Trials@uspto.gov
`571-272-7822
`
`Paper 8
`Date: January 6, 2021
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`PEAG LLC (d/b/a JLab Audio), AUDIO PARTNERSHIP LLC
`and
`AUDIO PARTNERSHIP PLC (d/b/a Cambridge Audio)
`Petitioner,
`
`v.
`
`VARTA MICROBATTERY GMBH,
`Patent Owner.
`____________
`
`IPR2020-01211
`Patent 9,496,581 B2
`____________
`
`Before CHRISTOPHER L. CRUMBLEY, JON B. TORNQUIST, and
`MONTÉ T. SQUIRE, Administrative Patent Judges.
`
`CRUMBLEY, Administrative Patent Judge.
`
`DECISION
`Granting Institution of Inter Partes Review
`35 U.S.C. § 314
`
`VARTA Ex. 2034 Page 1 of 50
`EVE Energy v. VARTA
`IPR2022-01484
`
`
`571-272-7822
`
`Paper 8
`Date: January 6, 2021
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`PEAG LLC (d/b/a JLab Audio), AUDIO PARTNERSHIP LLC
`and
`AUDIO PARTNERSHIP PLC (d/b/a Cambridge Audio)
`Petitioner,
`
`v.
`
`VARTA MICROBATTERY GMBH,
`Patent Owner.
`____________
`
`IPR2020-01211
`Patent 9,496,581 B2
`____________
`
`Before CHRISTOPHER L. CRUMBLEY, JON B. TORNQUIST, and
`MONTÉ T. SQUIRE, Administrative Patent Judges.
`
`CRUMBLEY, Administrative Patent Judge.
`
`DECISION
`Granting Institution of Inter Partes Review
`35 U.S.C. § 314
`
`VARTA Ex. 2034 Page 1 of 50
`EVE Energy v. VARTA
`IPR2022-01484
`
`
`
`IPR2020-01211
`Patent 9,496,581 B2
`
`
`I. INTRODUCTION
`PEAG LLC (d/b/a JLab Audio), Audio Partnership LLC and Audio
`Partnership PLC (d/b/a Cambridge Audio) (collectively, “Petitioner”) filed a
`Petition (Paper 1, “Pet.”) requesting the Board institute an inter partes
`review of claims 1–12 of U.S. Patent No. 9,496,581 B2 (Ex. 1001, “the ’581
`patent”). Varta Microbattery GmbH (“Patent Owner”) filed a Preliminary
`Response (Paper 7, “Prelim. Resp.”). Petitioner identifies PEAG LLC (d/b/a
`JLab Audio), Audio Partnership LLC, Audio Partnership PLC (d/b/a
`Cambridge Audio), and Guangdong Mic-Power New Energy Co. Ltd., as the
`real parties-in-interest. Pet. 1. Patent Owner identifies VARTA Microbattery
`GmbH, as the real party-in-interest. Paper 5, 1.
`We have authority to determine whether to institute an inter partes
`review. See 35 U.S.C. § 314 (2018); 37 C.F.R. § 42.4(a) (2019). The
`standard for instituting an inter partes review is set forth in 35 U.S.C.
`§ 314(a), which provides that an inter partes review may not be instituted
`“unless the Director determines . . . there is a reasonable likelihood that the
`petitioner would prevail with respect to at least 1 of the claims challenged in
`the petition.”
`Having considered the Petition, Preliminary Response, and evidence
`of record, for the reasons below, we determine that the Petition shows a
`reasonable likelihood that Petitioner would prevail with respect to at least
`one of the challenged claims. Patent Owner has not persuaded us that we
`should exercise our discretion to deny institution. We thus institute inter
`partes review on all challenged claims on all asserted grounds. See SAS Inst.,
`Inc. v. Iancu, 138 S. Ct. 1348, 1354, 1359–60 (2018); see also Patent Trial
`and Appeal Board Consolidated Trial Practice Guide 64 (Nov. 2019) (“The
`
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`Board will not institute on fewer than all claims or all challenges in a
`petition.”), available at
`https://www.uspto.gov/TrialPracticeGuideConsolidated (“TPG”).
`II. BACKGROUND
`A. Related Matters
`The parties indicate that the ’581 patent is the subject of the following
`pending consolidated district court actions: VARTA Microbattery GmbH v.
`Costco Wholesale Corporation, No. 2:20-cv-0051-JRG (E.D. Tex.); VARTA
`Microbattery GmbH v. Amazon.com, Inc., No. 2:20-cv-0052-JRG (E.D.
`Tex.); VARTA Microbattery GmbH v. Best Buy Co., Inc., No. 2:20-cv-0054-
`JRG (E.D. Tex.); VARTA Microbattery GmbH v. PEAG, LLC, No. 2:20-cv-
`0071-JRG (E.D. Tex.); VARTA Microbattery GmbH v. Audio Partnership
`LLC, et al., No. 2:20-cv-00138-JRG (E.D. Tex.); and VARTA Microbattery
`GmbH v. Samsung Electronics America, Inc., No. 2:20-cv-00029-JRG (E.D.
`Tex.) (collectively, “the District Court Action”). Pet. 1; Paper 5, 2–3; Ex.
`2002. Petitioner also filed petitions challenging claims of other patents
`asserted in the District Court Action in IPR2020-01212, IPR2020-01213,
`and IPR2020-01214. Pet. 2; Paper 5, 3.
`B. The ’581 Patent (Ex. 1001)
`The ’581 patent is titled “Button Cells and Method of Producing
`Same” and issued November 15, 2016, with claims 1–13. Ex. 1001, codes
`(54), (45), 12:15–13:12. The ’581 patent describes a button cell that includes
`a housing cup and a top separated by a seal and forms a housing with
`parallel flat bottom and top areas, and an electrode-separator assembly
`including a flat positive and negative electrode and connected by one flat
`separator, wherein the electrodes are aligned essentially at right angles to the
`
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`flat bottom and top areas and the assembly is a spiral winding having end
`faces defining side surfaces of the winding facing in an axial direction
`relative to the flat bottom and top areas. Id. at code (57), 9:34–39, 11:11–24.
`The ’581 patent further describes that the positive and negative electrodes
`are each in the form of flat electrode layers and connected to one another via
`a flat separator, and the electrodes are preferably laminated or adhesively
`bonded onto this separator. Id. at 3:22–30.
`Figure 4 of the ’581 patent, reproduced below, illustrates a button cell
`according to an embodiment of the claimed invention.
`
`
`Figure 4 of the ’581 patent, above, shows button cell 400 including a
`housing comprising cup part 401 and top part 402, between which seal 403
`is arranged; an assembly of electrodes 407 and 408 and separators 405 and
`406, contained as spiral winding 404 within the housing; output conductors
`409 and 410; insulating means 411 and 412; and support ring 413. Id. at
`11:11–24, Fig. 4.
`
`
`
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`The ’581 patent discloses that electrode 407 is connected via output
`conductor 410 to top part 402 and electrode 408 is connected via output
`conductor 409 to cup part 402. Ex. 1001, 11:21–24. The ’581 patent further
`discloses that insulating means 411 and 412 are arranged between the end
`faces of the winding and cup part 401 and top part 402. Id. at 11:28–31. The
`’581 patent also discloses that the insulating means may be a flat layer
`composed of plastic, for example, a plastic film. Id. at 6:35–36.
`C. Challenged Claims
`Petitioner challenges claims 1–12 of the ’581 patent. Pet. 8. Claim 1,
`the sole independent claim, is illustrative of the subject matter of the
`challenged claims:
`1. A button cell comprising:
`a housing cup and a housing top separated from one
`another by an electrically insulating seal and which
`form a housing with a flat bottom area and a flat top area
`parallel to it, and
`an electrode-separator assembly within the housing
`comprising at least one positive and at least one
`negative electrode in the form of flat layers and
`connected to one another by at least one flat separator,
`wherein
`the electrode layers are aligned essentially at right angles
`to the flat bottom area and the flat top area and the
`electrode-separator assembly is a spiral winding having
`end faces defining side surfaces of the spiral winding
`facing in an axial direction relative to the flat bottom
`area and the flat top area, and
`one of the electrodes connects to the flat bottom area or
`the flat top area via an output conductor comprising a
`foil resting flat between an end face of the spiral
`
`
`
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`winding and the flat top or the flat bottom area to which
`it is connected.
`Ex. 1001, 12:16–36.
`D. Asserted Grounds of Unpatentability
`Petitioner contends that the challenged claims are unpatentable based
`on the following grounds:
`Claims Challenged
`
`Reference(s)
`
`1–12
`1, 2, 4, 5, 8–12
`1–12
`
`Kobayashi2
`Kaun3
`Kaun and Kobayashi
`
`35 U.S.C. §1
`
`103
`103
`103
`
`Pet. 8. Petitioner contends that both references are prior art to the ’581
`patent under both 35 U.S.C. § 102(a) and (b). Id. at 20–24. At this stage of
`the proceeding, Patent Owner does not dispute the prior art status of any
`asserted reference.
`
`
`
` 1
`
` The Leahy-Smith America Invents Act (“AIA”) includes revisions to
`35 U.S.C. §§ 102, 103 that became effective on Mar. 16, 2013. Pub. L. No.
`112–29, §§ 3(b), 3(c), 3(n)(1), 125 Stat. 284, 287, 293 (2011). Because the
`application from which the ’581 patent issued was filed before Mar. 16,
`2013, we apply the pre-AIA versions of §§ 102, 103 to this Decision.
`2 Japanese Unexamined Patent Application Publication No. JP 2007-294111
`to Kobayashi, published November 8, 2007 (Ex. 1006). Exhibit 1006
`contains both the original Japanese-language version (id. at 16–28) and a
`certified English translation (id. at 2–14).
`3 U.S. Patent Application No. 2005/0233212 A1 to Kaun, published October
`20, 2005 (Ex. 1005).
`
`
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`
`III. ANALYSIS
`A. Discretion Under 35 U.S.C. § 325(d)
`Patent Owner argues that we should exercise our discretion under
`35 U.S.C. § 325(d) to deny institution because the Petition involves the same
`or substantially the same prior art previously presented to the Office. Prelim.
`Resp. 1–2, 22–23. Patent Owner contends that Petitioner relies on Kobayashi
`for each of the asserted grounds, but that Kobayashi was cited and already
`considered by the Examiner during prosecution, and Petitioner identifies no
`error by the Patent Office. Id. at 23 (citing Ex. 1002, 53, 136).4
`Patent Owner also contends that Petitioner relies on Kaun in
`combination with Kobayashi for the second asserted ground, and although
`Kaun was not cited, Kaun ’0075 was cited and considered by the Examiner
`during prosecution. Id. (citing Ex. 1002, 109, 256). Patent Owner asserts
`“Kaun ʼ007 provides the same teachings with respect to a cell cross section,
`the Z-fold separator between offset electrodes and other information from
`Kaun upon which Petitioners rely in the instant petition.” Id. at 23.
`Petitioner argues that we should not exercise our discretion to deny
`institution under § 325(d) because “Kobayashi was cited in an IDS filed on
`August 17, 2015, but was not substantively examined during prosecution.”
`Pet. 28. Petitioner also argues that during prosecution the Office erred in a
`manner material to the patentability of the challenged claims. Id. at 29.
`Petitioner contends that
`
`
` For citations to Exhibit 1002, we refer and cite to the page numbers added
`to the document in the lower right side.
`5 “Kaun ’007” refers to US 2003/0013007 A1 (published Jan. 16, 2003),
`which Patent Owner includes in the record as Exhibit 2013.
`7
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`[w]hile Kobayashi was cited in an IDS, . . . the Office erred in
`failing to consider Kobayashi in a manner “material to the
`patentability of the challenged claims” of the ’581 Patent by
`overlooking “specific teaching[s] in the relevant prior art” that
`“impact patentability of the challenged claims.”
`
`Id.
`
`Section 325(d) of Title 35 of the United States Code provides, in
`relevant part: “In determining whether to institute or order a proceeding
`under this chapter, chapter 30, or chapter 31, the Director may take into
`account whether, and reject the petition or request because, the same or
`substantially the same prior art or arguments previously were presented to
`the Office.” The Board uses a two-part framework for evaluating arguments
`under § 325(d):
`1.
`whether the same or substantially the same art previously
`was presented to the Office or whether the same or
`substantially the same arguments previously were
`presented to the Office; and
`
`
`
`2.
`
`if either condition of first part of the framework is
`satisfied, whether the petitioner has demonstrated
`that the Office erred in a manner material to the
`patentability of challenged claims.
`
`
`
`Advanced Bionics, LLC v. MED-EL Elektromedizinische Geräte GmbH,
`IPR2019-01469, Paper 6 at 8 (PTAB Feb. 13, 2020) (precedential)
`(“Advanced Bionics”). “Previously presented art includes art made of record
`by the Examiner, and art provided to the Office by an applicant, such as on
`an Information Disclosure Statement (IDS), in the prosecution history of the
`
`
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`challenged patent.” Id. at 7‒8. The Becton, Dickinson6 factors, which address
`discretion to deny when a petition presents the same or substantially the
`same prior art or arguments previously presented to the Office, are
`instructive. Id. at 9 (“[T]he Becton, Dickinson factors provide useful insight
`into how to apply the framework under 35 U.S.C. § 325(d).” (footnote
`omitted)).
`
` Applying the Advanced Bionics two-part framework to Patent
`Owner’s arguments, we are not persuaded the art presented in the Petition is
`the same or substantially the same as the art previously presented to the
`Office during prosecution of the ’581 patent. In particular, we are not
`persuaded that Kaun, as well as the combination of Kaun with Kobayashi,
`that Petitioner asserts in the Petition is the same or substantially the same art
`as the art previously presented to the Office during prosecution.
`Although Kobayashi and Kaun ’007 may have each been separately
`cited in IDSs during prosecution (Ex. 1002, 53, 256), the Kaun reference
`was never cited in any IDS or presented to the Office during prosecution,
`and no combination of Kobayashi with Kaun and/or with Kaun ’007 was
`ever presented to the Office during prosecution. See generally Ex. 1002.
`Contrary to what Patent Owner’s argument seems to suggest, Kaun
`and Kaun ’007 are not the same references. Compare Ex. 1005, code (57)
`with, Ex. 2013, code (57). And although Patent Owner asserts that
`Kaun ’007 provides some of the same teachings as Kaun, there is no
`
`
`
` 6
`
` Becton, Dickinson & Co. v. B. Braun Melsungen AG, IPR2017-01586,
`Paper 8 (PTAB Dec. 15, 2017) (precedential as to § III.C.5, first paragraph)
`(“Becton, Dickinson”).
`
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`evidence the Examiner ever applied Kaun ’007 during prosecution in the
`same way Petitioner applies Kaun in combination with Kobayashi in the
`Petition. See Advanced Bionics, Paper 6 at 19 (analyzing whether the prior
`art was being asserted in the petition in the same manner as the Examiner
`relied upon the references during prosecution).
`Because Patent Owner has not established that the art combinations
`Petitioner asserts in the Petition are the same or substantially the same as the
`art previously presented to the Office during prosecution, we need not
`address the second part of the Advanced Bionics framework. See Advanced
`Bionics, Paper 6 at 10.
`Even assuming that the same or substantially the same art was
`previously presented to the Office during prosecution, we determine
`Petitioner demonstrates sufficiently that the Office erred in a manner
`material to the patentability of challenged claims. In particular, Petitioner
`demonstrates that the Examiner materially erred by overlooking Kobayashi,
`which discloses all or nearly all of the claim limitations, and not applying it
`in a rejection. See Advanced Bionics at 8 n.9 (“An example of a material
`error may include misapprehending or overlooking specific teachings of the
`relevant prior art where those teachings impact patentability of the
`challenged claims.”). For example, in the first asserted ground, Petitioner
`relies on Kobayashi alone for teaching or suggesting all of the claim
`limitations. Pet. 31–52. In contrast, during prosecution, the Examiner did not
`rely on Kobayashi as a reference in any rejection (see generally Ex. 1002),
`which suggests that the Examiner overlooked Kobayashi’s teaching of all or
`nearly all of the claim limitations and the impact those teachings would have
`on the patentability of the claims.
`
`
`
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`Accordingly, we decline to exercise our discretion under 35 U.S.C.
`§ 325(d) to deny institution.
`B. Discretion Under 35 U.S.C. § 314(a)
`Patent Owner argues that we should exercise our discretion to deny
`institution based on the parallel proceeding in the District Court Action.
`Prelim. Resp. 1, 10. Patent Owner contends
`review would be inefficient given the complete overlap in
`Petitioners’ invalidity arguments in their Petition and the above
`lawsuits, and in view of the advanced stage and schedule of
`those lawsuits, where trial will occur seven months prior to any
`final decision that would be made by this Board.
`Id. at 10.
`Petitioner argues that we should not exercise our discretion to deny
`institution under § 314(a). Pet. 24–27. Petitioner contends that “the Board
`has repeatedly ruled that . . . the mere existence of parallel district court
`actions with scheduled trial dates earlier than an anticipated Final Written
`Decision is not a dispositive factor against institution” and that there is no
`per se rule against instituting an IPR in those circumstances. Id. at 24–25
`(citing cases).
`Under § 314(a), the Director has discretion to deny institution of an
`inter partes review, and that discretion has been delegated to the Board. See
`37 C.F.R. § 42.4(a) (“The Board institutes the trial on behalf of the
`Director.”); Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2140 (2016)
`(“[T]he agency’s decision to deny a petition is a matter committed to the
`Patent Office’s discretion.”); SAS, 138 S. Ct. at 1356 (“[Section] 314(a)
`invests the Director with discretion on the question whether to institute
`review . . . .” (emphasis omitted)); Harmonic Inc. v. Avid Tech., Inc., 815
`
`
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`F.3d 1356, 1367 (Fed. Cir. 2016) (“[T]he PTO is permitted, but never
`compelled, to institute an IPR proceeding.”).
`The Board has held that the advanced state of a parallel district court
`action is a factor that may weigh in favor of denying a petition under
`§ 314(a). See NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-00752,
`Paper 8 at 20 (PTAB Sept. 12, 2018) (precedential); TPG 58 & n.2. We
`consider the following factors to assess “whether efficiency, fairness, and
`the merits support the exercise of authority to deny institution in view of an
`earlier trial date in the parallel proceeding”:
`1.
`whether the court granted a stay or evidence exists that
`one may be granted if a proceeding is instituted;
`proximity of the court’s trial date to the Board’s
`projected statutory deadline for a final written decision;
`investment in the parallel proceeding by the court and the
`parties;
`overlap between issues raised in the petition and in the
`parallel proceeding;
`whether the petitioner and the defendant in the parallel
`proceeding are the same party; and
`other circumstances that impact the Board’s exercise of
`discretion, including the merits.
`Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 at 5–6 (PTAB Mar. 20,
`2020) (precedential) (“Fintiv”). Overlap among these factors often exists and
`some facts may be relevant to more than one factor. Id. at 6. Therefore, in
`evaluating these factors, we “take[] a holistic view of whether efficiency and
`
`2.
`
`3.
`
`4.
`
`5.
`
`6.
`
`
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`integrity of the system are best served by denying or instituting review.” Id.
`We address each of these factors in turn below.
`1. Whether the Court Granted a Stay or Evidence Exists That a Stay
`may be Granted if a Proceeding is Instituted
`In considering the first Fintiv factor, the Fintiv panel noted that the
`existence of a district court stay pending Board resolution of an inter partes
`review has weighed strongly against discretionary denial, while a denial of
`such a stay request sometimes weighs in favor of discretionary denial.
`Fintiv, Paper 11 at 6–8.
`Patent Owner notes that Petitioner filed a motion to stay the District
`Court Action on August 20, 2020 and the court denied that motion on
`October 7, 2020. Prelim. Resp. 11 (citing Ex. 2005 (motion to stay);
`Ex. 2007 (order on motion to stay)). Patent Owner argues that, even if the
`Board were to proceed with institution of this IPR and Petitioner were to
`renew its motion to stay the District Court Action, that motion would also
`likely be denied. Id.
`We disagree that this factor weighs against institution here. Although
`the district court previously denied Petitioner’s motion to stay, in reviewing
`the stay order, the district court indicated that the motion was “premature . . .
`in advance of the PTAB’s decision on whether or not to grant the petition for
`inter partes review” and denied without prejudice to renew. Ex. 2007, 3. The
`order on Petitioner’s motion to stay expressly provides that Petitioner is
`permitted to refile its motion to stay “within 14 days following the PTAB’s
`institution decision,” which evidences the district court’s willingness to
`revisit the issue and reconsider whether to grant a stay. Id. The fact that the
`court has expressed willingness to reconsider whether to grant a stay
`following our decision to institute generally weighs against exercising
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`discretion to deny institution. Fintiv, Paper 11 at 6-7 (explaining that where
`“the district court has denied a motion for stay without prejudice and
`indicated to the parties that it will consider a renewed motion or reconsider a
`motion to stay if a PTAB trial is instituted . . . [t]his fact has usually weighed
`against exercising authority to deny institution under NHK”).
`Patent Owner argues that the specific facts of the copending District
`Court Action make a stay less likely, noting that there is a “heightened
`prejudice” that would be caused by a stay due to Petitioner’s continued
`importation of the allegedly infringing products. Prelim. Resp. 12.
`According to Patent Owner, the Eastern District of Texas has denied a stay
`in an unrelated case, even after institution of an inter partes review, when
`there was a risk of heightened prejudice. Id. at 12–13 (citing Peloton
`Interactive, Inc. v. Flywheel Sports, Inc., 2:18-cv-030390, 2019 WL
`3826051, at *3 (E.D. Tex. Aug. 14, 2019)). But there are also other facts
`present in the District Court Action that increase the likelihood of a stay
`being granted, based on the court’s past practices. For example, we note the
`early stage of the litigation and the fact that the court has not issued a claim
`construction ruling, facts which have been found to weigh in favor of a stay
`in other cases. See Uniloc USA, Inc. v. Google, LLC, No. 2-17-cv-00231,
`Dkt. 47, 2 (E.D. Tex. Oct. 3, 2017) (granting stay where “[n]o patent claims
`have been construed by the Court in these cases and discovery has barely
`begun.”). Taken together, the facts of the District Court Action generally
`counterbalance one another, and do not make the grant of a stay significantly
`more or less likely.
`
`
`
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`Accordingly, the balance of the evidence on the first Fintiv factor
`neither weighs in favor of nor against exercising discretion to deny
`institution.
`
`2. Proximity of Trial Date
`The parties agree that the trial date of the District Court Action is
`currently scheduled for June 7, 2021 (Pet. 26; Prelim. Resp. 13), which is
`seven months before the statutory date for the final written decision. When a
`district court’s trial date will occur before the projected statutory deadline,
`the Board generally weighs this second Fintiv factor in favor of exercising
`authority to deny institution under § 314(a). Fintiv, Paper 11 at 9.
`Accordingly, the second Fintiv factor weighs in favor of exercising
`discretion to deny institution.
`3. Investment in the Parallel Proceeding
`Patent Owner argues that this factor favors denial because of the
`advanced stage and schedule of the District Court Action relative to this
`proceeding. Prelim. Resp. 10, 15. Patent Owner contends it has served
`infringement contentions, Petitioner has served invalidity contentions, and
`both parties have produced documents and propounded and responded to
`interrogatories. Id. at 15. Patent Owner further contends the parties have
`exchanged proposed terms and identified evidence upon which they intend
`to rely for claim construction, and that the claim construction hearing is
`scheduled for January 15, 2021. Id. (citing Ex. 2004, 4–5). Patent Owner
`also contends fact discovery is scheduled to close on January 29, 2021 and
`trial is scheduled to begin on June 7, 2021. Id. (citing Ex. 2004, 1, 3, 4).
`Patent Owner asserts that the “court’s claim construction decision will
`follow shortly after the institution decision and . . . trial will likely be
`
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`completed seven months before any final written decision even if institution
`were to occur.” Id.
`Petitioner contends that this Fintiv factor weighs against discretionary
`denial because the “district court proceeding is still at its infancy” and
`“Petitioner has worked diligently to file the subject petition approximately
`eight months before the statutory bar date.” Pet. 27.
`In considering this third Fintiv factor, the Board’s precedential Fintiv
`order provides the following guidance:
`[I]f, at the time of the institution decision, the district court has
`issued substantive orders related to the patent at issue in the
`petition, this fact favors denial.[] Likewise, district court claim
`construction orders may indicate that the court and parties have
`invested sufficient time in the parallel proceeding to favor
`denial. If, at the time of the institution decision, the district
`court has not issued orders related to the patent at issue in the
`petition, this fact weighs against exercising discretion to deny
`institution under NHK.
`Fintiv, Paper 11 at 9–10.
`There is no evidence that the district court has issued any substantive
`orders related to the ’581 Patent. Although the parties in the District Court
`Action have completed some work, for example, served preliminary
`infringement and invalidity contentions, responded to each other’s requests
`for documents and interrogatories, and exchanged proposed terms for claim
`construction, discovery is not over and much remains to be completed in
`advance of trial. See Ex. 2004, 1–4. The claim construction hearing has not
`yet occurred (it is scheduled to occur January 15, 2021) and the district court
`has not issued any claim construction orders. Id. at 4. The close of fact
`discovery is not currently scheduled to be completed until January 29, 2021
`and expert discovery is not currently scheduled to be completed until March
`
`
`
`
`16
`
`VARTA Ex. 2034 Page 16 of 50
`
`
`
`IPR2020-01211
`Patent 9,496,581 B2
`
`12, 2021. Id. at 3. There is also no evidence that the parties have submitted
`briefing on any dispositive issue, or that the district court has made any
`determination on the merits. Thus, the evidence shows that the investment in
`the parallel proceeding related to the validity issue is minimal. This fact
`weighs in favor of not exercising discretion to deny institution.
`In considering the court’s and the parties’ investment in the parallel
`proceeding to date, the panel in Fintiv further provides that a petitioner’s
`diligence or delay in filing a petition may be relevant. Fintiv, Paper 11 at
`11–12. If the evidence shows that a petitioner filed its petition expeditiously,
`such as promptly after becoming aware of the claims being asserted, this fact
`has weighed against denying institution. Id. at 11 (citing Intel Corp. v. VLSI
`Tech. LLC, IPR2019-01192, Paper 15 at 12–13 (PTAB Jan. 9, 2020);
`Illumina Inc. v. Natera, Inc., IPR2019-01201, Paper 19 at 8 (PTAB Dec. 18,
`2019)). If, however, the evidence shows the petitioner did not file its petition
`expeditiously, such facts have favored denial. Id. at 11–12 (citing Next
`Caller, Inc. v TRUSTID, Inc., IPR2019-00961, Paper 10 at 16 (PTAB Oct.
`16, 2019)). In considering this factor, Petitioner’s diligence in filing the
`Petition also weighs in favor of not exercising discretion to deny institution.
`In particular, the evidence shows Petitioner acted expeditiously by filing this
`Petition approximately eight months before the allotted twelve-month
`statutory bar date. Pet. 27.
`Accordingly, based on the minimal investment in the parallel
`proceeding and Petitioner’s diligence in filing the Petition, the third Fintiv
`factor weighs strongly in favor of not exercising discretion to deny
`institution.
`
`
`
`
`17
`
`VARTA Ex. 2034 Page 17 of 50
`
`
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`IPR2020-01211
`Patent 9,496,581 B2
`
`
`4. Overlap of Issues
`The fourth Fintiv factor evaluates “concerns of inefficiency and the
`possibility of conflicting decisions” when substantially identical prior art is
`submitted in both the district court and the inter partes review proceedings.
`Fintiv, Paper 11 at 12.
`Petitioner argues that “[t]he IPR . . . does not involve an appreciable
`duplication of efforts with respect to the district court action.” Pet. 27–28.
`Rather, Petitioner states it intends to rely on the testimony of a different
`expert and to raise different and additional invalidity arguments in the
`District Court Action. Id. at 27. Petitioner also states it intends to present at
`least one additional prior art based ground. Id.
`Patent Owner argues that the issues in the Petition completely overlap
`with those in the district court. Prelim. Resp. 16. In particular, Patent Owner
`contends Petitioner asserts the same invalidity grounds before the Board that
`it asserts in the District Court Action. Id. (citing Ex. 2012, 16–18). Patent
`Owner further contends that the motivations to combine the references
`Petitioner proffers in the Petition and the District Court Action substantially
`overlap. Id. at 17 (citing Pet. 52–53; Ex. 2012, 44–47, 49–51).
`We agree with Patent Owner’s arguments as they relate to this Fintiv
`factor. Notwithstanding Petitioner’s contentions (Pet. 27–28), on the current
`record, substantially identical prior art and invalidity grounds are asserted in
`both the district court and the inter partes review proceedings. Fintiv, Paper
`11 at 12.
`Accordingly, the fourth Fintiv factor weighs in favor of exercising
`discretion to deny institution.
`
`
`
`
`18
`
`VARTA Ex. 2034 Page 18 of 50
`
`
`
`IPR2020-01211
`Patent 9,496,581 B2
`
`
`5. Identity of Parties
`The parties agree that the District Court Action involves the same
`parties as this proceeding. Pet. 28; Prelim. Resp. 18. “If a petitioner is
`unrelated to a defendant in an earlier court proceeding, the Board has
`weighed this fact against exercising discretion to deny institution under
`NHK.” Fintiv, Paper 11 at 13–14.
`Accordingly, the fifth Fintiv factor does not weigh against exercising
`discretion to deny institution.
`6. Other Circumstances, Including the Merits
`This final Fintiv factor represents a catch-all for any other relevant
`circumstances. Whether to exercise discretion to deny institution under
`§ 314(a) involves “a balanced assessment of all relevant circumstances in the
`case, including the merits.” TPG 58.
`Considering the merits of the parties’ arguments presented in the
`Petition and the Preliminary Response, Petitioner makes a strong showing on
`the merits as to all asserted claims for each of the asserted grounds. See infra
`Section III.G–I; Pet. 31–82.
`Accordingly, the sixth Fintiv factor weighs in favor of not exercising
`discretion to deny institution.
`Conclusion on § 314(a) Discretionary Denial
`Under Fintiv, the Board takes “a holistic view of whether efficiency
`and integrity of the system are best served by denying or instituting review.”
`Fintiv, Paper 11 at 6. On balance, we believe a holistic evaluation of the
`factors and the efficiency and integrity of the system slightly disfavors
`declining to institute trial. Significant in our determination is the fact that
`there has not been substantial investment in the parallel district court
`
`
`
`
`19
`
`VARTA Ex. 2034 Page 19 of 50
`
`
`
`IPR2020-01211
`Patent 9,496,581 B2
`
`proceeding, Petitioner was diligent in filing its Petition, the district court’s
`willingness to reconsider a stay should we institute trial, and Petitioner’s
`strong showing on the merits of the unpatentability grounds before the
`Board. On balance, these and other facts outweigh the overlap of the issues
`between the proceedings and the fact that the trial date is currently (though
`not immovably) set for seven months before our final written decision is
`due.
`
`Accordingly, we decline to exercise our discretion under 35 U.S.C.
`§ 314(a) t
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