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`UNITED STATES PATENT AND TRADEMARK OFFICE
`___________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`___________________
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`APPLE INC.
`Petitioner,
`
`v.
`
`OPTIS WIRELESS TECHNOLOGY, LLC
`Patent Owner.
`
`
`___________________
`
`Case IPR2020-00466
`Patent No. 8,411,557
`___________________
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`
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`PATENT OWNER'S SUR-REPLY TO PETITIONER'S REPLY TO
`PATENT OWNER'S PRELIMINARY RESPONSE
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`
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`
`
`Mail Stop "PATENT BOARD"
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
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`10855809
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`Case IPR2020-00466
`Patent No. 8,411,557
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`TABLE OF CONTENTS
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`Page
`Apple's Fintiv Analysis Is Improper And/Or Incorrect ................................ 1
`A.
`Factor 1: stay at this stage is highly improbable ................................ 1
`B.
`Factor 3: Apple confounds it with General Plastic factors ............... 2
`C.
`Factor 4: Notwithstanding Apple's last-minute
`gamesmanship, the Petition and the district court case
`overlap substantially ........................................................................... 3
`Factor 6: Apple inappropriately used the Reply to
`supplement its Petition after reviewing the POPR ............................. 4
`None of the other factors recited by Apple favors institution ............ 6
`E.
`Apple's Challenge To Fintiv Decision Is Improper and Incorrect ............... 7
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`D.
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`
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`I.
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`II.
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`Ex. 2001
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`Ex. 2002
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`Ex. 2003
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`Ex. 2004
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`Ex. 2005
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`Ex. 2006
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`Case IPR2020-00466
`Patent No. 8,411,557
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`EXHIBIT LIST
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`Declaration of Professor Murali Annavaram in Support of Patent
`Owner's Preliminary Response
`
`Amended Docket Control Order In Parallel District Court Case,
`Case 2:19-cv-00066, Doc. 159, June 9, 2020
`Judge Gilstrap's Standing Order re COVID19
`
`"Why Gilstrap is Getting Ready for Trial and Not on Zoom," Law
`360, May 15, 2020
`https://www.law360.com/texas/articles/1273188/why-gilstrap-is-
`getting-ready-for-trial-and-not-on-zoom
`
`Claim Construction Memorandum Opinion and Order, Case 2:19-
`cv-00066, Doc. 130, April 7, 2020
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`Sutivong et al., U.S. Publication No. US2006/0018336 A1,
`published Jan. 26, 2006
`
`Ex. 2007
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`Email chain on proposals on reducing asserted claims and prior art
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`Ex. 2008
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`Ex. 2009
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`Table of Contents for Invalidity Expert Report of Mark Lanning
`regarding the Validity of U.S. Patent Number 8,411,557
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`Defendant Apple Inc.'s P.R. 3.3 Second Amended Invalidity
`Contentions
`
`Ex. 2010
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`KREHER, Ralf and RÜDEBUSCH, Torsten, UMTS Signaling,
`
`Ex. 2011
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`Ex. 2012
`
`(Gilstrap) Order denying request for stay of trial because of Covid-
`19Email exchange re filing of reply briefs after Opposition served
`in related court case
`
`2020-07-07 Email exchange between Patent Owner and Petitioner
`regarding filings of replies in support of summary judgment
`motions and motions to exclude/strike
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`Patent No. 8,411,557
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`Ex. 2013
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`2020-07-03 Apple's Identification of Prior Art pursuant to 35 USC
`§ 282
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`Ex. 2014
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`2020-07-02 Email from Sheasby to Apple Counsel
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`Ex. 2015
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`Ex. 2016
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`Texas Coronavirus Map and Case Count, New York Time, July 7,
`2020, 2:10 P.M. E.T.
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`2020-07-07 Email from Board authorizing Patent Owner to file sur-
`replies (with required page limits) in IPR2020-00465, IPR2020-
`00466, IPR2020-00642
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`Ex. 2017
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`2020-03-01 Returned Summons
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`Patent No. 8,411,557
`Apple represented to this Board that it sought a sur-reply to address the
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`Apple v. Fintiv factors. Ex. 1056. Using the POPR as a roadmap, it used the reply
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`instead to: (1) respond to the POPR substantively on the technical merits; and
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`(2) create "new" facts in an attempt to eliminate the complete overlap between the
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`PTAB and the district court proceedings. In an extreme movement, Apple
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`announced that it would no longer pursue the Sutivong ground in the IPR, in
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`addition to dropping the Harris ground in the district court. Reply at 2. The Board,
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`however, cannot disregard the Sutivong ground under SAS unless it denies the
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`Petition. That is, if Apple is to be held to its words that "it will not pursue Ground
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`2 . . . in this IPR" (Reply at 2), the outcome is no institution of trial.
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`I.
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`Apple's Fintiv Analysis Is Improper And/Or Incorrect
`A.
`Factor 1: stay at this stage is highly improbable
`Apple alleges that because it had not requested a stay, the Board should
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`assume this factor is neutral. Reply at 1. Not so. Apple does not dispute that the
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`district court trial is scheduled to start in less than a month, the Board's institution
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`decision would come after the trial, Judge Gilstrap has never before granted a stay
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`pre-institution, and Apple has not cited any instance where he has granted a stay
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`where review of fewer than all patents at issue was instituted. POPR at 2-4; Reply
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`at 1. Judge Gilstrap recently denied a request to stay a trial because of Covid-19,
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`further demonstrating the unlikeliness of a stay. Ex. 2011.
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`B.
`Factor 3: Apple confounds it with General Plastic factors
`Apple does not dispute any of the facts regarding Fintiv factor 3 presented in
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`POPR. Reply at 1-2; POPR at 6. Since the POPR, the parties have filed
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`oppositions to each other's dispositive and Daubert motions and have agreed to file
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`the associated replies tomorrow. Ex. 2012. That is, even more substantive work
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`has occurred in the district court.
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`Apple argues that because it exercised diligence and allegedly gained no
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`tactical advantage, Fintiv factor 3 weighs in favor of institution. Reply at 1-2. But
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`diligence and tactical advantage are factors addressed under General Plastic.
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`General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357,
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`Paper 19 at 16 (PTAB, Sept. 6, 2017) (precedential). Apple's case law is also not
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`on point: unlike Med-El, where petitioner demonstrated that the ground of petition
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`was only newly known to it a few days before filing the petition, Apple does not
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`dispute that it has known about the particular combination since August 2019. See
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`Ex. 2009; POPR 14. That is, contrary to its representation to the Board, Apple did
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`not search for any new art for the Petition. Reply 1.
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`Moreover, the totality of the circumstance indicates that Apple has gained
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`undue advantage by using POPR as a roadmap to surreptitiously modify its
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`Petition by arguing the merits of its case and even altering the grounds of challenge
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`in the Reply. See Reply at 2, 3-4.
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`C.
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`Factor 4: Notwithstanding Apple's last-minute gamesmanship, the
`Petition and the district court case overlap substantially
`Apple asserts that it has dropped its Harris-based first ground of challenge in
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`the district court and proposes to drop its Sutivong-based second ground of
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`challenge in the Petition. Reply at 2. Apple's claim has no connection to reality
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`and cannot avoid complete overlap between the two proceedings. On the district
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`court side, both Harris and Tan—the primary reference of the first ground—still
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`appears on Apple's formal statutory notice of prior art at issue that it served on July
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`3 (i.e., the very next day after Apple represented to the Board that it had abandoned
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`the Harris-based challenges in the district court action). Ex. 2013-p.5, rows 38-40
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`(Harris & Tan). Both Apple's expert and Patent Owner's expert have opined on
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`and testified regarding the Harris-Tan combination in the district court and Patent
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`Owner has made clear that it intends to present this issue to the jury. Ex. 2014
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`("PanOptis intends to present all of the art Apple has cited as to these patents to the
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`jury and obtain a definitive ruling on validity.").
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`As to Apple's attempt to alter its Petition, the statutory deadline for filing a
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`challenge passed on March 2, 2020. Ex. 2017. There is no statutory authority for
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`a substantive change to a petition after this date. Moreover, under SAS, the Board
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`either has to institute on all grounds of challenges or no grounds at all. Thus, the
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`only path to granting Apple's request that Sutivong be not considered or pursued in
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`this IPR is to deny the Petition in toto. Otherwise, the Board still has to reach a
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`decision on the merits for the Sutivong ground—that is, short of denying the IPR,
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`the Sutivong ground will be at issue in both proceedings (as well as Harris).
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`D.
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`Factor 6: Apple inappropriately used the Reply to supplement its
`Petition after reviewing the POPR
`While the strength of the Petition is one factor in Fintiv, that does not mean
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`it is procedurally appropriate for Apple to use a Reply to modify and supplement
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`its petition. For example, to salvage the fact that none of the references disclosed
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`"sequences generated from the same base sequence and having different cyclic
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`shifts are arranged in an increasing order of the cyclic shifts," (POPR at 25-26),
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`Apple tried to emphasize that such an arrangement would be the "most obvious
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`choice for a POSITA." Reply at 3. Apple, however, does not dispute that much of
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`its reasoning for motivation to combine on Pet. 30-31 is lifted from the '557 patent.
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`See POPR at 38-41. Apple also cites new case law to support this argument and
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`argues for the first time that "Paragraph 25 of Tan discloses multiple . . . cyclic
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`shifts." Reply at 3. The proper place for that argument is in the Petition and not as
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`a supplement to the Petition after it has a chance to review the POPR. See Ex.
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`2016 (arguments on the merits won't be considered unless in Petition or POPR).
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`Apple also realized from the POPR that it did not address why a POSITA
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`would have incorporated Tan's sequence in Harris given the disparate goals of the
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`two. Reply at 3-4. To remedy that, Apple made an attorney argument that
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`"avoiding collision by using more codes requires that the additional codes not
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`mutually interfere." Reply at 4. Apple continued with another attorney argument
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`on why Harris's disclosure that spreading channel codes need not be orthogonal
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`would not affect the outcome of the analysis. Id. Attorney arguments are not
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`evidence and does not create a basis for initiation, but if there was a factual basis to
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`support this assertion, it should have been in the Petition.
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`Apple's next attorney argument is that Patent Owner took inconsistent
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`infringement and invalidity positions. Reply at 4. This is false. Patent Owner
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`only accused Apple's products in which a selected sequence, as opposed to a signal
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`spread by the selected sequence, is transmitted. See Exs. 1045, 1046.
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`Finally, realizing that it has failed to explain why the combination disclosed
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`the last limitation of the independent claims, Apple again tries to provide a stopgap
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`with an attorney argument. Reply at 4. Specifically, the POPR noted, for element
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`1.2, Apple "points to Harris' disclosures regarding partitioning the code groups
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`based on received signal strength . . . ." POPR at 32. For element 1.4, Apple
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`instead contends the partitioning is based on "the current system load," i.e.,
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`something other than the "received signal strength" it alleged for element
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`1.2.Id.Yet Apple "does not explain how or why that varying system load would
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`affect groups based on received signal strength are partitioned or the number of
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`sequences contained in 'each of the plurality of groups.'"Id. at 33.
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`Apple cannot use the POPR as a roadmap to remedy its failure of proof in
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`the Petition. 35 U.S.C. § 314(a) (institution decision is based on "the information
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`presented in the petition . . . and any response filed" and not also on information
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`filed in a reply after petitioner has reviewed the POPR). Tellingly, the Reply does
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`not even assert that Harris's system load change would lead to the claimed
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`limitation for Harris' groups partitioned based on received signal strength. Id.
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`Instead, it faults Patent Owner for only pointing out one example illustrating why
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`Apple's analysis was deficient. Id.
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`E. None of the other factors recited by Apple favors institution
`It is nonsensical for Apple to suggest that because the '557 patent is declared
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`standard essential, there is somehow a heightened public interest to invalidate.
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`Reply at 4. The Congress has not created two classes of patents. Patent Owner
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`also has no plan to drop the '557 patent.
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`There are also ample procedural safeguards for Apple to challenge the '557
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`patent in the district court, including an experienced trial team, availability of
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`vigorous live cross-examination of witnesses, pre-trial and post-trial motions, and a
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`Federal Circuit appeal. Additionally, the one hour trial time that Apple spends on
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`the '557 patent (Reply 5) is as much as or more than the time that it is likely going
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`to get in an oral argument at the PTAB. Thus, Apple's assertion that it can only
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`adequately challenge the validity of the '557 patent in an IPR proceeding is
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`disconnected from reality. Likewise, Apple's argument that a detailed order is
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`unlikely to issue in the district court is again fiction. See Reply 5. The Federal
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`Circuit requires a judge to separately analyze validity, and the opinion of that judge
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`will be scrutinized by the Federal Circuit.
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`Apple also speculates that the district court might delay the case due to
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`COVID19. Apple fails to report that Judge Gilstrap has recently denied a party's
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`request to continue a trial due to COVID19. Ex. 2011.Apple also fails to report
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`that Harrison County where the trial is has a low infection rate, currently below
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`400 total cases. Ex. 2015. Further, evidence cited by Apple—that Judge Gilstrap
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`rejected the parties' proposed September 2020 trial date and picked August 3, 2002
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`instead—showed that he is serious to have the trial occur as scheduled. Reply at 5.
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`Contrary to Apple's speculation, PanOptis will not drop the '557 patent. And
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`the purported "narrowing of issues in the Texas case" on paper is just part of
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`Apple's game and does not reflect reality or the true dispute between the parties.
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`After the extraordinary expense associated with getting the case ready for trial, the
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`idea that Apple would at the eve of trial seek to withdraw obviousness arguments
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`from the district court in a tactical ploy is strongly against the public interest.
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`II. Apple's Challenge To Fintiv Decision Is Improper and Incorrect
`Apple's 3-page criticism of the Board's Fintiv decision exceeds the
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`authorization and is impermissible. At any rate, Fintiv is binding on the Board and
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`if Apple disagrees with it, its recourse is to seek review by the Precedential
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`Opinion Panel.
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`Apple's speculation of possible ill effects flowing from Fintiv is just that,
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`speculation; and those allegations do not even comport with reality. For example,
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`TC Heartland serves as a reasonable check on forum shopping. Years before
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`Fintiv was issued, Apple refused Plaintiffs' arbitration offer and told the Plaintiffs
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`to sue them if they wanted to get senior management's attention. Apple's allegation
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`that patent owners might hide important claims early in district court actions does
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`not make any sense: if a patent owner does that, it risks either being unable to add
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`those claims to the same case or facing a schedule delay. As to Apple's claim that
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`it would be prejudiced by being forced to file IPRs early, that is not an excuse that
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`Apple can make in this case. Apple has been aware of the '557 patent since at least
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`2017, and that would have left Apple with ample time to locate a suitable ground
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`of challenge even by the time of the infringement suit in February 2019.
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`Date: July 9, 2020
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`Respectfully submitted,
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`/Hong Zhong/
` Hong Zhong, /(Reg. No. 66,530)
` IRELL & MANELLA LLP
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`CERTIFICATE OF SERVICE
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`Pursuant to 37 C.F.R. § 42.6, the undersigned certifies that on July 9,
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`2020, a copy of the foregoing documents PATENT OWNER'S SUR-REPLY
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`TO PETITIONER'S REPLY TO PATENT OWNER'S PRELIMINARY
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`RESPONSE and EXHIBITS 2011-2017 were served, by electronic mail, as
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`agreed to by the parties, upon the following:
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`WILMER CUTLER PICKERING HALE AND DORR, LLP
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`Jason D. Kipnis, Reg. No. 40,680
`Jason.Kipnis@wilmerhale.com
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`Mary V. Sooter, Reg. No. 71,022
`Mindy.Sooter@wilmerhale.com
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`David L. Cavanaugh, Reg. No. 36,476
`David.Cavanaugh@wilmerhale.com
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`Ravinder Deol, Reg. No. 62,165
`Ravi.Deol@wilmerhale.com
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`By: /Susan M. Langworthy/
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`Susan M. Langworthy
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