UNITED STATES PATENT AND TRADEMARK OFFICE
`__________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`__________________
`
`VOLKSWAGEN GROUP OF AMERICA, INC.,
`Petitioner
`
`v.
`
`STRATOSAUDIO, INC.,
`Patent Owner
`
`
`__________________
`
`Case No. IPR2021-00716
`Patent No. 8,688,028
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`
`PETITIONER’S REPLY TO
`PATENT OWNER’S PRELIMINARY RESPONSE
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`__________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`__________________
`
`VOLKSWAGEN GROUP OF AMERICA, INC.,
`Petitioner
`
`v.
`
`STRATOSAUDIO, INC.,
`Patent Owner
`
`
`__________________
`
`Case No. IPR2021-00716
`Patent No. 8,688,028
`
`
`PETITIONER’S REPLY TO
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
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`
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`Exhibit
`No.
`1006
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`1007
`1008
`1009
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`
`LIST OF EXHIBITS
`Description
`
`Sand Revolution II, LLC v. Continental Intermodal Grp. – Trucking
`LLC, IPR2019-01393, Patent Owner’s Supplemental Brief
`[Proposed] Second Amended Joint Scheduling Order
`Volkswagen’s Motion to Dismiss, or Transfer, for Improper Venue
`September 3, 2021 Email Stipulation re IPR Grounds
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`i
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`Under the Board’s informative decision in Sand Revolution II, LLC v.
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`Continental Intermodal Grp. – Trucking LLC, IPR2019-01393, Paper 24 (P.T.A.B.
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`June 16, 2020), Patent Owner’s request in its Preliminary Response for
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`discretionary denial of institution of inter partes review (“IPR”) should be rejected.
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`In Sand Revolution II, the Board declined to discretionarily deny institution,
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`despite the fact that, with respect to the parallel district court litigation before
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`Judge Albright: a Markman Order had already been issued; significant fact
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`discovery had been completed; and trial was scheduled for months before expected
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`final written decision. IPR2019-01393, Paper 24 at 7–14. In finding for Petitioner
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`and instituting IPR, the Board placed particular emphasis on the uncertainty of
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`Judge Albright’s trial date and on Petitioner’s stipulation that it would not argue
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`the same grounds of invalidity in the district court case. Id.
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`With respect to the present parallel litigation before Judge Albright:
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`Petitioner filed its Petition within four months of the Complaint, before Patent
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`Owner’s preliminary infringement contentions; there has been no Markman
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`hearing or decision; fact discovery has not yet begun; a significant motion to
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`dismiss for improper venue has been fully briefed; trial is tentatively scheduled for
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`only three weeks before expected final written decision; and Petitioner has agreed
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`to stipulate that, if this IPR is instituted, it will not assert in Western District of
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`Texas case no. 6:20-cv-1131-ADA any ground of invalidity presented in this IPR.
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`1
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`
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`Fintiv Factor 1: Whether the Court Granted a Stay or Evidence Exists that One
`May be Granted if a Proceeding is Instituted
`With respect to the first Fintiv factor, Patent Owner argues in its Preliminary
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`Response that, absent a stipulation from both parties, “Judge Albright has never
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`granted a stay to litigation.” Paper 6 at 8–9 (emphasis in original). However, the
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`Board found this factor neutral under Sand Revolution II, under similar facts and
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`arguments. IPR2019-01393, Paper 24 at 7 (citing Paper 20 at 4–5, attached hereto
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`as Exhibit 1006).
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`As in Sand Revolution II, institution has not yet been granted and neither
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`party has requested a stay; therefore, this factor is neutral here.
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`Fintiv Factor 2: Proximity of the Trial Date to the Board’s Projected Statutory
`Deadline for a Final Written Decision
`With respect to the second Fintiv factor, Patent Owner argues that the
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`expected trial date is before the Board’s projected statutory deadline for a final
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`written decision. Paper 6 at 12–16. Here, the trial date—which is tentative—is
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`scheduled only 23 days before the projected statutory deadline. Exhibit 1007 at 5
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`(“Jury Selection/Trial. The Court expects to set these dates at the conclusion of the
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`Markman Hearing.”) (emphasis added). And, as the Board noted with respect to
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`the months-long gap in Sand Revolution II, trial dates are not fixed in stone. Sand
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`Revolution II at 8–9. The tentatively scheduled trial date here is particularly in
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`doubt as it is for five separate defendants; Volkswagen was the last to be sued.
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`2
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`
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`In addition, Petitioner long ago moved to dismiss on the basis of improper
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`venue. Exhibit 1008. Petitioner has no facilities or employees in Judge Albright’s
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`district, and Patent Owner’s only argument for venue is that Petitioner has
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`somehow ratified dealerships as places of business. This is contrary to law, and
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`inconsistent with a Texas statute requiring separation between automobile
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`manufacturers and dealerships. See Omega Patents, LLC v. BMW of North
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`America et al., 1:20-cv-01907-SDG, 2020 WL 8184342 (N.D. Ga. Dec. 21, 2020);
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`see also West View Research, LLC v. BMW of North America, LLC, et al., 16-cv-
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`2590 JLS (AGS), 2018 WL 4367378 (S.D. Cal. Feb. 5, 2018); Tex. Occ. Code §
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`2301.476(c). Decision on this fully-briefed motion is set for before Markman.
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`This factor weighs even more strongly in favor of Petitioner than in Sand
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`Revolution II.
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`Fintiv Factor 3: Investment in the Parallel Proceeding by the Court and the
`Parties
`With respect to the third Fintiv factor, Patent Owner argues that its
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`preliminary infringement contentions, and the upcoming Markman hearing, as well
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`as the impending opening of discovery directly after Markman, justify denial of
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`institution. These investments pale in comparison to those in Sand Revolution II,
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`which investments the Board found weighed “marginally, if at all, in favor of
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`exercising discretion.” Sand Revolution II at 9–10.
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`In Sand Revolution II, fact discovery had been underway for months; the
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`3
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`
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`parties had served and responded to eight sets of interrogatories, nine sets of
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`requests for production, and two sets of requests for admission; the parties had
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`served dozens of third-party subpoenas for documents and deposition testimony;
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`the parties had produced (and reviewed) more than 30,000 documents, taken eight
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`fact depositions, and prepared opening expert reports; and a Markman order had
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`already been issued. Exhibit 1006 at 3. Here, fact discovery has not yet opened, the
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`Court has not ruled on the pending motion to dismiss, and the Court has not held a
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`Markman hearing or issued a ruling. See Sotera Wireless, Inc. v. Masimo Corp.,
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`IPR2020-01019, Paper 12 at 17 (P.T.A.B. Dec. 1, 2020) (“Due to the relatively
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`limited investment in the parallel proceeding to date and the fact that the timing of
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`the Petition was reasonable, we find that this factor weighs in favor of not
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`exercising discretion to deny institution under 35 U.S.C. § 314(a).”).
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`This factor weighs in favor of Petitioner.
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`Fintiv Factor 4: Overlap between Issues Raised in the Petition and in the
`Parallel Proceeding
`With respect to the fourth Fintiv factor, there are various prior art references
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`(including prior art systems) not at issue in this IPR that are at issue in the district
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`court. Exhibit 2009. In addition, Petitioner has agreed to stipulate that, if this IPR
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`is instituted, it will not assert in Western District of Texas case no. 6:20-cv-1131-
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`ADA any ground of invalidity presented in this IPR. Exhibit 1009.
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`As in Sand Revolution II, this factor favors Petitioner here.
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`4
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`
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`Fintiv Factor 5: Whether Petitioner and Defendant in the Parallel Proceeding
`are the Same Party
`Because it is uncertain whether the district court proceeding or the IPR will
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`conclude first, the fifth Fintiv factor is neutral. See Juniper Networks, Inc. v. Wsou
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`Investments, LLC, IPR2021-00538, Paper 9 at 5 (P.T.A.B. Aug. 18, 2021).
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`Fintiv Factor 6: Other Circumstances that Impact the Board’s Exercise of
`Discretion, including the Merits
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`The sixth Fintiv factor weighs against discretionary denial because Petitioner
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`filed its Petition for IPR (and six other IPR Petitions against the other asserted
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`patents) within four months of Patent Owner’s filing of a seven-patent
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`infringement complaint against Petitioner in Judge Albright’s court.
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`The three asserted grounds are simple, straightforward, and include two
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`anticipation grounds (including one based on Patent Owner’s own prior art), and an
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`obviousness ground based on one of the two anticipation references in view of a
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`third reference. Paper No. 1.
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`Conclusion
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`Overall, the Fintiv factors weigh in favor of Petitioner and against
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`discretionary denial. A finding otherwise would run afoul of the informative Sand
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`Revolution II decision, as well as Congress’s intent for there to be a true alternative
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`venue for patent infringement defendants to efficiently challenge validity.
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`
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`5
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`
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`Dated: September 13, 2021
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`Respectfully submitted,
`
`SHEARMAN & STERLING LLP
`
`
`
`/Eric S. Lucas/
`Eric S. Lucas (Reg. No. 76,434)
`Shearman & Sterling LLP
`599 Lexington Ave
`New York, NY 10022
`Tel: (212) 848-4955
`Fax: (646) 848-4955
`Email: eric.lucas@shearman.com
`Lead Counsel for Petitioner
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`6
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`CERTIFICATE OF SERVICE
`Pursuant to 37 C.F.R. § 42.6(e), I certify that on September 13, 2021, a copy
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`
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`of the foregoing Petitioner’s Reply to Patent Owner’s Preliminary Response and
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`the accompanying exhibits were served by electronic mail on Patent Owner’s lead
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`and backup counsel at the following email addresses:
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`John Scheibeler (jscheibeler@whitecase.com)
`Jonathan Lamberson (jonathan.lamberson@whitecase.com)
`Ashley T. Brzezinkski (ashley.brzezinski@whitecase.com)
`Hallie Kiernan (hallie.kiernan@whitecase.com)
`WCStratosAudioIPR@whitecase.com
`
`
`
`
`/Eric S. Lucas/
`Eric S. Lucas (Reg. No. 76,434)
`Shearman & Sterling LLP
`599 Lexington Ave
`New York, NY 10022
`Tel: (212) 848-4955
`Fax: (646) 848-4955
`Email: eric.lucas@shearman.com
`
`Lead Counsel for Petitioner
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`7
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