung Electronics America, Inc. v. Uniloc 2017 LLC,
`IPR2020-00117, Paper 11 (P.T.A.B. May 28, 2020) ........................................... 14
`Synopsys, Inc. v. Mentor Graphics Corp.,
`IPR2012-00041, Paper 16 (P.T.A.B. Feb. 22, 2013) ........................................... 23
`Wowza Media Sys., LLC v. Adobe Sys. Inc.,
`IPR2013-00054, Paper 12 (P.T.A.B. April 8, 2013) ............................................ 24
`Statutes 
`35 U.S.C. § 112 ........................................................................................................ 19
`35 U.S.C. § 314 ......................................................................... 10, 11, 14, 19, 21, 22
`35 U.S.C. § 316 ........................................................................................................ 11
`35 U.S.C. § 325 ................................................................................................... 1, 21
`Other Authorities 
`Office Patent Trial Practice Guide, August 2018 Update,
`83 Fed. Reg. 39,989 (Aug. 13, 2018) ................................................................... 14
`The Board’s Trial Practice Guide, July 2019 Update,
`84 Fed. Reg. 33,925 (July 16, 2019) .................................................................... 11
`Rules 
`37 C.F.R. § 42.108 ................................................................................................... 22
`37 C.F.R. § 42.24 ..................................................................................................... 39
`37 C.F.R. § 42.6 ....................................................................................................... 40
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`37 C.F.R. § 42.8 ....................................................................................................... 40
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`Exhibit
`
`EXHIBITS CITED
`
`Description
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`2001 Email Chain dated April 27, 2020
`2002 First Amended Consolidation Order, 2:20-cv-00051-JRG, Dkt. 021
`(E.D. Tex., May 7, 2020)
`2003 Discovery Order, 2:20-cv-00051-JRG, Dkt 051 (E.D. Tex., June 10,
`2020)
`2004 Docket Control Order, 2:20-cv-00051-JRG, Dkt. 054 (E.D. Tex., June
`11, 2020)
`2005 Defendants’ Opposed Motion to Stay, 2:20-cv-00051-JRG, Dkt. 064
`(E.D. Tex., Aug. 20, 2020)
`2006 Plaintiff’s Opposition to Defendants’ Motion to Stay, 2:20-cv-00051-
`JRG, Dkt. 65 (E.D. Tex., Sept. 3, 2020)
`2007 Order Denying Stay, 2:20-cv-00051-JRG, Dkt. 68 (E.D. Tex., Oct. 7,
`2020)
`2008 Complaint for Patent Infringement, 2:20-cv-00138-JRG Dkt. 001 (E.D.
`Tex., May 4, 2020)
`2009 Complaint for Patent Infringement, 2:20-cv-00071-JRG, Dkt. 001 (E.D.
`Tex., March 4, 2020)
`2010 Answer to Complaint for Patent Infringement, 2:20-cv-00051-JRG, Dkt.
`26 (E.D. Tex., May 13, 2020)
`
`2011
`
`Joint Motion for Entry of Docket Control Order, 2:20-cv-00051-JRG,
`Dkt. 045, (E.D. Tex., June 8, 2020)
`2012 Defendants’ P.R. 3-3 Invalidity Contentions, 2:20-cv-00051-JRG, (E.D.
`Tex., July 10, 2020)
`
`2013 U.S. Publication No. 2003/0013007 to Kaun (“Kaun ’007”)
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`Varta Microbattery GmbH (“Patent Owner”) submits this Preliminary
`
`Preliminary Response
`U.S. Patent No. 9,153,835
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`
`
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`Response to the Petition of PEAG LLC (d/b/a JLab Audio), Audio Partnership
`
`LLC and Audio Partnership PLC (d/b/a Cambridge Audio) (“Petitioners”) seeking
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`inter partes review (“IPR”) of U.S. Patent No. 9,153,835 (“the ’835 Patent”).
`
`I.
`
`INSTITUTION SHOULD NOT BE GRANTED
`Patent Owner respectfully requests that the Board deny the Petition for IPR
`
`of the ’835 Patent. The ongoing parallel district court litigation will be completed
`
`seven months before any Final Decision here. That litigation concerns
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`substantially the same patent claims, the same invalidity arguments, and the same
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`prior art as presented in the Petition. As such, institution “would not be consistent
`
`with an objective of the AIA to provide an effective and efficient alternative to the
`
`district court litigation.” NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-
`
`00752, Paper 8 at 20 (P.T.A.B. Sep. 12, 2018) (precedential) (citation omitted).
`
`For this reason alone, institution should be denied.
`
`This Petition also involves “the same or substantially the same prior art…
`
`previously [] presented to the Office.” 35 U.S.C. § 325(d). For example,
`
`Petitioners rely on the Kobayashi reference for each ground and argue that the
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`Patent Office overlooked Kobayashi’s teachings. Pet. at 32. But Kobayashi was
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`cited and considered by the Examiner. Petitioners identify no error by the Patent
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`Office. Kobayashi is presented in combination with only the Kaun and Ryou
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`references—which are duplicative of other references considered during
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`prosecution. The Board should thus also exercise its discretion to deny institution
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`under the Becton Dickinson factors.
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`The Petition also fails on the merits. Petitioners’ first and second
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`obviousness grounds rely on a combination of Kobayashi and Kaun. Petitioners,
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`however, ignore the fundamental differences between these references. Kaun
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`teaches that offset electrodes are directly connected to opposed housing pieces.
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`Kobayashi, on the other hand, teaches that electrodes are wound around a core that
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`includes upper and lower insulating plates to isolate the electrode assembly from
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`the housing. Petitioners also do not explain how or why a POSA would have used
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`Kaun’s housing in combination with Kobayashi’s electrode assembly.
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`Further with respect to the first obviousness ground, Petitioners contend that
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`a goal of battery design is to increase the amount of usable power produced by the
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`cell, but then inexplicably propose a combination—replacing the winding of Kaun
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`with that of Kobayashi—that would increase the volume of inactive components
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`and decrease the volume of active components. Petitioners also do not explain
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`how or why a POSA would have used Kaun’s housing in combination with
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`Kobayashi’s electrode assembly. Kaun and Kobayashi require different
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`structures—both of which are critical for operation—that occupy the same location
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`in the respective battery cells. Kaun requires a fastener assembly to hold the
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`2
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`housing cups of the battery cell together. Kobayashi, on the other hand, requires a
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`winding core to enable the electrode assembly to be wound. Petitioners do not
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`explain how a POSA would combine the fastener in Kaun with the core in
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`Kobayashi. Indeed, a POSA would have been discouraged from making the
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`combination proposed by Petitioners.
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`As to the second obviousness ground, Petitioners present circular logic.
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`They contend that Kaun teaches an “increased effective volume” that allows for “a
`
`corresponding increase to the number of electrode layers” in the battery cell.
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`Based on Petitioners’ logic, however, a POSA would not have looked to
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`Kobayashi’s electrode assembly at all, but would instead have simply used Kaun’s
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`electrode layers to obtain “increased effective volume.”
`
`As to the third obviousness ground, Petitions offer no explanation why a
`
`POSA would incorporate a housing designed for horizontally oriented electrodes
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`(Ryou) into a button cell using a spiral wound assembly (Kobayashi). Indeed, the
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`proposed modification would result in a housing subject to failure under the radial
`
`loads produced by a spiral wound battery cell. Petitioners simply offer no
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`evidence or explanation that would justify making the modification proposed.
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`Petitioners have failed to meet their burden to support institution on any of
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`the proposed obviousness grounds. For all of these reasons, the Board should deny
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`institution.
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`II. BACKGROUND
`A. The ’835 Patent
`The ’835 Patent relates to a button cell battery having an electrode-separator
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`assembly located between a housing cup and a housing top. The electrode-
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`separator assembly is formed as a spiral winding in the housing so that the
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`electrodes are perpendicular to the flat bottom and top areas of the housing cup and
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`housing top. Output conductors electrically connect the electrodes to the housing
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`cup and top to provide highly efficient use of battery real estate. The housing cup
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`and top are closed such that their sides overlap each other without being beaded
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`over to provide a battery with durability. These features provide for a battery with
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`excellent energy density due the efficient use of space. At the same time, a highly
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`reliable interconnection of the internal components is provided, which can
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`withstand the radial forces of expansion and contraction incurred during charging
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`and discharging cycles.
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`Figures 3b and 4 show an embodiment in which electrodes 407 of one
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`polarity (highlighted in green) and the electrodes 408 of the other polarity
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`(highlighted in red) are wound in a spiral configuration (shown generally in FIG.
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`3b). The electrodes 407, 408 are separated from each other by separator layers
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`405, 406. The separator layers are made of non-conductive material that allow
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`ionic flow between the electrode layers.
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`In a preferred embodiment, the lower housing cup 401 and the upper
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`housing top 402 are fitted together to form a housing about the electrode-separator
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`assembly. A seal 403 is interposed between the housing cup and top to prevent a
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`short circuit between the two. In addition, insulating means (e.g., element 411,
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`412) electrically insulate the electrode-separator assembly from the housing. The
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`housing cup and top are closed by overlapping their sides without being beaded
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`over.
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`The ʼ835 patent discloses how to construct a button cell such that it is closed
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`so as to be liquid tight without beading over the sides. To do so, the following is
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`performed: (a) a seal is applied to a casing area of the top cup; (b) the cell top
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`(with seal) is inserted into the cell cup such that the sides overlap; and (c) pressure
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`is exerted on the casing area of the cell cup in the area of cut edge to seal the
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`housing. Ex. 1001 at 7:10-47. As to step (c), the ʼ835 patent discloses that the
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`heights of the sides of the housing cup and top are chosen so that the cut edge of
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`the cell cup can be pressed against the casing area of the cell top by the pressure.
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`Such pressure is applied so that the cut edge of the cell cup is not bent inward over
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`the edge area of the cell top. Id.
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`B.
`The ’835 Patent Claims
`The challenged claims of the ’835 Patent are directed to a button cell battery
`
`structure. The ’835 Patent contains thirteen claims, with claims 1 and 10 being
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`independent.1 Claim 1 reads as follows:
`
`1. A button cell comprising:
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`a housing cup and a housing top separated from one
`
`another by an electrically insulating seal and which form a
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`housing with a flat bottom area and a flat top area parallel to it,
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`an electrode-separator assembly within the housing
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`comprising at least one positive and at least one negative
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`electrode in the form of flat layers and connected to one another
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`by at least one flat separator, and
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`an insulating means,
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`wherein the electrode layers are aligned essentially at
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`right angles to the flat bottom area and the flat top area and the
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`button cell is closed without being beaded over, and
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`1 Petitioners have not challenged claim 13.
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`the electrode-separator assembly is in the form of a spiral
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`winding having end faces defining side surfaces of the spiral
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`winding face facing in an axial direction relative to the flat
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`bottom area and the flat top area, and
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`wherein the insulating means is arranged between the end
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`faces of the spiral winding and the housing cup and the housing
`
`top.
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`Independent claim 10 also includes these features. Thus, the challenged claims
`
`require a housing cup and top, both of which have flat areas parallel to each other;
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`an electrode separator assembly with positive and negative electrodes formed as
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`layers of a winding, disposed at a right angle to the flat areas of the housing cup
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`and top; the housing closed without being beaded over, and an insulator between
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`the end faces of the spiral winding and the housing cup and top.
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`C. The Parallel District Court Proceedings
`Petitioners acknowledge that the ʼ835 patent is at issue in the following
`
`pending district court litigations:2
`
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`2 The VARTA Microbattery GmbH v. Samsung Electronics America, Inc.; VARTA
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`Microbattery GmbH v. Costco Wholesale Corporation; and VARTA Microbattery
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`Preliminary Response
`U.S. Patent No. 9,153,835
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` VARTA Microbattery GmbH v. Best Buy Co., Inc., United States District
`Court for the Eastern District of Texas, Case No. 2:20-cv-0054-JRG;
`
` VARTA Microbattery GmbH v. PEAG, LLC, United States District Court for
`the Eastern District of Texas, Case No. 2:20-cv-0071-JRG; and
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` VARTA Microbattery GmbH v. Audio Partnership LLC, et al., United States
`District Court for the Eastern District of Texas, Case No. 2:20-cv-00138-
`JRG.
`The lawsuit against Petitioner Audio Partnership LLC was originally filed in
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`
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`the Northern District of Illinois (VARTA Microbattery GmbH v. Audio Partnership
`
`et al., 2:20-cv-0158). At the request of Petitioner Audio Partnership, VARTA
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`dismissed the case in Illinois and refiled in the Eastern District of Texas where the
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`other lawsuits were pending. Ex. 2001.
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`The pending cases have been consolidated for pre-trial purposes. Ex. 2002.
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`On June 10, 2020, the parties jointly moved the Court for entry of agreed docket
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`control and discovery orders governing the schedule and conduct of discovery,
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`which the Court entered. Ex. 2003; Ex. 2004. The schedule now calls for, inter
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`alia, a claim construction hearing on January 15, 2021; a deadline to complete fact
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`discovery of January 29, 2021; and trial beginning on June 7, 2021.
`
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`GmbH v. Amazon.com, Inc. litigations (Pet. at 1) were dismissed following
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`resolution of VARTA’s claims against Samsung Electronics America, Inc.
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`D.
`Petitioners’ Arguments
`Petitioners assert that claims 1-12 of the ’835 Patent are obvious in light of
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`three references:
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`1.
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`U.S. Publication No. 2005/0233212 to Kaun (“Kaun”)
`
`[Exhibit 1005]
`
`2.
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`J.P. Patent Publication No. 2007-294111 to Kobayashi
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`(“Kobayashi”) [Exhibit 1006],
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`3.
`
`E.P. Patent No. 1886364B1 to Ryou (“Ryou”) [Exhibit
`
`1007]
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`Petitioners contend that claims 1-12 are obvious over Kaun in view of
`
`Kobayashi, obvious over Kobayashi in view of Kaun, and obvious over Kobayashi
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`in view of Ryou.
`
`The Petition purports to be supported by a declaration from William H.
`
`Gardner, which largely reiterates the cursory arguments outlined in the Petition.
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`III. PERSON OF ORDINARY SKILL
`Petitioners assert that a POSA “would have had at least a bachelor’s degree
`
`in mechanical engineering, or a similar field, such as materials engineering,
`
`chemical engineering, or physics with at least five years of experience in the field
`
`of battery design and manufacturing,” or would have required less experience with
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`an advanced degree. Pet. at 18. Patent Owner reserves the right to dispute
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`Petitioners’ definition of a POSA if an IPR is instituted. For present purposes, this
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`Response establishes that Petitioners’ arguments fail even under their proffered
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`definition of a POSA.
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`IV. CLAIM CONSTRUCTION
`Patent Owner disagrees with Petitioners’ proposed claim constructions as
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`they depart from the plain and ordinary meaning of the terms in the challenged
`
`claims as would be understood by a POSA on consideration of the intrinsic record.
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`However, as Patent Owner’s response does not depend upon Petitioners’ erroneous
`
`claim constructions, Patent Owner does not dispute Petitioners’ claim
`
`constructions at this time. Patent Owner reserves the right to advance its own
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`construction for any claim term should an IPR be instituted.
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`V. THE BOARD SHOULD EXERCISE ITS DISCRETION TO DENY
`INSTITUTION
`Whether to institute an IPR is “a matter committed to the Patent Office’s
`
`discretion.” Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2140 (2016). The
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`Board should exercise its discretion to deny the Petition here at issue to avoid
`
`duplicating the district court’s efforts, and because the Examiner already
`
`considered substantially the same prior art upon which Petitioners rely.
`
`A.
`Institution Should Be Denied Under § 314(a)
`The Board should deny institution because review would be inefficient given
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`the complete overlap in Petitioners’ invalidity arguments in their Petition and the
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`pending lawsuits, and in view of the advanced stage and schedule of those
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`lawsuits, where trial will occur seven months prior to any final decision that would
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`be made by this Board.
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`The Board’s Trial Practice Guide, July 2019 Update, 84 Fed. Reg. 33,925
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`(July 16, 2019) (“Guide”) instructs “there may be [] reasons besides the ‘follow-
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`on’ petition context where the ‘effect … on the economy, the integrity of the patent
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`system, the efficient administration of the Office, and the ability of the Office to
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`timely complete proceedings,’ 35 U.S.C. § 316(b), favors denying a petition even
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`though some claims meet the threshold standards for institution under 35 U.S.C. §
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`314(a).” Guide at 25. These reasons include “events in other proceedings related
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`to the same patent, either at the Office, in district courts, or the ITC.” Id.
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`The Board has considered six factors in deciding whether to deny institution
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`based on parallel district court litigation: “1) whether a stay exists or is likely to be
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`granted if a proceeding is instituted; 2) proximity of the court’s trial date to the
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`Board’s projected statutory deadline; 3) investment in the parallel proceeding by
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`the court and parties; 4) overlap between issues raised in the petition and in the
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`parallel proceeding; 5) whether the petitioner and the defendant in the parallel
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`proceeding are the same party; and 6) other circumstances that impact the Board’s
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`exercise of discretion, including the merits.” Apple Inc. v. Fintiv, Inc., IPR2020-
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`11
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`00019, Paper 11 at 6 (P.T.A.B. Mar. 20, 2020). Contrary to Petitioners’
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`arguments, each of these factors weighs decidedly against institution.
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`1.
`The District Court Is Not Likely to Grant a Stay
`Petitioners represent that “upon institution [they] intend to seek a stay of the
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`district court cases involving this patent to which it is a party.” Pet. at 29. In fact,
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`Petitioners filed a Motion to Stay on August 20, 2020. Ex. 2005. Patent Owner
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`has opposed Petitioners’ Motion. Ex. 2006. That Motion was denied on October
`
`7, 2020. Ex. 2007.
`
`Assuming Petitioners attempt to renew their motion for a stay if institution
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`were granted, such motion would also likely be denied. Petitioners provide
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`statistics purportedly showing that 58.14% of requests for stay have been granted
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`by the courts in the E.D. of Texas when filed post institution. But those
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`statistics—even if correct3—are misleading because they ignore critical facts.
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`Here, Patent Owner makes and sells products covered by the ʼ835 patent. Ex. 2008
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`3 Petitioners do not provide any exhibit in support of this statistic and the hyperlink
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`cited in their brief does not return any meaningful information. Nor do Petitioners
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`provide the search criteria they used to generate the statistic. For example,
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`Petitioners do not indicate whether the statistic includes uncontested and joint
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`motions to stay.
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`12
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`¶¶ 10-16; Ex. 2009 ¶¶ 9-15. Petitioners are irreparably harming the Patent Owner
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`by making, selling and importing into the United States products with infringing
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`cells made by Chinese manufacturer and interested party MIC-Power. Ex. 2008 ¶¶
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`24-30; Ex. 2009 ¶¶ 23-29. Given these facts, the district court is likely to deny a
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`stay because of the heighted prejudice to VARTA should the matter be stayed.
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`See, e.g., Peloton Interactive, Inc. v. Flywheel Sports, Inc., 2:18-cv-00390, 2019
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`WL 3826051, at *3 (E.D. Tex. Aug. 14, 2019) (denying post-institution request for
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`a stay finding inter alia that “a stay would result in heightened prejudice for [a
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`patent owner that practices the patent] as compared to other cases.”)
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`Given the district court’s denial of Petitioners’ request for a stay and because
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`any future request for a stay will also more likely than not be denied, this factor
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`weighs against institution.
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`2.
`The District Court’s Trial Date Favors Denial
`Petitioners concede that the trial date of the district court litigations is
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`“currently scheduled for June 7, 2021, six [sic, seven] months before the statutory
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`Final Decision date.” Pet. at 29. This factor thus plainly favors denial of
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`institution.
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`Denying institution is consistent with General Plastic, which has been
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`applied to deny institution when parallel litigation is at an advanced stage. See
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`General Plastic Indus. Co., v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19
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`13
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`at 16– 17 (P.T.A.B. Sept. 6, 2017) (precedential); Office Patent Trial Practice
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`Guide, August 2018 Update, 83 Fed. Reg. 39,989 (Aug. 13, 2018). For example,
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`in NHK Spring Co., the Board denied institution under § 314(a) because the trial
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`was scheduled six months before the Board’s expected final decision—here, it is
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`seven months. Paper 8 at 19–20; see also Mylan Pharm. Inc. v. Bayer Intellectual
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`Prop. GmbH, IPR2018- 01143, Paper 13 at 13–14 (P.T.A.B. Dec. 3, 2018)
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`(denying institution because a trial was scheduled “eight months” before the final
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`written decision); NetApp Inc. v. Realtime Data LLC, IPR2017-01195, Paper 9 at
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`12–13 (P.T.A.B. Oct. 12, 2017); Samsung Electronics America, Inc. v. Uniloc
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`2017 LLC, IPR2020-00117, Paper 11 at 6-8 (P.T.A.B. May 28, 2020) (denying
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`institution when district court trial scheduled several months before final decision).
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`The district court action will proceed to trial in June 2021 regardless of any
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`institution decision. Granting IPR will not conserve judicial resources, but rather
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`waste them and lead to possibly inconsistent results between the district court and
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`the Patent Office.
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`Petitioners contend that the “Patent Owner’s forum selection, not any action
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`on the part of Petitioner, is the sole reasons the Final Written Decision would be
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`rendered after the scheduled date.” To the extent relevant, Petitioners’ argument is
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`disingenuous. Petitioner Peag, LLC resides in the forum, i.e., the United States
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`District Court for the Eastern District of Texas. Ex. 2009 ¶ 8; Ex. 2010 ¶ 8. With
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`14
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`respect to Petitioner Audio Partnership, it was originally sued in the United States
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`District Court for the Northern District of Illinois and it was at the request of Audio
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`Partnership that the case was effectively transferred to the Eastern District of
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`Texas. Ex. 2001.
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`Moreover, the schedule entered by the district court resulted from an agreed
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`schedule jointly filed by the parties. Ex. 2011. While the court initially assigned
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`the trial date, Petitioners had the opportunity to request a later trial date. Ex. 2004
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`at 6 (providing for amendment of the schedule). Petitioners made no attempt to
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`amend the schedule, nor did Petitioners even advise the court they intended to
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`request inter partes review when the schedule was put in place. Having failed to
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`act, Petitioners can hardly now be heard to complain. This factor favors denial of
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`institution.
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`3.
`Investment in the Parallel Proceeding Favors Denial
`In the district court proceedings, Patent Owner has already served its P.R. 3-
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`1 and 3-2 Disclosures (Infringement Contentions), and Petitioners have served
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`their P.R. 3-3 and 3-4 Disclosures (Invalidity Contentions). Both sides have
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`produced documents and both sides have propounded and responded to
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`interrogatories. The parties exchanged proposed terms for claim construction on
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`September 11, 2020, and exchanged proposed constructions of claim terms as well
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`as identifying extrinsic evidence upon which they intend to rely. Ex. 2004 at 4-5.
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`15
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`Preliminary Response
`U.S. Patent No. 9,153,835
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`The claim construction hearing is set for January 15, 2021; fact discovery closes on
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`January 29, 2021; and jury selection is set for June 7, 2021. Id. at 4, 3, and 1. The
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`court’s claim construction decision is expected to follow shortly after the
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`institution decision and, importantly, trial will likely be completed seven months
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`before any final written decision even if institution were to occur.
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`Given the substantial investment in the district court litigation that has
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`already been made, and that will have been made before an institution decision is
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`reached, this factor weighs against institution.
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`4.
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`The Issues in the Petition Substantially Overlap with Those
`in the District Court
`The Petitioners have raised three grounds for invalidity before the Board:
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`(1) obviousness of claims 1-12 over Kaun and Kobayashi, (2) obviousness of
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`claims 1-12 over Kobayashi and Kaun, and (3) obviousness of claims 1-12 over
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`Kobayashi and Ryou. Pet. at 8. Petitioners have advanced these same grounds for
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`invalidity in the District Court Proceedings as shown in the below excerpt from
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`Defendants’ Invalidity Contentions served in connection with the district court
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`litigation. See Ex. 2012 at 16-29.
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`16
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`Prelimina