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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________________________________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________________________________________
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`VOLKSWAGEN GROUP OF AMERICA, INC.,
`Petitioner
`
`v.
`
`STRATOSAUDIO, INC.,
`Patent Owner
`________________________
`
`IPR2021-00712 (Patent 8,903,307)
`IPR2021-00716 (Patent 8,688,028)
`IPR2021-00718 (Patent 9,584,843)
`IPR2021-00719 (Patent 9,294,806)
`IPR2021-00720 (Patent 9,355,405)
`IPR2021-00721 (Patent 8,166,081)
`________________________
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`
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`PATENT OWNER’S SUR-REPLY
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`
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`IPR2021-00712, IPR2021-00716, IPR2021-00718,
`IPR2021-00719, IPR2021-00720, IPR2021-00721
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`The facts here favor discretionary denial of institution. Petitioner’s Reply
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`does not address numerous points raised by Patent Owner. Petitioner relies heavily
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`on a single case, Sand Revolution II, which differs from the present facts.
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`A. Fintiv Factor 1: Whether the Court Granted a Stay or Evidence Exists
`that One May be Granted if a Proceeding is Instituted
`Petitioner’s Reply does not address the specific evidence Patent Owner
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`identified showing that the district court is unlikely to stay litigation. The district
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`court has twice denied stays relating to Petitioner’s pending motion to transfer, and
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`no party has requested a stay pending the Board’s review. See Patent Owner’s
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`Preliminary Response (“POPR”) at 11. In addition, Petitioner acknowledged the
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`unlikeliness of a stay based on its motion to dismiss in its Petition for Writ of
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`Mandamus. See POPR at 8 (quoting Ex. 2002).
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`Instead, Petitioner argues this factor is neutral because “[a]s in Sand
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`Revolution II, institution has not yet been granted and neither party has requested a
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`stay.” Reply at 2.1 Adopting Petitioner’s position would entice future petitioners
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`to delay moving to stay until after institution to better position themselves to
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`oppose discretionary denial under Fintiv. This factor weighs in favor of exercising
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`discretionary denial.
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`
`1 Unless otherwise indicated, all citations to the Preliminary Response and Reply
`are to the documents in IPR2021-00721.
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`
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`- 1 -
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`
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`B.
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`IPR2021-00712, IPR2021-00716, IPR2021-00718,
`IPR2021-00719, IPR2021-00720, IPR2021-00721
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`
`Fintiv Factor 2: Proximity of the Trial Date to the Board’s Projected
`Statutory Deadline for a Final Written Decision
`Petitioner’s argument that this factor “weighs even more strongly in favor of
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`Petitioner than in Sand Revolution II” is unavailing. Petitioner likens the facts here
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`to Sand Revolution II for three reasons: (1) the trial date here is “tentative;” (2) the
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`“Court expects to set” trial after the Markman hearing; and (3) the trial date is in
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`doubt because Volkswagen was the last of five defendants to be sued. Reply at 2-
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`3. Petitioner ignores the factual differences between Sand Revolution II and this
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`case.
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`The parties in Sand Revolution II requested multiple amendments to the
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`scheduling order that caused the trial date to move by almost a year. See Sand
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`Revolution II, LLC v. Continental Intermodal Group – Trucking LLC (“Sand
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`Revolution II”), IPR2019-01393, Paper 24 at 8-9 (PTAB June 16, 2020). The
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`Board found these continual changes and the qualifier “or as available” for each
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`calendared trial date weighed only “marginally” against exercising its discretion to
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`deny institution. See Sand Revolution II at 9-10. Here, the second and third
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`amended scheduling orders did not change the October 3, 2022 trial date. See Exs.
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`1010, 2006, 2016. The scheduling order provides that the “Court expects to set
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`[trial] dates at the conclusion of the Markman hearing.” See Ex. 2016. The Court
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`recently moved up the Markman hearing from October 4, 2021 to September 27,
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`2021. See Ex. 2015. The trial date will therefore be set by the time of the
`- 2 -
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`
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`IPR2021-00712, IPR2021-00716, IPR2021-00718,
`IPR2021-00719, IPR2021-00720, IPR2021-00721
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`institution decision. The Board should take this at face value. That the Court
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`advanced the Markman hearing confirms its intent not to delay the case.
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`Petitioner also points to its “fully-briefed” motion to dismiss based on
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`improper venue as weighing against discretionary denial. Reply at 3. This
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`argument is moot because the Court has denied Petitioner’s motion. See Ex. 2017.
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`C. Fintiv Factor 3: Investment in the Parallel Proceeding by the Court and
`the Parties
`Petitioner contends this factor weighs in its favor because “fact discovery
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`has not yet opened, the Court has not ruled on the pending motion to dismiss, and
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`the Court has not held a Markman hearing or issued a ruling.” Reply at 4.
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`However, investment is determined at the “time [the Board is] projected to issue an
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`institution decision.” See POPR at 16 (citing Fintiv and NVIDIA). At that time,
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`fact discovery will be open, and the Court will have held a Markman hearing and
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`likely issued a claim construction decision. See Ex. 2016. The Court also has
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`already denied Petitioner’s motion to dismiss. See Ex. 2017. This factor weighs in
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`favor of exercising discretionary denial of institution.
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`D. Fintiv Factor 4: Overlap between Issues raised in the Petition and in the
`Parallel Proceeding
`Petitioner argues that this factor weighs against discretionary denial because
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`(1) the district court proceeding contains prior art not asserted in the inter partes
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`review (“IPR”) proceedings and (2) Petitioner agreed to stipulate that it will not
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`
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`- 3 -
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`
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`IPR2021-00712, IPR2021-00716, IPR2021-00718,
`IPR2021-00719, IPR2021-00720, IPR2021-00721
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`assert in the district court case “any ground of invalidity presented in this IPR.”
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`Reply at 4. In originally denying institution, the Board in Sand Revolution II
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`acknowledged that the “patentability issues presented here are nevertheless a
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`subset of the issues in the district court case.” Sand Revolution II at 12. That issue
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`was mitigated to some degree by the Petitioner’s proposed stipulation. Id.
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`Here, Petitioner’s proposed stipulation does not mitigate the duplicative
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`efforts and overlap of issues. First, the stipulation is only proposed; Petitioner has
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`not filed a stipulation in the district court or this proceeding. Second, unlike Sand
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`Revolution II, where the Petitioner was the sole defendant in the district court
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`litigation, Petitioner here is one of five defendants in the district court who served
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`joint invalidity contentions based on the same prior art at issue in these IPRs.
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`Regardless of the Petitioner’s proposed stipulation, the district court will be
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`deciding the same issues of invalidity as raised or reasonably could be raised in the
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`petitions here. Patent Owner raised this issue during the telephone conference
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`requesting this reply. See Order at 2-3. Petitioner’s Reply does not address it.
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`Petitioner’s proposed narrow stipulation does not mitigate the overlapping
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`prior art issues that co-defendants will pursue in district court. See Samsung
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`Electronics Co., Ltd. et al. v. Ancora Technologies, Inc., IPR2020-01184, Paper 11
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`at 21 (stipulation does not bind co-defendants). This factor weighs in favor of
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`discretionary denial.
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`
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`- 4 -
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`
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`E.
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`IPR2021-00712, IPR2021-00716, IPR2021-00718,
`IPR2021-00719, IPR2021-00720, IPR2021-00721
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`
`Fintiv Factor 5: Whether Petitioner and Defendant in the Parallel
`Proceeding are the Same Party
`There is no dispute that Petitioner is a defendant in the district court case.
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`Petitioner’s argument that this factor is neutral (see Reply at 5) is unpersuasive
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`because the trial date is scheduled to occur before the final written decision. The
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`Board should take this date at face value. See, supra, Section B; see also POPR at
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`13 (citing Verizon Business Network Services LLC v. Huawei Techs., IPR2020-
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`01291, Paper 13 at 11 (PTAB Jan. 25, 2021)).
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`F.
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`Fintiv Factor 6: Other Circumstances that Impact the Board’s Exercise
`of Discretion, including the Merits
`Patent Owner previously explained that the existence of other co-defendants
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`in the district court case further justifies discretionary denial of institution. POPR
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`at 21-22. Petitioner does not address this point. Reply at 5. Instead, Petitioner
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`contends that it timely filed its petitions and the grounds are straightforward. The
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`Preliminary Response points out the various faulty reasonings in Peitioner’s
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`alleged “straightforward” grounds. See POPR at 23-48. In any event, the co-
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`defendants will continue to assert the grounds in the district court proceeding,
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`rendering Petitioner’s argument ineffective. See, supra, Section D.
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`CONCLUSION
`The Fintiv factors weigh in favor of discretionary denial of institution.
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`- 5 -
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`
`
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`Date: September 23, 2021
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`IPR2021-00712, IPR2021-00716, IPR2021-00718,
`IPR2021-00719, IPR2021-00720, IPR2021-00721
`
`
`Respectfully submitted,
`/John Scheibeler/
`John Scheibeler
`USPTO Reg. No. 35,346
`WHITE & CASE LLP
`1221 Avenue of the Americas
`New York, NY 10020-1095
`jscheibeler@whitecase.com
`Phone: 212-819-8200
`
`
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`- 6 -
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`
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`IPR2021-00712, IPR2021-00716, IPR2021-00718,
`IPR2021-00719, IPR2021-00720, IPR2021-00721
`
`
`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that a copy of the foregoing Patent
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`Owner’s Sur-Reply, Updated Exhibit List and Exhibits were served on September
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`23, 2021, by filing these documents through the Patent Trial and Appeal Board
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`End to End Systems as well as delivering copies via electronic mail upon the
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`following counsel of record for Petitioner:
`
`
`
`Eric S. Lucas (Reg. No. 76,434)
`David J. Cooperberg (Reg. No. 63,250)
`Mark A. Hannemann (Pro Hac Vice Pending)
`Thomas R. Makin (Pro Hac Vice Pending)
`SHEARMAN & STERLING LLP
`599 Lexington Avenue
`New York, New York 10022
`Phone: (212) 848-4955
`eric.lucas@shearman.com
`david.cooperberg@shearman.com
`mark.hannemann@shearman.com
`thomas.makin@shearman.com
`VW-Stratos@Shearman.com
`
`
`Respectfully submitted,
`
`
`
`
`
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`
`
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`
`
`/John Scheibeler/
`John Scheibeler
`USPTO Reg. No. 35,346
`
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`- 7 -
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`
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