Trials@uspto.gov
`571-272-7822
`
`Paper 18
`Entered: December 23, 2020
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`CODE200, UAB; TESO LT, UAB; METACLUSTER LT,
`
`UAB; AND OXYSALES, UAB,
`
`Petitioner,
`
`V.
`
`LUMINATI NETWORKS LTD.,
`Patent Owner.
`
`IPR2020-01266
`
`Patent 10,257,319 B2
`
`Before THOMAS L. GIANNETTI, SI-HEILA F. MCSHANE, and
`
`RUSSELL E. CASS, Administrative Patent Judges.
`
`GIANNETTI, Administrative Patent Judge.
`
`DECISION
`
`Denying Institution of Inter Partes Review
`35 US. C. § 314
`
`
`571-272-7822
`
`Paper 18
`Entered: December 23, 2020
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`CODE200, UAB; TESO LT, UAB; METACLUSTER LT,
`
`UAB; AND OXYSALES, UAB,
`
`Petitioner,
`
`V.
`
`LUMINATI NETWORKS LTD.,
`Patent Owner.
`
`IPR2020-01266
`
`Patent 10,257,319 B2
`
`Before THOMAS L. GIANNETTI, SI-HEILA F. MCSHANE, and
`
`RUSSELL E. CASS, Administrative Patent Judges.
`
`GIANNETTI, Administrative Patent Judge.
`
`DECISION
`
`Denying Institution of Inter Partes Review
`35 US. C. § 314
`
`
`
`IPR2020-01266
`
`Patent 10,257,319 B2
`
`1. INTRODUCTION
`
`Petitioner (collectively, Code200, UAB; Teso LT, UAB; Metacluster
`
`LT, UAB; and Oxysales, UAB) filed a Petition (Paper 5, “Pet.”) requesting
`
`an inter partes review of claims 1, 2, 14, 15, 17—19, 21, 22, and 24—29 (“the
`
`challenged claims”) of US. Patent No. 10, 257,319 B2 (Ex. 1001, “the
`
`’3 19 patent”). Patent Owner, Luminati Networks, LTD, filed a Corrected
`
`Preliminary Response (Paper 16, “Prelim. Resp”).l
`
`The Board has authority to determine whether to institute an inter
`
`partes review. See 35 U.S.C. § 314; 37 CPR. § 42.4(a). Under 35 U.S.C.
`
`§ 314(a), we may not authorize an inter partes review unless the information
`
`in the petition and the preliminary response “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.”
`
`The Board, however, has discretion to deny a petition even when a
`
`petitioner meets that threshold. 161.; see, e. g., 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”); NHK
`
`Spring Co. v. Intri-Plex Techs, Ina, IPR2018-00752, Paper 8 (PTAB Sept.
`
`12, 2018) (precedential).
`
`Both the Petition and Preliminary Response address the issue of
`
`discretionary denial under 35 U.S.C. § 314(a). Pet. 6—9; Prelim. Resp. 4—14.
`
`For the reasons that follow, we exercise our discretion under 35
`
`U.S.C. § 314(a) to deny institution of inter partes review.
`
`1 The Board authorized a Corrected Preliminary Response providing
`citations to a stipulation entered after the original preliminary response was
`filed. Paper 15.
`
`
`
`IPR2020-01266
`
`Patent 10,257,319 B2
`
`II. BACKGROUND
`
`A. Real Parties-in-Interest
`
`Petitioner identifies the following as the real parties-in-interest:
`
`Code200, UAB; Teso LT, UAB; Metacluster LT, UAB; Oxysales, UAB;
`
`and coretech lt, UAB. Pet. 2.
`
`Patent Owner identifies Luminati Networks LTD as the real party-in-
`
`interest. Paper 7, 2.
`
`B. Related Proceedings
`
`The parties identify the following litigation in the Eastern District of
`
`Texas involving the ’3 19 patent: Luminati Networks Ltd. v. Teso LT, UAB et
`
`al., 2:19-cv-00395-IRG (E.D. Tex.) (“the Texas Litigation”). Pet. 2; Paper
`
`7, 2. The parties identify other proceedings involving patents related to the
`
`’3 19 patent, including other litigations in the Eastern District of Texas, other
`
`petitions for inter partes review, and numerous pending applications. Pet. 3;
`
`Paper 7, 2—3.
`
`C. The ’319 Patent
`
`The ’3 19 patent is directed to a system for increasing network
`
`communication speed for users, while lowering network congestion for
`
`content owners and internet service providers (ISPs). Ex. 1001, (57). The
`
`system employs network elements including an acceleration server, clients,
`
`agents, and peers, where communication requests generated by applications
`
`are intercepted by the client on the same machine. Id. The IP address of the
`
`server in the communication request is transmitted to the acceleration server,
`
`which provides a list of agents to use for this IP address. Id.
`
`
`
`lPR2020-01266
`
`Patent 10,257,319 B2
`
`The communication request is sent to the agents. One or more of the
`
`agents respond with a list of peers that have previously seen some or all of
`
`the content which is the response to this request (after checking whether this
`
`data is still valid). Id. The client then downloads the data from these peers
`
`in parts and in parallel, thereby speeding up the Web transfer, releasing
`
`congestion from the Web by fetching the information from multiple sources,
`
`and relieving traffic from Web servers by offloading the data transfers from
`
`them to nearby peers. Id.
`
`D. Illustrative Claim
`
`Claim 1 is the only independent claim, and is illustrative of the
`
`challenged claims. Claim 1 recites:
`
`A method for use with a first client device, for use with a
`1.
`first server that comprises a web server that is a Hypertext
`Transfer Protocol (HTTP) server that responds to HTTP
`requests, the first server stores a first content identified by a
`first content identifier, and for use with a second server, the
`method by the first client device comprising:
`
`receiving, from the second server, the first content
`identifier;
`
`sending, to the first server over the Internet, a Hypertext
`Transfer Protocol (HTTP) request that comprises the first
`content identifier;
`
`receiving, the first content from the first server over the
`Internet in response to the sending of the first content identifier;
`and
`
`sending, the first content by the first client device to the
`second server, in response to the receiving of the first content
`identifier.
`
`Ex.1001,19:16—32.
`
`
`
`IPR2020-01266
`
`Patent 10,257,319 B2
`
`E. Prior Art
`
`Petitioner relies on the following prior art:
`
`1. Michael Reiter & Aviel Rubin, Crowds: Anonymityfor
`Web Transactions, ACM Transactions on Information and
`System Security, Vol. 1, No. 1, Nov. 1998, at 66-92 (Ex. 1011,
`“Crowds”);
`
`2. Marc Rennhard, MorphMix — A Peer-to-Peer-based
`System for Anonymous Internet Access (2004) (Doctoral Thesis)
`(Ex. 1013, “MorphMix”);
`
`3. Border et a1. United States Patent No. 6,795,848 (Ex,
`
`1017, “Border”);
`
`4. Network Working Group, RFC 2616 (Ex. 1018).
`
`F The Asserted Grounds
`
`Petitioner challenges claims 1, 2, 14, 15, 17—19, 21, 22, and 24—29 of
`
`the ’3 19 patent on the following grounds (Pet. 5—6):
`
`Claims Challenged
`
`35 U.S.C.§
`
`103(a)2
`
`Crowds, RFC 2616
`
`102(b)
`
`Border
`
`103(a)
`
`Border, RFC 2616
`
`102(b)
`
`MorphMix
`
`103(a)
`
`MorphMix, RFC 2616
`
`
`
`
`
`
`
`
`
`
`
`1, 2, 14, 15, 17, 18,
`21, 22, 24—27
`
`1, 12, 14, 21, 22, 24,
`25, 27—29
`
`1, 12, 14, 15, 17, 18,
`21, 22, 24—29
`
`1, 2, 17, 19,21, 22,
`24—27
`
`1, 2, 14, 15, 17—19,
`21, 22, 24—27
`
`2 The Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112-29, 125
`Stat. 284, 287—88 (2011), amended 35 U.S.C. § 103. Because the
`’3 19 patent was filed before March 16, 2013 (the effective date of the
`relevant amendments), the pre-AIA version of § 103 applies.
`
`
`
`IPR2020-01266
`
`Patent 10,257,319 B2
`
`III. ANALYSIS
`
`Patent Owner contends we should exercise our discretion to deny
`
`institution under 35 U.S.C. § 314(a), relying on the Board’s precedential
`
`decision in Apple Inc. v. Fintiv Ina, IPR2020-00019, Paper 11 (PTAB
`
`March 20, 2020) (“Fintiv”). Prelim. Resp. 4—14. Patent Owner contends the
`
`parallel Texas Litigation, which asserts the same prior art as the Petition,
`
`begins jury selection over seven months before a final determination would
`
`be expected in this proceeding. Prelim. Resp. 4. Anticipating Patent
`
`Owner’s challenge, Petitioner addresses the §314(a) issue in its Petition.
`
`Pet. 6—9.
`
`A. Fintiv Factors
`
`Fintiv identifies a non-exclusive list of factors parties may consider
`
`addressing where there is a related, parallel district court action to determine
`
`whether such action provides any basis for discretionary denial. Fintiv,
`
`Paper 11 at 5—16. Those factors include:
`
`1. whether the court granted a stay or evidence exists that one
`may be granted if a proceeding is instituted;
`
`2. proximity of the court’s trial date to the Board’s projected
`statutory deadline for a final written decision;
`
`3. investment in the parallel proceeding by the court and the
`parties;
`
`4. overlap between issues raised in the petition and in the
`parallel proceeding;
`
`5. whether the petitioner and the defendant in the parallel
`proceeding are the same party; and
`
`6. other circumstances that impact the Board’s exercise of
`discretion, including the merits.
`
`Id. at 5—6.
`
`
`
`IPR2020—01266
`
`Patent 10,257,319 B2
`
`In evaluating the factors, we take a holistic View of whether efficiency
`
`and integrity of the system are best served by denying or instituting review.
`
`Fintiv, Paper 11 at 6.
`
`B. The Texas Litigation
`
`The Texas Litigation is pending before District Judge Rodney
`
`Gilstrap, in the United States District Court for the Eastern District of Texas,
`
`Marshall Division. Judge Gilstrap has entered a Docket Control Order
`
`setting December 14, 2020, as the deadline for completing fact discovery,
`
`January 21, 2021, as the deadline for completing expert discovery, and May
`
`3, 2021, for jury selection and trial. Ex. 1004, 1, 3. The parties have
`
`advised us that the date for jury selection has been moved to May 10, 2021.
`
`The Court has conducted a Markman hearing, and on December 7,
`
`2020, issued a Claim Construction Opinion and Order. Paper 17; Ex. 2016.
`
`Petitioner advised us (and we have independently confirmed) that in
`
`other cases before him, Judge Gilstrap has continued jury trial dates in cases
`
`scheduled for trial from December 2020 through February 2021 due to the
`
`COVID—19 pandemic. See. e. g, Ex. 3001. However, we have not been
`
`informed of any change in the May 10, 2021 jury selection date in the Texas
`
`Litigation.
`
`C. Analysis ofthe Fintiv Factors
`
`Both Petitioner and Patent Owner address the Fintiv factors in their
`
`submissions. We conclude that overall, the factors favor exercising our
`
`discretion to decline to institute a trial. Our reasoning follows.
`
`1'. Stay in the Texas Litigation
`
`Neither party asserts that the Texas Litigation has been stayed. Pet. 7;
`
`Prelim, Resp. 5. In the Petition, Petitioner contends this factor is neutral
`
`
`
`IPR2020-01266
`
`Patent 10,257,319 B2
`
`because “No party has requested a stay of the Lawsuit pending the IPR.”
`
`Pet. 7. Patent Owner contends that on October 1, 2020, after the Petition
`
`was filed, “Petitioners filed a sealed opposed motion to stay the 395 District
`
`Court case pending the inter partes reviews in which they concede as a
`
`general rule that such stays are not granted.” Prelim. Resp. 5 (citing Ex.
`
`2001). Patent Owner contends Judge Gilstrap “would not likely grant a stay
`
`given the lateness of the Petition.” Id. at 6. The parties have not informed
`
`us of any ruling by Judge Gilstrap on Petitioner’s motion to stay.
`
`In the absence of any specific information from the parties about a
`
`stay by the district court, we decline to speculate on the likelihood of a stay.
`
`See Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 15 at 12 (PTAB May
`
`13, 2020) (informative) (“We decline to infer, based on actions taken in
`
`different cases with different facts, how the District Court would rule should
`
`a stay be requested by the parties in the parallel case here.”). Thus, we find
`
`this factor is neutral.
`
`ii. Trial Date in the Texas Litigation
`
`Patent Owner notes that jury selection in the Texas Litigation is set to
`
`occur over seven months before the final written decision is due. Prelim.
`
`Resp. 6—7. According to Patent Owner, the possibility that the trial date
`
`will be delayed due to the COVID-19 pandemic is “sheer speculation.” Id.
`
`at 7—8. Thus, Patent Owner contends that this factor “strongly favors denial
`
`of institution.” Id. at 8. Petitioner contends that in previous lawsuits,
`
`“Luminati has previously sought to abandon its trial dates as the ‘day of
`
`reckoning’ approaches.” Pet. 7. Petitioner argues that “[i]n View of
`
`Luminati’s history and the potential for COVID-related delays (which are
`
`more likely to affect a jury trial),” this factor “is neutral.” Id. at 8.
`
`
`
`IPR2020—01266
`
`Patent 10,257,319 B2
`
`The trial in the Texas Litigation is currently set to occur at least seven
`
`months before a Final Written Decision in this case will issue if trial is
`
`instituted. Although district court trial delays are always a possibility, we
`
`have no hard evidence before us that would indicate the likelihood of a trial
`
`postponement in the Texas Litigation, due to COVID-l9 or otherwise.
`
`Thus, based on the current record, this factor favors exercising discretion to
`
`deny institution of inter partes review.
`
`iii. Investment by the Court and the Parties
`in the Texas Litigation
`
`Petitioner contends that the Texas Litigation “is at a very early stage.”
`
`Pet. 8. PatentOwner disagrees and points to the efforts of the parties and the
`
`Court in connection with the Markman proceedings. Prelim. Resp. 8—10.
`
`As noted supra, those efforts have now resulted in a Markman claim
`
`construction order. Ex. 2016. Moreover, according to the most recent
`
`Docket Control Order that the parties have submitted from the Texas
`
`Litigation, fact discovery closed on December 14, 2020, and expert
`
`discovery will close on January 21, 2021. Ex. 1004, 3. The parties have not
`
`informed us of any delays that impacted or would impact these dates.
`
`Based on the evidence of record, we agree with Patent Owner that the
`
`investment of time and effort in the Texas Litigation has been substantial
`
`and that this factor favors denial of institution. Prelim. Resp. 10.
`
`iv. Overlap 0fthe Issues
`
`Patent Owner contends the overlap in issues between the Petition and
`
`the Texas Litigation “is substantial.” Prelim. Resp. 10. Petitioner identified
`
`all four references relied on in this proceeding (Crowds, Border, MorphMix,
`
`
`
`IPR2020-01266
`
`Patent 10,257,319 B2
`
`and RFC 2616) in its invalidity contentions in the Texas Litigation. Paper
`
`14, 1111 1— 2.3
`
`In addition, the claims asserted in the Texas Litigation overlap with
`
`the claims challenged in this proceeding. Prelim. Resp. 11. Petitioner
`
`asserts that because the Petition challenges four claims that are not asserted
`
`in the Texas Litigation, this factor “weighs in favor of institution.” Pet. 8.
`
`But Patent Owner responds that those claims depend from claim 1, the only
`
`independent claim in the ’3 19 patent. Prelim. Resp. 11. Patent Owner
`
`further contends that two of those dependent claims merely add a “non-
`
`transitory computer readable medium containing computer instructions that,
`
`when executed by a computer processor, cause the processor to perform the
`
`method” of claim 1. Id. Thus, Patent Owner argues, “[t]his is not a
`
`significant difference.” Id.
`
`We agree with Patent Owner and find that the overlap of issues with
`
`the Texas Litigation is “substantial.” Prelim. Resp. 10. We find that this
`
`factor strongly favors exercising our discretion to deny institution.
`
`v. Whether Petitioner is Unrelated to the
`
`Defendants in the Texas Litigation
`
`“If a petitioner is unrelated to a defendant in an earlier court
`
`proceeding, the Board has weighed this fact against exercising discretion.”
`
`Fintiv, Paper 11 at 13—14. Three of the four petitioners, namely, Teso LT,
`
`Metacluster LT, and Oxysales, are the defendants in the Texas Litigation.
`
`3 Petitioner and Patent Owner have entered a stipulation acknowledging that
`these four references have been asserted in Petitioner’s invalidity
`contentions in the Texas Litigation. Paper 14. Petitioner excludes Code 200
`from this stipulation, as Code 200 is not a party to the Texas Litigation. Id.
`112.
`
`10
`
`
`
`IPR2020-01266
`
`Patent 10,257,319 B2
`
`Prelim. Resp. 12; Ex. 1038. Petitioner argues that because the fourth
`
`petitioner, Code200, is not a party to the Texas Litigation, this factor
`
`“weighs in favor of institution.” Pet. 9. Patent Owner responds that this
`
`argument “fails to acknowledge the close corporate relationship between
`
`Code200 and the other defendants/petitioners.” Prelim. Resp. 12.
`
`After reviewing the corporate structure of the named petitioners,
`
`Patent Owner concludes: “Code200 is related to the other petitioners and all
`
`of them are under the control of their common parent company.” Prelim.
`
`Resp. 13 (citing Exs. 2013, 2014). Petitioner does not challenge this
`
`assertion.
`
`We find that the overlap between the defendants in the Texas
`
`Litigation and petitioners this proceeding, even without considering the
`
`relationship of Code 200 to the other petitioners, is substantial, and favors
`
`denial of institution.
`
`vi. Other Considerations
`
`The final Fintiv factor takes into account any other relevant
`
`circumstances. Petitioner contends the ’3 19 patent “is extraordinarily
`
`weak.” Pet. 9. Patent Owner responds “Petitioners’ reading of the claims is
`
`unreasonable —- an issue that will be resolved by the .
`
`.
`
`. District Court.”
`
`Prelim. Resp. 13—14.
`
`Having reviewed Petitioner’s unpatentability arguments and Patent
`
`Owner’s responses, and based on the limited record before us, we do not
`
`find that the merits outweigh the other Fintiv factors favoring denial of
`
`institution.
`
`11
`
`
`
`IPR2020-401266
`
`Patent 10,257,319 B2
`
`D. Conclusion
`
`The decision whether to exercise discretion to deny institution under
`
`§ 314(a) is based on “a balanced assessment of all relevant circumstances in
`
`the case, including the merits.” Patent Trial and Appeal Board Consolidated
`
`Trial Practice Guide 58 (Nov. 2019), available at
`
`https://www.uspto.gov/sites/default/files/documents/tpgnov.pdf.
`
`Patent Owner has established that (1) the trial in the Texas Litigation
`
`is set to occur at least seven months before a Final Written Decision would
`
`be issued here; (2) the court and the parties have invested subStantial time
`
`and effort in the Texas Litigation; and (3) there is almost complete overlap
`
`I
`of issues and parties with this proceeding and the Texas Litigation. Thus,
`based on the facts and circumstances of this case, we exercise our discretion
`
`under 35 U.S.C. § 314(a) to deny inter partes review.
`
`Accordingly, it is
`
`IV. ORDER
`
`ORDERED that the Petition is denied as to all grounds and all
`
`challenged claims of the ’3 19 patent.
`
`12
`
`
`
`IPR2020-01266
`
`Patent 10,257,319 B2
`
`PETITIONER:
`
`Craig Tolliver
`George Scott
`CHARHON, CALLAHAN, ROBSON & GARZA
`ctolliver@toliverlawfirm.com
`jscott@ccrglaw.com
`
`PATENT OWNER:
`
`Thomas M. Dunham
`
`Don F. Livornese
`
`RUYAKCHERIAN LLP
`
`tomd@dunham.cc
`donl@ruyakcherian.com
`
`13
`
`
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