ZTE CORPORATION AND ZTE (USA) INC.v.CONTENTGUARD HOLDINGS INC.

Patent Trial and Appeal Board

Sep 25, 2013

10015951 (P.T.A.B. Sep. 25, 2013)

Trials@uspto.gov Paper 12
571-272-7822 Entered: September 25, 2013

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

ZTE CORPORATION AND ZTE (USA) INC.
Petitioners

v.

CONTENTGUARD HOLDINGS INC.
Patent Owner
____________

Case IPR2013-00454
Patent 7,225,160

Before JAMESON LEE, MICHAEL W. KIM, and MICHAEL R. ZECHER,
Administrative Patent Judges.

KIM, Administrative Patent Judge.

DECISION
Institution of Inter Partes Review
37 C.F.R. § 42.108
Case IPR2013-00454
Patent 7,225,160

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Introduction
ZTE Corporation and ZTE (USA) Inc. (“ZTE”) filed a petition (Paper
2) (“Pet.”) to institute an inter partes review of claims 1-11 and 23-29 of
Patent 7,225,160 (“the ’160 patent”) pursuant to 35 U.S.C. § 311 et seq. and
a motion for joinder with Case IPR2013-00134. Paper 4. Patent Owner
ContentGuard Holdings, Inc. (“ContentGuard”) has not yet filed a
preliminary response to the petition. We have jurisdiction under 35 U.S.C.
§ 314. For the reasons that follow, the Board does not institute an inter
partes review.1
I. BACKGROUND
A. Related Matter
Case IPR2013-00134
On February 11, 2013, ZTE filed a petition in IPR2013-00134 to
institute an inter partes review of claims 1-38 of the ’160 patent, asserting
ten grounds of unpatentability. IPR2013-00134, Paper 3. On June 19, 2013,
the Board granted the petition and instituted an inter partes review of claims
12-22 and 30-38 of the ’160 patent. IPR2013-00134, Paper 12 at 32-33.
Patent Owner filed a Request for Adverse Judgment in IPR2013-00134,
Paper 28. The Board granted Patent Owner’s request and entered judgment
against Patent Owner on August 6, 2013. IPR2013-00134, Paper 34. ZTE
did not file a request for rehearing.

1 In a decision entered concurrently, Petitioners’ motion for joinder with
Case IPR2013-00134 is denied.
Case IPR2013-00454
Patent 7,225,160

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B. The ’160 Patent (Ex. 1001)
The ’160 patent, titled “Digital Works Having Usage Rights and
Method for Creating the Same,” issued on May 29, 2007, based on
Application 10/015,951, filed Dec. 17, 2001, which claims priority to
Application 08/344,760, filed Nov. 23, 1994.

C. The Prior Art
ZTE relies on the following prior art:
Hartrick EP 0 567 800 A1 Nov. 3, 1993 Ex. 1011
(hereinafter “EP ’800”)
Wyman US 5,260,999 Nov. 9, 1993 Ex. 1013
Porter US 5,263,160 Nov. 16, 1993 Ex. 1014
O’Callaghan US 5,477,263 Dec. 19, 1995 Ex. 1016
Henry H. Perritt, Jr., “Knowbots, Permissions Headers and Contract
Law,” Paper for the Conference on Technological Strategies for
Protecting Intellectual Property in the Networked Multimedia
Environment (Apr. 30, 1993) (retrieved from
http://archive.ifla.org/documents/infopol/copyright/perh2.txt on Jan.
4, 2013) (Ex. 1006) (hereinafter “Perritt”).
Admitted Prior Art—During the original prosecution, the Examiner
rejected dependent claim 8 (now dependent claim 5) because “mark-
up prices‟ are old and well known to those of ordinary skill in retail.”
Ex. 1002-001347 (Non-Final Rejection dated July 27, 2004, p. 4).
Patent Owner did not traverse the Examiner’s position that “mark-up
prices” are common knowledge in the retail art. As such, the
Examiner’s statement regarding “mark-up prices” is taken to be
admitted prior art.
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D. The Asserted Grounds
Petitioners challenge claims 1-11 and 23-29 of the ’160 patent on the
following grounds:

Reference(s) Basis Claims Challenged
EP ’800 § 102(b) 1-3, 8, 9, and 23
EP ’800 and O’Callaghan § 103(a) 1-3, 8, 9, and 23
EP ’800 and Perritt § 103(a) 2-4, 6, 7, 25, and 26
EP ’800, O’Callaghan, and
Perritt § 103(a)
2-4, 6, 7, 25,
and 26
EP ’800 and Wyman § 103(a) 2, 10, and 24-28
EP ’800, O’Callaghan, and
Wyman § 103(a)
2, 10, and 24-
28
EP ’800, Perritt, and
Admitted Prior Art § 103(a) 5
EP ’800, O’Callaghan,
Perritt, and Admitted
Prior Art
§ 103(a) 5
EP ’800 and Porter § 103(a) 11 and 29
EP ’800, O’Callaghan, and
Porter § 103(a) 11 and 29
II. ANALYSIS
After considering the petition and all papers concerning joinder, we
do not institute an inter partes review in this case. In determining whether
to institute an inter partes review, the Board may “deny some or all grounds
for unpatentability for some or all of the challenged claims.” 37 C.F.R.
§ 42.108(b); see 35 U.S.C. § 314(a). Furthermore, 35 U.S.C. § 325(d) reads
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as follows (emphasis added):
MULTIPLE PROCEEDINGS.—Notwithstanding sections
135(a), 251, and 252, and chapter 30, during the pendency of
any post- grant review under this chapter, if another proceeding
or matter involving the patent is before the Office, the Director
may determine the manner in which the post-grant review or
other proceeding or matter may proceed, including providing
for the stay, transfer, consolidation, or termination of any such
matter or proceeding. In determining whether to institute or
order a proceeding under this chapter, chapter 30, or
chapter 31, the Director may take into account whether,
and reject the petition or request because, the same or
substantially the same prior art or arguments previously
were presented to the Office.
In denying ZTE’s petition, we have considered: (1) that ZTE already
had filed timely a petition for inter partes review of claims 1-11 and 23-29
of the ’160 patent in IPR2013-00134 and failed to have inter partes review
instituted on those claims; (2) that ZTE’s petition in this case was filed
outside of the one-year period provided in 35 U.S.C. § 315(b) for petitions
filed in the absence of a motion for joinder under 35 U.S.C. § 315(c); (3)
that ZTE’s motion for joinder filed with the instant petition has been denied;
and (4) that ZTE’s petition in this case presents the same or substantially the
same prior art or arguments previously presented in the petition for
IPR2013-00134.
This petition to institute an inter partes review, having attendant to it
the facts described above, stands on weak footing; specifically, we note that
ZTE did not file the petition within the one-year period provided in 35
U.S.C. § 315(b) for a petition that is not accompanied by a joinder motion,
and the motion for joinder accompanying the petition for inter partes review
that ZTE filed outside the one year window has been denied. The Board is
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concerned about encouraging, unnecessarily, the filing of petitions which are
partially inadequate. A decision to institute review on some claims should
not act as an entry ticket, and a how-to guide, for the same Petitioner who
filed an unsuccessful joinder motion, and is outside of the one-year statutory
period, for filing a second petition to challenge those claims which it
unsuccessfully challenged in the first petition.
Nor is the concern regarding an improper, second attempt for the
Petitioner, which second attempt would result from a grant of the joinder
motion, be ameliorated in view of the possibility that the issues presented by
the second petition would be similar to those already presented in the pre-
existing proceeding. In this instance, there no longer is a pre-existing
proceeding. The joinder motion has been denied, and the first proceeding
has terminated. Thus, all of the issues in the new petition are not in common
with a pending proceeding to which a new inter partes review would be
joined.
Without any extraordinary circumstance, it would be unjust and
inequitable to subject the Patent Owner to a new challenge by a Petitioner
who unsuccessfully had attempted to institute inter partes review on the
claims in a previous petition, if the second petition is not itself filed within
the one-year period provided in 35 U.S.C. § 315(b) and if a joinder motion
has been denied. ZTE has not shown any such extraordinary circumstance.
ZTE asserts that because the current petition involves the same
parties, same panel of judges, and many of the same issues as IPR2013-
00134, any trial instituted on the basis of the current petition can have an
accelerated schedule, weighing in favor of granting the current petition. The
assertion is no longer true as IPR2013-00134 has terminated. The assertion
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also ignores the burden and inequity on the Patent Owner if it is forced to
defend the same claims twice from attack by the same Petitioner,
notwithstanding that the second petition is filed outside of the one-year
window of 35 U.S.C. § 315(b) and that the joinder motion has been denied.
Indeed, by ZTE’s own assertion, the petition in this case presents many of
the same issues previously presented in the petition for IPR2013-00134. In
particular, ZTE asserts the following:
Specifically, half of the grounds of invalidity presented in the
Second Petition (grounds 1, 3, 5, 7, 9) are based on the same
prior art references as presented in the First Petition. The
remaining grounds of invalidity presented in the Second
Petition (grounds 2, 4, 6, 8, 10) simply combine O’Callaghan to
prior art references previously presented in the First Petition.
Paper 11 at p. 8. Those facts present a scenario disfavored by the portion of
35 U.S.C. § 325(d) cited above.
ZTE also asserts that resorting to district court litigation or initiating a
new proceeding elsewhere would be inefficient and costly to ZTE, especially
if the claims challenged in the current petition are indeed unpatentable.
Thus, ZTE asserts that granting the petition offers the most just, speedy, and
cost effective resolution pursuant to 37 C.F.R. § 42.1(b). However, the
arguments are misplaced, because 37 C.F.R. § 42.1(b) pertains to the just,
speedy, and inexpensive resolution of proceedings before the Patent Trial
and Appeal Board, and not to the just, speedy, and inexpensive resolution of
the parties’ disputes generally. In any event, the Board determines that
under the circumstances of this case, declining to institute inter partes
review achieves a just and appropriate result.
Therefore, based on the record before us and exercising our discretion
under 35 U.S.C. §§ 314(a), 325(d) and 37 C.F.R. § 42.108(b), we decline to
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institute an inter partes review in the instant proceeding.
III. ORDER
In consideration of the foregoing, it is hereby:
ORDERED that the Petition is denied as to all challenged claims of
the ’160 patent.

Case IPR2013-00454
Patent 7,225,160

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PETITIONERS:

Jon H. Beaupre
Miyoung Shin
David H. Bluestone
Rickard Demille
Peter Lee
Lawrence Chen
BRINKS HOFER GILSON AND LIONE
jbeaupre@brinkshofer.com
mshin@brinkshofer.com
dbluestone@brinkshofer.com
rdemille@brinkshofer.com
plee@brinkshofer.com
lchen@brinkshofer.com

PATENT OWNER:
Robert Greene Sterne
Jon E. Wright
Jason Eisenberg
STERNE, KESSLER, GOLDSTEIN & FOX P.L.L.C
rsterne-PTAB@skgf.com
jwright-PTAB@skgf.com
jasone-PTAB@skgf.com