`571-272-7822
`
` Paper No. 13
`Entered: September 14, 2015
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`KAPSCH TRAFFICCOM IVHS INC., KAPSCH TRAFFICCOM IVHS
`HOLDING CORP., KAPSCH TRAFFICCOM IVHS TECHNOLOGIES
`HOLDING CORP., KAPSCH TRAFFICCOM U.S. CORP., and
`KAPSCH TRAFFICCOM HOLDING CORP.,
`Petitioner,
`
`v.
`
`NEOLOGY, INC.,
`Patent Owner.
`____________
`
`Case IPR2015-00808 (Patent 6,229,443)
`Case IPR2015-00814 (Patent 6,690,264)
`Case IPR2015-00815 (Patent 8,587,436)
`Case IPR2015-00818 (Patent 8,237,568)
`Case IPR2015-00819 (Patent 8,325,044)
`Case IPR2015-00823 (Patent 7,119,664)
`Case IPR2015-00824 (Patent 7,119,664)1
`____________
`
`
`1 This Decision addresses issues that are the same in all seven cases. We
`exercise our discretion to issue one Decision to be filed in each case. The
`parties are not authorized to use this style heading.
`
`Exhibit 1021, Page 1 of 21
`
`
`
`Trials@uspto.gov
`571-272-7822
`
` Paper No. 13
`Entered: September 14, 2015
`
`
`
`Before JUSTIN T. ARBES, GLENN J. PERRY, and
`TREVOR M. JEFFERSON, Administrative Patent Judges.
`
`PERRY, Administrative Patent Judge.
`
`
`
`DENIAL OF MOTIONS TO VACATE
`Real Party In Interest Under 35 U.S.C. § 312(a)(2)
`
`
`I. INTRODUCTION
`
`Petitions seeking inter partes reviews were filed in each of the
`
`captioned cases by Kapsch TrafficCom IVHS Inc. (“Kapsch TC IVHS”),
`
`Kapsch TrafficCom IVHS Holding Corp., Kapsch TrafficCom IVHS
`
`Technologies Holding Corp., Kapsch TrafficCom U.S. Corp., and Kapsch
`
`TrafficCom Holding Corp. (collectively “Petitioners”). Mot. 1. These
`
`Petitions challenge six patents owned by Neology, Inc. (“Neology”). Each
`
`Petition also names three additional corporate entities as real parties in
`
`interest (“RPI”): Kapsch TrafficCom Holding II US Corp.; Kapsch
`
`TrafficCom AG (“Kapsch TCAG”); and Kapsch TrafficCom, B.V. (“Kapsch
`
`TCBV”). Decisions regarding institution of trial are being issued in these
`
`cases.
`
`Neology filed substantially identical motions to vacate2 in each of its
`
`seven inter partes review matters challenging six different patents. These
`
`motions are based on Petitioners’ failure to name at least two additional
`
`
`2 IPR2015-00808, Paper 8 (“Mot.”); IPR2015-00814, Paper 8; IPR2015-
`00814, Paper 8; IPR2015-00818, Paper 8; IPR2015-00819, Paper 10;
`IPR2015-00823, Paper 8; IPR2015-00824, Paper 8;
`
`Exhibit 1021, Page 2 of 21
`
`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`corporate entities as RPIs: Kapsch-Group Beteiligungs GmbH
`
`(“Kapsch-Group”) and Kapsch Aktiengesellschaft (“Kapsch AG”). For
`
`simplicity, we discuss Neology’s motion made in IPR2015-00808, which is
`
`illustrative. Our conclusions apply to all seven inter partes reviews.
`
`According to Neology, because the Petition in each case fails to
`
`identify all real parties in interest (“RPI”), it is not entitled to a filing date.
`
`See 35 U.S.C. § 312(a)(2) (a petition for inter partes review may be
`
`considered “only if” it meets certain statutory requirements, including
`
`identification of “all” real parties in interest); 37 C.F.R. § 42.106; Office
`
`Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,759 (Aug. 14, 2012)
`
`(“Trial Practice Guide”). It has been more than one year since the service on
`
`Petitioners of a complaint asserting the challenged patents against them.
`
`Consequently, 37 C.F.R. § 42.106, which affords Petitioners one month to
`
`correct a defective petition, is inapplicable, and if a new filing date were
`
`accorded, the Petitions would be time-barred under 35 U.S.C. § 315(b).
`
`Neology’s motion attempts to demonstrate sufficient involvement of
`
`the unnamed corporate entities based on 1) events surrounding a settlement
`
`meeting, 2) statements made in Kapsch-Group public documents, and 3)
`
`“admissions” by Kapsch AG. Petitioners oppose the motion.3 For reasons
`
`stated below, we DENY Neology’s motion to vacate.
`
`
`3 IPR2015-00808, Paper 9 (“Opp.”); IPR2015-00814, Paper 9; IPR2015-
`00814, Paper 9; IPR2015-00818, Paper 9; IPR2015-00819, Paper 11;
`IPR2015-00823, Paper 9; IPR2015-00824, Paper 9.
`
`
`
`3
`
`Exhibit 1021, Page 3 of 21
`
`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`
`II. APPLICABLE LAW
`
`A. Burden
`
`We generally accept a petitioner’s identification of real parties in
`
`interest at the time of filing the petition. See Changes to Implement Inter
`
`Partes Review Proceedings, Post-Grant Review Proceedings, and
`
`Transitional Program for Covered Business Method Patents; Final Rule,
`
`77 Fed. Reg. 48,680, 48,695 (Aug. 14, 2012). A patent owner challenging a
`
`petitioner’s RPI disclosure must provide sufficient evidence to show the
`
`disclosure is inadequate. Intellectual Ventures Mgmt., LLC v. Xilinx, Inc.,
`
`Case IPR2012-00018, slip op. at 3 (PTAB Jan. 24, 2013) (Paper 12). Prior
`
`to institution, when a patent owner provides sufficient evidence that
`
`reasonably brings into question the accuracy of a petitioner’s identification
`
`of RPI, the overall burden remains with the petitioner to establish that it has
`
`complied with the statutory requirement of 35 U.S.C. § 312(a)(2) to identify
`
`all real parties in interest. Zerto, Inc. v. EMC Corp., Case IPR2014-01254,
`
`slip op. at 6–7 (PTAB Feb 12, 2015) (Paper 32).
`
`B. Considerations and Factors
`
`As stated in the Trial Practice Guide, whether a party who is not a
`
`named participant in a given proceeding is a “real party-in-interest” to that
`
`proceeding “is a highly fact-dependent question.” 77 Fed. Reg. at 48,759
`
`(citing Taylor v. Sturgell, 533 U.S. 880 (2008)). There is no “bright line
`
`test.” Id. In general, a “real party-in-interest” is “the party that desires
`
`review of the patent,” and “may be the petitioner itself, and/or it may be the
`
`party or parties at whose behest the petition has been filed.” Id. The
`
`Supreme Court in Taylor set forth a list of factors that might be relevant in a
`
`
`
`4
`
`Exhibit 1021, Page 4 of 21
`
`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`particular case. 533 U.S. at 893–95. Although “rarely will one fact,
`
`standing alone, be determinative of the inquiry” (Trial Practice Guide, 77
`
`Fed. Reg. at 48,760), “[a] common consideration is whether the non-party
`
`exercised or could have exercised control over a party’s participation in a
`
`proceeding” (id. at 48,759 (citations omitted)); see also Reflectix, Inc. v.
`
`Promethean Insulation Tech. LLC, Case IPR2015-00039, slip op. at 12
`
`(PTAB April 24, 2015) (Paper 18) (“The proper RPI analysis [] focuses on
`
`. . . the degree to which [the related non-named entity] exercised, or could
`
`have exercised, control over the Petitions.”).
`
`Other considerations may include whether a non-party “funds and
`
`directs and controls” an IPR petition or proceeding; the non-party’s
`
`relationship with the petitioner; the non-party’s relationship to the petition
`
`itself, including the nature and/or degree of involvement in the filing; and
`
`the nature of the entity filing the petition. Trial Practice Guide, 77 Fed. Reg.
`
`at 48,760; see also id. at 48,759 (citing Taylor, 553 U.S. at 893–95 & n.6
`
`(2008)). A party does not become a RPI merely through association with
`
`another party in an endeavor unrelated to the IPR proceeding. Id. at 48,760;
`
`see also Denso Corp. v. Beacon Navigation GmbH, Case IPR2013-00026,
`
`slip op. at 10–11 (PTAB Mar. 14, 2014) (Paper 34) (stating that the mere
`
`fact that parties are co-defendants or concurrent defendants in related
`
`litigation does not make them RPI).
`
`When a patent owner asserts control as a basis for a non-party being a
`
`real party in interest, the non-party’s participation with the petitioner may be
`
`overt or covert, and the evidence may be direct or circumstantial, but the
`
`evidence as a whole must show that the non-party possessed effective
`
`
`
`5
`
`Exhibit 1021, Page 5 of 21
`
`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`control over the IPR proceeding. ZOLL Lifecor Corp. v. Philips Elec. N.
`
`Am. Corp., Case IPR2013-00609, slip op. at 10 (PTAB Mar. 20, 2014)
`
`(Paper 15). In this regard, we consider “the degree of control the nonparty
`
`could exert over the inter partes review.” Aruze Gaming Macau, Ltd. v.
`
`MGT Gaming, Inc., Case IPR2014-01288, slip op. at 11 (PTAB Feb. 20,
`
`2015) (Paper 13).
`
`We may consider whether a non-party “has the actual measure of
`
`control or opportunity to control that might reasonably be expected between
`
`two formal coparties.” Trial Practice Guide, 77 Fed. Reg. at 48,759 (quoting
`
`18A Charles Alan Wright et al., FEDERAL PRACTICE & PROCEDURE § 4451
`
`(2d ed. 2011)) (internal quotations omitted). We also may consider whether
`
`a petitioner’s actions “have blurred sufficiently the lines of corporate
`
`separation with [an unnamed related entity], such that [the entity] could have
`
`controlled the filing and participation of the IPRs.” ZOLL Lifecor Corp. v.
`
`Philips Elec. N. Am. Corp., Case IPR2013-00606, slip op. at 10 (PTAB Mar.
`
`20, 2014) (Paper 13); see also Galderma S.A. v. Allergan Industrie, SAS,
`
`Case IPR2014-01422, slip op. at 12 (PTAB Mar. 5, 2015) (Paper 14) (same
`
`person serving as President and CEO of both parent and subsidiary
`
`determined to have “a significant degree of effective control over the present
`
`matter”).
`
`III. ANALYSIS
`
`A. Summary of Neology Arguments
`
`Neology argues that a settlement meeting held on February 23, 2015
`
`demonstrates that Kapsch-Group and/or Kapsch AG control this IPR
`
`proceeding. Mot. 10. Neology further argues that statements made in public
`
`
`
`6
`
`Exhibit 1021, Page 6 of 21
`
`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`documents establish that Kapsch-Group controls or has the ability to control
`
`Petitioners, either directly or through Kapsch TCAG. Id. at 12. Neology
`
`further argues that “admissions” by Kapsch AG establish that it controls
`
`Kapsch TCAG and Petitioners. Id. at 14.
`
`B. Settlement Meeting of February 23, 2015
`
`Neology argues that a settlement meeting held on February 23, 2015
`
`demonstrates that Kapsch-Group and/or Kapsch AG control this IPR
`
`proceeding and therefore should have been named as a real party in interest.
`
`Mot. 10−12.
`
`1. Events Leading Up to Settlement Meeting
`
`In March 2013, Neology’s parent company, Smartrac N.V.
`
`(“Smartrac”), and Petitioner Kapsch TrafficCom Holding Corp. discussed
`
`and evaluated a potential acquisition. Opp. 3−4 (citing Ex. 1023). A
`
`confidentiality agreement executed in connection with that effort listed
`
`Petitioner Kapsch TrafficCom IVHS Inc. and Kapsch TCAG as “Affiliates”
`
`of Kapsch TrafficCom Holding Corp., and did not mention Kapsch-Group or
`
`Kapsch AG. Id. at 4. The agreement was signed by Smartrac’s Chairman
`
`and CFO Christian Uhl and Kapsch TrafficCom Holding Corp.’s Chairman
`
`Gerhard Plaschka and CFO Michael Hofer. Id. No acquisition occurred. Id.
`
`On February 28, 2014, Neology sued the Petitioner entities for patent
`
`infringement. Neither the first nor second amended complaint mentioned
`
`any involvement by Kapsch-Group or Kapsch AG, the two alleged unnamed
`
`real parties in interest. Id.; see Ex. 2001.
`
`In September, 2014, Joerg Zirener of One Equity Partners, the
`
`majority shareholder of Smartrac, requested a meeting with Dr. Franz
`
`
`
`7
`
`Exhibit 1021, Page 7 of 21
`
`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`Semmernegg, Chairman of Kapsch TCAG’s supervisory board, to discuss
`
`Neology’s lawsuit. Opp. 4 (citing Ex. 1024 ¶ 9). According to Petitioners,
`
`Mr. Zirener knew Dr. Semmernegg from prior business discussions and told
`
`Dr. Semmernegg that he felt there was too much emotion involving the
`
`parties in the U.S. and proposed working to a solution in Europe. Id. at 4
`
`(citing Ex. 1024 ¶¶ 9, 10). Dr. Semmernegg passed along the request to
`
`Kapsch TrafficCom Holding Corp.’s Chairman, Dr. Plaschka, who
`
`instructed Dr. Semmernegg to decline the request. Id. at 4 (citing Ex. 1024
`
`¶ 11).
`
`In January 2015, Dr. Plaschka requested that Dr. Semmernegg reach
`
`out to Mr. Zirener to set up a meeting because the two knew each other and
`
`because Mr. Zirener had contacted him several months earlier. Id. (citing
`
`Ex. 1024 ¶ 12). According to Petitioners, Dr. Semmernegg’s only role at
`
`this meeting was to deliver Petitioners’ settlement proposal. Id. at 5 (citing
`
`Ex. 1024 ¶ 14).
`
`According to Neology, on January 16, 2015, Dr. Semmernegg called
`
`Mr. Zirener and suggested a meeting to discuss resolution of the dispute
`
`between Petitioners and Neology. Mot. 4 (citing Ex. 2007).
`
`Dr. Semmernegg’s confirmation email included a signature line identifying
`
`himself as “Chairman of the Board” of Kapsch BusinessCom AG. Id.
`
`(citing Ex. 2008). Petitioners do not dispute this.
`
`Discussions ensued among litigation counsel, during which Petitioners
`
`raised the specter of an inequitable conduct counterclaim to Neology’s
`
`infringement claim. Id. As a result of these discussions, Dr. Semmernegg
`
`and Mr. Zirener agreed that a meeting would happen “at the parent level
`
`
`
`8
`
`Exhibit 1021, Page 8 of 21
`
`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`between folks in Stuttgart on your [Neology parent] end and Vienna on mine
`
`from Kapsch AG.” Mot. 4−5 (citing Ex. 2009) (emphasis omitted).
`
`Neology argues that these preliminary communications establish that
`
`Dr. Semmernegg would be negotiating as an executive of Kapsch-Group
`
`and/or Kapsch AG and that the Kapsch executives at the meeting would
`
`come from “Kapsch AG.” Mot. 10 (citing Exs. 2009, 2010). Neology
`
`further argues that if the meeting did not result in the resolution of the
`
`district court case, the defendants indicated that they would file inter partes
`
`review petitions challenging the patents. Id. (citing Exhibits 2010–14).
`
`Petitioners argue that the email exchange does not establish that Dr.
`
`Semmernegg would be participating “as an executive of Kapsch-Group
`
`and/or Kapsch AG.” Opp. 12. According to Petitioners, “Kapsch AG” was
`
`used as shorthand for “Kapsch TrafficCom AG” to distinguish it from the
`
`five Petitioners that also have “Kapsch TrafficCom” in their names. Opp. 12
`
`(citing Ex. 1025 ¶ 8). Similarly, use of “at the parent level” by Petitioners’
`
`counsel refers again to Kapsch TCAG, a parent of the Petitioner entities, and
`
`Neology’s parent Smartrac. Id. (citing Ex. 1025 ¶ 9). Petitioners’ counsel
`
`was not referring to either Kapsch AG (which is not a parent of Petitioners)
`
`or Kapsch-Group. Id. And nothing in the emails suggests that “Kapsch
`
`AG” controlled whether the inter partes review petitions would be filed. Id.
`
`We find Petitioners’ interpretation of events leading up to the
`
`settlement meeting to be plausible and supported by evidence in the record.
`
`Dr. Semmernegg states in his declaration that he communicated the
`
`settlement proposal, and told Mr. Uhl that he had “no power to negotiate a
`
`settlement.” Ex. 1024 ¶¶ 13–16. We agree with Neology that Dr.
`
`
`
`9
`
`Exhibit 1021, Page 9 of 21
`
`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`Semmernegg delivered the settlement proposal on behalf of the
`
`“defendants.” See id. Petitioners are the defendants in the district court
`
`case; Kapsch-Group and Kapsch AG are not named as defendants. Dr.
`
`Semmernegg wears multiple hats within the Kapsch Family and likely was
`
`engaged by the defendants as a capable resource to present the settlement
`
`proposal on behalf of the “defendants.” The engagement of Dr.
`
`Semmernegg under these circumstances does not compel a conclusion that
`
`either Kapsch-Group or Kapsch AG controlled conduct of the IPRs.
`
`2. Settlement Meeting of February 23, 2015
`
`Neology argues that the “settlement” meeting held on February 23,
`
`2015 in Vienna among Dr. Semmernegg and Messrs. Uhl (Smartrac CEO)
`
`and Zirener shows that Kapsch-Group and Kapsch AG control the IPRs. At
`
`that meeting, Dr. Semmernegg tendered a business card (Ex. 2006)
`
`identifying himself as “Member of the Board” of Kapsch-Group. Mot. 10.
`
`Neology argues that Dr. Semmernegg’s presence on behalf of Kapsch-
`
`Group suggests that Kapsch-Group and Kapsch AG “controlled the
`
`decisions regarding Petitioners’ activities.” Id.
`
`Kapsch disagrees and argues that Dr. Semmernegg’s presence and
`
`actions at the February 23 meeting do not suggest that Kapsch-Group and
`
`Kapsch AG “controlled the decisions regarding Petitioners’ activities.” Opp.
`
`13. Dr. Semmernegg, Chairman of the Kapsch TCAG Supervisory Board,
`
`represented Petitioners at the meeting. Id. (citing Ex. 1024). Mr. Uhl
`
`admits that Dr. Semmernegg stated that he made the proposal on behalf of
`
`Kapsch TrafficCom Holding Corp. Ex. 2005 ¶ 6. The settlement offer
`
`came from Petitioners. Id. Dr. Semmernegg relayed that offer to Messrs.
`
`
`
`10
`
`Exhibit 1021, Page 10 of 21
`
`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`Uhl and Zirener, and made clear that he did not have authority to settle and
`
`would have to relate back Neology’s counterproposal to Petitioners. Id.
`
`Petitioners further argue that Neology identifies no requirement that
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`someone who appears at a negotiation must have “legal authority” to settle it
`
`then and there. Id.
`
`Petitioners further argue that Dr. Semmernegg’s business card does
`
`not indicate he was appearing in his role at Kapsch-Group. Id. Dr.
`
`Semmernegg has responsibilities in multiple companies, including
`
`companies that Neology does not suggest are RPIs. Id. at 13–14 (citing Ex.
`
`2008 (signature block)). As explained above, Dr. Semmernegg merely
`
`relayed Petitioners’ proposal and has no involvement in these proceedings or
`
`the district court case according to Petitioners. Id.
`
`Mr. Uhl admits that Dr. Semmernegg stated that “he made this
`
`proposal on behalf of Kapsch TrafficCom.” Ex. 2005 ¶ 6. Mr. Uhl
`
`responded that Neology’s settlement proposal was for Kapsch TrafficCom
`
`Holding Corp. to acquire Neology. Ex. 1024 ¶ 15. Further, according to
`
`Petitioners, following the meeting, Dr. Semmernegg has had no involvement
`
`with this proceeding or the district court case. Opp. 14. Based on these
`
`facts, we are not persuaded that Dr. Semmernegg’s presence at the
`
`settlement meeting or his business card demonstrate that either Kapsch-
`
`Group or Kapsch AG controlled the inter partes reviews.
`
`C. Public Statements
`
`Neology argues that statements made in public documents establish
`
`that Kapsch-Group controls or has the ability to control Petitioners, either
`
`directly or through Kapsch TCAG. Mot. 12.
`
`
`
`11
`
`Exhibit 1021, Page 11 of 21
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`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`
`1. The Statements
`
`Neology argues that Kapsch-Group’s public documents indicate its
`
`control over Petitioners. Chief among these documents is a Kapsch-Group
`
`Annual Report (Ex. 2002) that (1)4 refers to “consolidated” subsidiaries of
`
`Kapsch-Group, which Kapsch-Group has the power to govern. Mot. 3, 12
`
`(citing Ex. 2002, 96−97, 104). Additional statements noted by Neology
`
`(Mot. 12−13) include statements that: (2) Kapsch-Group owns 61.92% of
`
`the voting shares of Kapsch TCAG (Ex. 2002, 67, 95); (3) Kapsch TCAG is
`
`the parent of Kapsch TCBV (a named RPI), which operates through yet
`
`more subsidiaries, including Petitioners (Ex. 2002, 26–27, 96–97); (4) Georg
`
`Kapsch is the CEO of both Kapsch-Group and Kapsch TCAG (Ex. 2002, 11,
`
`52, 55); (5) Kapsch-Group manages the intellectual property rights in
`
`intelligent transportation systems, through which it monitors claims of
`
`infringement (Ex. 2002, 84); (6) Kapsch-Group and Kapsch TCAG list the
`
`identical address and phone number (Ex. 2015, 1−2); and (7) in disclosing
`
`that it has 5,484 employees worldwide, Kapsch-Group includes the
`
`employees of all subsidiaries, including Kapsch TCAG and Petitioners (Ex.
`
`2002, 4, 14, 16). Similarly, Kapsch TCAG’s annual report discloses that
`
`Kapsch-Group provides services to Kapsch TCAG on group consolidation
`
`and legal advice (Ex. 2016, 83).
`
`2. Petitioners’ Explanations for the Public Statements
`
`Petitioners respond to the above-numbered statements as follows. For
`
`convenience, we correlate specific responses using the same numbers
`
`assigned to the various statements above.
`
`
`4 The numbers of these statements are used for reference below.
`
`
`
`12
`
`Exhibit 1021, Page 12 of 21
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`
`
`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`
`
`(1) Petitioners argue that the annual report reflects that Kapsch-
`
`Group’s subsidiaries are “consolidated” for purposes of disclosing Kapsch-
`
`Group’s “Consolidated Financial Statements,” but does not demonstrate that
`
`Kapsch-Group controls Petitioners in this proceeding. Opp. 9 (citing Ex.
`
`2002, 7, 90–97).
`
`(2) Petitioners argue that although Kapsch-Group owns 61.92% of
`
`the voting shares of Kapsch TCAG (Ex. 2002, 67, 95), “[t]here is a
`
`presumption of corporate separateness that must be overcome by clear
`
`evidence that the parent in fact controls the activities of the subsidiary.”
`
`Opp. 8 (citing Negrón-Torres v. Verizon Commc’ns, Inc., 478 F.3d 19, 27
`
`(1st Cir. 2007)). Petitioners argue (Opp. 8) that the Board repeatedly has
`
`rejected assertions that a traditional parent/subsidiary relationship alone
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`makes a parent a RPI. See Sony Computer Entm’t Am. LLC v. Game
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`Controller Tech. LLC, Case IPR2013-00634, slip op. at 7–8 (PTAB Apr. 2,
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`2015) (Paper 31); Compass Bank v. Intellectual Ventures, Case
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`IPR2014(cid:173)00786, slip op. at 6 (PTAB Sept. 24, 2014) (Paper 10).
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`(3) Petitioners argue that under U.S. law, Petitioners’ “regulatory
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`structure . . . treats the corporate family as a unified enterprise for at least
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`some purposes,” such as financial reporting; and “absent some compelling
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`reason to disregard entity separateness, in the typical case courts should treat
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`the various members of the corporate group as the separate corporations they
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`are.” Opp. 8−9 (citing In re Teleglobe Commc’ns Corp., 493 F.3d 345, 371,
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`372 (3d Cir. 2007)).
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`(4) Petitioners acknowledge that Georg Kapsch is CEO of Kapsch-
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`Group, Kapsch AG, and Kapsch TCAG. Opp. 9. However, Petitioners
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`13
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`Exhibit 1021, Page 13 of 21
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`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
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`point out that they do not share any executives with Kapsch-Group or
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`Kapsch AG. Id. Further, that Kapsch TCAG shares certain corporate
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`officers with other entities does not establish that either Kapsch-Group or
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`Kapsch AG controls Petitioners in this proceeding. Id. (citing Gillig v. Nike,
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`Inc., 602 F.3d 1354, 1362 (Fed. Cir. 2010)). In addition, there are other
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`unaffiliated executives, and each executive, including Mr. Kapsch, owes a
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`fiduciary duty to act in Kapsch TCAG’s best interest without influence from
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`the controlling shareholder, i.e., Kapsch-Group. Id.
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`(5) Kapsch argues that this statement merely describes what occurs
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`generally in the group (of which Kapsch TCAG and its subsidiaries are
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`members). Id. It does not suggest that Kapsch-Group controls any
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`litigation, let alone these proceedings. Id. at 9–10. Further, Kapsch TCAG’s
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`annual report shows that Kapsch TCAG is the entity that has implemented
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`this IP management. Id. at 10 (citing Ex. 1021 at 69).
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`(6) Neology relies on Kapsch-Group, Kapsch AG, and Kapsch TCAG
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`sharing an address and phone number and on Kapsch-Group including
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`Petitioners’ employees in its employee headcount. Mot. 13, 15. But
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`according to Petitioners, Neology identifies no authority supporting its claim
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`that a shared address or phone number makes a party an RPI. Id.
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` (7) Petitioners argue that it is unsurprising—and, in fact, to be
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`expected—that Kapsch-Group includes Kapsch TCAG’s employees in its
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`headcount. Id. A basic purpose of a consolidated financial report of a
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`parent entity is to report on the business as a whole including all
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`subsidiaries, but that does not mean that the parent controls a subsidiary’s
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`participation in an IPR proceeding. Id.
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`
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`14
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`Exhibit 1021, Page 14 of 21
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`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
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`Petitioners’ explanations for each of the statements identified by
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`Neology are supported by evidence in the record and are persuasive.
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`3. Kapsch Family
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`Dr. Semmernegg identifies in his declaration testimony various
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`Kapsch corporate entities that are related as shown in the figure below. Opp.
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`3 (citing Ex. 1024 ¶ 7).
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`
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`We collectively refer to these entities as the “Kapsch Family.”
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`Kapsch-Group is based in Austria. Id. at 2. The five Petitioner entities are
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`represented by a single block at the lower left of this figure. Petitioners’
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`parent (Kapsch TrafficCom Holding II US Corp.), grand-parent (Kapsch
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`TrafficCom, B.V. (“Kapsch TCBV”)), and great-grandparent (Kapsch
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`TrafficCom AG (“Kapsch TCAG”)) were identified by Petitioners as RPIs.
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`These companies are represented by the three entities directly above the
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`Petitioner box at the left side of the figure.
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`
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`15
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`Exhibit 1021, Page 15 of 21
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`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
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`Kapsch-Group owns about 62% of the shares of Kapsch TCAG,
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`which operates the “traffic” business responsible for the RFID technology at
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`issue in the IPR proceedings. Opp. 2−3.
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`Also according to Petitioners, each of the Petitioner entities has its
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`own board of directors and officers, appointed by the board, who supervise,
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`direct, and control the business. Id. at 3. The commencement of any legal
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`proceeding also requires the board’s approval. Id. (citing Ex. 2017 at 29).
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`Accordingly, the Petitioners’ boards signed the powers of attorney in these
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`proceedings. Paper 2. None of Petitioners’ officers or directors have
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`positions with Kapsch TCAG, Kapsch AG, or Kapsch-Group. Id.
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`According to Petitioners, Kapsch TCAG is a publicly-traded company
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`on the Vienna Stock Exchange, with almost 40% of its shares owned by
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`third-parties. Id. at 2−3 (citing Ex. 1021, 34). It has an executive board that
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`directs the company’s business and a supervisory board that appoints and
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`supervises the executive board. Id. Kapsch TCAG complies with the
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`Austrian Code of Corporate Governance, which requires the executive board
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`to make decisions without being influenced by the interests of any
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`controlling shareholder. Id. (citing Ex. 1024 ¶ 7) (emphasis omitted).
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`Neology points out that Kapsch-Group is managed by an Executive
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`Board consisting of Georg Kapsch (CEO), Kari Kapsch (COO), and Dr.
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`Franz Semmernegg (CFO). Mot. 3. These executives hold the same titles at
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`Kapsch AG. Id. Georg Kapsch also serves as CEO of Kapsch TCAG, and
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`Dr. Semmernegg is chairman of the Supervisory Board of Kapsch TCAG.
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`Id. Kapsch TCAG’s Executive Board “is responsible for directing the
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`business and represents the company in dealings with third parties.” Id.
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`
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`16
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`Exhibit 1021, Page 16 of 21
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`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
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`(citing Ex. 2003, 2) (emphasis omitted). The Supervisory Board “is
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`responsible for appointing and dismissing the members of the executive
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`board and supervision of the business conducted by the executive board,”
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`but “does not actively manage the company.” Id. at 3−4 (citing Ex. 2002,
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`11, 52, 55, 153; Ex. 2003, 2) (emphasis omitted).
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`D. Kapsch AG “Admissions”
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`Neology argues that “admissions” by Kapsch AG establish that it
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`controls Kapsch TCAG and Petitioners. Mot. 14−15.
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`Neology argues that Kapsch AG provides management and consulting
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`services to Kapsch TCAG and its subsidiaries, including Petitioners. Mot.
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`14 (citing Ex. 2016, 83). Kapsch TCAG shares its CEO, Georg Kapsch,
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`with Kapsch AG, and Georg Kapsch’s work at Kapsch TCAG includes
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`“management and consulting services provided by Kapsch AG.” Id. (citing
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`Ex. 2003, 3–5). Kapsch AG buys insurance on behalf of Kapsch TCAG and
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`Petitioners, and carries out corporate development, public relations, and
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`marketing activities for Kapsch TCAG and Petitioners. Id. (citing Ex. 2016,
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`83). Kapsch AG also was the applicant for, and is the owner of, the
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`trademark “KAPSCH TRAFFICCOM,” registered with the USPTO and the
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`Austrian Patent Office. Id. at 14−15 (citing Ex. 2018, 1–2, 12–20). Georg
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`Kapsch signed the Power of Attorney and Designation of Domestic
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`Representative on behalf of Kapsch AG when it applied for the mark in the
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`U.S. Id. at 15 (citing Ex. 2018, 9, 11). Further, the mark is used as a trade
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`name to identify Kapsch AG. Id. (citing Ex. 2019, 1). Finally, Kapsch AG
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`and Kapsch TCAG (together with Kapsch-Group) share the same address,
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`phone number, and fax number. Id. (citing Ex. 2015, 1–2; Ex. 2020). Thus,
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`
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`17
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`Exhibit 1021, Page 17 of 21
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`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
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`Neology argues Kapsch AG should have been named as a real party in
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`interest.
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`Petitioners disagree with Neology’s conclusions with respect to
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`Kapsch AG. Kapsch AG is not a parent of Kapsch TCAG. Opp. 8 (citing
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`Ex. 1024 ¶ 5). Rather, Kapsch AG merely provides support services for
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`several Kapsch companies, including Kapsch TCAG, for which Kapsch
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`TCAG pays. Id. Although Kapsch-Group is a majority shareholder in
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`Kapsch TCAG, that is not evidence Kapsch-Group controls or has the ability
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`to control Petitioners or these IPR proceedings according to Petitioners. Id.
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`Petitioners note that none of the Petitioner entities share any executives with
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`Kapsch AG. Id. at 9. According to Petitioners, Neology overlooks the other
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`unaffiliated executives, as well as the fiduciary duty that each executive,
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`including Mr. Kapsch, has to act in Kapsch TCAG’s best interest without
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`influence from the controlling shareholder, i.e., Kapsch-Group. Id.
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`Petitioners acknowledge that Kapsch-Group, Kapsch AG, and Kapsch
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`TCAG share an address and phone number and that the Kapsch AG
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`headcount is included in the consolidated financial report of Kapsch-Group,
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`but argue that these facts are insignificant, as explained above. Opp. 10; see
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`supra Section III.C.2.
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`Petitioners argue that although Kapsch AG provides specialized
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`services (e.g., insurance, management, and consulting services) to other
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`Kapsch Family entities, Kapsch TCAG reimburses Kapsch AG for these
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`services. Opp. 10−11 (citing Ex. 1021, 132). Neology’s argument that
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`Kapsch AG controls Kapsch TCAG because it applied for and owns the
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`“Kapsch TrafficCom” trademark overlooks certain facts according to
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`
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`18
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`Exhibit 1021, Page 18 of 21
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`
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`Case IPR2015-00808, -00814, -00815, -00818, -00819, -00823, and -00824
`Patents 6,229,443; 6,690,264; 8,587,436; 8,237,568; 8,325,044; and
`7,119,664
`