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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`———————
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`———————
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`APPLE INC.,
`Petitioner,
`
`v.
`
`FINTIV, INC.,
`Patent Owner
`
`
`
`
`———————
`
`IPR2022-00976
`U.S. Patent No. 9,892,386
`
`
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`
`
`PETITIONER’S AUTHORIZED REPLY TO
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
`
`
`
`Petitioner’s Reply to Patent Owner’s Preliminary Response
`IPR2022-00976 (U.S. Patent No. 9,892,386)
`As authorized by the Board’s email dated September 16, 2022, Petitioner
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`submits this reply in response to Patent Owner’s Preliminary Response (“POPR”)
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`(Paper 7). The Board should not exercise its discretion to deny institution.
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`I. The Fintiv Factors Favor Institution
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`The Fintiv factors strongly favor institution. Petitioner is not a party to the
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`only district court proceeding involving the ’386 patent: Fintiv, Inc. v. PayPal
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`Holdings, Inc., No. 6:22-cv-00288 (WDTX) (“PayPal litigation”). Based on
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`median time-to-trial statistics, the Board would issue a final written decision eight
`
`months before a projected trial date in the PayPal litigation. Further, the Petition
`
`presents compelling evidence of unpatentability. See “Interim Procedure for
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`Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court
`
`Litigation,” June 21, 2022 (“Director’s Fintiv Guidance”); Apple Inc. v. Fintiv,
`
`Inc., IPR2020-00019, Paper 11 at 5-6 (PTAB Mar. 20, 2020) (precedential).
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`A. Factor 1 is neutral (possibility of stay)
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`According to public information, PayPal has not moved to stay the PayPal
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`litigation based on this IPR proceeding. Patent Owner speculates that “it is unlikely
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`that a stay would be granted” if PayPal moved for a stay, because other “cases
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`suggest that it is likely that the Western District of Texas would deny stays” based
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`on IPRs. POPR, 47-48. The Board should reject Patent Owner’s speculation based
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`on other cases with different facts. Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper
`
`1
`
`
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`Petitioner’s Reply to Patent Owner’s Preliminary Response
`IPR2022-00976 (U.S. Patent No. 9,892,386)
`15 at 12 (May 13, 2020) (informative) (“We decline to infer, based on actions
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`taken in different cases with different facts, how the District Court would rule
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`should a stay be requested by the parties.”).
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`The Board should not infer the outcome of any stay motion that has not been
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`filed. See Dish Network L.L.C. v. Broadband iTV, Inc., IPR2020-01359, Paper 15
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`at 11 (Feb. 15, 2021) (“It would be improper to speculate…what the Texas court
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`might do regarding a motion to stay” when a stay had not yet been requested).
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`Without “specific evidence” of how the court would rule on any stay motion, this
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`factor is neutral. Sand Revolution II, LLC v. Cont’l Intermodal Grp.—Trucking
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`LLC, IPR2019-01393, Paper 24 at 7 (June 16, 2020) (informative).
`
`B. Factor 2 strongly favors institution (timing of trial)
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`Factor 2 weighs in favor of institution because the Board would issue a final
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`written decision in this proceeding eight months before the relevant trial date in
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`the PayPal litigation. The Board would issue a final written decision by
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`approximately November 24, 2023. Due to the unreliability of scheduled trial
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`dates in civil litigation, the Director’s Fintiv Guidance provides that the Board
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`should take into account the “median time-to-trial for civil actions in the district
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`court in which the parallel litigation resides” when applying Fintiv factor 2.
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`Director’s Fintiv Guidance, 8-9; see also id., 8 (“A court’s scheduled trial date [] is
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`not by itself a good indicator of whether the district court trial will occur before the
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`2
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`
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`Petitioner’s Reply to Patent Owner’s Preliminary Response
`IPR2022-00976 (U.S. Patent No. 9,892,386)
`statutory deadline for a final written decision.”). The median time-to-trial for the
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`Western District of Texas is 28.3 months. APPL-1016, 37 (listing the median time
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`to trial in the 12-month period ending June 30, 2022). Based on this median time-
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`to-trial, a trial date in the PayPal litigation would be approximately July 26, 2024,
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`eight months after the Board would issue a final written decision here.
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`Factor 2 also weighs strongly against denial because Petitioner is not a party
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`to the PayPal litigation. See, e.g., Bose Corp. v. Koss Corp., IPR2021-00680, Paper
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`15 at 15 (Oct. 13, 2021) (factor 2 “weigh[ed] strongly against” discretionary denial
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`when the petitioner was not a party to the parallel litigation on which the patent
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`owner sought discretionary denial).
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`Patent Owner indicates that the parties to the PayPal litigation submitted a
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`joint motion to enter an agreed scheduling order. Ex.2007 (“Joint Motion”). The
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`Joint Motion proposes a trial date of November 30, 2023. Ex.2007, 8. At present,
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`the Court has not entered the Joint Motion. In any event, the proposed trial date is
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`after the projected date for issuing a final written decision (November 24, 2023).
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`Therefore, even the proposed trial date in the Joint Motion favors institution.
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`Under the Director’s Fintiv Guidance, Board panels have used median time-to-trial
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`dates instead of scheduled trial dates. The Board should do the same here. See, e.g.,
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`Google LLC v. Jawbone Innovations, LLC, IPR2022-00630, Paper 10 at 14 (Sept.
`
`13, 2022) (applying median time-to-trial over scheduled trial date); Apple Inc. v.
`
`3
`
`
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`Petitioner’s Reply to Patent Owner’s Preliminary Response
`IPR2022-00976 (U.S. Patent No. 9,892,386)
`Scramoge Tech., Inc., IPR2022-00532, Paper 9 at 11-12 (Sept. 13, 2022) (same).
`
`Patent Owner also argues that “the 8.5 month median time for disposition in
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`the WDTX” favors denial. POPR, 50 (citing Ex.2006). Patent Owner is wrong.
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`Fintiv factor 2 considers median time-to-trial, not median time-to-disposition.
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`Director’s Fintiv Guidance, 8-9 (“most recent statistics on median time-to-trial”).
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`C. Factor 3 favors institution (investment in parallel proceeding)
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`Factor 3 favors institution because there has been minimal investment in the
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`invalidity issues in the PayPal litigation, which is in the early stages. The focus of
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`this factor is not the total amount invested by the court and parties, but rather the
`
`amount invested “in the merits of the invalidity positions.” Sand Revolution II,
`
`LLC v. Continental Intermodal Group – Trucking LLC, IPR2019-01393, Paper 24
`
`at 10 (June 16, 2020) (informative).
`
`According to the Joint Motion, PayPal served preliminary invalidity
`
`contentions by August 25, 2022. Ex.2007, 6. However, after the Board issues its
`
`institution decision (by November 24, 2022), much work remains in the invalidity
`
`issues in the PayPal litigation. Claim construction briefing will not be completed
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`until November 30, 2022, a Markman hearing is not scheduled until December 8,
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`2022, fact discovery does not begin until December 9, 2022, and expert discovery
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`does not begin until July 13, 2023. Ex.2007, 6-7. Accordingly, factor 3 weighs in
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`favor of institution because there has not been significant investment in the
`
`4
`
`
`
`Petitioner’s Reply to Patent Owner’s Preliminary Response
`IPR2022-00976 (U.S. Patent No. 9,892,386)
`invalidity issues in the PayPal litigation.
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`D. Factor 4 favors institution (overlap of issues)
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`Petitioner is not a party to the PayPal litigation and is unaware of any
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`overlap between the grounds in this proceeding and PayPal’s invalidity
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`contentions. Factor 4 weighs in favor of institution in the absence of overlap.
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`E. Factor 5 strongly favors institution (overlapping parties)
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`Fintiv factor 5 weighs heavily in favor of institution. Petitioner is not a
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`defendant and is not related to any defendant in the PayPal litigation. See Fintiv,
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`Paper 11 at 13-14 (“If a petitioner is unrelated to a defendant in an earlier court
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`proceeding, the Board has weighed this fact against exercising discretion to deny
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`institution under NHK.”).
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`F. Factor 6 strongly favors institution (other circumstances)
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`This factor weighs strongly in favor of institution. The Board “will
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`not…deny institution” under Fintiv “where a petition presents compelling evidence
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`of unpatentability.” Director’s Fintiv Guidance, 2. Here, the Petition plainly shows
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`that the challenged claims are no more than a well-known and obvious
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`arrangement of prior art teachings in the field of monetary transaction systems.
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`Thus, the Petition presents compelling evidence of unpatentability that “if
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`unrebutted in trial, would plainly lead to a conclusion that one or more claims are
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`unpatentable.” Id., 4. The Board should therefore not deny institution.
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`5
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`
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`Date: September 23, 2022
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`
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`
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`Petitioner’s Reply to Patent Owner’s Preliminary Response
`IPR2022-00976 (U.S. Patent No. 9,892,386)
`Respectfully submitted,
`/Andrew S. Ehmke/
`Andrew S. Ehmke
`Counsel for Petitioner
`Reg. No. 50,271
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`
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`6
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`
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`Petitioner’s Reply to Patent Owner’s Preliminary Response
`IPR2022-00976 (U.S. Patent No. 9,892,386)
`PETITIONER’S EXHIBIT LIST
`
`APPL-1001 U.S. Patent No. 9,892,386
`APPL-1002 File History of U.S. Patent No. 9,892,386
`APPL-1003 Declaration of Henry Houh, Ph.D.
`APPL-1004 Curriculum Vitae of Henry Houh, Ph.D.
`APPL-1005 U.S. Patent Publication No. 2009/0265272 to Dill et al. (“Dill”)
`APPL-1006 U.S. Patent Publication No. 2010/013334 to Vadhri (“Vadhri”)
`APPL-1007 U.S. Patent Publication No. 2009/0217047 to Akashika et al.
`(“Akashika”)
`APPL-1008 U.S. Patent Publication No. 2004/0230527 to Hansen et al.
`(“Hansen”)
`APPL-1009 U.S. Patent No. 7,865,141 to Liao et al. (“Liao”)
`APPL-1010 Claims Appendix for U.S. Patent No. 9,892,386
`APPL-1011 Comparison chart for claims 1-3 of U.S. Patent No. 9,892,386
`APPL-1012 G. Winfield Treese et al., “Designing Systems for Internet
`Commerce,” Second Edition, Addison-Wesley, 2003 (“Treese”)
`(excerpt)
`APPL-1013 Original Complaint for Patent Infringement, Fintiv, Inc. v. PayPal
`Holdings, Inc., No. 6:22-cv-00288, ECF. No. 1 (W.D. Tex. March
`17, 2022) (Albright)
`APPL-1014 H. Newton, “Newton’s Telecom Dictionary,” 17th Edition, CMP
`Books, 2001 (excerpt)
`APPL-1015 T. Thai et al., “.Net Framework Essentials,” Third Edition,
`O’Reilly & Associates, Inc., 2003 (excerpt)
`United States District Court – National Judicial Caseload Profile
`(June 2022), available at:
`https://www.uscourts.gov/statistics/table/na/federal-court-
`management-statistics/2022/06/30-2
`
`APPL-1016
`(NEW)
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`
`
`
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`
`
`7
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`
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`Petitioner’s Reply to Patent Owner’s Preliminary Response
`IPR2022-00976 (U.S. Patent No. 9,892,386)
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`APPLE INC.
`
`Petitioner
`
`§
`§
`§
`
`Petition for Inter Partes Review
`
`U.S. Patent No. 9,892,386
`
`CERTIFICATE OF SERVICE
`
`The undersigned certifies, under 37 C.F.R. § 42.6, that service was made on
`the Patent Owner as detailed below.
`Date of service September 23, 2022
`
`Manner of service Electronic Service by E-mail: jwaldrop@kasowitz.com;
`jdowning@kasowitz.com
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`to Patent Owner’s
`Documents served Petitioner’s Authorized Reply
`Preliminary Response; and Exhibit APPL-1016
`
`Persons served Jonathan K. Waldrop
`John W. Downing
`Kasowitz Benson Tones LLP
`333 Twin Dolphin Drive, Suite 200
`Redwood Shores, California 94065
`
`
`
`
`/Andrew S. Ehmke/
`Andrew S. Ehmke
`Lead Counsel for Petitioner
`Registration No. 50,271
`
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`8
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