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`
`(cid:1)(cid:2) (cid:79)(cid:148)(cid:204)(cid:62)(cid:104)(cid:96)(cid:170)(cid:190)(cid:91)(cid:170)(cid:197)(cid:204)(cid:43)(cid:11)(cid:204)(cid:39)(cid:35)(cid:37)(cid:44)(cid:11)(cid:204)(cid:167)(cid:104)(cid:177)(cid:162)(cid:158)(cid:148)(cid:100)(cid:105)(cid:155)(cid:181)(cid:177)(cid:204)(cid:115)(cid:140)(cid:104)(cid:100)(cid:204)(cid:91)(cid:204)(cid:145)(cid:158)(cid:181)(cid:128)(cid:158)(cid:148)(cid:204)(cid:120)(cid:167)(cid:204)(cid:138)(cid:107)(cid:91)(cid:192)(cid:104)(cid:204)(cid:181)(cid:158)(cid:204)(cid:118)(cid:138)(cid:104)(cid:204)(cid:93)(cid:204)(cid:170)(cid:104)(cid:164)(cid:138)(cid:199)(cid:29)(cid:204) (cid:73)(cid:158)(cid:188)(cid:127)(cid:158)(cid:148)(cid:204)(cid:59)(cid:160)(cid:98)(cid:137)(cid:105)(cid:185)(cid:204)(cid:78)(cid:158)(cid:30)(cid:204)
`(cid:48)(cid:47)(cid:42)(cid:18)(cid:42)(cid:31)(cid:204)(cid:202)(cid:204)(cid:79)(cid:150)(cid:204)(cid:63)(cid:104)(cid:96)(cid:167)(cid:190)(cid:94)(cid:170)(cid:197)(cid:204)(cid:37)(cid:46)(cid:11)(cid:204)(cid:39)(cid:35)(cid:37)(cid:44)(cid:11)(cid:204)(cid:98)(cid:158)(cid:147)(cid:161)(cid:141)(cid:91)(cid:128)(cid:151)(cid:95)(cid:186)(cid:204)(cid:114)(cid:138)(cid:105)(cid:100)(cid:204)(cid:91)(cid:204)(cid:167)(cid:105)(cid:177)(cid:162)(cid:158)(cid:151)(cid:177)(cid:105)(cid:204)(cid:134)(cid:148)(cid:204)(cid:158)(cid:161)(cid:161)(cid:158)(cid:177)(cid:129)(cid:182)(cid:128)(cid:158)(cid:148)(cid:32)(cid:204) (cid:86)(cid:126)(cid:105)(cid:204)(cid:145)(cid:158)(cid:180)(cid:132)(cid:158)(cid:148)(cid:204)(cid:119)(cid:170)(cid:204)(cid:138)(cid:105)(cid:93)(cid:192)(cid:105)
`(cid:133)(cid:177)(cid:204)(cid:122)(cid:170)(cid:91)(cid:157)(cid:185)(cid:108)(cid:103)(cid:33)
`
`Philip Morris Products, S.A.
`Exhibit 1038
`PMP v. RAI
`IPR2020-01602
`
`Ex. 1038-001
`
`

`

`..J,"'
`
`is meaningfully different from the instituted claims for purposes of invalidity.
`Indeed, each of those petitions involves the same core prior art reference at issue
`in the instituted IPRs, and the Patent Office has already found that many of the
`asserted claims-even those for which IPR petitions have not yet been filed-are
`"not patentably distinct" from claims in other Energetiq patents for which IPRs
`have been instituted. Given Complainant's representation in the parallel district
`court litigation that the patents "[are] all the same" and "come off of the same
`disclosure [and] relate to the same product," Ex. 1 at 62:21-24 (Nov. 4, 2015 Hr'g
`Tr.), Respondents fully expect the PTAB to institute review on all asserted claims.
`
`Congress has made clear that such IPR proceedings should be given
`precedence wherever appropriate. Federal district courts have heeded that call,
`routinely staying pending litigation in light of pending IPR proceedings(cid:173)
`sometimes even before institution of an IPR. This is for good reason: IPRs were
`designed by Congress to be faster than any other forum in adjudicating patent
`claims (including this forum), and only 8% of patents for which IPR proceedings
`are instituted emerge unchanged. It would be a tremendous Waste of resources to
`proceed with this investigation when there is such a high likelihood that the
`asserted claims will not exist by the time this investigation is scheduled to be
`completed.
`
`Respondents recognize that the Commission rarely stays investigations.
`Respondents submit, however, that under the singular circumstances of this case a
`stay is highly appropriate. In particular, as far as Respondents can tell, in no case
`prior to this one had the PT AB already instituted IP Rs prior to the
`commencement of an ITC investigation. Because IPRs involving asserted claims .
`have already been instituted and are certain to be complete well before the
`anticipated May 2017 target date, a stay of this investigation until the first of
`those IPRs is completed in November 2016 would effectuate Congressional
`policy, simplify the contested issues, and conserve the parties' and the
`Commission's resources, without undue prejudice to any party.
`
`Furthermore, Energetiq should not be allowed to forum shop. Displeased
`with the PT AB' s decision to institute inter part es review proceedings because
`"there is a reasonable likelihood" Energetiq's patents are invalid, and displeased
`with the repeated adverse rulings of the United States District Court for the
`District of Massachusetts (before whom its patent allegations have.been pending
`for nearly a year) that Energetiq has no basis-for accelerated injunctive relief,
`Energetiq now turns tci this forum. The public has no interest in condoning
`Energetiq's bid to have the Commission and Administrative Law Judge expend
`substantial additional resources on top of the Congressionally~directed IPR
`proceedings already underway and nearly a year's worth of federal judicial
`resources that have already been spent by the District of Massachusetts on
`Energetiq's same patent allegations.
`
`For these reasons, and those detailed below; Respondents respectfully
`request that the ALJ stay thisinvestigation until a final-written d_ecision is issued
`
`2
`
`Ex. 1038-002
`
`

`

`in the currently instituted IPRs involving the asserted claims (i.e., no later than
`November 2016).
`
`Mem. at 1-3 (emphasis in original).
`
`Complainant argues:
`
`Respondents' motion to stay this Investigation pending the outcome of co(cid:173)
`pending inter partes review-on only two of the three patents asserted here(cid:173)
`should be denied.
`
`First, Energetiq asserts infringement of three patents in this Investigation
`covering its laser driven light so'urce inventions. No IPR has even been requested
`as to one ofthem-U.S. Patent No. 9;I 85,786 .. This one fact undermines the
`entire basis of Respondents' motion.
`
`Second, Respondents rely heavily on a raw statistic regarding the results
`of IPRs to justify their stay request. In doing ~o, Respondents fail to acknowledge
`that only obviousness-based arguments are being advanced in the IPRs. To be
`clear, Respondents did not make a single anticipation-based argument in their IPR
`petition. Respondents also fail to acknowledge that Energetiq has yet to provide
`the PTO with a substantive response, particularly where in addition to technical
`distinctions between the claims and the, asserted references, here there are a
`number of secondary considerations demonstrating the non-obviousness of the
`claimed inventions. For example, Energetiq was the first to sell any laser-driven
`plasma light source to provide the high brightness levels the semiconductor
`industry was demanding (i.e., an order of magnitude brighter than the industry
`standard); Respondents sought a license to Energetiq's patents and chose to
`infringe only years after w9rking with Energetiq; and Energetiq's products have
`garnered critical industry acclaim and commercial success. Moreover,
`.
`Respondents fail to acknowledge that even if 42% of patents fail in IPR (taking
`Respondents~ statistic as true), then well over half of the patents survive. In other
`words, using Respondents own statistic, it is much more likely than not that these
`two patents will survive IPR-and the third patent is not even subject to an IPR
`petition at this point. [ ]
`
`Third, Respondents do not cite a single Commission decision staying an
`Investigation for 10 months (or longer) pending an IPR (or other patent office)
`proceeding that will not dispose of the entire Investigation. To that end,
`Respondents have made clear that they do not consider the IPR proceedings
`dispositive on validity issues and that they intend to raise a host of other validity
`defenses that are not subject to the IPR proceedings. Without any Commission
`precedent to support their request, Respondents cite a number of readily(cid:173)
`distinguishable cases in which district courts have granted stays. But the
`Commission is not a district court and is under a mandate to conclude its
`procedures "at the earliest practicable time." 19 U.S.C. § 1337(b)(l); see also
`Certain Semiconductor Chips with Minimized Chip Package Size and Products
`
`3
`
`Ex. 1038-003
`
`

`

`Containing Same ("Semiconductor Chips''), Inv. No. 337-TA-605, Comm'n Op.,
`2008 WL 2223426, at *4 (U.S.I.T.C. May 27, 2008) ("As the effect of such
`actions could be to override the statutory mandate to presume the patents are valid,
`we. caution the presiding ALJ to carefully weigh the possibility of such
`manipulation in order to avoid undue prejudice to patent holders seeking to
`enforce their rights. Such consideration may also prevent unjustified limitations
`on the Commission's ability to complete section 337 investigations as soon as
`practicable according to its mandate."). And, that mandate is particularly
`important here, where Respondents are large foreign companies that have taken
`the position in the district court that their "making, using and selling" infringing
`activities are outside the U.S., giving them the freedom to steal Energetiq's
`technology after years of working with it, and then destroying its market. If there
`was ever a small, highly innovative U.S. company that needed the ITC's help to
`,
`save itself against unfair competition, this is it.
`
`Fourth, it is disingenuous for Respondents to argue that this stay is
`necessary to save them from legal fees. Despite the right to stay the district court
`case under 28U.S.C. § 1659 as to two of the patents~ Respondents are refusing to
`stay that case, forcing Energetiq to seek a stay of the district court. That
`Respondents face the prospect of litigating at the Commission and the district
`court is of their own choosing.
`
`Last, the actions of respondents in connection with the pending district
`court litigation underscore the necessity of moving this case forward
`expeditiously. Energetiq originally brought suit in district court and, in
`connection with that litigation, Energetiq sought a preliminary injunction to cease
`the research and development of an infringing second generation laser product. In
`response to that motion, the defendants, who were already importing infringing
`products into the United States, moved their development activities overseas. The
`defendants then told the Court it lacked the authority to address those overseas
`development activities. The Court agreed. Faced with these prospects, Energetiq
`was left with no choice but to bring this Investigation. And now, through their
`motion to stay, Respondents are asking the Commission to give them another 10-
`plus-month window in which they can continue to infringe Energetiq's patents on
`the slim hopes that they invalidate all of the claims in only two of the asserted
`patents.
`
`Opp'n at 2-4 (emphasis in original).
`
`For the reasons discussed below, Motion No. 983-1 is denied.
`
`The Commission's enabling statute requires it to conclude Section 337 investigations "at
`
`the earliest practicable time." See 19 U.S.C. § 1337(b)(l). In deciding whether to grant a stay,
`
`the Commission considers the following factors: "(1) the state of discovery and the hearing date;
`
`4
`
`Ex. 1038-004
`
`

`

`(2) whether a stay will simplify the issues·and hearing of the case; (3) the undue prejudice or
`
`clear tactical disadvantage to any party; (4) the stage of the PTO proceedings; and (5) the
`
`efficient use of Commission resources." See Semiconductor Chips, Inv. No. 337-TA-605,
`
`Comm'n Op., 2008 WL 2223426, at *2 (U.S.I.T.C. May 27, 2008). In addition, in certain
`
`limited circumstances the Commission also considers a sixth factor-the alternatives available in
`
`Federal Court. See Certain Pers. Comput./Consumer Elec. Convergent Devices, Components
`
`, Thereof, and Prods. Containing Same, Inv. No. 337-TA-558, Order No. 6, 2006 WL 322622 at
`
`*8 (U.S.I.T.C. Feb. 7, 2006).2
`
`The State of Discovery and the Hearing Date
`
`Respondents argue that because this investigation is in its earliest phase, the investigation
`
`can be stayed to save money on expensive discovery. Respondents' motion is premised on the
`
`assumption that they are going to prevail at the USPTO as to two of the three patents asserted
`
`here. In essence, they argue that once an IPR proceeding has begun, the Commission should
`
`conclude that all patents in the patent family (whether or not they themselves are before the
`
`PT AB) are likely invalid.
`
`The evidentiary hearing in this investigation will be held September 8-13, 2016. A final
`
`determination on the earliest ofIPR petitions is not expected until November, 2016. Accepting
`
`respondents' argument that the IPRs will conclude six months before the target date, a window
`
`would exist to integrate the insights obtained from the IPRs into this investigation. In these
`
`circumstances, the status of the IPR proceedings provides no reason to stay this investigation.
`
`2 The analysis of these factors contained herein assumes arguendo that t4e administrative law
`judge has the authority to grant an initial determination staying an investigation.
`
`5
`
`Ex. 1038-005
`
`

`

`Whether a Stay Will Simplify the Issues and Hearing of the Case
`
`Respondents' motion is based on an assumption using one raw data point: the percentage
`
`of all patents that are ultimately affected by IPR proceedings. Respondents argue that this raw
`
`number in view of all IPRs means that Energetiq is not entitled the presumption of validity on its
`
`patents, even those not in the IPR proceeding. However, the grant of an IPR proceeding does not
`
`create a presumption 'of invalidity which Energetiq must overcome.
`
`Complainant's issued patents are entitled to a presumption of validity. See Microsoft
`
`Corp. v. i4i Ltd. P'ship, 131 S.Ct. 2238, 2239, 45 (2011) (holding that 35 U.S.C. § 282
`
`establishes a presumption of validity, requiring an invalidity defense to be proved by clear and
`
`convincing evidence). It is unclear how the institution of an IPR proceeding could deprive
`
`Energetiq of its right to a presumption of validity when it had no right to submit evidence before
`
`the IPR was instituted. Nevertheless, even accepting respondents' arguments that 42% of
`
`instituted trials result in claims that are found unpatentable, 58% must include at least one claim
`
`that survives.
`
`Respondents argue that the IPR process will simplify and streamline the issues in this
`
`investigation. First, the IPR process uses a different claim construction standard-the "broadest
`
`reasonable interpretation"-as opposed to the Phillips standard used under Section 337 and in
`
`the federal courts. See 37 C.F.R. § 42.l00(b). Although the record created during reexamination
`
`may aid in construing claim terms and in considering patent validity, such considerations are, "to
`
`a great extent, of a general nature and may apply in virtually any dispute over whether the stay
`
`pending reexamination is appropriate." Semiconductor Chips,,2008 WL 2223426, at *4. These
`
`general considerations receive limited weight when compared to "the particular facts specific to
`
`' Id.
`the present case.1
`
`6
`
`Ex. 1038-006
`
`

`

`Second, the IPR process is not able to address the question of indefiniteness under 3 5
`
`/
`
`U.S.C. § 112. The result is that any claim terms that respondents regard as indefinite in the
`
`litigation will'not be addressed by the IPRs. This consideration is significant because
`
`respondents indicate that they intend to offer different constructions in the PT AB and in
`
`litigation for at least one term that they regard as key-"high brightness." See Opp'n at 14 citing
`
`Ex. G (Petition for Inter Partes Review) (May 29, 2015) at 9.
`
`Third, respondents have taken the position that their invalidity case does not'end with
`
`§ 102 or § 103 issues. They intend to introduce a host of prior art devices that are not able to be
`
`considered by the IPRs. See Opp'n at 14 citing Ex. H (Civ. Ac. No. 1:15-cv-10240-LTS, Nov. 4,
`
`2015 Tr. at 48.) Thus, the IPR process will address only a limited number of prior art issues that
`
`may arise under 35 U.S.C. §§ 102 and 103 using overbroad claim constructions. Although
`
`respondents argue that the IPR will simplify this investigation, the streamlining would only occur
`
`if complainant loses on all asserted claims in the' PT AB. Further, the PT AB cannot do anything
`
`to simplify the case as to the third patent asserted in this investigation, for which no IPR petition
`
`has been filed.
`
`Finally, respondents argue that waiting for the IPRs to conclude will allow estoppel to
`
`attach to any argument they failed to raise at the IPR stage. However, given the timing of the
`
`IPRs, that estoppel will attach before the Commission enters its final decision. Indeed,
`
`respondents are already estopped from raising these grounds here, if the PT AB decision comes
`
`before the Commission decision. See 35 U.S.C. § 315(e)(2).
`
`The Undue Prejudice or Clear Tactical Disadvantage to Any Party
`
`According to complainant, respondents' infringement threatens complainant's viability as
`
`.
`
`.
`
`a company and marketplace competitor. It is argued that respondents' infringement will cause
`
`7
`
`Ex. 1038-007
`
`

`

`Energetiq to lose not only sales, but goodwill in the marketplace, business opportunities, and
`
`reputational status-all of which support a finding of irreparable harm. Complainant argues that
`
`inasmuch as the sole remedy Energetiq can obtain before the Commission is injunctive relief,
`
`any delay in the proce,edings would be prejudicial to Energetiq. See Opp'n at 17.
`
`Indeed, respondents may gain advantages from a stay. Delaying a final determination
`
`may mean that respondents would have years to import infringing products, where any .
`
`importation of infringing·merchandise derogates from the statutory right, diminishes the value of
`
`the intellectual property, and thus indirectly harms the public interest.
`
`The Stage of the Parallel Proceedings·
`
`The stage of the USPTO proceedings vis-a-vis this investigation weighs against a stay.
`
`The IPR proceedings on the two patents were instituted at the end of November, 2015, which
`
`means that they are not expected to conclude before November, 2016, not accounting for any
`
`appeals. The IPR proceedings will be far enough along such that any insights that emerge can be
`
`)
`
`'
`
`incorporated into this investigation, inasmuch as the Final Initial Determination is not due until
`
`December 14, 2016. Meanwhile, substantial progress will be made here on the one asserted
`
`patent that is not in an IPR proceeding.
`
`Additionally, the stage of the District Court proceedings should have no impact on the
`
`Commission because respondents can ask for a stay of that proceeding at any time, even after the
`
`permitted time to seek a mandatory stay. The trial is scheduled for July, 2017. Such a large gap
`
`contributes to the weight of this factor against granting.the proposed stay.
`
`The Commission has reversed a stay granted by an administrative law judge when there
`
`was no final judgment in the parallel proceeding. Semiconductor Chips, 2008 WL 2223426, at
`
`*13-14-. The same situation exists in this investigation. There is no final judgment from either
`
`8
`
`Ex. 1038-008
`
`

`

`the USPTO or the District Court.
`
`The Efficient Use of the Commission Resources
`
`In this case, respondents assume that their IPR petitions will dispose of numerous patent
`
`claims, but that assumption cannot fully account for the differences that exist in the claims of the
`
`third asserted patent relative to the patent claims involved in the IPR proceedings. The two
`
`proceedings are not truly parallel because this investigation involves numerous other issues
`
`separate from the IPRs. See Semiconductor Chips, 2008 WL 2223426, at *7 (suggesting that less
`
`weight should be given to the "efficient use of Commission resources" factor when
`
`considerations are of a general nature). Consequently, the most efficient use of Commission
`
`resources is to proceed with this investigation in a timely fashion.
`
`*
`
`*'
`
`*
`
`For the reasons discussed above, Motion No. 983-1 is denied.
`
`So ordered.
`
`David P. Shaw
`Administrative Law Judge
`
`Issued: March 3, 2016
`
`9
`
`Ex. 1038-009
`
`

`

`CERTAIN LASER-DRIVEN LIGHT SOURCES,
`SUBSYSTEMS CONTAINING LASER-DRIVEN LIGHT
`SOURCES, AND PRODUCTS CONTAINING SAME
`
`Inv. No. 337-TA-983
`
`PUBLIC CERT