Maxell, Ltd.Download PDFPatent Trials and Appeals BoardDec 15, 2020IPR2020-00199 (P.T.A.B. Dec. 15, 2020) Copy Citation Trials@uspto.gov Paper 21 571-272-7822 Date: December 15, 2020 UNITED STATES PATENT AND TRADEMARK OFFICE ____________ BEFORE THE PATENT TRIAL AND APPEAL BOARD ____________ APPLE INC., Petitioner, v. MAXELL, LTD., Patent Owner. ____________ IPR2020-00199 Patent 6,329,794 B1 ____________ Before MINN CHUNG, KEVIN C. TROCK, and JOHN A. HUDALLA, Administrative Patent Judges. HUDALLA, Administrative Patent Judge. DECISION Denying Patent Owner’s Request for Rehearing 37 C.F.R. § 42.71(d) Apple Inc. (“Petitioner”) filed a Petition (Paper 1, “Pet.”) requesting an inter partes review (“IPR”) of claims 1–3 and 5–14 (“the challenged claims”) of U.S. Patent No. 6,329,794 B1 (Ex. 1001, “the ’794 patent”). Patent Owner, Maxell, Ltd. (“Patent Owner”), filed a Preliminary Response (Paper 6, “Prelim. Resp.”). With our authorization (Paper 7), Petitioner also filed a Reply (Paper 8, “Pet. Reply”) and Patent Owner filed a Sur-Reply IPR2020-00199 Patent 6,329,794 B1 2 (Paper 10, “PO Sur-reply”) addressing whether we should exercise our discretion to deny institution under 35 U.S.C. § 314(a). On June 19, 2020, we entered a Decision on Institution (Paper 11, “Dec.”) that instituted inter partes review on all claims and all grounds presented in the Petition. As part of the Decision, we considered Patent Owner’s arguments (Prelim. Resp. 2–19; PO Sur-reply 1–10) that we should exercise our discretion to deny institution under 35 U.S.C. § 314(a) based on the duplicative nature and advanced stage of the related case styled Maxell, Ltd. v. Apple Inc., No. 5:19-cv-00036 (E.D. Tex. Mar. 15, 2019) (“the underlying litigation”). Dec. 2, 14–23. We based our discretionary denial analysis on the Board’s precedential decision in Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential) (“Fintiv”). After weighing the factors identified in Fintiv, we declined to exercise our discretion under 35 U.S.C. § 314(a) to deny inter partes review. Dec. 23. Patent Owner filed a Request for Rehearing (Paper 13, “Req. Reh’g”) asking us to reconsider our analysis of the Fintiv factors and our decision not to exercise discretion to deny institution.1 For the reasons stated below, we deny the Request for Rehearing. I. ANALYSIS When reconsidering a decision on institution, we review the decision for an abuse of discretion. See 37 C.F.R. § 42.71(c). An abuse of discretion 1 Patent Owner also requested rehearing by the Precedential Opinion Panel (“POP”) to “clarify the date from which Fintiv Factor 4 should be analyzed, namely, the Petition’s filing date.” Req. Reh’g 1. POP denied Patent Owner’s request for review. Paper 20. Notwithstanding, we consider Petitioner’s arguments regarding Fintiv Factor 4 below. IPR2020-00199 Patent 6,329,794 B1 3 may be determined if a decision is based on an erroneous interpretation of law, if a factual finding is not supported by substantial evidence, or if the decision represents an unreasonable judgment in weighing relevant factors. See Star Fruits S.N.C. v. United States, 393 F.3d 1277, 1281 (Fed. Cir. 2005); Arnold P’ship v. Dudas, 362 F.3d 1338, 1340 (Fed. Cir. 2004); In re Gartside, 203 F.3d 1305, 1315–16 (Fed. Cir. 2000). The party requesting rehearing has the burden of showing the decision should be modified, which includes specifically identifying all matters the party believes we misapprehended or overlooked. See 37 C.F.R. § 42.71(d). In our Decision on Institution, we found that Fintiv Factor 4, i.e., overlap between issues raised in the Petition and in the underlying litigation, weighed strongly against exercising our discretion to deny institution. Dec. 18–20. Specifically, we noted that the primary reference for every ground in this case, Hikishima, is not asserted in the underlying litigation. See id. at 18–19 (citing, inter alia, Ex. 1047, 3). We viewed “this difference in prior art as a significant distinction between this case and the underlying litigation.” Id. at 19. In weighing all of the Fintiv factors, we found that the lack of overlap in the issues and Petitioner’s relatively strong preliminary showing of unpatentability outweighed concerns about inefficiency due to the impending trial date and the investment in the underlying litigation, among other things. See id. at 23. We also noted that Petitioner’s unpatentability grounds based on primarily on Hikishima would never be considered if we were to exercise our discretion under 35 U.S.C. § 314(a) to deny institution. Id. Thus, we declined to exercise our discretion to deny inter partes review. Id. IPR2020-00199 Patent 6,329,794 B1 4 Patent Owner contends our weighing of the Fintiv factors— particularly with regard to Factor 4—represents an unreasonable judgment. See Req. Reh’g 3–6. Specifically, Patent Owner argues that we should have considered the overlap only at the time the Petition was filed and that we should not have considered any developments affecting the overlap arising thereafter. See id. at 1–2, 4, 6–9. Patent Owner argues that there was complete overlap in prior art, challenged claims, and grounds at the time the Petition was filed. Id. at 2, 5; see also id. at 7 (timeline chart regarding overlap). Patent Owner also argues that Petitioner “selectively dropped” certain overlapping prior art references when it filed its Final Election of Prior Art in the underlying litigation. Id. at 1–2. Patent Owner notes that this election occurred four months after Petitioner filed the Petition in this case. Id. According to Patent Owner, our consideration of post-filing developments such as these “necessarily leads to gamesmanship, allowing petitioners to assert positions in the district court and the petition and then switch positions when it suits their purpose.” Id. at 1; see also id. at 1–2, 4– 9 (similar arguments). We do not agree with Patent Owner that our analysis of Fintiv Factor 4 must be constrained to the facts as they existed when the Petition was filed. In the Board’s informative Sand Revolution decision, the panel considered and gave weight to a petitioner’s stipulation to withdraw certain prior art references from a related litigation if inter partes review was instituted. Sand Revolution II, LLC v. Cont’l Intermodel Grp.–Trucking LLC, IPR2019-01393, Paper 24 at 11–12 (June 16, 2020) (informative) (“Sand Revolution”). Importantly, the stipulation in Sand Revolution arose long after the Petition was filed. Compare IPR2019-01393, Paper 1, 88 IPR2020-00199 Patent 6,329,794 B1 5 (petition with July 25, 2019, filing date), with IPR2019-01393, Ex. 1015 (stipulation to withdraw prior art dated April 13, 2020). Just as in Sand Revolution, our consideration of post-filing developments here (i.e., Petitioner’s Final Election of Prior Art in the underlying litigation) is consistent with the policy considerations underlying Factor 4 in Fintiv, namely, “concerns of inefficiency and the possibility of conflicting decisions.” Fintiv at 12. Thus, we do not agree with Patent Owner that it was unreasonable for us to consider Petitioner’s post-filing election of prior art, which greatly diminished the overlap between the underlying litigation and this case. Patent Owner also argues we improperly “placed emphasis on Factor 4 when there was overlap present in the prior art grounds presented by [Petitioner] here and in the District Court.” Req. Reh’g 2; see also id. at 5 (same argument). Patent Owner argues there is still overlap between this case and the underlying litigation in prior art and claims. Id. at 2, 5. Nevertheless, we expressly considered the overlap in two secondary prior art references, Tagoshi and Flynn, but we found them to “play minor roles in this case.” Dec. 19. Although Patent Owner contends we “misapprehended and discounted this overlap” in a way that is not suggested by Fintiv (Req. Reh’g 13), the fact that these references play minor roles when combined with Hikishima directly leads to “materially different grounds [and] arguments,” which favors institution.2 Fintiv at 12–13. We also expressly 2 Moreover, contrary to Patent Owner’s argument (PO Sur-reply 9; Req. Reh’g 14), Petitioner’s boilerplate reservation of rights regarding asserted prior art in the underlying litigation (see Ex. 1047, 2) has no impact on our analysis. IPR2020-00199 Patent 6,329,794 B1 6 considered the overlap in claims. See Dec. 18 (“Petitioner notes that only claims 1 and 14 are challenged in the underlying litigation, which is a subset of the 13 claims challenged here.”), 20 (“[C]laims claims 2, 3, and 5–13 are being challenged here, but not in the underlying litigation . . . .”). Patent Owner merely expresses its disagreement with our weighing of these facts with others as strongly favoring institution and does not state any persuasive reason why our judgment was unreasonable based on these facts. And, contrary to Patent Owner’s contentions (Req. Reh’g 5), our Decision did not “require[] complete overlap in claims and prior art in its analysis of Factor 4” in order for this factor to favor denial of institution. No such statement appears in our Decision. Patent Owner also argues that Petitioner “failed to articulate a reason why it would be harmed” with respect to claims 2, 3, and 5–13, which are not challenged in the underlying litigation, if we were to deny institution here. See Req. Reh’g 2 (citing Next Caller v. TRUSTID, IPR2019-00961, Paper 10 at 14 (PTAB Oct. 14, 2019)), 6. Nevertheless, we are not aware of a requirement to show harm in this instance. Instead, we reasonably considered that eleven of thirteen asserted claims are absent in the underlying litigation (Dec. 20), which necessarily impacts how much overlap there is in the two proceedings. Correspondingly, Petitioner noted “the user ability to set up usage priorities recited in claims 5 and 11 and the pre-set values for usage priorities of claims 6 and 12,” are “non-overlapping, notable limitations.” Pet. Reply 10. As such, we reasonably considered the lack of overlap in the asserted claims here as one factor (among many) that impacted our Factor 4 analysis. IPR2020-00199 Patent 6,329,794 B1 7 Patent Owner also alleges error in our analysis of other Fintiv factors. Req. Reh’g 9–12, 14–15. Regarding Factor 3, investment in the underlying litigation, Patent Owner argues that we “significantly discounted the time and effort the Court and the Parties have invested in the underlying litigation.” Id. at 10. In particular, Patent Owner contends we were wrong to discount this factor based on “the fact that Petitioner’s unpatentability challenges here do not overlap significantly with Petitioner’s invalidity contentions in the underlying litigation.” Id. at 10–11 (quoting Dec. 18). Patent Owner emphasizes that there was overlap prior to Petitioner’s election of prior art in the underlying litigation. Id. at 11. Patent Owner also argues that “the Court issued substantive orders related to the ’794 Patent.” Id. As such, Patent Owner contends we should weigh Factor 3 as strongly, rather than moderately, favoring denial. Id. Nevertheless, we consider whether the alleged investment in the underlying litigation is tethered to the merits of the parties’ validity positions in that litigation and, by extension, their patentability positions here. See Sand Revolution at 10–11. We credited the investment in claim construction and expert discovery to the extent they “may have relevance to issues in the Petition,” but noted that such relevance was diminished by the lack of overlap between Petitioner’s invalidity contentions in the underlying litigation and unpatentability contentions here. Dec. 18. This reasonably reflects the fact that most of the investment after Petitioner’s election of prior art would not have been relevant to issues here, because Petitioner no longer asserted the primary reference here, Hikishima. And Patent Owner acknowledges that this factor should be evaluated “at the time of the institution decision” (Req. Reh’g 11 (quoting Fintiv at 9–10)), by which time IPR2020-00199 Patent 6,329,794 B1 8 Petitioner had finalized its prior art elections in the underlying litigation. We also noted that it was unclear how “the court’s rulings on the motion to dismiss or the motion to transfer bear on the patentability issues presented here.” Dec. 18. This was appropriate, because not all orders touted by Patent Owner (see PO Sur-reply 5) were “substantive orders related to the ’794 Patent.” Thus, given these circumstances, we do not agree that it was unreasonable to find that Factor 3 moderately, rather than strongly, favored denial. Regarding Factor 5, we quoted language from Fintiv: “If a petitioner is unrelated to a defendant in an earlier court proceeding, the Board has weighed this fact against exercising discretion.” Dec. 20 (quoting Fintiv at 13–14). We noted that Petitioner here is the defendant in the underlying litigation, so we found that Factor 5 does not weigh against exercising discretionary denial. Id. Patent Owner contends we should have found this factor to favor denial. Req. Reh’g 11–12. We disagree. We applied the direct language of Fintiv. Nonetheless, for added clarity, we view Factor 5 as neutral under the particular facts and circumstances of this case because the overlap between the claims and grounds here and in the underlying litigation is minimal, especially given that Hikishima is not asserted in the underlying litigation, as discussed above.3 3 In our view, our treatment of Factor 5 as neutral in this case due to the lack of overlap of issues with the underlying litigation is not inconsistent with other Board decisions viewing Factor 5 as favoring denial when issues overlap with the related district court litigation. See, e.g., Apple Inc. v. Maxell, Ltd., IPR2020-00203, Paper 12 at 16 (PTAB July 6, 2020) (determining that Factor 5 favors the exercise of discretionary denial when “the trial court may reach the overlapping issues before the Board would in a final written decision” (emphasis added)). IPR2020-00199 Patent 6,329,794 B1 9 Patent Owner additionally argues that we “improperly discounted [Petitioner’s] extreme delay in filing its Petition.” Req. Reh’g 14; see also id. at 10–11. According to Patent Owner, Petitioner had already drafted invalidity contentions for all of the asserted claims here four months before the filing date of the Petition. Id. (citing Ex. 2003). Patent Owner also argues that Petitioner does not explain why “work being done in the District Court Action by a completely different law firm and experts had any bearing on delays in its filing of the IPR Petition.” Id. at 14–15. Nevertheless, Fintiv recognizes “that it is often reasonable for a petitioner to wait to file its petition until it learns which claims are being asserted against it in the parallel proceeding.” Fintiv at 11. As stated in our Decision, this is consistent with the legislative history of the America Invents Act (“AIA”) as to the one-year statutory bar under § 315(b), particularly with respect to complex underlying litigation. Dec. 21 (citing 157 Cong. Rec. S5429 (daily ed. Sept. 8, 2011) (statement of Senator Kyl)). Our Decision credited Petitioner’s arguments about Patent Owner’s initial assertion of 10 different patents and 132 claims in the underlying litigation as a reason why it took nine months for Petitioner to file its Petition here. Dec. 21–22. We also noted that Petitioner filed its Petition only one month after Patent Owner made a preliminary election of asserted claims in the underlying litigation. Id. In light of this, and considering the multiple patents and numerous claims in the underlying litigation, we did not find Petitioner’s filing to be untimely. Id. at 22. The fact that multiple law firms and experts were involved does not negate the complexity of the underlying litigation. And, even if Petitioner had prepared invalidity charts earlier, Fintiv and the AIA’s legislative history recognize why Petitioner reasonably IPR2020-00199 Patent 6,329,794 B1 10 may have waited to file here until after Patent Owner identified its asserted claims. Thus, we did not render an unreasonable judgment regarding the time of Petitioner’s filing. Patent Owner also disputes the manner in which we collectively weighed all of the Fintiv factors. See Req. Reh’g 9, 12. In particular, Patent Owner contends we placed undue weight on Factor 4. Id. at 9. Patent Owner also contends we should have weighed Factor 2 more than others based on the following statement from Fintiv: “[I]f the court[’s trial] date is at [or] around the same time [as the projected statutory deadline] or [even] significantly after the [projected] statutory deadline, the decision whether to institute will likely implicate other factors discussed herein . . . .” Id. at 12 (quoting Fintiv at 9) (emphasis added by Patent Owner). As stated above, however, the Board’s informative Sand Revolution decision supports our rationale for crediting Petitioner’s post-filing election not to pursue certain prior art in the underlying litigation. Regarding Factor 2, we do not interpret the quote from Fintiv as suggesting that Factor 2 should be given more weight. Rather, it recognizes how other Fintiv factors likely come into play when a trial in related litigation is on a similar or slower timeline. And we credited the trial date in the underlying litigation as supporting the exercise of discretionary denial. Dec. 17, 23. Moreover, in our conclusion, we weighed these factors against each other per the guidance provided in Fintiv. Dec. 23; see Fintiv at 6 (“[I]n evaluating the factors, the Board takes a holistic view of whether efficiency and integrity of the [patent] system are best served by denying or instituting review.”). Given that we reasonably accounted for the various factors, we do not agree with Patent Owner that we failed to conduct a balanced assessment of all relevant circumstances. IPR2020-00199 Patent 6,329,794 B1 11 II. CONCLUSION For the reasons above, we conclude that Patent Owner has not met its burden of showing that we abused our discretion in evaluating and weighing the Fintiv factors as part of our decision not to exercise discretion under 35 U.S.C. § 314(a) to deny inter partes review. Therefore, we deny Patent Owner’s requests to reweigh the Fintiv factors and to exercise our discretion to deny institution in this proceeding. III. ORDER Accordingly, it is ORDERED that Patent Owner’s Request for Rehearing is denied. IPR2020-00199 Patent 6,329,794 B1 12 PETITIONER: Jennifer C. Bailey Adam P. Seitz Paul R. Hart jennifer.bailey@eriseip.com adam.seitz@eriseip.com paul.hart@eriseip.com PATENT OWNER: Robert G. Pluta Amanda S. Bonner Luiz Miranda James A. Fussell William J. Barrow Saqib J. Siddiqui rpluta@mayerbrown.com asbonner@mayerbrown.com lmiranda@mayerbrown.com jfussell@mayerbrown.com wbarrow@mayerbrown.com ssiddiqui@mayerbrown.com Copy with citationCopy as parenthetical citation