`571-272-7822
`
`Paper 12
`Date: December 15, 2020
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`WALMART INC.,
`Petitioner,
`
`v.
`
`CARAVAN CANOPY INTERNATIONAL, INC.,
`Patent Owner.
`_______________
`
`IPR2020-01026
`Patent 5,944,040
`_______________
`
`Before BART A. GERSTENBLITH, JAMES J. MAYBERRY, and
`ERIC C. JESCHKE, Administrative Patent Judges.
`
`JESCHKE, Administrative Patent Judge.
`
`
`
`DECISION
`Granting Institution of Inter Partes Review
`35 U.S.C. § 314
`
`
`
`Page 1 of 79
`
`Petitioners Exhibit 1023
`Patent 5,944,040
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`
`I. BACKGROUND
`
`Petitioner, Walmart Inc., filed a Petition to institute an inter partes
`
`review of claims 1–3 (the “challenged claims”) of U.S. Patent No. 5,944,040
`
`(Ex. 1001, “the ’040 patent”). Paper 1 (“Pet.”). Patent Owner, Caravan
`
`Canopy International, Inc. filed a Preliminary Response. Paper 8 (“Prelim.
`
`Resp.”). With Board authorization (Paper 9), Petitioner timely filed a
`
`Preliminary Reply to Patent Owner’s Preliminary Response (Paper 10,
`
`“Prelim. Reply”), and Patent Owner timely filed a Preliminary Sur-reply to
`
`Petitioner’s Preliminary Reply (Paper 11, “Prelim. Sur-reply”).
`
`We have authority to determine whether to institute an inter partes
`
`review. See 35 U.S.C. § 314 (2018); 37 C.F.R. § 42.4(a) (2019) (“The
`
`Board institutes the trial on behalf of the Director.”). Section 314(a) of
`
`Title 35 of the United States Code provides that an inter partes review may
`
`not be instituted “unless . . . the information presented in the petition . . .
`
`shows that there is a reasonable likelihood that the petitioner would prevail
`
`with respect to at least 1 of the claims challenged in the petition.” Upon
`
`consideration of the arguments in the briefing and the evidence of record
`
`(including testimonial evidence), for the reasons below, we determine that
`
`the Petition shows a reasonable likelihood that Petitioner would prevail with
`
`respect to at least one of the challenged claims. We thus institute inter
`
`partes review on all challenged claims on all asserted grounds. See SAS
`
`Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1354, 1359–60 (2018); Consolidated
`
`Trial Practice Guide 64 (Nov. 2019), https://www.uspto.gov/TrialPractice
`
`GuideConsolidated (“Consolidated TPG”) (“The Board will not institute on
`
`fewer than all claims or all challenges in a petition.”).
`
`2
`
`Page 2 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`
`A. Related Proceedings
`
`The parties identify a proceeding in the U.S. District Court for the
`
`Central District of California (“the District Court”) in which Patent Owner
`
`asserts the ’040 patent against Petitioner: Caravan Canopy Int’l, Inc. v.
`
`Walmart Inc., 2:19-cv-06978 (C.D. Cal.), filed Aug. 12, 2019 (the “Walmart
`
`Litigation”). Pet. 84; Paper 5 (Patent Owner’s Mandatory Notices), at 1.
`
`The Walmart Litigation was stayed on August 19, 2020. See Paper 6
`
`(Petitioner’s Updated Mandatory Notices), at 2 (discussing Ex. 1019 (order
`
`staying the Walmart Litigation)).
`
`The parties also identify other proceedings in which Patent Owner has
`
`asserted or is asserting the ’040 patent against parties not involved in this
`
`inter partes review:
`
`1. Caravan Canopy Int’l, Inc. v. The Home Depot USA, Inc., 8:19-
`
`cv-01072 (C.D. Cal.), filed May 31, 2019;
`
`2. Caravan Canopy Int’l, Inc. v. ShelterLogic Corp., 5:19-cv-
`
`01224 (C.D. Cal.), filed July 1, 2019;
`
`3. Caravan Canopy Int’l, Inc. v. Z-Shade Co. Ltd., 2:19-cv-06224
`
`(C.D. Cal.), filed July 18, 2019;
`
`4. Caravan Canopy Int’l, Inc. v. Lowe’s Home Centers, LLC,
`
`2:19-cv-06952 (C.D. Cal.), filed August 9, 2019;
`
`5. Caravan Canopy Int’l, Inc. v. Bravo Sports, 2:19-cv-06031
`
`(C.D. Cal.), filed July 12, 2019 (dismissed without prejudice);
`
`6. Int’l E-Z Up v. Caravan Canopy Int’l, Inc., 2:01-cv-06530
`
`(C.D. Cal.), filed July 30, 2001 (settled);
`
`7. Jang v. Caravan Canopy Int’l, Inc., 2:03-cv-01024 (C.D. Cal.),
`
`filed February 11, 2003 (settled).
`
`3
`
`Page 3 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`Pet. 84–85; Paper 5, at 1. On December 13, 2019, the District Court
`
`consolidated proceedings 1–4 listed above (collectively, “the Ongoing
`
`Litigations”) and the Walmart Litigation “for all purposes except for trial.”
`
`Ex. 2001, at 1. After the District Court granted the stay of the Walmart
`
`Litigation, several of the defendants in the Ongoing Litigations requested
`
`clarification that the stay applies to all the consolidated cases. See Ex. 2004
`
`(Request for Clarification re Stay of Litigation). On August 28, 2020, the
`
`District Court denied the “request for clarification.” Ex. 2005 (order
`
`denying Request for Clarification). The Ongoing Litigations are thus
`
`currently active.
`
`B. The ’040 Patent
`
`The ’040 patent relates to collapsible tent frames. See Ex. 1001, 1:1–
`
`10. According to the ’040 patent, when pitching (i.e., putting up) existing
`
`collapsible tent frames, “the center pole ribs 3 are positioned across the
`
`upper portion of the interior space as shown in FIG. 2 [below], thus limiting
`
`the height of the interior space.”1 Id. at 1:57–60. Inconvenience results
`
`because users must be mindful not to bump their heads against center pole
`
`ribs 3 or connector 4 when entering or standing in the tent. See id. at 1:61–
`
`64.
`
`
`1 Throughout this Decision, we omit any bold emphasis of reference
`numerals and figure numbers in quotations from the ’040 patent and from
`the relied-upon references.
`
`4
`
`Page 4 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`
`Figures 1 and 2 are reproduced below:
`
`
`
`Figure 1 is a “perspective view showing the construction of a typical
`
`collapsible tent frame” and Figure 2 is a “sectional view of a tent with the
`
`typical collapsible tent frame when the tent is completely pitched.”
`
`Ex. 1001, 2:35–38. The ’040 patent discloses that, because center pole 6
`
`includes connector 4 and slide guider 5, the existing collapsible tent frames
`
`have “a complex construction” and increased production costs. See id. at
`
`1:65–67. The existing tent frames are also described as “too heavy for a user
`
`to easily handle or move.” Id. at 2:1–2.
`
`Figures 3 and 4 are reproduced below:
`
`5
`
`
`
`Page 5 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`
`Figure 3 is a “perspective view showing the construction of a
`
`collapsible tent frame in accordance with the preferred embodiment” of the
`
`’040 patent, and Figure 4 is a “sectional view of a tent with the collapsible
`
`tent frame of this invention when the tent is completely pitched.” Ex. 1001,
`
`2:39–43. The collapsible tent frame in these figures includes “four side
`
`poles 10 [that] are individually coupled to a center pole 50, having a simple
`
`construction, through a center pole rib 30.” Id. at 2:64–66. Each center pole
`
`rib 30 is coupled to one of four sliders 70 through a support link 40. See id.
`
`at 3:1–3. The depicted tent frame also includes “a plurality of side pole
`
`connection beams 20, with each pair of ribs 20 being coupled to each other
`
`at the center of them into a scissor assembly.” Id. at 2:53–56. The
`
`’040 patent describes the depicted tent frame as “convenient to users,” as
`
`having a “simple construction capable of effectively reducing the production
`
`cost, volume and weight,” and as having “heighten[ed] interior space . . . in
`
`comparison with a typical collapsible tent frame.” Id. at 4:1–19.
`
`C. Challenged Claims
`
`Petitioner challenges claims 1–3, of which claim 1 is independent.
`
`Claims 2 and 3 depend from claim 1. Independent claim 1 is reproduced
`
`below, with bracketed text added to identify certain language:
`
`1. A collapsible tent frame, comprising:
`
`[A] a center pole constructed for stretching and sustaining
`a tent’s roof when a tent is pitched with the tent frame;
`
`[B] a plurality of side poles coupled to each other through
`a plurality of scissor-type ribs, with upper ends of said ribs being
`hinged to connectors provided at top ends of said side poles and
`lower ends of said ribs being hinged to sliders movably fitted
`over said side poles; and
`
`6
`
`Page 6 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`
`[C1] plurality of center pole ribs coupling said center pole
`to said connectors of the side poles, [C2] said center pole ribs
`individually comprising two rib members coupled to each other
`through a hinge joint and being hinged to the slider of an
`associated side pole through a support link, [C3] thus being
`collapsible at the hinge joint in accordance with a sliding motion
`of said slider along the side pole.
`
`Ex. 1001, 4:27–42.2
`
`D. Asserted Grounds of Unpatentability
`
`Petitioner challenges claims 1–3 on the following grounds:
`
`Claim(s) Challenged
`
`35 U.S.C. §
`
`Reference(s)/Basis
`
`1–3
`
`1–3
`
`1–3
`
`1–3
`
`1–3
`
`103(a)
`
`103(a)
`
`103(a)
`
`103(a)
`
`103(a)
`
`Yang,3 Lynch4
`
`Yang, AAPA5
`
`Yang, Berg6
`
`Tsai,7 Lynch
`
`Tsai, AAPA
`
`
`2 We adopt Petitioner’s designations for the elements of the challenged
`claims. We use these designations in the discussion below.
`3 Japanese Publication No. H1-61370 (with translation and affidavit),
`published April 19, 1989 (Ex. 1005 (Japanese version) and Ex. 1004
`(translation with affidavit), collectively “Yang”).
`4 US 4,779,635, issued October 25, 1988 (Ex. 1007, “Lynch”).
`5 Statements in the ’040 patent at column 1, lines 11–15; column 1,
`lines 18–25; and Figures 1 and 2 (“AAPA”). For clarity and consistency
`with the Petition, we use the term “AAPA” (for Applicant Admitted Prior
`Art (see Pet. 2)). Patent Owner appears to disagree with this term. See
`generally Prelim. Resp. (frequently referring to “alleged AAPA”).
`6 US 1,502,898, issued July 29, 1924 (Ex. 1008, “Berg”).
`7 US 5,638,853, issued June 17, 1997 (Ex. 1006, “Tsai”).
`
`7
`
`Page 7 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`
`Claim(s) Challenged
`
`35 U.S.C. §
`
`Reference(s)/Basis
`
`1, 2
`
`38
`
`103(a)
`
`103(a)
`
`Tsai, Berg
`
`Tsai, Berg, Carter9
`
`Petitioner supports its challenges with a declaration from Dr. Richard
`
`W. Klopp, P.E. (Ex. 1003, “the Klopp Declaration” or “Klopp Decl.”), who
`
`Petitioner has retained as an independent expert (id. ¶¶ 1–6). Patent Owner
`
`relies on the Declaration of Mr. Lance Rake (Ex. 2014, “Rake Decl.”), who
`
`Patent Owner has retained as an independent expert (id. ¶¶ 1, 5).
`
`II. DISCUSSION
`
`A. Discretion Under 35 U.S.C. § 314(a)
`
`Patent Owner argues that we should exercise our discretion to deny
`
`institution under 35 U.S.C. § 314(a) based on the Ongoing Litigations and
`
`other factors. Prelim. Resp. 3–15. The parties addressed this issue in the
`
`authorized additional briefing. See Prelim. Reply; Prelim. Sur-reply.
`
`1. Legal Framework
`
`In deciding whether to exercise discretion under § 314(a), the Board
`
`may consider “events in other proceedings related to the same patent, either
`
`at the Office, in district courts, or the ITC.” Consolidated TPG 58. The
`
`precedential order in Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11
`
`(PTAB Mar. 20, 2020), identifies factors to consider when a patent owner
`
`
`8 Although Petitioner states that the ground of Tsai, Berg, and Carter
`renders unpatentable claims “1–3” (Pet. 9), for claims 1 and 2, Petitioner
`relies on only Tsai and Berg (id. at 79). See Prelim. Resp. 55 n.1 (“Grounds
`6 and 7 are identical as to claim 1.” (citing Pet. 79)). Petitioner thus relies
`on the ground of Tsai, Berg, and Carter to address only claim 3.
`9 US 5,511,572, issued April 30, 1996 (Ex. 1009, “Carter”).
`
`8
`
`Page 8 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`raises an argument for discretionary denial due to the advanced state of a
`
`parallel proceeding:
`
`1. whether the court granted a stay or evidence exists that one
`may be granted if a proceeding is instituted;
`
`proximity of the court’s trial date to the Board’s projected
`2.
`statutory deadline for a final written decision;
`
`investment in the parallel proceeding by the court and the
`3.
`parties;
`
`overlap between issues raised in the petition and in the
`4.
`parallel proceeding;
`
`5. whether the petitioner and the defendant in the parallel
`proceeding are the same party; and
`
`other circumstances that impact the Board’s exercise of
`6.
`discretion, including the merits.
`
`Fintiv, Paper 11 at 5‒6. “These factors relate to whether efficiency, fairness,
`
`and the merits support the exercise of authority to deny institution in view of
`
`an earlier trial date in the parallel proceeding.” Id. at 6. There is some
`
`overlap among these factors and some facts may be relevant to more than
`
`one factor. Id. In evaluating the factors, the Board takes a holistic view of
`
`whether efficiency and integrity of the system are best served by denying or
`
`instituting review. Id.
`
`2. Analysis
`
`a. Factor 1: whether the court granted a stay or
`evidence exists that one may be granted if a
`proceeding is instituted
`
`Patent Owner focuses on the Ongoing Litigations, stating that they
`
`“are not stayed, and the [D]istrict [C]ourt rejected the other defendants’
`
`Request to extend the Caravan/Walmart stay to ‘all consolidated cases.’”
`
`Prelim. Sur-reply 4 (citing Ex. 2004, at 2; Ex. 2005). Petitioner responds
`
`9
`
`Page 9 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`that the Walmart Litigation is stayed, “which weighs strongly against
`
`denying institution.” Prelim. Reply 1 (citing Ex. 1019). According to
`
`Petitioner, Patent Owner’s position that “the Board should deny institution
`
`based on other cases pending between Patent Owner and other parties . . . is
`
`unsupported by any authority.” Id. at 2.
`
`“A district court stay of the litigation pending resolution of the PTAB
`
`trial allays concerns about inefficiency and duplication of efforts. This fact
`
`has strongly weighed against exercising the authority to deny institution
`
`under NHK [Spring Co. v. Intri-Plex Techs. Inc., IPR2018-00752, Paper 8
`
`(PTAB Sept. 12, 2018) (precedential)].” Fintiv, Paper 11 at 6. Here, the
`
`District Court granted Petitioner’s motion to stay the Walmart Litigation
`
`“pending the Patent Office’s decision on [this] IPR petition.” Ex. 1019, at 6;
`
`see Prelim. Reply 2 (arguing that the District Court “has stayed the Walmart
`
`[Litigation] to allow the IPR to proceed”). Although the stay will not
`
`address potential inefficiencies and duplication of efforts in the Ongoing
`
`Litigations, the stay will allay such concerns as to the Walmart Litigation.
`
`We turn now to the District Court’s denial of the “request for
`
`clarification” that the stay in the Walmart Litigation applied to the Ongoing
`
`Litigations. See Ex. 2004; Ex. 2005. In general, “[i]f a court has denied a
`
`defendant’s motion for a stay pending resolution of a PTAB proceeding, and
`
`has not indicated to the parties that it will consider a renewed motion or
`
`reconsider a motion to stay if a PTAB trial is instituted, this fact has
`
`sometimes weighed in favor of exercising authority to deny institution under
`
`NHK.” Fintiv, Paper 11 at 7–8. We do not, however, view the request for
`
`clarification, filed by three of the four defendants in the Ongoing Litigations
`
`(see Ex. 2004, at 3), as a motion for a stay that the District Court denied. Cf.
`
`10
`
`Page 10 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`Prelim. Resp. 7 (stating that “the [D]istrict [C]ourt has expressly declined to
`
`stay three of the five” Ongoing Litigations). Instead, as argued by
`
`Petitioner, those three defendants in the Ongoing Litigations “asked only for
`
`clarification whether the court’s stay as to Walmart also applied to their
`
`cases.” Prelim. Reply 2–3 (citing Ex. 2004). Indeed, in its response to the
`
`request for clarification, Patent Owner acknowledges this distinction and
`
`emphasizes that none of the defendants in the Ongoing Litigations actually
`
`moved for a stay. See Ex. 2022, at 2–3 (arguing (1) that a “request” does not
`
`exist under the Local Rules, and (2) that “the original motion to stay [was]
`
`(a) filed by Defendant Walmart only as movant, (b) not joined by any other
`
`Defendant, and (c) granted by this Court specifically only as to Walmart”).
`
`Because the Walmart Litigation is the only parallel litigation
`
`involving Petitioner, we weigh each factor in the overall analysis in this
`
`proceeding with that fact in mind. See Fintiv, Paper 11 at 6 (stating that
`
`“[s]ome facts may be relevant to more than one factor” and that, “in
`
`evaluating the factors, the Board takes a holistic view of whether efficiency
`
`and integrity of the system are best served by denying or instituting
`
`review”). On the particular facts here, we view this factor overall as
`
`weighing strongly against discretionary denial.
`
`b. Factor 2: proximity of the court’s trial date to the
`Board’s projected statutory deadline for a final
`written decision
`
`Patent Owner states that “[t]rial in the [Ongoing Litigations] is
`
`scheduled to begin on June 8, 2021.” Prelim. Resp. 7 (citing Ex. 2002
`
`(Scheduling Order, dated January 27, 2020)). Patent Owner contends that a
`
`final written decision in this proceeding, if instituted, would not issue until
`
`approximately December 2021—six months after the scheduled trial date.
`
`11
`
`Page 11 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`Id. According to Patent Owner, the Board has viewed similar relative dates
`
`as favoring discretionary denial. Id. (citing Cisco Sys., Inc. v. Ramot at Tel
`
`Aviv Univ. Ltd., IPR2020-00122, Paper 15 at 8 (PTAB May 15, 2020)).
`
`Petitioner argues that this factor weighs against discretionary denial
`
`because the Walmart Litigation “is stayed, so any trial on Walmart’s
`
`invalidity defenses will not occur until after this proceeding is final.”
`
`Prelim. Reply 3 (citing Fintiv, Paper 11 at 9). According to Petitioner, “[t]he
`
`timing of the trials of the [Ongoing Litigations] is irrelevant under this
`
`factor, and will have no effect” on this proceeding. Id. In the alternative,
`
`Petitioner contends that, “even if [the timing] were relevant (it is not), the
`
`timing of trial in [the Ongoing Litigations] is unknown” for two reasons:
`
`(1) if this proceeding is instituted “each of th[e] defendants [in the Ongoing
`
`Litigations] would have the opportunity to file motions for joinder with this
`
`[proceeding] and to obtain stays of their own district court cases” and
`
`(2) even if the Ongoing Litigations were to occur, they could not all occur on
`
`the scheduled date of June 8, 2021. Id. at 3–4.
`
`As to the Walmart Litigation, we agree with Petitioner that, based on
`
`the stay, any trial would take place after resolution of this proceeding. See
`
`Prelim. Reply 3. Thus, as to the parallel litigation involving Petitioner, this
`
`factor weighs strongly against discretionary denial.
`
`Although we do not agree with Petitioner that the timing of the trials
`
`in the Ongoing Litigations are entirely “irrelevant” (Prelim. Reply 3), as
`
`discussed above, we are mindful of the fact that the Walmart Litigation is
`
`the only parallel litigation involving Petitioner. As noted by Patent Owner,
`
`in the most recent scheduling order, the District Court maintained June 8,
`
`2021, as the start date for the “Jury Trials” in the Ongoing Litigations. See
`
`12
`
`Page 12 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`Prelim. Sur-reply 5 (citing Ex. 2023 (Amended Scheduling Order, dated
`
`August 11, 2020), at 2 (listing “Jury Trials” on “June 8, 2021” and “No
`
`Change” from the prior scheduling order (Ex. 2002))). Although Petitioner
`
`may be correct that the Ongoing Litigations do not simultaneously begin on
`
`June 8, 2021, the Board “generally take[s] courts’ trial schedules at face
`
`value absent some strong evidence to the contrary.” Apple Inc. v. Fintiv,
`
`Inc., IPR2020-00019, Paper 15 at 13 (PTAB May 13, 2020) (informative).
`
`Moreover, given (1) the six-month period from the scheduled trial
`
`start date (June 8, 2021) to the due date for the final written decision in this
`
`proceeding (December 2021) and (2) the overlap in issues between this
`
`proceeding and each of the Ongoing Litigations (as discussed below), we are
`
`persuaded by Patent Owner’s argument that—even if only one of the
`
`Ongoing Litigations actually started on June 8, 2021—at least some of the
`
`overlapping invalidity issues will likely be decided before a final written
`
`decision here. See Prelim. Sur-reply 6. But Petitioner will have no control
`
`over which invalidity issues are presented in any trial or how they are
`
`presented. As to Petitioner’s assertion that, upon institution of this inter
`
`partes review, the defendants in the Ongoing Litigations “would have the
`
`opportunity to file motions for joinder” and then seek stays in the District
`
`Court (Prelim. Reply 3), we decline to speculate how the analysis may differ
`
`under that hypothetical situation. For the reasons above, as to the Ongoing
`
`Litigations, this factor weighs slightly in favor of discretionary denial.
`
`Overall, we accord more weight to the lack of a trial date in the parallel
`
`litigation involving Petitioner than to the trial dates in the Ongoing
`
`Litigations involving different parties, and thus overall this factor weighs
`
`against discretionary denial.
`
`13
`
`Page 13 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`
`c. Factor 3: investment in the parallel proceeding by the
`court and the parties
`
`Patent Owner argues that this factor weighs in favor of discretionary
`
`denial based on the investment by the parties and the District Court in the
`
`Ongoing Litigations and the Walmart Litigation (prior to the stay) as well as
`
`the timing of the filing of the Petition here. See Prelim. Resp. 7–10. As to
`
`the investment in the parallel proceedings, Patent Owner highlights the
`
`District Court’s “significant investment of time and resources in its detailed
`
`21-page claim construction order construing six claim terms.” See id. at 7–
`
`8. Noting that the parties have exchanged initial infringement and invalidity
`
`contentions, Patent Owner argues that the investment thus far in the parallel
`
`proceedings is similar to that in the informative Fintiv decision, in which this
`
`factor weighed “somewhat in favor of discretionary denial.” Id. at 8
`
`(quoting Fintiv, Paper 15 at 14). As to the timing of the Petition, Patent
`
`Owner states that Petitioner “waited six months after receiving [the] initial
`
`infringement contentions [in the Walmart Litigation] (Ex. 2006) and two and
`
`a half months after serving its initial invalidity contentions (Ex. 2007) to file
`
`its Petition.” Id. at 9. Patent Owner also argues that Petitioner’s “initial
`
`invalidity contentions involve the same art and at least substantially the same
`
`arguments as its Petition.” Id. at 9–10 (chart showing the overlap in the
`
`asserted grounds here and the initial invalidity contentions).
`
`Petitioner responds that the District Court has not invested significant
`
`resources and that Petitioner did not delay in filing the Petition. See Prelim.
`
`Reply 4–7. Petitioner argues that “the [D]istrict [C]ourt had not invested
`
`significant resources in resolving the merits of the parties’ invalidity
`
`positions” and that, in the order staying the Walmart Litigation, the District
`
`Court stated that the case was “still in its early stages.” Id. at 4 (quoting
`
`14
`
`Page 14 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`Ex. 1019, at 3). Petitioner contends that Patent Owner “overstates the
`
`[D]istrict [C]ourt’s investment in claim construction, particularly in view of
`
`the work that remains in the stayed litigation,” because the claim
`
`construction order “only addressed six terms, four of which the Court simply
`
`accorded their plain and ordinary meaning.” Id. (citing Ex. 1018, at 20–21).
`
`As to the timing of the filing of the Petition, Petitioner argues that any delay
`
`was due to “Patent Owner’s initial disclosure of deficient infringement
`
`allegations,” which, according to Petitioner, “made it impossible . . . to
`
`understand [the] allegations.” Id. at 6.
`
`We first address the investment in the consolidated proceedings. As
`
`stated in the precedential Fintiv decision, “district court claim construction
`
`orders may indicate that the court and parties have invested sufficient time in
`
`the parallel proceeding to favor denial.” Fintiv, Paper 11 at 10. Here, the
`
`District Court issued the claim construction order in all five parallel
`
`proceedings on June 23, 2020, almost two months before staying the
`
`Walmart Litigation. See Ex. 1018; Ex. 1019. We view the District Court’s
`
`21-page claim construction order (Ex. 1018) more in line with the “detailed”
`
`order in the parallel proceeding in Apple v. Fintiv (see Fintiv, Paper 15 at 14)
`
`than the “two-page” claim construction order in Sand Revolution (see Sand
`
`Revolution II, LLC v. Cont’l Intermodal Grp. – Trucking LLC, IPR2019-
`
`01393, Paper 24 at 10–11 (PTAB June 16, 2020) (informative)). See Prelim.
`
`Resp. 8. Although, as noted by Petitioner (Prelim. Reply 5–6), the District
`
`Court applied the plain and ordinary meaning for some terms (Ex. 1018, at
`
`20–21), the Court considered the arguments and provided a thorough
`
`discussion of the issues. See id. at 1–21.
`
`15
`
`Page 15 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`
`As to the Walmart Litigation, we agree with Petitioner that, aside
`
`from the claim construction order, the District Court and the parties have not
`
`invested a significant amount of resources in the invalidity positions. See
`
`Prelim. Reply 4. And, as argued by Petitioner, “in view of the stay, no
`
`further investment will occur until this [proceeding] is resolved.” Id. at 5.
`
`For the reasons discussed above, we view the investment in the
`
`Ongoing Litigations as relevant to this factor. Although the District Court
`
`has likely not expended significant resources on invalidity issues (aside from
`
`claim construction) (see Prelim. Reply 4), the parties in the Ongoing
`
`Litigations recently served their final invalidity contentions. See Exs. 2024–
`
`2027 (final invalidity contentions, each dated August 18, 2020); see also
`
`Fintiv, Paper 11 at 9 (“The Board also has considered the amount and type
`
`of work already completed in the parallel litigation by the court and the
`
`parties at the time of the institution decision.” (emphasis added)); Prelim.
`
`Sur-reply 6 (“The [D]istrict [C]ourt, [Patent Owner], and the other
`
`defendants continue and will continue to invest valuable time and resources
`
`into litigations involving the ’040 Patent.”). Thus, at this point, the Ongoing
`
`Litigations are at approximately the same stage as the parallel proceeding in
`
`Apple v. Fintiv, in which this factor weighed “somewhat in favor of
`
`discretionary denial.” Fintiv, Paper 15 at 14.
`
`We turn now to the timing of the filing of the Petition. “If the
`
`evidence shows that the petitioner filed the petition expeditiously, such as
`
`promptly after becoming aware of the claims being asserted, this fact has
`
`weighed against exercising the authority to deny institution under NHK.”
`
`Fintiv, Paper 11 at 11. In contrast, if “the evidence shows that the petitioner
`
`did not file the petition expeditiously, such as at or around the same time that
`
`16
`
`Page 16 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`the patent owner responds to the petitioner’s invalidity contentions, or even
`
`if the petitioner cannot explain the delay in filing its petition, these facts
`
`have favored denial.” Id. at 11–12.
`
`In light of the overlap between the grounds asserted in the Petition and
`
`the initial invalidity contentions in the Walmart Litigation (as discussed
`
`below) (see Prelim. Resp. 9–10), we determine that Petitioner has not
`
`adequately explained the 2.5-month delay from the date of service of the
`
`initial invalidity contentions—March 16, 2020 (Ex. 2007, at 17)—and the
`
`date of filing of the Petition—June 1, 2020. We are not persuaded by
`
`Petitioner’s argument that “Patent Owner’s initial disclosure of deficient
`
`infringement allegations” impeded Petitioner’s ability to file. Prelim.
`
`Reply 6. Although the allegedly deficient initial contentions do not appear
`
`to identify all allegedly infringing products (compare Ex. 2006 (initial
`
`infringement claim chart), with Ex. 1020, at 20–28 (revised infringement
`
`claim chart)), the relevant issue is not the identity of the infringing products,
`
`but rather the identity of the claims asserted. See Fintiv, Paper 11 at 11
`
`(stating that the Board recognizes “that it is often reasonable for a petitioner
`
`to wait to file its petition until it learns which claims are being asserted
`
`against it in the parallel proceeding” (emphasis added)), quoted at Prelim.
`
`Sur-reply 7. Here, as argued by Patent Owner, as early as December 9,
`
`2019, Petitioner knew Patent Owner was asserting all three claims of the
`
`’040 patent. See Prelim. Sur-reply 7 (citing Ex. 2006; Ex. 1021 (Plaintiff’s
`
`Initial Disclosures), at 2).
`
`Moreover, although Petitioner filed the Petition within the one-year
`
`statutory bar under § 315(b) (see Prelim. Reply 6), that does not, by itself,
`
`demonstrate filing “expeditiously.” Fintiv, Paper 11 at 11 (“As a matter of
`
`17
`
`Page 17 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`petition timing, notwithstanding that a defendant has one year to file a
`
`petition, it may impose unfair costs to a patent owner if the petitioner, faced
`
`with the prospect of a looming trial date, waits until the district court trial
`
`has progressed significantly before filing a petition at the Office.” (emphasis
`
`added and footnote omitted)). For the reasons above, we determine that this
`
`factor overall weighs slightly in favor of discretionary denial.
`
`d. Factor 4: overlap between issues raised in the petition
`and in the parallel proceeding
`
`Patent Owner argues that the ’040 patent “has three claims, all of
`
`which are asserted against each of the defendants [in the Ongoing
`
`Litigations,] all of which Walmart challenges in its Petition, and all of which
`
`will be litigated in” the Ongoing Litigations. Prelim. Resp. 11. Patent
`
`Owner provides a chart showing the degree of overlap between Petitioner’s
`
`asserted grounds here and each defendant’s final invalidity contentions in
`
`the Ongoing Litigations. See Prelim. Sur-reply 8–9 (discussing Ex. 2024
`
`(final invalidity contentions of Costco Wholesale Corporation); Ex. 2025
`
`(final invalidity contentions of Z-Shade Co. Ltd.); Ex. 2026 (final invalidity
`
`contentions of ShelterLogic Corp.); Ex. 2027 (final invalidity contentions of
`
`Loew’s Home Centers, LLC)); Prelim. Resp. 11 (“The defendants in the four
`
`[Ongoing L]itigations have raised the same art in many of the same
`
`combinations as Walmart advances in its Petition.”).
`
`Petitioner responds that the Walmart Litigation “is stayed, thereby
`
`eliminating any concerns of overlap or duplicative efforts between the
`
`[D]istrict [C]ourt and the Board.” Prelim. Reply 7 (discussing Sand
`
`Revolution, Paper 24 at 11 (“This factor evaluates ‘concerns of inefficiency
`
`and the possibility of conflicting decisions’ when substantially identical
`
`prior art is submitted in both the district court and the inter partes review
`
`18
`
`Page 18 of 79
`
`
`
`IPR2020-01026
`Patent 5,944,040
`
`proceedings.” (quoting Fintiv, Paper 11 at 12))). In addition, “to eliminate
`
`any potential inefficiencies or overlap, Petitioner stipulates that, if this IPR is
`
`instituted, Petitioner will not pursue the same grounds in” the Walmart
`
`Litigation. Id. According to Petitioner, “[t]he stay [in the Walmart
`
`Litigation] and this stipulation weigh[] this factor against discretionary
`
`denial.” Id. (citing Sand Revolution, Paper 24 at 11–12).
`
`As to the Walmart Litigation, we generally agree with Petitioner that
`
`the stay will allay some concern as to potential inefficiencies. See Prelim.
`
`Reply 7. As discussed below, however, the overlap in issues between the
`
`Petition and the invalidity allegations in the Ongoing Litigations raises
`
`related concerns. See Fintiv, Paper 11 at 12 (“[I]f the petition includes the
`
`same or substantially the same claims, grounds, arguments, and evidence as
`
`presented in the parallel proceeding, this fact has favored denial.”).
`
`We first address the degree of overlap in issues based on the claims at
`
`issue here and in the Ongoing Litigations. See Fintiv, Pa