throbber
UNITED STATES INTERNATIONAL TRADE COMMISSION
`
`Washington, D.C.
`
`
`
`
`
`
` Inv. No. 337-TA-1228
`
`In the Matter of
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`CERTAIN AUTOMATED STORAGE
`AND RETRIEVAL SYSTEMS, ROBOTS,
`AND COMPONENTS THEREOF
`
`ORDER NO. 6:
`
`
`
`
`DENYING RESPONDENTS’ MOTION FOR A STAY
`
`(March 9, 2021)
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`Everyone is entitled to a day in court.1
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`I. BACKGROUND
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`A. Procedural background
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`This investigation was initiated on November 2, 2020. Comm’n Notice (Nov. 2, 2020);
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`see 85 Fed. Reg. 71096-97 (Nov. 6, 2020). Between November 30, 2020 and January 18, 2021,
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`Respondents Ocado Group plc (“Ocado”), Ocado Central Services Ltd., Ocado Innovation Ltd.,
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`Ocado Operating Ltd., Ocado Solutions, Ltd., Ocado Solutions USA Inc., Tharsus Group Ltd.,
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`and Printed Motor Works Ltd. (collectively, “Respondents”), filed four inter partes review
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`(“IPR”) petitions and one post grant review (“PGR”) petition with the Patent Trial and Appeal
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`Board (“PTAB”) to obtain a decision from the PTAB cancelling all the asserted patents and
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`claims on the ground of invalidity. Motion at 1.
`
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`1 “Where does the search for justice and ultimate truth end and injustice begin? . . . . It is easy to
`generalize[] and say that ‘everyone is entitled to his day in court’ . . . but [w]hen that ‘day’
`becomes ‘many days,’ . . . requiring the retention of counsel, filing of briefs and all the other
`trappings which are a part of any court proceeding, [it] [may] become[] ‘injustice’ at some point.
`A little common sense is required.” EEOC v. New Enter. Stone & Lime Co., 74 F.R.D. 628, 633
`(W.D. Pa. 1977).
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`On January 19, 2021, Respondents filed a motion seeking to stay the investigation
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`pending resolution of inter partes review (“IPR”) and post-grant review (“PGR”) proceedings
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`regarding all of the asserted patents and claims. Motion Docket No. 1128-001 (the “motion”).
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`On January 29, 2021, Complainants AutoStore Technology AS, AutoStore AS and AutoStore
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`System Inc. (collectively, “Complainants”) filed an opposition. On February 3, 2021,
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`Respondents filed a reply brief.
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`B. AIA background
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`“The Leahy-Smith America Invents Act (AIA) of 2011 created the Patent Trial and
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`Appeal Board, 35 U.S.C. § 6(c), and established three types of administrative review proceedings
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`. . . that enable a “person” other than the patent owner to challenge the validity of a patent post-
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`issuance: (1) “inter partes review,” § 311; (2) “post-grant review,” § 321; and (3) “covered-
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`business-method review” (CBM review), note following § 321.” Return Mail, Inc. v. United
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`States Postal Serv., 139 S. Ct. 1853 (2019). “After an adjudicatory proceeding, the Board either
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`confirms the patent claims or cancels some or all of them, §§ 318(b), 328(b).” Id. “Any
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`‘dissatisfied’ party may then seek judicial review in the Federal Circuit, §§ 319, 329. In addition
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`to AIA review proceedings, a patent can be reexamined either in federal court during a defense
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`to an infringement suit, § 282(b), or in an ex parte reexamination by the Patent Office, §§ 301(a),
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`302(a).” Id.
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`The AIA “separates the Director’s decision to ‘institute’ the review, § 314, on one hand,
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`from the Board’s ‘conduct’ of the review ‘instituted’ by the Director, § 316(c), and the Board’s
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`subsequent ‘written decision,’ § 318, on the other.” St. Jude Med., Cardiology Div., Inc. v.
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`Volcano Corp., 749 F.3d 1373, 1375–76 (Fed. Cir. 2014). The statute thus establishes a two-step
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`procedure for inter partes review: “the Director's decision whether to institute a proceeding,
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`followed (if the proceeding is instituted) by the Board’s conduct of the proceeding and decision
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`with respect to patentability.” Id. at 1376. 2 “Under the title, ‘No Appeal,’ Section 314(d)
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`declares that ‘[t]he determination by the Director whether to institute an inter partes review under
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`this section shall be final and nonappealable.’” Id.3
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`C. Recent PTAB trends
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`Respondents assert that in recent months the PTAB has denied institution of nineteen IPR
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`petitions because a parallel ITC investigation was not stayed. See Resps.’ Mem. at. 3-4; Mot.
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`
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`2 Section § 314 states:
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`Institution of inter partes review
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`(a) Threshold.—The Director may not authorize an inter partes review to be instituted unless the
`Director determines that the information presented in the petition filed under section 311 and any
`response filed under section 313 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.
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`(b) Timing.—The Director shall determine whether to institute an inter partes review under this
`chapter pursuant to a petition filed under section 311 within 3 months after—
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`(1) receiving a preliminary response to the petition under section 313; or
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`(2) if no such preliminary response is filed, the last date on which such response may be filed.
`Thryv, Inc v. Click-To-Call Techs., LP, 140 S. Ct. 1367, 1377 (2020).
`
` 3
`
` The procedures regarding inter partes review are complex: “Under inter partes review, anyone
`may file a petition challenging the patentability of an issued patent claim at almost any time. §§
`311(a), (c). The grounds for challenge are limited to the patentability of the claim under § 102
`(which requires patent claims to be novel) and § 103 (which requires patent claims to be
`nonobvious). § 311(b). The statute imposes other restrictions as well. A petition for inter partes
`review ‘may be considered only if’ the petition satisfies certain requirements, including (as
`relevant here) that the petition ‘identif[y], in writing and with particularity, each claim
`challenged, the grounds on which the challenge to each claim is based, and the evidence that
`supports the grounds for the challenge to each claim.’ § 312(a)(3). Additionally, ‘inter partes
`review may not be instituted’ if the party challenging the patent previously filed a civil action
`challenging the patent's validity or was sued for infringing the patent more than a year before
`seeking inter partes review. §§ 315(a)(1), (b).” Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct.
`2131, 2149, 195 L. Ed. 2d 423 (2016).
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`App. A. Respondents assert that in many of those denials, the PTAB stated that it was denying
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`institution because the petitioner had not sought a stay from the ITC. See id.
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`D. Respondents’ Arguments
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`Using the traditional criteria for determining whether a stay of proceedings under section
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`337 should be granted, see infra, Respondents assert that staying this investigation pending
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`resolution of their IPR and PGR petitions will preserve resources, simplify the issues presented
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`in the investigation, and possibly eliminate the need for an investigation entirely.4 Respondents
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`contend that under the Commission’s traditional stay analysis the facts will never be “better”
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`from the standpoint of granting a stay.
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`Respondents urge that a stay be granted because of the recent trend at the PTAB to deny
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`institution of post-review challenges unless the ITC stays any parallel investigation under section
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`337. Respondents claim that, unless a stay is granted, patentees in general will take advantage of
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`the situation to force respondents to defend themselves in an ITC investigation involving patents
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`that may ultimately be proven invalid.
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`4 “Reflecting Congress’ unified intention to streamline both processes, inter partes review and
`post-grant are nearly identical in their purposes and procedural requirements, differing only in
`minute areas, such as the time restraints of each respective procedure. See generally id. §§ 312–
`19, 321–29. Both review proceedings are conducted entirely by the PTAB alone, §§ 316(c) and
`326(c); both proceedings require a petition seeking to institute review proceedings which
`identifies all RPIs, § 312(a)(2) and 37 C.F.R. § 42.8(b)(1); 35 U.S.C. § 322(a)(2); both
`procedures specifically state that the PTAB's decision of whether to institute the requested
`review proceedings is final and nonappealable, §§ 314(d) and 324(e); and finally, both
`procedures provide for appellate review, at the Federal Circuit, only after the PTAB has issued a
`‘final written decision’ ‘with respect to the patentability’ of the reviewed patents, at the
`conclusion of the review process, §§ 314(d), 318(a), regarding inter partes review; see also id.
`§§ 328(a), 329, regarding post-grant review; id. § 141(c) (describing the appellate posture for
`both inter partes and post-grant review).” Medtronic, Inc. v. Lee, 151 F. Supp. 3d 665, 670–71
`(E.D. Va. 2016).
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`II. DISCUSSION
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`A. Complainants’ Opposition is rejected for failure to follow the ground rules.
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`In violation of Ground Rule 3.9, the opposition contains no page numbers and, after the
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`first page, does not include a footer bearing the investigation number and the title of the
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`document. Ground Rule 3.9 states:
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`3.9 Cover Page and Footer
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`Pursuant to Commission Rule 210.4(a), the front page of every filing and
`submission shall include the name of the investigation and the investigation
`number. Every subsequent page shall bear a footer with the investigation number,
`a summary of the title of the document, and consecutive numbering at the bottom
`of the page.
`
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`Order No. 2 at 9. In this investigation, as in every investigation to which I am assigned, I
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`conducted an initial telephonic pre-hearing conference to discuss the investigation and explain
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`my expectations of the parties. Because parties sometimes fail to follow my ground rules, which
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`are designed to benefit the parties and the court by facilitating the resolution of these complex
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`and highly disputed cases, I lay emphasis in the conference on compliance with the ground rules.
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`In the initial telephonic conference in this investigation, compliance with the ground rules was
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`discussed at some length:
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`10 These days I generally note the extraordinary
`11 conditions in which we are operating, and I'll have a
`12 little more to say about that in a few minutes, and we can
`13 address some of the issues related to the pandemic as we
`14 come to them.
`15 But just so everyone is aware, that we're not in
`16 the building. We are -- we have some restraints in terms
`17 of what we can and can't do. And so we all need to be
`18 flexible and, above all, to cooperate.
`19 So one way to facilitate the whole process is to
`20 consult the ground rules and be sure to take care to follow
`21 them.
`22 I have been warning the parties in all my cases
`23 that even minor deviations may result in a negative result
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`5
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`24 for your pleading. So it's really in your interest to
`25 follow the ground rules to the last letter.
`1
` If you have any questions about the rules,
`2 please feel free to contact my Chambers. We would be happy
`3 to try and help you. And it's better to do that than to
`4 guess about what the ground rules are.
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`
`
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`***
`10
` I don’t – it’s not an excuse when people blame
`11 paralegals or other administrative personnel for failing to
`12 follow the ground rules. It is counsels' responsibility to
`13 make sure that the pleadings conform. So that's something
`14 that you or someone on your team needs to be on top of at
`15 all times.
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`Pre-Hearing Conference Tr. (Dec. 3, 2020) at 5:10-6:15
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`Complainants’ non-compliance results in rejection of their opposition and non-
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`consideration of the arguments raised therein.5 Under the conditions of the ITC’s COVID-19
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`Action plan, employees must work from home. Employees in the Office of Administrative Law
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`Judges must view pleadings and exhibits entirely online, and decisions (including page
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`references) similarly must be drafted without the benefit of hard copy.6 It is difficult enough to
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`engage in these tasks without the benefit of a paper version of a legal brief and supporting
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`documents. For a party to submit a brief under these circumstances without numbering the pages
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`is an abuse. See Pre-hearing conference Tr. at 8:17-18 (“you need to be aware of the limitations
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`that we have”), 21-22 (“I would urge you to do what you do with the awareness of the limitations
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`5 In addition to the publication of the ground rules themselves and the specific warning provided
`to counsel at the pre-hear conference, it is public information that in some previous
`investigations, non-compliance has resulted in pleadings being rejected and the arguments
`therein not being considered. See Certain Vehicle Security and Remote Convenience Systems
`and Components Thereof, Inv. No. 337-TA-1152, Order No. 11 (Nov. 25, 2019) at 1 (“Because
`DEI’s reply does not comply with the requirements of the ground rules, the reply will not be
`considered.”); Certain Vehicle Security and Remote Convenience Systems and Components
`Thereof, Inv. No. 337-TA-1152, Order No. 12 (Dec. 3, 2019) at 1 (“Because DEI’s opposition
`and Respondents’ reply do not comply with the ground rules, they will not be considered.”).
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` Printing at home is not allowed because of agency security concerns.
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` 6
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`that are imposed on us.”). The ground rules are promulgated not just for the sake of making
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`rules. The rules exist to facilitate getting the work done faster and better. A degree of
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`cooperation is expected, as stated in the initial telephone conference. That cooperation was
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`lacking in this instance.7
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`B. Traditional factors regarding stays under section 337
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`In determining whether a stay is appropriate, the Commission traditionally weighs five
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`factors: “(1) the state of discovery and the hearing date; (2) whether a stay will simplify the
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`issues and hearing of the case; (3) the undue prejudice or clear tactical disadvantage to any party;
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`(4) the stage of the PTO proceedings; and (5) the efficient use of Commission resources.”
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`Certain Microelectromechanical Systems and Products Containing Same, Inv. No. 337-TA-876,
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`Order No. 6 at 3 (May 21, 2003) (citing Certain Semiconductor Chips with Minimized Chip
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`Package Size & Prods. Containing Same, Inv. No. 337-TA-605, Comm’n Op. at 3-4 (May 27,
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`2008)). Motion Memo. at 6.
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`1. State of discovery and hearing date
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`A hearing date was set in this investigation by order dated November 16, 2020. Order
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`No. 3. At present, according to the procedural schedule, the parties are engaged in discovery,
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`have exchanged claim constructions, and have filed initial Markman briefs. Order No. 4 (Dec. 4,
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`2020). Given the amount of effort that has been expended already in this litigation, it cannot be
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`said that this factor favors a stay.
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`While the target date for completion of this investigation is March 7, 2022, there is no
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`evidence that the PTAB’s review will be completed any time before that date, and the
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`7 Everyone in the business of litigation makes mistakes and a degree of forbearance regarding
`such errors is necessary, particularly under the present circumstances. But ten lawyers in four
`cities signed on to Complainants’ opposition. With the exercise of due care, one of them should
`have noticed that the document was not paginated.
`7
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`expectation is that it will be completed later. See Mot. Mem. at 7 (“The Target Date currently is
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`set for March 7, 2022, which would be only two months before the latest date on which PTAB
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`would start to issue final written decisions, which could moot the outcome of this
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`Investigation.”). It is impossible to predict whether either the ITC or the PTAB would extend
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`those dates.
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`2. Simplification of the issues
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`Since Respondents challenge all the patents and claims asserted in this investigation,
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`there is of course the potential for the issues in this investigation to be simplified by PTAB
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`rulings. There also is a possibility, however, that at least some if not all the patents and claims
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`will survive PTAB review, in which case the investigation will be simpler but significantly
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`delayed. We have no way of knowing, based on current information, whether there will be a
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`significant simplification of the issues. This factor also does not weigh in favor of a stay.
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`3. Undue prejudice or clear tactical advantage
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`To be sure, it is disturbing to contemplate the very real prospect of a complainant rushing
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`to the ITC to head off PTAB review, knowing that the PTAB will not institute proceedings if
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`there is an ongoing ITC investigation. On the other hand, the very real prospect of a respondent
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`running to the PTAB to delay a newly filed investigation at the ITC also is disturbing. This
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`factor does not seem to weigh heavily in one direction or the other.8
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`8 Respondents argue: “Under the PTAB’s recent practice of discretionarily denying institution of
`IPR because of parallel ITC proceedings, Respondents are compelled to note the potential for
`gamesmanship. Alleged infringement that dates back many years will be pursued in both the
`District Court and ITC because the latter will effectively enable the patent owner to escape
`meritorious IPR and undermine Congress’s intent when it created IPR in the America Invents
`Act—i.e., ‘to . . . establish a more efficient and streamlined patent system that will . . . limit
`unnecessary and counterproductive litigation costs.’ 3Shape A/S and 3Shape Inc. v. Align
`Technology, Inc., 2020 WL 2738516, at *14 (P.T.A.B. May 26, 2020).” Mot. Memo. at 8 n.5. I
`am unconvinced that the possibilities for gamesmanship rest more with one side than the other.
`8
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`4. Stage of the PTAB proceedings
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`Respondents argue that, before substantial resources have been invested in this
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`investigation the parties will have invested far greater resources in the PTAB proceedings and,
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`accordingly, the fourth factor weighs in favor of a stay. Mot. Memo. at 10. Respondents argue
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`that they have submitted detailed disclosures to the PTAB in connection with the IPR and PGR
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`proceedings, including evidence related to alleged prior art and expert analysis. Respondents
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`state that Complainants will have the opportunity to begin submitting preliminary responses no
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`later than February, and then the PTAB will make its institution decisions beginning in May.
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`But this argument ignores not only the effort that has gone into discovery and other
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`matters in this investigation since the motion was filed, but the fact that complainants in general,
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`before filing at the ITC, must spend considerable resources pulling together a detailed complaint
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`conforming to the Commission’s rules. See 19 C.F.R. § 210.12 (requirements for filing a
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`complaint). The process of preparing for a Markman hearing also requires consulting with
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`experts. The fact is that all parties are investing abundant resources in these various patent
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`disputes.
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`Respondents say the proper criterion should be the relative “diligence” of the parties in
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`pressing their interest through litigation, but I find no merit in this argument. Respondents assert
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`that they filed petitions at the PTAB promptly after being sued at the ITC, while noting that
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`Complainants had notice of the potential infringement for two years before the complaint in this
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`investigation was filed. These facts simply do not compel the conclusion that the investigation
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`should be stayed.
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`5. Efficient use of Commission resources
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`Respondents point out that Commission resources would be spent unnecessarily if the
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`PTAB were to cancel the asserted claims soon after the target date, and they note that this has
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`occurred in some cases. To mitigate the potential for such a scenario, the agencies could perhaps
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`seek a memorandum of understanding regarding how they will proceed when the PTAB decides
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`to institute review of patents that are the subject of section 337 investigations. But a unilateral
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`decision staying an investigation whenever a party files for PTAB review would in many cases
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`result in long delays of proceedings under section 337, in contravention of the statutory
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`requirement to proceed “at the earliest practicable time.” 19 U.S.C. § 1337(b)(1); 19 C.F.R. §
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`210.2. see also Certain Semiconductor Chips with Minimized Chip Package Size and Products
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`Containing Same (“Semiconductor Chips”), Inv. No. 337-TA-605, Comm'n Op., 2008 WL
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`2223426, at *4 (U.S.I.T.C. May 27, 2008) (“As the effect of such actions could be to override the
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`statutory mandate to presume the patents are valid, we caution the presiding ALJ to carefully
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`weigh the possibility of such manipulation in order to avoid undue prejudice to patent holders
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`seeking to enforce their rights. Such consideration may also prevent unjustified limitations on the
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`Commission's ability to complete section 337 investigations as soon as practicable according to
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`its mandate.”).
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`Granting a stay whenever a respondent seeks PTAB review after being named in a
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`complaint under section 337 would not conform with these statutory requirements. Accordingly,
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`this factor does not favor a stay.9
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`9 Respondents contend that they filed for PTAB review at the earliest possible time. While I
`agree that as an ITC investigation proceeds the argument for staying it gets weaker, I am
`unconvinced that this investigation should be stayed, even so. As noted above, it might make
`sense to stay a 337 investigation if, when, and to the extent that the PTAB determines there is a
`sufficient likelihood of invalidity that the PTAB institutes review.
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`C. Other Considerations
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`Some additional factors weigh in the balance.
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`1. The public interest
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`First, section 337 is not only an avenue for resolving intellectual property disputes.
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`Section 337 permits excluding of infringing products from importation into the United States. 19
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`U.S.C. §1337(d). Private parties have an interest in exclusion, to be sure, but the public interest
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`in protecting significant domestic industries from unfair competition from abroad dominates.
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`Delaying such protection to preserve the resources of respondents (or even the ITC itself),
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`therefore cannot be approved routinely.
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`2. Statutory intent
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`There are indications that Congress did not intend that petitions at the PTAB should
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`result in a stay at the ITC. When Congress recognizes the desirability of staying cases involving
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`the same patent claims in different fora, Congress “knows how” to legislate to bring about this
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`result. See 28 U.S.C. §1659(a) (regarding district court stay for proceedings under section
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`337).10 Moreover, when it enacted the AIA, Congress legislated with the ITC in mind, so the
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`10 Section 1659(a) provides:
` (a) Stay.--In a civil action involving parties that are also parties to a proceeding before the
`United States International Trade Commission under section 337 of the Tariff Act of 1930, at the
`request of a party to the civil action that is also a respondent in the proceeding before the
`Commission, the district court shall stay, until the determination of the Commission becomes
`final, proceedings in the civil action with respect to any claim that involves the same issues
`involved in the proceeding before the Commission, but only if such request is made within--
`(1) 30 days after the party is named as a respondent in the proceeding before the Commission, or
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`(2) 30 days after the district court action is filed, whichever is later.
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`28 U.S.C. § 1659. See Return Mail, Inc. v. United States Postal Serv., 139 S. Ct. 1853, 1867
`(2019).
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`absence of a stay provision cannot be considered a mere oversight. See, e.g., 35 U.S.C. §315(e),
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`325(e) (precluding a party from relitigating issues in subsequent proceedings in district court,
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`before the ITC, or (for inter partes review and post-grant review) before the Patent Office. The
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`AIA also requires that a respondent file for PTAB review within a year of the filing of a district
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`court or ITC complaint. 35 U.S.C. § 315(b).11
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`It is true that the Congressional purpose in enacting the AIA was “to establish a more
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`efficient and streamlined patent system that will improve patent quality and limit unnecessary
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`and counterproductive litigation costs.” Thryv, Inc v. Click-To-Call Techs., LP, 140 S. Ct. 1367,
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`1374, 206 L. Ed. 2d 554 (2020) (citing H.R. Rep. No. 112-98, pt. 1, p. 40 (2011)). The
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`Congressional purpose under the AIA indeed may be thwarted by the PTAB’s refusal to institute
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`review whenever an ITC investigation is ongoing, but that would argue for an adjustment in the
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`PTAB’s current practices, not for a stay of proceedings under section 337.
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`11 One could interpret this provision as embodying an assumption by the lawmakers that PTAB
`proceedings would have terminated before litigation was concluded in district court, under
`section 337, or before the Patent Office. On the other hand, Congress simply may have
`recognized in this provision that some PTAB proceedings will conclude during the pendency of
`patent litigation in other forums.
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`Accordingly, Motion Docket No. 1228-001 is hereby DENIED.
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`SO ORDERED.
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`Dee Lord
`Administrative Law Judge
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`Lisa R. Barton, Secretary
`U.S. International Trade Commission
`500 E Street, SW, Room 112
`Washington, DC 20436
`
`CERTAIN AUTOMATED STORAGE AND RETRIEVAL
`SYSTEMS, ROBOTS, AND COMPONENTS THEREOF
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`PUBLIC CERTIFICATE OF SERVICE
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`I, Lisa R. Barton, hereby certify that the attached ORDER has been served to the
`following parties as indicated, on March 9, 2021.
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`Inv. No. 337-TA-1228
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`On Behalf of Complainants AutoStore Technology AS,
`AutoStore AS, and AutoStore System Inc.:
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`Paul F. Brinkman, Esq.
`KIRKLAND & ELLIS LLP
`1301 Pennsylvania Avenue, NW
`Washington, DC 20004
`Email: paul.brinkman@kirkland.com
`
`On Behalf of Respondents Ocado Group PLC, Ocado Central
`Services Ltd., Ocado Innovation Ltd., Ocado Operating Ltd.,
`Ocado Solutions, Ltd., Ocado Solutions USA Inc., Tharsus
`Group Ltd., and Printed Motor Works, Ltd.:
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`David F. Nickel, Esq.
`FOSTER, MURPHY, ALTMAN & NICKEL, PC
`1150 18th Street, NW
`Suite 775
`Washington, DC 20036
`Email: dnickel@fostermurphy.com
`
`
`
`
`
`☐ Via Hand Delivery
`☐ Via Express Delivery
`☐ Via First Class Mail
`☒ Other: Email Notification
`of Availability for Download
`
`
`
`
`☐ Via Hand Delivery
`☐ Via Express Delivery
`☐ Via First Class Mail
`☒ Other: Email Notification
`of Availability for Download
`
`AliveCor Ex. 2005 - Page 14
`
`

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