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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________________
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`Playtika Ltd. and Playtika Holding Corp.,
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`Petitioners,
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`v.
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`NEXRF Corp.,
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`The Patent Owner.
`____________________
`
`Case No. IPR2021-00951
`U.S. Patent No. 8,747,229
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`
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`PETITIONERS’ PRE-INSTITUTION REPLY IN RESPONSE TO THE
`PATENT OWNER’S PRELIMINARY RESPONSE
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`I.
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`
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`IPR2021-00951 Petition
`Petitioners’ Pre-Institution Reply
`TABLE OF CONTENTS
`
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`Collateral Estoppel Does Not Apply to Playtika’s Petitions ........................... 1
`A.
`Summary of Facts .................................................................................. 1
`B.
`Element 1: The Petitions’ §§ 102 and 103 Grounds Are Not
`Identical to the District Court’s § 101 Ground ..................................... 2
`Element 2: The §§ 102 and 103 Issues Were Never Litigated in
`the First Action ...................................................................................... 4
`Element 3: Resolution of the § 101 Issues Was Neither Final
`nor Essential to the Judgment in the District Court Proceeding ........... 5
`Element 4: Playtika Has Not Had a Full and Fair Opportunity to
`Litigate the §§ 102 and 103 Issues in the First Action.......................... 5
`
`C.
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`D.
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`E.
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`
`
`ii
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`
`
`Exhibit
`Ex-1001
`Ex-1002
`Ex-1003
`Ex-1004
`Ex-1005
`Ex-1006
`Ex-1007
`Ex-1008
`Ex-1009
`Ex-1010
`
`Ex-1011
`
`Ex-1012
`Ex-1013
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`Ex-1014
`Ex-1015
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`Ex-1016
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`Ex-1017
`Ex-1018
`Ex-1019
`Ex-1020
`Ex-1021
`Ex-1022
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`IPR2021-00951 Petition
`Petitioners’ Pre-Institution Reply
`LIST OF EXHIBITS
`Description
`U.S. Patent No. 8,747,229 (the ’229 patent)
`Prosecution File History of U.S. Patent No. 8,747,229
`Declaration of Stacy A. Friedman
`Curriculum Vitae of Stacy A. Friedman
`U.S. Patent No. 7,470,196 B1 (“Joshi”)
`European Patent Application No. EP 0 934 765 A1 (“Agasse”)
`U.S. Patent No. 5,918,013 (“Mighdoll”)
`Reserved
`Australian Patent No. 721645 (“Finlayson”)
`David Ohlson, Lasseters On-Line, “Internet Gambling” (May 6-7,
`1999).
`Access Systems PTY Ltd., Submission to The Productivity
`Commission Inquiry into Australia’s Gambling Industries (Oct.
`1998).
`U.S. Patent No. 6,874,084 (“Dobner”).
`John R. Smith et al., Content-Based Transcoding of Images in the
`Internet (1998).
`Reserved
`Complained Filed in NEXRF Corp. v. Playtika Ltd., Case No. 3:20-
`cv-604-MMD-CLB (D. Nev.)
`Henrik Frystyk Nielson, et al., Network Performance Effects of
`HTTP/1.1, CSS1, and PNG, note 24-June 1997 (“Neilson”).
`U.S. Patent No. 6,409,602 (“Wiltshire”)
`As-filed Application of U.S. Patent Application No. 09/688,501
`E-mail Correspondence
`Playtika’s Motion to Dismiss Filed on Feb. 18, 2021
`Reserved
`NEXRF’s Notice of Appeal
`
`
`
`iii
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`
`
`I.
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`IPR2021-00951 Petition
`Petitioners’ Pre-Institution Reply
`Collateral Estoppel Does Not Apply to Playtika’s Petitions1
`The collateral estoppel argument in the preliminary responses should be
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`rejected because none of the required elements of collateral estoppel are met.
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`Collateral estoppel requires a showing of the following elements: “(1) the issue at
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`stake must be identical to the one involved in the prior litigation; (2) the issue must
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`have been actually litigated in the prior suit; (3) the determination of the issue in
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`the prior litigation must have been a critical and necessary part of the judgment in
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`that action; and (4) the party against whom the earlier decision is asserted must
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`have had a full and fair opportunity to litigate the issue in the earlier proceeding.”
`
`Voter Verified, Inc. v. Election Sys. & Software LLC, 887 F.3d 1376, 1382-83 (Fed.
`
`Cir. 2018) (emphasis in original). Here, the issue decided by the district court
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`(eligibility under 35 U.S.C. § 101) and the issues before the Board (anticipation
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`and obviousness under 35 U.S.C. § 102 and 103) are different.
`
`Summary of Facts
`A.
`On May 26, 2021, Petitioners Playitka Ltd. and Playtika Holding Corp.
`
`(“Playtika”) filed three inter partes review petitions (IPR2021-00951, 00952, and
`
`00953) against the Patent Owner, NEXRF Corp. NEXRF was at the same time
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`1 The Board authorized, via e-mail, a five-page brief responding to the collateral
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`estoppel arguments raised in Patent Owner’s preliminary responses. Ex-1019.
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`1
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`
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`IPR2021-00951 Petition
`Petitioners’ Pre-Institution Reply
`asserting the same patents against Playtika in a parallel district court proceeding,
`
`and Playtika filed a motion to dismiss the complaint under Fed. R. Civ. P. 12(b)(6),
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`arguing inter alia that the asserted patents are invalid under 35 U.S.C. § 101. Ex-
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`1020. No other invalidity issues were briefed. See id. On July 7, 2021, the district
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`court issued an order granting Playtika’s motion to dismiss, holding that the
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`asserted patents are invalid under § 101. Ex-2006. The order did not address any
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`other issues of invalidity. See id. On July 13, 2021, The Patent Owner appealed the
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`district court’s judgment to the Federal Circuit. Ex-1022.
`
`B.
`
`Element 1: The Petitions’ §§ 102 and 103 Grounds Are Not
`Identical to the District Court’s § 101 Ground
`Collateral estoppel should not apply because the § 101 issues decided in the
`
`district court’s order are not identical to the anticipation and obviousness
`
`arguments raised in Playtika’s IPR petitions. See Voter Verified, 887 F.3d at 1379-
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`80 (refusing to apply collateral estoppel to § 101 arguments even though invalidity
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`under §§ 102, 103, and 112 was adjudicated in the prior proceeding on summary
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`judgment). The IPR petitions only address anticipation and obviousness arguments
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`pursuant to 35 U.S.C. § 311(b). On the other hand, Playtika’s motion to dismiss
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`and the district court’s order only addressed invalidity under § 101. See Ex-1020,
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`Ex-2006. Invalidity issues under § 101 are different from anticipation and
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`obviousness issues under §§ 102 and 103, involving different legal and factual
`
`analyses. Moreover, unlike § 101 analysis, which can be decided as a matter of law
`
`2
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`
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`IPR2021-00951 Petition
`Petitioners’ Pre-Institution Reply
`without any discovery or claim construction (as was the case in the district court
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`action), §§ 102 and 103 analyses require claim construction and extensive
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`discovery regarding prior art and the state of art at the time of the invention. Orexo
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`AB v. Actavis Elizabeth LLC, 371 F. Supp.3d 175, 185-86 (D. Del. May 8, 2018)
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`(holding that “validity should not as a matter of law, be treated as a single issue for
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`estoppel purposes,” because there is “no uniformity among the rules that govern
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`the invalidity defenses afforded to an accused infringer.”).
`
`The Patent Owner argues that multiple theories of invalidity should be
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`treated as a single issue of invalidity for collateral estoppel, citing two inapposite
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`district court cases. ’229 POPR at 31. In XpertUniverse, the Northern California
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`district court’s application of collateral estoppel was driven, in part, by the fact that
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`the patent challenger “could have presented but chose not to” raise § 101 issues in
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`the prior district court action, which proceeded to completion with a jury verdict.
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`XpertUniverse, Inc. v. Cisco Sys., Inc., 2018 WL 2585436, at *4 (N.D. Cal. May 8,
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`2018). In contrast, Playtika could not have raised §§ 102 and 103 issues at the
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`pleading stage in the district court action without any discovery or claim
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`construction. The court in XpertUniverse also noted that other courts apply
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`different laws that may lead to the opposite outcome. See id. For example, the
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`Delaware district court has held that § 101 issues are separate and distinct from
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`other invalidity issues (e.g., §§ 102 and 103) involving different legal analyses and
`
`3
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`
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`IPR2021-00951 Petition
`Petitioners’ Pre-Institution Reply
`evidence. Orexo AB, 371 F. Supp.3d at 185-86; see also Sprint Commc’n Co. v.
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`Charter Commc’n, Inc., 2021 WL 982726, at *5-*6 (D. Del. Mar. 16, 2021).
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`Rudolph Techs. is also inapposite. As in XpertUniverse, the earlier district
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`court action in Rudolph Techs. proceeded to a jury trial, resulting in a verdict of
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`invalidity, during which the patent challenger had the opportunity and incentive to
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`raise all invalidity issues. Rudolph Techs., Inc. v. Camtek Ltd., Case No. 15–cv–
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`1246 (WMW/BRT), 2016 WL 8668504, at *1 (D. Minn. Aug. 8, 2016). Moreover,
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`the court in Rudolph Techs. considered the Second Restatement factors, which
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`weigh against applying collateral estoppel in this case. Here, there is very little, if
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`any, overlap in evidence between the issues raised in the two actions; they involve
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`application of different rules of law; and there was no pretrial preparation or
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`discovery relating to this matter presented in the district court action. See id. at *4.
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`C. Element 2: The §§ 102 and 103 Issues Were Never Litigated in the
`First Action
`As explained above, anticipation and obviousness theories were not litigated
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`
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`in the district court because Playtika did not, and could not, raise them in its
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`motion to dismiss. Voter Verified, 887 F.3d at 1383 (holding that § 101 invalidity
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`was not actually litigated because validity was upheld solely based on the patent
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`challenger’s failure to respond).
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`4
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`
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`IPR2021-00951 Petition
`Petitioners’ Pre-Institution Reply
`D. Element 3: Resolution of the § 101 Issues Was Neither Final nor
`Essential to the Judgment in the District Court Proceeding
`Because the anticipation and obviousness theories were not raised in the
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`
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`district court motion to dismiss, they were not essential to the court’s order
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`granting that motion. Furthermore, the court’s judgment of invalidity under § 101
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`was not final for collateral estoppel purposes because it is currently on appeal at
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`the Federal Circuit. See Ex-1022. The PTAB has refused to apply collateral
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`estoppel in similar factual circumstances. See Samsung Elecs. Co. v. M & K
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`Holdings Inc., IPR2018-00698, Paper 12 at 13-14 (Sept. 12, 2018); Interthinx, Inc.
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`v. Corelogic Sol. LLC, CBM2012-00007, Paper 15 at 9-10 (Jan. 31, 2013).
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`E.
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`Element 4: Playtika Has Not Had a Full and Fair Opportunity to
`Litigate the §§ 102 and 103 Issues in the First Action
`Playtika has not yet had a full and fair opportunity to litigate anticipation and
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`
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`obviousness issues in the district court action because the case never proceeded
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`beyond the pleading stage. See Stripe, Inc. v. Boom! Payments, Inc., CBM2020-
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`00002, Paper 22 at 8 (May 19, 2020). Without any claim construction or discovery,
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`Playtika could not have raised these issues in the motion to dismiss. Thus, applying
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`collateral estoppel based on the district court’s order would prejudice Playtika.
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`Date: September 27, 2021
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`
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`Respectfully Submitted,
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`/Cory C. Bell/
`Cory C. Bell
`Reg. No. 75,096
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`5
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`
`
`IPR2021-00951 Petition
`Petitioners’ Pre-Institution Reply
`CERTIFICATE OF SERVICE
`The undersigned certifies that a copy of the foregoing Petitioners’ Pre-
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`Institution Reply in Response to the Patent Owner’s Preliminary Response and
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`Exhibits 1019-1020, 1022 were served electronically via email on September 27,
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`2021, in their entirety on the following:
`
`Eugene LeDonne
`Brian Murphy
`Jonathan Herstoff
`Christopher Gosselin
`HAUG PARTNERS LLP
`745 Fifth Avenue
`New York, New York 10151
`Eledonne@haugpartners.com
`BMurphy@haugpartners.com
`JHerstoff@haugpartners.com
`cgosselin@haugpartners.com
`ipr.NEXRF@haugpartners.com
`
`Adam Yowell
`Alastair Warr
`FISHERBROYLES
`5470 Kietzke Ln, Suite 300
`Reno, NV 89511
`adam.yowell@fisherbroyles.com
`alastair.warr@fisherbroyles.com
`
`
`Date: September 27, 2021
`
`By: /William Esper/
`William Esper
`Case Manager and PTAB Coordinator
`FINNEGAN, HENDERSON, FARABOW,
`GARRETT & DUNNER, LLP
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