Maxell, Ltd.

Patent Trials and Appeals Board

Dec 15, 2020

IPR2020-00199 (P.T.A.B. Dec. 15, 2020)

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
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(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.
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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.
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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
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(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.
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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.
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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
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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)).
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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
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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.
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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.
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Patent 6,329,794 B1
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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