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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`NAUTILUS, INC.,
`Petitioner,
`
`v.
`
`ICON HEALTH & FITNESS, INC.,
`Patent Owner.
`____________
`
`Case IPR2017-01363 (Patent 9,403,047 B2)
`Case IPR2017-01407 (Patent 9,616,276 B2)
`Case IPR2017-01408 (Patent 9,616,276 B2)
`____________
`
`Record of Oral Hearing
`Held: August 29, 2018
`____________
`
`
`
`
`Before GEORGE R. HOSKINS, TIMOTHY J. GOODSON, and
`JAMES A. WORTH, Administrative Patent Judges.
`
`
`
`
`Case IPR2017-01363 (Patent 9,403,047 B2)
`Case IPR2017-01407 (Patent 9,616,276 B2)
`Case IPR2017-01408 (Patent 9,616,276 B2)
`
`
`
`APPEARANCES:
`
`ON BEHALF OF THE PETITIONER:
`
`
`RYAN J. McBRAYER, ESQUIRE
`LANE M. POLOZOLA, ESQUIRE
`Perkins Coie LLP
`1201 Third Avenue
`Suite 4800
`Seattle, Washington 98101-3099
`
`
`
`ON BEHALF OF THE PATENT OWNER:
`
`
`JOHN T. GADD, ESQUIRE
`ADAM F. SMOOT, ESQUIRE
`Maschoff Brennan
`1389 Center Drive
`Suite 300
`Park City, Utah 84098
`
`
`
`
`The above-entitled matter came on for hearing on Wednesday, August
`
`29, 2018, commencing at 1:00 p.m., at the U.S. Patent and Trademark
`Office, 600 Dulany Street, Alexandria, Virginia.
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`P R O C E E D I N G S
`- - - - -
`JUDGE WORTH: Good afternoon. Please be seated.
`JUDGE GOODSON: Welcome to the Patent Trial and Appeal
`Board. This is the hearing for Case [IPR2017-0]1363 involving Patent
`Number 9,403,047 and Cases IPR2017-01407 and 1408, both of which
`involve Patent Number 9,616,276. I'm Judge Goodson and I'm appearing
`remotely from the San Jose Regional Office. Judge Hoskins is also
`participating remotely and Judge Worth is there with you in Alexandria.
`Can we begin with introductions from counsel, starting with
`counsel for Petitioner?
`MR. McBRAYER: Good afternoon or good morning as the case
`may be, Your Honor. I'm Ryan McBrayer of Perkins Coie for Petitioner
`Nautilus. With me today are my several colleagues who have been involved
`in the IPR and one who is observing here, Lane Polozola and Stephanie
`Nelson who have been with me as counsel in the matter and then Dr. Karen
`Lisko, jury trial consultant, who wanted to take the opportunity to observe a
`PTAB hearing and is here today observing.
`JUDGE GOODSON: Thank you. And, Mr. McBrayer, are you
`going to be doing the presentation in all three cases today?
`MR. McBRAYER: Yes, Your Honor.
`JUDGE GOODSON: Okay. Thank you.
`And counsel for Patent Owner?
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`MR. SMOOT: Thank you, Your Honors. Adam Smoot
`representing Patent Owner ICON Health and Fitness. I will be discussing
`IPR2017-01363 and then the Motion to Exclude in the other two IPRs.
`MR. GADD: Good afternoon. My name is John Gadd, also here
`for Patent Owner ICON Health and Fitness, and I will be discussing the
`Motion to Amend in the two IPRs.
`JUDGE GOODSON: Okay. Thank you.
`I'll also go over some reminders from our trial hearing order of
`August 14, 2018. Please indicate the slide number or the page number of
`the -- from the record that you're referring to during your presentations.
`That will help Judge Hoskins and I and will also clarify the record in the
`transcript.
`If during the argument today either party believes that something
`the other party is saying is improper in any way, please just save that issue
`and raise it during your presentation as opposed to interrupting the other
`party's presentation to object. Each party will have 90 minutes of total time
`to present arguments.
`Have the parties agreed to an allocation of time as between the
`proceedings?
`MR. McBRAYER: Your Honor, we conferred about it and were
`unable to come to an agreement, other than we both anticipate taking less
`than the 30 minutes the Board allotted in its order as the default for the 1363
`proceeding. So we fully intend both of us to wrap up before the 30-minute
`point and can take whatever break, or if the Board wants to roll right into the
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`1407 and 1408 IPRs, but we didn't have a limit that we agreed to less than
`30 minutes.
`JUDGE GOODSON: All right. Well, that will make the
`housekeeping a little more complicated since we would like for the parties to
`have the same allocation of time as between the two cases. So do you intend
`to reserve some rebuttal time for your presentation?
`MR. McBRAYER: I intend to reserve a small amount of rebuttal
`time in our presentation. If the Court needs the parties to agree on a single
`limit, I think we can agree on 25, although -- is that correct?
`MR. SMOOT: Uh-huh.
`MR. McBRAYER: I'll let -- I think Judge Worth can see counsel
`nodding at the table, you know, 25, but I think we both fully intend to take
`less than that.
`JUDGE GOODSON: Okay. So we'll shoot for 25 minutes and
`we'll keep our time accordingly, and we'll begin with the 1363 case.
`Petitioner will go first to present its case and then the Patent Owner will
`respond. The Petitioner can reserve time and Patent Owner can reserve
`sur-rebuttal time.
`So, Mr. McBrayer, you'd like to reserve -- how many minutes
`would you like us to have you reserve for rebuttal time?
`MR. McBRAYER: Here five minutes, Your Honor.
`JUDGE GOODSON: Five minutes. Okay.
`MR. McBRAYER: Thank you.
`JUDGE GOODSON: And, Mr. Smoot, how many minutes of
`sur-rebuttal time would you like us to reserve for you?
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`MR. SMOOT: Five minutes as well, Your Honor. Thank you.
`JUDGE GOODSON: Okay. Thanks.
`Okay. Well, that's all the preliminaries, so, Mr. McBrayer, we'll
`turn it over to you and you can begin whenever you're ready.
`MR. McBRAYER: Thank you, Your Honor.
`In the 1363 case, as Your Honors may remember or recall from
`your recent review of the papers, where we start is that the Petitioner
`Nautilus petitioned based on a number of grounds that they've asserted
`claims or the Petition claims were unpatentable.
`ICON, Patent Owner ICON, responded only with respect to a
`single issue that a particular piece of prior art was not publicly accessible on
`that date. It's the TuffStuff web page and reference manual which is subject
`to a declaration from the Internet Archive, but Patent Owner ICON did not
`argue that the claims are somehow patentable over the prior art if the
`TuffStuff manual is, indeed, or deemed to be publicly accessible.
`So we are not going to start out by reiterating all of the art and all
`of the grounds and all of the motivations to combine, because we view those
`as having been waived and conceded by ICON. However, because we have
`the burden, it is worth noting for the Board that consistent with your findings
`in the Institution Order that all of the grounds here that we're dealing with in
`every single case, we are dealing with fitness machines that are in the art and
`in the same technical field as the claims.
`So this is not a situation where we've got some art that we're
`claiming is nonetheless analogous art, but it's from a different industry. It
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`might be around what you might think of as the periphery of analogous art.
`That's not the case here.
`Everything that we have put before the Board to show why these
`claims are unpatentable is a fitness machine, and broadly throughout all the
`grounds Your Honors found, and it is the case as we stand here today,
`combinations that are of known components combined in known ways that
`reach predictable results. That under Patent Office guidance all the way up
`to the United States Supreme Court precedent in KSR is prima facie
`obvious, that when one takes known components, combines them in known
`ways and reaches a predictable result, that's the very definition of obvious
`and that is what the Board has before it here today.
`But also, and this is important, in every situation you have more.
`You have additional reasons why the experts in this case have testified
`people of ordinary skill in the art would have been motivated to combine the
`references as we have discussed. Maybe it's because there are weight
`limitations and by having a particular component one saves weight and that
`makes it more shippable. Maybe that's because it makes it safer.
`Whatever the reason is with respect to the particular grounds, there
`are additional motivations to combine that provide motivation for a person
`of ordinary skill in the art to combine these things in the way we have. So
`while we acknowledge our burden, ICON has not responded, has not
`contested it and that the Board has already found consistent with our robust
`motivation to combine case that these claims, indeed, are unpatentable and
`we ask that you do so, again, when you find, as I'll get to in a moment, that
`the TuffStuff web page and manuals were publicly accessible prior art.
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`JUDGE WORTH: Just on that point.
`MR. McBRAYER: Yes, Your Honor.
`JUDGE WORTH: You're not arguing that something that is
`waived is, therefore, deemed admitted.
`MR. McBRAYER: No, Your Honor. We don't think it's admitted,
`but we just think for the purposes of oral argument, I don't want to spend a
`bunch of Your Honors' time going over why these combinations should be
`made. I'll note I don't think ICON has admitted that, but under the Patent
`Office's Trial Guidelines and the Board's rules, ICON can't get up here today
`and have any other argument, for instance, why we wouldn't combine a
`particular reference with another particular reference or why, you know, the
`Wu reference might not have disclosed a pull cable or something like that.
`They have waived the ability to make that argument.
`So to the extent there's a distinction for Your Honor between being
`waived and being admitted, I think it's leopards with the same spots, Your
`Honor, and ICON can't stand up and the Board already found that we
`provided what -- as what I'm trying to note is what we view as a case that
`more than meets our burden where you've got now before the Board
`undisputed combinations of fitness equipment, undisputed known
`components, undisputably combined in known ways and undisputably
`reaching predictable results. That under any case law, guidance, guideline
`out there is obvious.
`So let me turn to the TuffStuff manual and web page, if I might,
`Your Honors. And what I wanted to start with there is what we view as
`undisputed, because we think that the Board based on what is before it of an
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`undisputed nature is more than enough to find under the prevailing case law
`from the Federal Circuit and the Board's own decisions in other cases that
`the TuffStuff manual and TuffStuff website were publicly accessible prior
`art.
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`The first thing, as I'm showing here on slide 6 for the benefit of
`Judges Goodson and Hoskins, ICON does not dispute that the PDF manual
`was online as of December 26, 2010 at that displayed internet address.
`ICON doesn't dispute that that was part of a known fitness company's
`website, and ICON doesn't dispute --
`I'm sorry, Your Honor, go ahead.
`JUDGE GOODSON: Where's the evidence that that was a known
`fitness company?
`MR. McBRAYER: That the TuffStuff Company had a website
`and as I think -- I don't have a particular paragraph number and I can get it
`for Your Honor, if necessary, but Mr. Rawls testified -- I'm sorry, for hitting
`the microphone, Your Honor -- that the TuffStuff Company had a particular
`number of products. And if you look specifically at the web page, you've
`got their kind of line-up of products that you can find and that they
`maintained an internet web page presence to sell these many products.
`Does that answer your question, Your Honor?
`JUDGE GOODSON: That would be a helpful paragraph from the
`Rawls declaration if you can find that. You don't have to stop what you're
`doing right now, but that would be --
`MR. McBRAYER: I'll try and return to the paragraph on rebuttal,
`Your Honor. But the fact that the manual was undisputably publicly
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`available and that we've got the Butler declaration from the Internet Archive
`who's the same gentleman that the Board has accepted before declarations
`from to prove the public accessibility of particular web pages on a particular
`date, those two things alone cause these -- this set of facts to fall squarely
`within the set of cases that we have highlighted for the Board that are
`existing PTAB cases, the Samsung case, the Mitsubishi case and the AMD
`case, in particular, I wanted to discuss with Your Honors.
`In the Mitsubishi case, the PTAB found that these two facts alone
`were enough to prove public accessibility in a final decision. So the
`Mitsubishi case was a final decision where the Board found that a Wayback
`Machine declaration from the Internet Archive from Mr. Butler, plus the
`dates on the documents, those two things alone were enough to establish in a
`final decision the public accessibility of the documents, and that's exactly as
`I'll get into more detail here what we have before the Court today.
`In the Samsung --
`JUDGE GOODSON: But in the Mitsubishi case, isn't it true that
`the Patent Owner didn't contest the sufficiency of the Petitioner's evidence
`on that point of public accessibility?
`MR. McBRAYER: Yes, Your Honor, but now we get into the
`difference between burdens of production and burdens of persuasion. In the
`Samsung case and the Mitsubishi case -- your point, Your Honor, is also the
`same in the Samsung case and it's a good one, that in those cases the Patent
`Owner did not contest at the hearing whether those two pieces of evidence,
`the declaration from the Internet Archive and a date stamp on the document,
`were enough.
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`But at that moment the Board faced a decision nonetheless about
`whether the Petitioner had met their burden of production to provide
`evidence to the Board that the document was publicly accessible. Did they
`cross some minimal threshold for a final written decision to prove public
`accessibility?
`Now, as we all know being former trial practitioners or trial
`practitioners now, that a burden of persuasion may be greater and in that
`instance the Patent Owner did not fight that battle between the burden of
`production and the burden of persuasion, and the Board went ahead and
`found that those -- that that combination of evidence from the Internet
`Archive and in the case of the Mitsubishi case, the date stamp on the
`document was enough.
`And what's important here today is that in providing this evidence,
`and again it's uncontested, we’re over the burden of production. We can
`fight about, Your Honor, Judge Goodson, we can fight about the burden of
`persuasion if we want, and I will speak in a moment about why this is the
`right result about why you should be persuaded that this, indeed, was
`accessible to members of the art and to people who wanted to inquire about
`the art of fitness machines at the time, but that --
`Because we have met the burden of production, that goes back to
`Your Honor's earlier point that whether TuffStuff was a well-known fitness
`company or not, that certainly might go to whether people actually would
`have found it or not, but it's not necessary for the burden of production to
`meet our burden with respect to public accessibility. We have done that by
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`providing facts and uncontested facts to the Board that are 100 percent in
`line with the Mitsubishi and Samsung cases.
`JUDGE GOODSON: So just to make sure I understand the
`evidence that’s in the record, as I understand, the evidence in the record
`regarding the public accessibility of the Six-Pack reference is the Butler
`affidavit. That's the only evidence; is that correct?
`MR. McBRAYER: Mr. Rawls spoke briefly to the fact, and this is
`cited in our brief, that this is the kind of evidence, the product manual, that
`people of ordinary skill in the art would have looked to. It's the type of
`document that would have been informative to a person of ordinary skill in
`the art. But as to whether or not they would have gotten it by going to the
`website, Mr. Rawls we concur, Your Honor, did not testify about that.
`JUDGE GOODSON: Well, if I'm looking at the paragraph in the
`Rawls declaration that you're referring to, it's paragraph 96, it says, The
`manual is a printed publication that a skilled artisan would reasonably have
`relied upon in understanding the design, functionality and operation of the
`Six-Pack trainer. As I understand that, he's just saying this is the kind of
`manual that a person of ordinary skill would look to, to understand how this
`actual device would operate. He's not testifying about whether this was
`publicly available.
`MR. McBRAYER: You're right, Your Honor, whether you would
`have -- to get it in the first place whether you would have gone to that
`website. I concur in your interpretation of that, Your Honor. But, again, I
`want to go back to the difference between the burden of production and the
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`burden of persuasion, because I wanted to start with, Your Honor, what is
`undisputed and bedrock for the Board here today.
`What the Mitsubishi and Samsung cases stand for is that the
`Wayback Machine/Internet Archive declaration and in the case of
`Mitsubishi, if you add to it the document date stamp, those as a matter of law
`meet our burden of production, otherwise you would be saying -- you would
`have to say that the Mitsubishi and Samsung cases were wrongly decided,
`right? Even though it was undisputed, the Board still had an obligation to
`only find that in a situation where the Petitioner bore the burden there, right,
`only find obviousness and only find that something was prior art if sufficient
`facts were before them regardless of any dispute.
`So if what we put before you is not enough to establish a burden of
`production, the only way you can get to that is to say that Samsung and
`Mitsubishi were wrongly decided.
`JUDGE GOODSON: I'm not sure I agree with that because you're
`equating the fact that it was undisputed with not presenting an issue as to
`whether the burden of production was satisfied. In other words, if
`Mitsubishi had presented a situation like here where the Patent Owner didn't
`present its own evidence, its own affirmative evidence or, you know,
`rebuttal evidence on public accessibility, but still challenged the Petitioner’s
`showing -- the sufficiency of the Petitioner’s showing, then I could
`understand how this case is on all fours with Mitsubishi, but they didn't – the
`Patent Owner in Mitsubishi didn't challenge it at all, so I don't think it
`necessarily stands for the proposition of law that the Wayback Machine is
`sufficient to meet the burden of production.
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`MR. McBRAYER: I don't think it's -- Your Honor, it doesn't hold
`that, but that's the proposition of law that we think is implied by the finding
`and importantly necessarily implied. Let me draw an analogy for you. It's
`no different than our burden here today with respect to patentability.
`ICON hasn't contested patentability, right? But we come to the
`Board and we still say that Your Honors have the duty here today to decide
`whether the references I've put before you and we have put before you
`satisfy every claim limitation and would have been combined in ways that
`were obvious. You know, it would have been obvious and motivated for a
`person of ordinary skill in the art to do that.
`If I fall down in that respect, Your Honors are still obligated, even
`though they haven't contested it, to not find obviousness. ICON has argued
`that as a matter of fact that we still bear the burden of proof and if for some
`reason you're not persuaded, Your Honors have the obligation, if there's a
`hole in our evidence, to shoot down that particular argument.
`So if you decide that -- if this Board were to decide that a
`particular ground proved the non-patentability of particular claims, what that
`is implying is I had enough evidence on every single ground and enough
`evidence on motivation to combine for Your Honors to make that decision,
`otherwise it would be wrong for Your Honors to make that decision.
`Regardless of whether it's contested, that's what a burden is. I have to show
`up here in this Court with evidence to get over the threshold, right?
`And in Mitsubishi, Your Honor, Judge Goodson, that's what
`happened is they had to get over that threshold and regardless if Patent
`Owner didn't contest it or not, the Board was under an obligation not to find
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`that to be publicly accessible prior art if, in fact, it didn't get over that
`threshold. That's why we think it stands for that proposition that that's
`enough to get over the threshold.
`Now, I want to persuade you today beyond that, that this is the
`right result, right? And if I can turn to that, right, because that's really what
`we think should be at issue today and why we think that Your Honors should
`find in Nautilus' favor is this is the right result.
`What you have is a fitness industry manual. Let me just focus the
`Court's attention without slides and I'm going to black out my slides here in
`the courtroom for Judges Goodson and Hoskins and not refer to a slide.
`You've got a fitness company posting a products page. That's what the
`evidence is, is, you know, a fitness company posting a products page.
`And we can get into a debate about whether this is a well-known
`fitness company or not, but I don't think it's disputed that TuffStuff was a
`fitness company because Your Honors have the product web page. It's
`undisputed that the manual is online at a website called TuffStuff Fitness,
`right? That's -- there's more than enough evidence and I think proper and
`right for Your Honors to find that this was online at a fitness company
`website and that other people in the art would have looked to that website.
`Let me give you an example.
`JUDGE HOSKINS: Mr. McBrayer, what evidence do you have?
`So the standard here is not simply whether it was available on the website.
`It's whether a person of ordinary skill exercising reasonable diligence during
`a search would find the website. Do you agree with that in terms of the
`standard to be applied here?
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`MR. McBRAYER: I'm not sure that the standard would find it.
`It's if they're interested that they could reasonably find it.
`JUDGE HOSKINS: Exercising reasonable diligence.
`MR. McBRAYER: That's right, yeah, exercising, but it's the
`difference between if you exercise reasonable diligence and you're a person
`of ordinary skill in the art wanting to inquire in this area, could you find it or
`would you definitely find it?
`JUDGE HOSKINS: I understand. I appreciate the distinction. So
`what evidence do you have in terms of exercising reasonable diligence, why
`it is that a person of ordinary skill in the art could have found this as part of
`exercising reasonable diligence?
`MR. McBRAYER: I think two things, Your Honor. First, as we
`keep pointing out, it's a fitness company website and we don't think that's
`disputed. We think that the nature of the evidence by itself is enough for
`Your Honors to find that this was a fitness company selling fitness products,
`right? Just look at the evidence. It's a conclusion that the Court can draw
`from the evidence itself.
`Secondly, Your Honor, that the Wayback Machine itself indexed
`this web page, right? That it was out there and it wasn't part of the dark
`web, it wasn't an inaccessible part of the web. You've got the Wayback
`Machine indexing it. That says something about the presence of TuffStuff
`on the internet being at a level high enough that at least the Internet Archive
`was able to find an archive, this website.
`Now, you don't have -- you've got cases out there, some of them
`that ICON cites, some of them that we cite about whether or not the page
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`was indexed by a commonly known search engine. That proof is not here,
`but we think that the nature of the website that it's a fitness -- that it's a
`fitness company obviously selling products in this space and the fact that the
`Internet Archive found it are enough, in addition to just it being the right
`result, again, Judge Hoskins. Let me give you a couple examples that speak
`to that.
`
`JUDGE GOODSON: Could I ask you a question about what it
`means to be indexed by the Wayback Machine? Is there any evidence in the
`record to tell us what it signifies that the Wayback Machine was able to
`access this?
`MR. McBRAYER: I'm not quite sure I understand Your Honor's
`question, but let me give it a shot. Mr. Butler testified about the Wayback --
`about the Wayback Machine. I call it the Wayback Machine. It's also
`known as -- I view those as interchangeable with the Internet Archive, so I
`apologize if I've confused anybody. But he testifies about the Wayback
`Machine and how it archives websites. I don't believe he testifies about it
`archiving or not archiving certain websites and how it might make a choice.
`JUDGE GOODSON: Okay. Yeah, I was just following up
`because you mentioned that the fact that the Wayback Machine captured this
`site was an indication that it was accessible or available through a reasonable
`search, and I don't know how we can deduce from the record that the capture
`by the Wayback Machine signifies anything about its availability through a
`normal search.
`MR. McBRAYER: Except it wasn't a hidden web page, Your
`Honor. Is Your Honor familiar with the term dark web? Is that something --
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`JUDGE GOODSON: I've heard of it, but again we don't have
`information about -- we don't have evidence in the record here about, you
`know, whether sites that are protected by a password or things that are not
`publicly available are not captured by the Wayback Machine.
`MR. McBRAYER: Well, the Wayback Machine has captured it is
`evidence that it was available to members of the public, right? The
`Wayback Machine -- there's no evidence to the contrary either that the
`Wayback Machine is, for instance, capable of inputting passwords or
`capable of getting behind a company or governmental firewalls to get at
`documents that aren't part, so you don't have the opposite either.
`What I'm trying to get to, Your Honor, is that the right result here
`is to look at the evidence and draw the inference that Your Honor is talking
`about, because you don't have the opposite evidence either. Like ICON isn't
`standing here saying like this website was password protected, therefore, it
`wasn't available.
`You also -- this also is a good time to bring this up, Your Honor.
`This also isn't the situation that was -- that existed in a lot of the cases that
`ICON points to and that the Federal Circuit has dealt with before regarding
`what one might think of as obscure prior art. This is not a thesis in a
`Russian library, not indexed in any sort of card catalog. Okay. This is not --
`JUDGE GOODSON: The Federal Circuit cases that we have from
`the parties, they don't specifically reach this issue or this fact pattern and I
`was wondering if you knew of any cases that are directed towards websites
`of a commercial venture.
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`MR. McBRAYER: Your Honor, certainly the Voter Verified case
`that we cited relates to industry, right? There you had an article that was
`posted in risk -- on the Risk Digest website and I cite the Voter Verified case
`because it relates to industry, not a library or some thesis or it's not academia
`and it's not government. It's an industry, a commercial website called Risk
`Digest and the paper at issue was posted there.
`JUDGE GOODSON: But it was uncontested in that case that the
`Risk Digest was known to ordinarily skilled artisans. That's not a fact that's
`presented here.
`MR. McBRAYER: Your Honor, I agree. I only note, though,
`Your Honor's question was about whether it was a company industry
`website, right? And that was a case where it was.
`Voxx -- let me go back also to the Voxx case because I'm looking
`at it right now. In that case there was -- even though that was an institution
`decision, not a final decision, the Voxx case highlighted and properly
`distinguished the cases that ICON relies on, these academic cases where, for
`instance, in the ServiceNow case where the website link proved that the
`document postdated the priority date.
`Another case that ICON cited was the Blue Calypso case. That
`was an undergraduate thesis, an individual person's website. Like, Your
`Honor, I have kids in college right now. My 19-year-old son's personal
`Facebook page, even though he's an engineering major, would not be
`reasonably or public accessible to a member of skill in the engineering art.
`Like an individual undergraduate page, that's just of a different and
`obscure nature than what we have here and what Your Honors can and we
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