UNITED STATES PATENT AND TRADEMARK OFFICE
`
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`_______________
`
`TICKET NETWORK INC.
`
`Petitioner
`
`v.
`
`CEATS INC.
`
`Patent Owner
`
`_______________
`
`
`
`Case CBM2018-00004
`
`Patent No. 8,229,774
`
`_______________
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`UNDER 37 C.F.R. § 42.107
`
`(Filed under seal)
`
`Mail Stop PATENT BOARD, PTAB
`Commissioner for Patents
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`

`

`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`TABLE OF CONTENTS
`
`I.
`
`INTRODUCTION ................................................................................................. 1
`
`II. SUMMARY OF WHY THE PETITION SHOULD BE DENIED ...................... 1
`
`A. The Petition Should Be Denied For Lack Of Standing Under 37 C.F.R. §
`42.304(a) and § 42.302(a) ..................................................................................... 1
`
`III. STATEMENT OF FACTS ................................................................................... 2
`
`A. TicketNetwork’s Business..................................................................................... 2
`
`B. CEATS’ Patents .................................................................................................... 4
`
`C. CEATS 2012 Infringment Action ......................................................................... 6
`
`D. Settlement and License Agreement ....................................................................... 6
`
`E. TicketNetwork’s Attempt to Terminate the License Agreement .......................... 8
`
`F. TicketNetwork’s Lawsuit Against CEATS for Declaratory Relief to Invalidate
`22 of CEATS’s Patents and an Order Declaring Termination of License
`Agreement ............................................................................................................. 9
`
`G. CEATS’s CounterClaim Against TicketNetwork for Breach of the License
`Agreement ............................................................................................................. 9
`
`H. TicketNetwork’s Dismissal of the Declaratory Relief Action ............................10
`
`I. CEATS’s Jury Verdict Against TicketNetwork Finding Breach of the License
`Agreement ...........................................................................................................10
`
`J. CEATS Proffer of a Covenant Not To Sue to TicketNetwork ...........................11
`
`IV. THE PETITION SHOULD BE DENIED DUE TO PETITIONER’S LACK OF
`STANDING.........................................................................................................12
`
`A. Petitioner Lacks Standing Because Patent Owner Has Not Sued Or Charged
`Petitioner With Patent Infringement ...................................................................12
`
`V. CONCLUSION ...................................................................................................17
`
`
`
`
`
`
`
`
`ii
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`TABLE OF AUTHORITIES
`
`Case Law
`
`Page
`
`
`Medimmune, Inc. v. Genetech, Inc.
`
`549 US 188, 127 n.7 (2007)…………………………………12, 13, 14
`
`Danisco US Inc. v. NOVOZYMES A/S,
`
`744 F. 3d 1325
`
`Court of Appeals, Federal Circuit (2014)………………………..14
`
`Sasol North America, Incorporated v. GTLpetrol, LLC,
`
`No. 16-20122
`
`2017 U.S. App. LEXIS 5107
`
`Court of Appeals, 5th Circuit 2017…………………………..14, 15
`
`Vantage Trailers, Inc. v. Beall Corp.
`
`567 F. 3d 745
`
`Court of Appeals, 5th Circuit 2009……………………………….15
`
`Already, LLC v. Nike, Inc.
`
`133 S. Ct. 721………………………………………………..…...16
`
`Super Sack Mfg. Corp. v. Chase Packaging Corp.,
`
`57 F. 3d 1054
`
`Court of Appeals, Federal Circuit 1995……………………….…16
`
`Dow Jones & Co., Inc. v. Ablaise Ltd.
`
`606 F. 3d 1338
`
`Court of Appeals, Federal Circuit 2010………………………….16
`
`
`Ocean Tomo, LLC v. Patent Ratings, LLC,
`
`Case No. CBM2015-00157, Paper No. 17
`
`
`
`
`
`
`iii
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`(PTAB 2016) ……………………………………………………17
`
`
`
`Mastercard International Inc. v. Alexsam inc.
`
`Case No. CBM2017-00041
`
`(PTAB 2017)…………………………………………………….17
`
`
`
`
`Other Authority
`
`
`
`Page
`
`37 C.F.R. § 42.302(a) ………………………………………………….1, 2, 12
`
`37 C.F.R. § 42.304(a) ………………………………………………….. 1, 2
`
`
`
`
`
`
`
`
`iv
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`LIST OF PATENT OWNER EXHIBITS
`
`
`
`Exhibit C-2001
`
`Exhibit C-2002
`
`Exhibit C-2003
`
`First Amended Complaint in CEATS vs. Continental Airlines
`et.al. United States Eastern District of Texas, Case: 6:10-cv-
`00120-JRG
`
`Internet web page from Ticketnetwork.com produced by
`TicketNetwork in TicketNetwork v CEATS, US District Court
`E.D. Tex. Civil Action No.2-15-cv01470, with Bates number
`TN001928.
`
`Internet web from Ticketnetwork.com produced by
`TicketNetwork in TicketNetwork v CEATS, US District Court
`E.D. Tex. Civil Action No.2-15-cv01470, with Bates number
`TN001919.
`
`Exhibit C-2004
`
`U.S. Patent 7,548,869
`
`Exhibit C-2005
`
`Jury verdict in TicketNetwork v CEATS, US District Court
`E.D. Tex. Civil Action No.2-15-cv01470
`
`Exhibit C-2006
`
`Standard Licensing Rates for Airline Industry
`
`Exhibit C-2007
`
`CEATS Proffer of Covenant Not to Sue TicketNetwork
`
`Exhibit C-2008
`
`Declaration of David W. Affeld
`
` v
`
`
`
`
`
`
`
`.
`
`
`
`

`

`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`I.
`
`INTRODUCTION
`
`Pursuant to 37 C.F.R. § 42.107, the Patent Owner, CEATS, Inc., hereby
`
`submits the following Preliminary Response to the Petition for covered business
`
`method (“CBM”) patent review of U.S. Patent No. 8,229,774 (“the ‘774 patent”),
`
`Case No. CBM2018-00004.
`
`
`
`II.
`
`SUMMARY OF WHY THE PETITION SHOULD BE DENIED
`
`A. The Petition Should Be Denied For Lack Of Standing
`
`Under 37 C.F.R. § 42.304(a) and § 42.302(a)
`
`The Petition should be denied pursuant to 37 C.F.R. § 42.304(a) and §
`
`42.302(a) because Patent Owner has not sued Petitioner for patent infringement,
`
`nor has Patent Owner charged Petitioner with infringement.
`
`Petitioner incorrectly asserts that a real and substantial controversy exists.
`
`Petitioner has admitted in recent court filings as well as in open court that Patent
`
`Owner has not sued Petitioner for infringement of the ‘774 patent, nor charged it
`
`with infringement. Petitioner thus has no reasonable apprehension regarding
`
`infringement. Petitioner TicketNetwork’s position has been consistent at all
`
`
`
`1
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`times prior to the filing of its Petition: “TicketNetwork understands that
`
`CEATS’s claims against TicketNetwork have been limited to royalties under the
`
`Settlement and License Agreement and that there is no present intent to assert
`
`claims for patent infringement against TicketNetwork.” (See Exhibit TN-1013
`
`at 4, TicketNetwork’s (Petitioner) Motion for Voluntary Dismissal of Complaint
`
`in TicketNetwork v CEATS) (emphasis added). Furthermore, while Petitioner is
`
`licensed to practice the CEATS ‘774 patent under a Settlement and License
`
`Agreement, Petitioner does not and has not ever practiced the ‘774 patent.
`
`Petitioner is a ticket broker regarding tickets for concerts, sports, and theater
`
`events. The ‘774 patent relates to airline tickets only.
`
`Finally, as of today’s date, February 28, 2018, Patent Owner CEATS has
`
`proffered a covenant not to sue Petitioner TicketNetwork with regard to the ‘774
`
`patent, extinguishing even a hypothetical argument that any controversy exists
`
`between the parties.
`
`Thus, the Petition should be denied for lack of standing in accordance with
`
`37 C.F.R. §42.304(a) and § 42.302(a).
`
`III. STATEMENT OF FACTS
`
`A. TicketNetwork’s Business
`
`
`
`2
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`Petitioner TicketNetwork is in the “secondary ticketing market” business of
`
`selling or reselling concert, sports, and theater event tickets online. Petitioner’s
`
`description of its business has been and remains consistent and unequivocal.
`
`“TicketNetwork powers the secondary ticketing market, by hosting a leading
`
`online exchange for tickets to concerts, sports, and theater events around the
`
`globe.” (See Exhibit C-2002: Web page from Ticketnetwork.com produced in
`
`TicketNetwork v. CEATS, Inc. with Bates number TN001928.) Similarly,
`
`“TicketNetwork hosts a leading online exchange with over $5.5 billion in ticket
`
`inventory to concerts, sport, and theater events around the globe.” (Exhibit C-
`
`2003: Page from Ticketnetwork.com produced in TicketNetwork v CEATS, Bates
`
`number TN001919, emphasis added.)
`
`During the recently adjudicated related matter of TicketNetwork v CEATS,
`
`U.S. District Court E.D. Tex. Civil Action No.2-15-cv01470, Ben Jensen, counsel
`
`for TicketNetwork, reiterated that TicketNetwork does not sell airline tickets at
`
`the October 13, 2017 hearing regarding the motion for summary judgment:
`
`…So, say, for example, that CEATS says that, well, we've got -- you
`
`know, one of the claims of one of the patents was not affected by the
`
`District Court judgment and it relates to the sale of airline tickets,
`
`CEATS -- it's TicketNetwork's position that CEATS would not be
`
`able to enforce a royalty obligation that's expressly tied to the sale of
`
`
`
`3
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`tickets online for sporting events, concerts, and theatrical promotion --
`
`productions to a claimed -- a patent claim that relates to something
`
`entirely different…(Exhibit TN-1014, page 31 lines 14-22: Transcript
`
`of Hearing on Motion for Summary Judgement, TicketNetwork v.
`
`CEATS, Inc., October 13, 2017, emphasis added.)
`
`Simply put, TicketNetwork is not in the business of selling airline tickets.
`
`B. CEATS’ Patents
`
`CEATS, Inc. is the owner of a portfolio of patents related to online
`
`ticketing technology. Some of the CEATS patent portfolio patents have claim
`
`scope covering technology used for both event and other online ticketing, such as
`
`CEATS patent 7,548,869 “System and method for selecting and reserving sets of
`
`seats.” (See Exhibit C-2004). Other patents from the CEATS portfolio have claim
`
`scope that is exclusively limited to and directed to airline ticketing, such as the
`
`subject of this proceeding, patent 8,229,774 “System and method for arbitrating
`
`the selection and reserving of airline seats” (Exhibit TN-1001) (emphasis added).
`
`Independent claims 1, 4 and 7 of the ‘774 patent include a limitation restricting
`
`the application of those claims to airline ticketing. For example, Claim 1 reads:
`
`A computer-implemented method for reserving seats, the method
`
`comprising:
`
`transmitting first data to an application running on a general
`
`purpose computer associated with a first user and a general purpose
`
`
`
`4
`
`

`

`
`
`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`computer associated with a second user, the first data including
`
`information descriptive of available individual seats on one or more
`
`flights, the first data encoded to cause the application to generate
`
`graphical user interfaces on the general purpose computers associated
`
`with the first and second users that comprise interactive seating maps
`
`representing individual seats on the one or more flights;
`
`receiving from the general purpose computer associated with the
`
`first user second data representing a seat selected by the first user;
`
`receiving from the general purpose computer associated with the
`
`second user third data representing a seat selected by the second user,
`
`wherein the seat selected by the second user is the same as the seat
`
`selected by the first user;
`
`receiving from the general purpose computer associated with the
`
`first user fourth data representing payment information;
`
`requesting verification of the received payment information; and
`
`if the received payment information is verified, then transmitting
`
`fifth data to the general purpose computer associated with the second
`
`user, the fifth data including information indicating that the seat
`
`selected by the second user is no longer available.
`
`(Exhibit TN-1001, emphasis added)
`
`Independent claims 4 and 7 contain similar language. Thus, the ‘774 patent
`
`is limited to systems and methods associated with airline ticketing.
`
`
`
`5
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`C. CEATS 2012 Infringment Action
`
`In 2012, CEATS sued a number of companies, including airlines and event
`
`ticketing companies, for the infringement of certain patents from its portfolio.
`
`TicketNetwork was alleged only to infringe on claims of the ‘869 patent. (See
`
`Patent Owner’s Exhibit C-2001, First Amended Complaint from CEATS, Inc. v
`
`Continental Airlines, Inc. et.at., No. 6:10-cv-120-LED, at 14).
`
` CEATS has never sued TicketNetwork for infringement of the ‘774 patent,
`
`nor any of its other patents with claims limited to airline ticketing technology.
`
`D.
`
`Settlement and License Agreement
`
`In March of 2012, CEATS and TicketNetwork reached a settlement during
`
`the aforementioned trial and executed a license and settlement agreement
`
`following the trial, executed on March 28, 2012. See Petitioner’s Exhibit TN-
`
`1007 (“License Agreement”). The License Agreement licensed the
`
`
`
`
`
`
`
`
`
`
`
` See Exhibit TN-1007 at paragraph 4:
`
`
`
`6
`
`

`

`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`
`
`
`
`
`
`(Exhibit TN-1007, emphasis added)
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Ticket Industry
`
`The use of the Subject Functionality in combination with the selling
`
`of tickets online for entertainment including sporting events, concerts,
`
`theatrical productions, and other events.
`
`(Exhibit TN-1008, emphasis added)
`
`In contrast, CEATS offers a separate rate-card for the airline industry, and
`
`at a reduced license rate than the ticket industry:
`
`The use of the Subject Functionality in combination with the selling
`
`Air Line Industry
`
`of tickets online in the Air Line Industry.
`
`(Exhibit C-2006, emphasis added)
`
`
`
`7
`
`

`

`
`
`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`The License Agreement states that
`
`
`
`(Exhibit TN-1007 at paragraph 3.1)
`
`
`
`The license is
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`(Exhibit TN-1007 at paragraph 3.2)
`
`
`
`E.
`
`TicketNetwork’s Attempt to Terminate the License
`
`Agreement
`
`On December 3, 2015, TicketNetwork sent CEATS a letter purporting to
`
`terminate the License Agreement. (See Exhibit TN-1009). Several months later,
`
`Steve Hillyard, a former attorney for CEATS, responded with a letter which
`
`mistakenly included the ‘774 patent in a list of patents which would be
`
`
`
`8
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`hypothetically relevant should TicketNetwork’s license be terminated. Regardless
`
`of the content of Mr. Hillyard’s letter, Petitioner TicketNetwork’s assertion that
`
`the license was terminated was eventually shown to be incorrect. As determined
`
`by an E.D. Texas federal jury, the License Agreement remains in effect; Petitioner
`
`has breached it; and Petitioner owes CEATS unpaid royalties. (See Exhibit C-
`
`2006: Jury verdict in Ticketnetwork v. CEATS.)
`
`F.
`
` TicketNetwork’s Lawsuit Against CEATS for
`
`Declaratory Relief to Invalidate 22 of CEATS’s Patents
`
`and an Order Declaring Termination of License
`
`Agreement
`
`Realizing that its termination letter was sent under false pretenses and that
`
`the License Agreement
`
`
`
`, on August 28, 2015,
`
`TicketNetwork filed a Declaratory Relief action in the U.S District Court, Eastern
`
`District of Texas, seeking to invalidate what was then CEATS’s portfolio of 22
`
`patents, and for an order by the court terminating the License Agreement. (See
`
`Exhibit TN-1011).
`
`G. CEATS’s CounterClaim Against TicketNetwork for
`
`Breach of the License Agreement
`
`9
`
`
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`In response to the lawsuit TicketNetwork filed, CEATS counterclaimed for
`
`breach of the License Agreement, seeking unpaid royalties owed by
`
`TicketNetwork, among other breaches. (See Exhibit TN-1004).
`
`H. TicketNetwork’s Dismissal of the Declaratory Relief
`
`Action
`
`Following a Report and Recommendation by the Magistrate-Judge in the
`
`TicketNetwork v. CEATS litigation that was highly unfavorable to TicketNetwork,
`
`TicketNetwork withdrew its poorly premised effort to invalidate 22 patents
`
`(Exhibit TN-1012), leaving just CEATS’s counterclaims for breach of contract
`
`against TicketNetwork to go to trial. (See TN-1013 Dismissal of Compliant).
`
`I.
`
`CEATS’s Jury Verdict Against TicketNetwork Finding
`
`Breach of the License Agreement
`
`On January 22-25, 2018, a jury trial of the TicketNetwork v. CEATS matter
`
`was conducted in Marshall, Texas which resulted in a jury verdict in CEATS’s
`
`favor against TicketNetwork, confirming that TicketNetwork had breached the
`
`License Agreement and for the payment of royalties by TicketNetwork to
`
`CEATS. (See Exhibit C-2006, Jury verdict in Ticketnetwork v. CEATS.) CEATS’s
`
`License Agreement with TicketNetwork remains in effect, including the license to
`
`
`
`10
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`the ‘774. What was at best a very thin basis for the standing of Petitioner is now
`
`gone. Institution of the Petition should be denied.
`
`J.
`
`CEATS Proffer of a Covenant Not To Sue to
`
`TicketNetwork
`
`As of February 28 2018, prior to the submission of this Preliminary
`
`Response, Patent Owner proffered a Covenant Not to Sue to Petitioner
`
`TicketNetwork regarding the ‘774 patent for infringement of the patent by any
`
`past or present products or services of TicketNetwork. In pertinent part, the
`
`correspondence to TicketNetwork’s counsel, reads:
`
`CEATS Inc., on behalf of itself and any successors-in-interest to the
`
`8,229,774 patent (“the ‘774 patent”), releases and unconditionally
`
`covenants not to sue TicketNetwork, Inc., or Ticket Software Inc.
`
`(“TicketNetwork”), for infringement of the '774 patent as of February
`
`28, 2018 based on TicketNetwork's manufacture, importation, use,
`
`sale and/or offer for sale of past or currently existing products or use
`
`or methods. This covenant extends to TicketNetwork’s affiliates only
`
`as such affiliates are defined in the Settlement and License Agreement
`
`between CEATS and TicketNetwork dated March 28, 2012.
`
`(Exhibit C-2007)
`
`In accordance with a series of court decisions beginning with Medimmune,
`
`Inc. v. Genetech, Inc., 549 US 188, 127 n.7 (2007), such covenants not to sue
`
`
`
`11
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`have been dispositive of federal court declaratory judgement subject matter
`
`jurisdiction, the standard which applies to Petitioner’s standing to bring this
`
`Petition. Denial of its institution is appropriate.
`
`
`
`IV. THE PETITION SHOULD BE DENIED DUE TO PETITIONER’S
`
`LACK OF STANDING
`
`A.
`
`Petitioner Lacks Standing Because Patent Owner Has
`
`Not Sued Or Charged Petitioner With Patent
`
`Infringement
`
`Petitioner does not have standing before the PTAB for a CBM patent
`
`review because Patent Owner has not sued or charged Petitioner for patent
`
`infringement. Under 37 C.F.R. § 42.302(a), a person may not file a petition for
`
`covered business method patent review, “unless the petitioner, the petitioner’s real
`
`party-in-interest, or a privy of the petitioner has been sued for infringement of the
`
`patent or has been charged with infringement under that patent.” See 37 C.F.R. §
`
`42.302(a).
`
`It is undisputed that the Patent Owner has not sued the Petitioner for
`
`infringement of the ‘774 patent. What is left to determine is whether the
`
`Petitioner has been “charged” with infringement under the statute, which is
`
`
`
`12
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`defined as a “real and substantial controversy” such that a declaratory judgement
`
`action could be brought before a Federal court.
`
`
`
`The legal nuances of subject matter jurisdiction of declaratory
`
`judgement cases in Federal court are greatly simplified by the facts in the present
`
`matter. The Petitioner is seeking to invalidate a patent which it has openly
`
`admitted it does not practice or intend to practice, and which in fact covers a
`
`substantially different business than Petitioner engages in. Petitioner
`
`TicketNetwork is an event ticket broker. The ‘774 patent covers airline ticketing
`
`technology.
`
`
`
`Following the Supreme Court’s decision in Medimmune, Inc. v.
`
`Genetech, Inc., 549 US 188, 127 n.7 (2007), and as specifically mentioned in the
`
`statute, the standard for subject matter jurisdiction has remained “substantial
`
`controversy.” However, the determination of whether such a controversy exists
`
`must be based on a “totality of the circumstances” factual analysis:
`
`…whether the facts alleged, under all the circumstances, show that
`
`there is a substantial controversy, between the parties having adverse
`
`legal interests, of sufficient immediacy and reality to warrant the
`
`issuance of a declaratory judgment.
`
`Id. at 766
`
`
`
`
`
`13
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`More recent Federal Circuit decisions have confirmed the “totality of
`
`
`
`the circumstances” analysis, such as Danisco US Inc. v. NovosymesA/S, 744 F. 3d
`
`1325, Court of Appeals, Federal Circuit (2014). When the petitioner fails to meet
`
`the burden of establishing a “real and substantial controversy,” denial of the
`
`institution of a covered business method proceeding is appropriate.
`
`Petitioner relies upon the Hillyard letter and a hypothetical raised in an oral
`
`argument to demonstrate “real and substantial controversy.” Although Patent
`
`Owner contends that adjudication of the breach of contract matter is not
`
`necessary, to remove any doubt that no controversy exists, the breach of contract
`
`case was litigated to verdict in Patent Owner’s favor, and any hypothetical
`
`apprehension that Petitioner may be sued for infringement of a patent claiming
`
`technology it does not practice has ended. Additionally, the “immediacy” of
`
`controversy factor identified by Medimmune renders the Hillyard letter not just a
`
`misstatement, but an anachronism of controversy after more than 52 months have
`
`passed. In a recent decision of the 5th Circuit, Sasol North America, Incorporated
`
`v. GTLpetrol, LLC, No. 16-20122, 2017 U.S. App. LEXIS 5107, Court of
`
`Appeals, 5th Circuit 2017, GTLpetrol sent Sasol a cease and desist letter, which
`
`through the passage of time and change of circumstances of the parties including
`
`the drop in the price of oil, became stale, extinguishing the controversy. Although
`
`
`
`14
`
`

`

`
`
`PROTECTIVE ORDER MATERIAL
`
`
`Patent Owner contends that no controversy has ever existed in the first place as to
`
`TicketNetwork regarding the ‘774 patent, the change in circumstances and the
`
`business of the parties further demonstrates the non-existence of a controversy:
`
`The counterclaims do not specify any other particular plants where
`
`Sasol may be using or planning to use Petrol's technology, nor does
`
`Sasol identify another facility where it is using or contemplating use
`
`of the same types of technology that spawned the Louisiana plant
`
`dispute. In the absence of any concrete allegation of misuse, the court
`
`had no reason to suspect that these claims are of sufficient immediacy
`
`or reality to justify litigating a declaratory judgment proceeding.
`
`Id. at 3.
`
`Citing other authority, the Sasol court underlined that actual, real and
`
`substantial controversy is a requirement for subject matter jurisdiction of
`
`declaratory judgement matters:
`
`“A federal court may not issue a declaratory judgment unless there
`
`exists an actual controversy.” Am. States Ins. Co. v. Bailey, 133 F.3d
`
`363, 368 (5th Cir. 1998). “The Supreme Court directs that the dispute
`
`must be definite and concrete, real and substantial, and admit of
`
`specific relief through a decree of a conclusive character.” Vantage
`
`Trailers, Inc. v. Beall Corp., 567 F.3d 745, 748 (5th Cir. 2009).
`
`Further, the Supreme Court has “repeatedly held that an actual
`
`controversy must exist not only at the time the complaint is filed, but
`
`through all stages of the litigation.” Already, LLC v. Nike, Inc., 133
`
`
`
`15
`
`

`

`
`
`
`
`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`S.Ct. 721, 726 (2013).
`
`Id. at 2.
`
`By the Patent Owner’s proffering of a covenant not to sue, Petitioner has
`
`ultimately extinguished even a hypothetical controversy between the parties, as
`
`has been established in a series of cases beginning with Super Sack Mfg. Corp. v.
`
`Chase Packaging Corp., 57 F. 3d 1054, Court of Appeals, Federal Circuit 1995:
`
`Because the trial court correctly concluded that Super Sack's promise
`
`to assert neither U.S. Patent No. 4,143,796 ('796) nor U.S. Patent No.
`
`4,194,652 ('652) against Chase as to any of its past or present products
`
`precludes the existence of an actual controversy, we affirm.
`
`Id. at 1055.
`
`More recently, in Dow Jones & Co., Inc. v. Ablaise Ltd., 606 F. 3d 1338
`
`(CAFC 2010), the Federal Circuit affirmed that a covenant not to sue would
`
`divest the court of subject matter jurisdiction:
`
`In the case at bar, Ablaise's covenant not to sue avowed that Ablaise
`
`would not sue Dow Jones for any acts of infringement of its '530
`
`patent. The covenant therefore extinguished any current or future case
`
`or controversy between the parties, and divested the district court of
`
`subject matter jurisdiction.
`
`Id. at 1348.
`
`
`
`16
`
`

`

`PROTECTIVE ORDER MATERIAL
`
`
`This now well-established standard for divesting jurisdiction when a
`
`covenant not to sue has been proffered has been affirmed before the PTAB in
`
`CBM matters. See Mastercard international Inc. v. Alexsam Inc., Case No.
`
`CBM2017-00041, Paper 37 (PTAB 2017); Ocean Tomo, LLC v. Patent Ratings,
`
`LLC, Case No. CBM2015-00157, Paper No. 17 (PTAB 2016).
`
`
`
`No substantial controversy exists regarding the ‘774 patent and the
`
`parties because Petitioner does not practice the patent, and a 52-month-old letter
`
`mentioning the ‘774 by mistake does not create a hypothetical controversy. Since
`
`Patent Owner has now proffered a covenant not to sue Petitioner, even a
`
`hypothetical controversy has been extinguished.
`
`
`
`
`
`V. CONCLUSION
`
`For the reasons stated above, the Petition should be denied.
`
`Respectfully submitted this 28th day of February, 2018.
`
`
`
`
`
`/Brian Billett/
`Brian Billett, Ph.D.
`USPTO Reg. No. 69,900
`2049 Century Park East Ste. 2460
`Los Angeles, CA 90067
`bsbillett@gmail.com
`
`17
`
`

`

`
`
`
`
`PROTECTIVE ORDER MATERIAL
`
`
`
`Tel. 310.2952528
`
`David W. Affeld
`(pro hac vice admission pending)
`AFFELD GRIVAKES
`2049 Century Park East Ste. 2460
`Los Angeles, CA 90067
`dwa@agzlaw.com
`Tel. 310.979.8700
`Fax. 310.979.8701
`
`Counsel for Patent Owner
`
`
`
`
`
`
`18
`
`

`

`PROTECTIVE ORDER MATERIAL
`
`
`CERTIFICATE OF SERVICE
`
`Pursuant to 37 CFR §§ 42.6(e)(4)(i) et seq. and 42.205(b), the undersigned
`
`certifies that on March 2, 2018, a complete and entire copy of this PATENT
`
`OWNER PRELIMINARY RESPONSE [REDACTED] and all supporting
`
`exhibits were provided by electronic mail to the Petitioner by serving the
`
`correspondence address of record as follows:
`
`P. Weston Musselman, Jr. musselman@fr.com
`Ricardo J. Bonilla rbonilla@fr.com
`Fish & Richardson P.C.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`___/Brian Billett/______
` Brian Billett, Ph.D.
`USPTO Reg. No. 69,900
`2049 Century Park East Ste. 2460
`Los Angeles, CA 90067
`bsbillett@gmail.com
`Tel. 310.2952528
`
`Lead Counsel for Patent Owner
`
`
`
`
`19
`
`