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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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`FITBIT, INC.,
`Petitioner
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`v.
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`PHILIPS NORTH AMERICA LLC
`Patent Owner
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`Case No. IPR2020-00783
`Patent No. 7,088,233
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`PETITIONER’S REPLY TO PATENT OWNER’S PRELIMINARY
`RESPONSE
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`Relying on NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-00752,
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`Paper 8 (Sept. 12, 2018) (“NHK”) and Apple Inc. v. Fintiv, Inc., IPR2020-00019,
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`Paper 11 (Mar. 20, 2020) (“Fintiv”), Patent Owner (“PO”) urges denial of
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`institution based on district court proceedings involving U.S. Patent 7,088,233
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`(“’233 patent”). But, Fintiv and NHK are inapplicable as there is no trial set in the
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`related district court proceeding here. And, even if these cases apply, the Fintiv
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`factors favor institution.
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`I.
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`NHK AND FINTIV ARE INAPPLICABLE TO THIS PROCEEDING
`As PO acknowledged, a key fact raising the question of discretionary denial
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`in both NHK and Fintiv was that the district court “trial [was] set to take place
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`months before any final written decision would issue.”1 Paper 6 (“POPR”) at 14-15
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`(citing NHK at 20). In fact, in Fintiv, the district court’s scheduling of a trial date
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`was the fact that led to the Board ordering supplemental briefing on the issue of
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`discretionary denial. In Fintiv, the Board explained “[a]lthough Petitioner
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`addressed the [discretionary denial] issue briefly in the Petition, at that time no
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`trial date had been set.” Fintiv at 2. Only after the district court then set a trial date
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`did the Board order supplemental briefing on discretionary denial “[i]n light of the
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`apparent change in status of the parallel proceeding.” Id
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`1 All emphasis added unless otherwise noted.
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`1
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`Unlike NHK and Fintiv, no trial date has been set in the Fitbit district court
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`proceeding (“Fitbit litigation,” Paper 1 at 1). As a result, PO asks for discretionary
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`denial of Fitbit’s petition based on the trial date of a different party sued by Philips
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`in a different venue; namely, the trial date set in Philips’ district court proceeding
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`against Garmin. POPR at 16-17. The Fitbit and Garmin district court proceedings
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`are distinct, unconsolidated, and in different venues. PO provides no grounds for
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`discretionary denial of Fitbit’s petition, based on Garmin’s district court schedule.
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`In the Fitbit district court proceeding, a trial date has not been set, and therefore
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`Fintiv is inapplicable.
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`II. THE FINTIV FACTORS FAVOR INSTITUTION
`Even if the Board determines that, despite there being no trial date set in the
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`Fitbit litigation, Fintiv applies, each of the six factors favor institution.
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`A. Fintiv factor 1: Strong evidence shows that a stay will be granted
`if IPR is instituted
`PO argues Fintiv factor one favors denial because a stay has not yet been
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`granted in district court. POPR at 16. While at first blush, and at a minimum, this
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`factor is at least neutral because no stay motion has yet been filed in the Fitbit
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`litigation, further details demonstrate that this factor favors institution. Namely, in
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`an effort to conserve resources for the court and parties in the Fitbit litigation,
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`Fitbit has not yet sought a stay because of the court’s known practice to deny stays
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`before IPR institution. Exs. 1068-69. Conversely, the court typically grants stays
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`2
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`upon institution, even in instances where not all patents are challenged in IPRs.2
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`Exs. 1043-45. Thus, upon institution, Fitbit will immediately file a stay motion in
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`district court. This district court has granted stays even at later litigation stages.
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`Exs. 1043, 1046 (district court granted stay 2.5 years after complaint was filed).
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`Accordingly, this factor favors institution.
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`B.
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`Fintiv factor 2: The district court has not set a trial date, so there
`is no evidence of proximity to the Board’s deadline to issue a final
`written decision
`Fintiv factor two examines the district court’s trial date in relation to the
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`Board’s projected statutory deadline for a final written decision. Fintiv at 6. Fitbit’s
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`litigation has no trial date. Nonetheless, PO attempts to tip the scale for this factor
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`by relying on a Garmin trial date and a guess of Fitbit’s “likely” trial date. POPR at
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`16-17. Neither supports discretionary denial of Fitbit’s petition. First, even if
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`Garmin’s trial date is considered relevant, the likelihood that the Garmin district
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`court proceeding will go to trial before the PTAB’s projected final written decision
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`is low. The Central District of California where the Garmin case resides has
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`recently “indefinitely postponed all jury trials.” Ex. 1047. The Board has
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`2 Fitbit has filed IPR challenges against all of PO’s asserted patents asserted in the
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`Fitbit litigation except U.S. Patent No. 6,013,007, which is subject to a pending
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`motion for partial summary judgment of invalidity. Ex. 1070 at 6, 7.
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`3
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`considered such COVID-19 delays in weighing the Fintiv factors. Apple Inc. v.
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`Maxell, Ltd., IPR2020-00204, Paper 11 at 14 (PTAB June 19, 2020).
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`Second, PO’s speculation as to when the Fitbit litigation may go to trial fails
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`to take into account the historical scheduling practice of that court, which points to
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`a trial date being set long after the Board’s projected deadline to issue a final
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`written decision in October 2021. Metrics show that the court’s average time to
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`trial in civil cases is approximately 36 months. Ex. 1048 at 1. Given that Philips’
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`complaint was served on October 2, 2019, the correct estimate for a “likely” trial
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`date is October 2022—a year after the Board’s projected October 2021 deadline to
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`issue a final written decision. Indeed, the district court where the Fitbit action
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`resides has six currently pending patent cases on its docket that were filed before
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`Philips’ complaint and none currently have a trial date set. Ex. 1049-56. The most
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`recent scheduling order issued in one of these pending cases (dating back to March
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`2017) did not set a trial date. Ex. 1050. Thus, PO’s speculation is both irrelevant
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`and inaccurate, and cannot support discretionary denial here.
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`C. Fintiv factor 3: Investment in the district court proceeding has
`been minimal, and Fitbit expeditiously filed its petition
`Fintiv factor three considers the parties’ and court’s investment in the district
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`court proceedings. Fintiv at 6. The parties’ and court’s investment in the Fitbit
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`litigation have been minimal due to delays in the case thus far. Philips filed suit on
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`July 22, 2019 but delayed service until October 2, 2019. Exs. 1058, 1070 at 3.
`4
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`Moreover, Philips filed an amended complaint on November 27, 2019, which is
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`subject to Fitbit’s December 10, 2019 renewed motion to dismiss that has not yet
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`been decided by the court. Ex. 1070 at 4, 5. Accordingly, Fitbit has not yet
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`answered and asserted affirmative defenses or counterclaims. Further, the district
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`court imposed a hybrid stay on most discovery, which was only lifted on March
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`24, 2020. Exs. 1062 at 25-26; Ex. 1063 at 17. PO’s argument that claim
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`construction is complete is not completely accurate. PO fails to inform the Board
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`that the court’s scheduling order allowed for initial briefing of a maximum of ten
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`terms. Ex. 1071 at 2. Denying Fitbit’s request to construe additional terms, the
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`district court established a procedure for a second round to construe additional
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`terms. Ex. 1064. Thus, claim construction will not be not complete even after the
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`court eventually rules on the first round of terms. Moreover, “the most burdensome
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`parts of the case—filing and responding to pretrial motions, preparing for trial,
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`going through the trial process, and engaging in post-trial motions practice—all lie
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`in the future.” Cywee Grp. Ltd. v. Samsung Elecs. Co., 2019 U.S. Dist. LEXIS
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`144149, *20 (E.D. Tex. Feb. 14, 2019). And, Fitbit’s diligence in pursuing its IPR
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`challenge only a few months after finally learning of Philips’ asserted claims in the
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`Fitbit litigation weighs in favor of institution under this factor. Fintiv at 11.3
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`3 Philips identified its asserted claims on January 31, 2020 and Fitbit filed its
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`5
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`D. Fintiv factor 4: Fitbit’s conditional waiver will prevent duplicative
`litigation on instituted grounds
`To avoid any doubt as to the benefit of instituting trial here, Fitbit stipulates
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`that it will not pursue, in district court, invalidity of the ’233 patent based on any
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`instituted IPR ground. Apple, IPR2020-00204, Paper 11 at 16-17. There is thus no
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`overlap that warrants non-institution under this factor. That this conditional
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`stipulation is not yet formally submitted in the Fitbit litigation is of no moment
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`given Fitbit is bound by its representation here.
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`E.
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`Fintiv factor 5: Petitioner is not a party to the Garmin district
`court litigation
`While Fitbit cannot control who Philips targets in its litigious campaign, the
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`Board should ignore Philips’ attempt to lump the Garmin litigation with Fitbit.
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`Indeed, Philips offers no legal support for doing so. POPR at 19.
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`F.
`Fintiv factor 6: Other circumstances support institution
`There
`is a significant public
`interest against “leaving bad patents
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`enforceable.” Thryv, Inc. v. Click-To-Call Techs., LP, 140 S. Ct. 1367, 1374
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`(2020). The strength of the Petition is highlighted by the details demonstrating the
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`invalidity of the challenged claims in the ’233 patent. See e.g., Paper 1 at § X.
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`Nothing in the POPR weakens those grounds. Indeed, PO’s attack of the Petition
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`depends on adoption of its proposed claim construction that conflicts with the
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`petition promptly thereafter on April 8. Ex. 1065.
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`6
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`claim language and specification of the ’233 patent. For example, PO’s position
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`that both Jacobsen and Say (Petitioner’s primary references) fail to disclose the
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`claimed “security mechanism” is premised on PO’s view that the related
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`“governing information” phrase “require[s] more than mere encryption.” POPR at
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`2. But PO does not explain how encryption does not “govern”—the language used
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`in claim 1—the information transmitted between the claimed devices or reconcile
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`its position with the requirement in claim 2, which states that “the security
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`mechanism encrypts the information” (Ex. 1001, claim 2), the specification’s
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`recital of “encryption” as one possible embodiment of “security” “of the present
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`invention” (id., 13:24-26, 13:43-46), or PO’s expert admissions that the claimed
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`“security mechanism” may comprise merely encryption. Ex. 1066, 17:10-17,
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`131:6-12, 132:5-12, 132:25-133:4 (“It could only be encryption”). PO thus seeks
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`discretionary denial by introducing unclaimed features to the claims in an attempt
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`to distinguish the prior art, which in any event, are issues that should be decided
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`during trial where Petitioner will have a fair opportunity to fully challenge PO’s
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`proposed construction-based arguments. PO’s litigious behavior strengthens the
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`public interest in ensuring review of the ’233 patent, especially given that Fitbit’s
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`Petition (and Garmin’s later filed copycat petition) are the sole IPR challenges to
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`the ’233 patent; a “crucial fact” weighing in favor of institution. Google LLC v.
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`Uniloc, 2017 LLC, IPR2020-00115, Paper 10 at 6 (May 12, 2020).
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`7
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`Dated: August 28, 2020
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`Respectfully submitted,
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`By: /Yar R. Chaikovsky/
` Yar R. Chaikovsky (Reg. No. 39,625)
` Counsel for Petitioner
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`8
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`CERTIFICATE OF SERVICE
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`I hereby certify that on August 28, 2020, I caused a true and correct copy of
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`the foregoing Petitioner’s Reply to Patent Owner’s Preliminary Response to be
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`served electronically on counsel for Patent Owner at the following addresses:
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`George C. Beck (GBeck@foley.com)
`Eley O. Thompson (EThompson@foley.com)
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`PhilipsIPRs@foley.com
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`By: /Yar R. Chaikovsky/
` Yar R. Chaikovsky (Reg. No. 39,625)
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