Trials@uspto.gov
`571.272.7822
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`
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`Paper 21
`Entered: June 14, 2019
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`
`DTN, LLC,
`Petitioner,
`
`v.
`
`FARMS TECHNOLOGY, LLC,
`Patent Owner.
`____________
`
`Case IPR2018-01412 (Patent 7,991,685 B2)
`Case IPR2018-01525 (Patent 7,742,979 B2)
`
`____________
`
`
`
`Before SCOTT C. WEIDENFELLER, Vice Chief Administrative Patent
`Judge, GEORGE R. HOSKINS, and FRANCES L. IPPOLITO,
`Administrative Patent Judges.
`
`HOSKINS, Administrative Patent Judge.
`
`
`
`DECISION
`Denying Joint Requests to Expunge Collateral Agreements,
`Granting Joint Requests to Treat Agreements as Confidential, and
`Granting Joint Motions to Terminate Proceedings
`35 U.S.C. § 317; 37 C.F.R. §§ 42.72, 42.74
`
`
`
`

`

`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
`
`
`Introduction and Procedural Background
`I.
`In each of these two proceedings, the parties have filed a Joint Motion
`to Terminate the proceeding on the basis of a settlement reached by the
`parties. See 35 U.S.C. § 317(a); 1412 IPR, Paper 17; 1525 IPR, Paper 17.
`Pursuant to 35 U.S.C. § 317(b):
`Any agreement or understanding between the patent owner and
`a petitioner, including any collateral agreements referred to in
`such agreement or understanding, made in connection with, or
`in contemplation of, the termination of an inter partes review
`under this section shall be in writing and a true copy of such
`agreement or understanding shall be filed in the Office before
`the termination of the inter partes review as between the parties.
`Id. Pursuant to that statute, in connection with the Joint Motions to
`Terminate, the parties also filed a copy of their written settlement agreement
`(Exhibit 1012 in both proceedings, hereafter “Settlement Agreement”), and
`Joint Requests that the Settlement Agreement be treated as business
`confidential information.1 1412 IPR, Paper 18; 1525 IPR, Paper 16.
`Upon review of the foregoing, on May 1, 2019, we sent an e-mail
`communication to counsel of record in both proceedings, in which we
`informed counsel that “the Board has some inquiries concerning other
`agreements that are referenced in the Settlement Agreement, and the filing
`requirements of 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(b).” A telephone
`conference was scheduled for May 9, 2019 to discuss those inquiries.
`
`
`1 In an e-mail communication dated April 29, 2019, we noted that the
`parties did not seek (and therefore were not granted) prior authorization
`before filing the Papers submitted on April 23, 2019. See 37 C.F.R.
`§ 42.20(b). Our e-mail waived the requirement for prior authorization for
`those Papers, and further granted authorization to file further Papers. The
`further Papers were thereafter submitted on April 29, 2019.
`
`2
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`

`

`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
`
`
`During the May 9 telephone conference, Judges Weidenfeller,
`Hoskins, and Ippolito participated on behalf of the Board. David Cabello,
`James Hall, and Dan Morris appeared on behalf of Petitioner. Joshua Larsen
`and Todd Vare appeared on behalf of Patent Owner. The Board explained
`that the Settlement Agreement refers to two other agreements (hereafter
`“Collateral Agreements”), which may be subject to the mandatory filing
`requirement of § 317(b). Counsel for both parties argued that the two
`Collateral Agreements are not subject to the mandatory filing requirement of
`§ 317(b). We took this issue under advisement at the end of the telephone
`conference.
`On May 10, 2019, we sent another e-mail communication to counsel
`of record in both proceedings, indicating “that based upon the facts
`presented here, the two [Collateral Agreements] referenced in the Settlement
`Agreement must be filed before the proceedings may be terminated via
`settlement under 35 U.S.C. § 317.” We also scheduled another telephone
`conference on May 15, 2019.
`During the May 15 telephone conference, Judges Weidenfeller,
`Hoskins, and Ippolito participated on behalf of the Board. David Cabello
`and James Hall appeared on behalf of Petitioner. Joshua Larsen appeared on
`behalf of Patent Owner. We briefly explained the reasoning behind the
`conclusion stated in our May 10 e-mail. Counsel continued to maintain that
`the two Collateral Agreements are not subject to the mandatory filing
`requirement of § 317(b). However, counsel proposed that they would file
`the Collateral Agreements for the Board’s consideration in that regard, along
`with Requests to treat the Collateral Agreements as business confidential
`information, and Motions to Expunge the Collateral Agreements. Counsel
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`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
`
`expressed the view that the Board could use the Motions to Expunge as a
`vehicle to reach a final decision concerning whether the Collateral
`Agreements are subject to the mandatory filing requirement of § 317(b), and
`then grant the Motions to Terminate regardless of whether the Collateral
`Agreements are expunged. The Board granted authorization for the parties
`to make the proposed filings, and set a five page limit on the Motions to
`Expunge.
`Accordingly, on May 21, 2019, the parties filed the two Collateral
`Agreements (Exhibits 2008 and 2009 in both proceedings). The parties also
`filed Joint Requests that the Collateral Agreements be treated as business
`confidential information. 1412 IPR, Paper 19; 1525 IPR, Paper 18. The
`parties further filed Joint Motions to Expunge the Collateral Agreements.
`1412 IPR, Paper 20; 1525 IPR, Paper 19.
`
`Joint Motions to Expunge the Collateral Agreements
`II.
`The parties filed the same Joint Motion to Expunge the two Collateral
`Agreements in both proceedings. 1412 IPR, Paper 20; 1525 IPR, Paper 19.
`We will hereafter cite only to the 1412 IPR filing for convenience. The
`parties contend the Collateral Agreements “do not fall within the scope of
`35 U.S.C. § 317 and 37 C.F.R. § 42.74” for two reasons, which we consider
`in turn. 1412 IPR, Paper 20, 1–2.
`
`Agreement “between the patent owner and a petitioner”
`A.
`First, the parties contend § 317(b) does not require the filing of the
`Collateral Agreements because the agreements are not “between the patent
`owner and a petitioner” (35 U.S.C. § 317(b)) or “between the parties”
`(37 C.F.R. § 42.74(b)). 1412 IPR, Paper 20, 1–2. The parties interpret
`
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`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
`
`§ 317(b) to require the filing only of collateral agreements that are between
`the patent owner and a petitioner, and cite the use of the term “including”
`before “any collateral agreements” in the statute as supporting that
`interpretation. Id. at 2–3. Construing the statute to include collateral
`agreements that are not between the patent owner and a petitioner would, in
`the parties’ view, improperly replace the term “including” with the term
`“and.” Id. at 3. The parties further rely on the statutory construction
`principle that “a general statutory term should be understood in light of the
`specific terms that surround it” as indicating, when applied to § 317(b), that
`“the general term ‘any collateral agreements’ should not be read to broaden
`the more specific term ‘agreement or understanding between the patent
`owner and a petitioner.’” Id. (citing Hughey v. U.S., 495 U.S. 411, 418–19
`(1990)). The parties moreover contend 37 C.F.R. § 42.74(b) interprets the
`statute as being limited to agreements “between the parties,” that is, between
`the patent owner and a petitioner. Id. at 3–4 (emphasis in original). The
`parties, finally, point out that neither of the two Collateral Agreements is
`between the patent owner and a petitioner in these two proceedings, because
`the patent owner (Farms Technology, LLC) is not a party to either
`agreement. Id. at 4.
`In consideration of the foregoing, 35 U.S.C. § 317(b) pertinently
`requires the filing of “[a]ny agreement or understanding between the patent
`owner and a petitioner, including any collateral agreements referred to in
`such agreement or understanding . . . .” In this case, the Settlement
`Agreement (Ex. 1012) is between patent owner Farms Technology, LLC and
`petitioner DTN, LLC. See, e.g., 1412 IPR, Paper 18, 2 (referring to the
`Settlement Agreement as being “between the parties”). The Settlement
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`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
`
`Agreement, thus, is an “agreement or understanding between the patent
`owner and a petitioner” as specified in 35 U.S.C. § 317(b).
`It is, further, undisputed that the Settlement Agreement refers to the
`two Collateral Agreements. See Ex. 1012, 1–2 (Clauses #10 and #11 of
`twelve “WHEREAS” Clauses). In requiring the filing of the Settlement
`Agreement “including any collateral agreements referred to” in the
`Settlement Agreement, the statute does not require any more than that.
`35 U.S.C. § 317(b) (emphasis added).
`In particular, the statutory language of § 317(b) does not limit the
`“collateral agreements” to agreements that are between the patent owner and
`a petitioner. We conclude, instead, that the term “any” means “any,” so the
`collateral agreements need not be between the patent owner and a petitioner
`to fall under the ambit of the statute. It is sufficient for a collateral
`agreement (here, the two Collateral Agreements) to be referred to in an
`agreement between the patent owner and a petitioner (here, the Settlement
`Agreement). By referring to the two Collateral Agreements, the Settlement
`Agreement includes the Collateral Agreements, as required by § 317(b),
`regardless of whether patent owner Farms Technology, LLC, and petitioner
`DTN, LLC, are both parties to the Collateral Agreements. Thus, while the
`parties are correct that patent owner Farms Technology, LLC is not a party
`to either one of the two Collateral Agreements, that fact does not exempt the
`two Collateral Agreements from the filing requirement of § 317(b).
`37 C.F.R. § 42.74(b) is not contrary to the foregoing understanding of
`35 U.S.C. § 317(b). The regulation pertinently refers only to “[a]ny
`agreement or understanding between the parties . . . .” 37 C.F.R. § 42.74(b)
`(emphasis added). That is, the regulation does not refer to the “collateral
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`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
`
`agreements” described in the statute at all, much less specify that the
`collateral agreements must be between the patent owner and a petitioner.
`The regulation, therefore, is not particularly pertinent to the statutory
`construction presented here. Further, our review of the commentary
`accompanying the regulation does not shed any light on the applicability of
`the regulation to the “collateral agreements” referenced in the statute. See
`Rules of Practice for Trials Before the Patent Trial and Appeal Board and
`Judicial Review of Patent Trial and Appeal Board Decisions, 77 Fed. Reg.
`48,612, 48,625 & 48,649–50 (Aug. 14, 2012). Absent a clear indication to
`the contrary, which we do not find in either the regulatory text or in the
`accompanying commentary, we do not agree with the parties’ interpretation
`of 37 C.F.R. § 42.74(b) as setting forth Office policy on the correct
`interpretation of the “collateral agreements” clause in 35 U.S.C. § 317(b).
`The decision in Hughey v. U.S., 495 U.S. 411 (1990), also does not
`support the parties’ position here. In the Hughey decision, the Court
`considered a criminal statute that provided:
`The court, in determining whether to order restitution under
`[18 U.S.C. § 3579] and the amount of such restitution, shall
`consider the amount of the loss sustained by any victim as a
`result of the offense, the financial resources of the defendant,
`the financial needs and earning ability of the defendant and the
`defendant’s dependents, and such other factors as the court
`deems appropriate.
`Hughey, 495 U.S. at 416–417 (emphasis added). The United States
`Government argued that the statute’s final, “catchall phrase . . . authorizes
`courts to include in their restitution calculus losses resulting from offenses
`other than the offense of conviction.” Id. at 417. The Court rejected the
`Government’s argument in pertinent part on the basis that “the . . . remaining
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`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
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`considerations preceding the catchall phrase are designed to limit, rather
`than to expand, the scope of any order of restitution.” Id. at 418–19. By
`contrast, in the case presented here, the surrounding terms in § 317(b) are
`expansive rather than restrictive in nature, in referring to “[a]ny agreement
`or understanding between the patent owner and a petitioner, including any
`collateral agreements referred to in such agreement or understanding”
`(emphases added). Moreover, the statutory language at issue here
`(“including any collateral agreements referred to . . . ”) is not sufficiently
`akin to the general or catchall language at issue in Hughey (“and such other
`factors as the court deems appropriate”) to require application of the same
`canon of statutory construction.
`Finally, interpreting § 317(b) in the manner proposed by the parties
`here would allow parties to IPR proceedings to circumvent the statute’s
`filing requirement easily, thereby frustrating the purpose of the statute. The
`parties to an IPR proceeding could enter into a very short agreement
`between themselves, referring to a separate agreement between one or more
`related but different corporate entities than the parties to the IPR proceeding,
`either controlling or controlled by the parties to the proceeding. That
`separate agreement, which the parties here contend would be exempt from
`§ 317(b), would contain all the terms the parties desire to insulate from
`review by “Federal Government agencies on written request” or “any person
`on a showing of good cause.” 35 U.S.C. § 317(b).
`Thus, we conclude the two Collateral Agreements fall under the scope
`of 35 U.S.C. § 317(b), despite that patent owner Farms Technology, LLC is
`not a party to either one of the two Collateral Agreements.
`
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`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
`
`
`B.
`
`Agreement “made in connection with, or in contemplation of,
`the termination of” IPR Proceedings
`Second, the parties contend the two Collateral Agreements are not
`required to be filed because they were not “made in connection with, or in
`contemplation of, the termination of” these two IPR proceedings. 1412 IPR,
`Paper 20, 1–2, 4–5 (quoting 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(b)).
`In support, the parties point out that one Collateral Agreement (Ex. 2008)
`does not mention either of these two proceedings. Id. at 5. The parties point
`out that the other Collateral Agreement (Ex. 2009) refers to these two
`proceedings in introductory “WHEREAS” clauses, yet “none of the
`obligations undertaken . . . requires or depends upon the termination of
`either [IPR proceeding] in any way.” Id. The parties maintain “the
`termination (or non-termination) of these IPRs will have no effect on the
`[two] Collateral Agreements.” Id.
`The problem with the foregoing arguments is that § 317(b) does not
`require the Collateral Agreements to have been “made in connection with, or
`in contemplation of, the termination” of the IPR proceedings. The statute
`requires the “agreement or understanding between the patent owner and a
`petitioner” (i.e., the Settlement Agreement here) to be “made in connection
`with, or in contemplation of, the termination of an inter partes review under
`this section.” 35 U.S.C. § 317(b). Our regulation likewise requires that only
`the “agreement or understanding between the parties” (again, the Settlement
`Agreement here) be “made in connection with, or in contemplation of, the
`termination of a proceeding.” 37 C.F.R. § 42.74(b). The Collateral
`Agreements need only be “referred to” in the Settlement Agreement to
`qualify under § 317(b), which they undisputedly are.
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`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
`
`
`C.
`
`Conclusion on Joint Motions to Expunge the Collateral Agreements
`For the foregoing reasons, we conclude the two Collateral Agreements
`fall under the ambit of 35 U.S.C. § 317(b) as agreements that must be filed
`in the Office before these two proceedings may be terminated. We,
`therefore, deny the Joint Motions to Expunge the Collateral Agreements.
`
`III.
`
`Joint Requests to Treat the Settlement Agreement, and the Two
`Collateral Agreements, as Business Confidential Information
`The parties have filed Joint Requests to treat the Settlement
`Agreement, and the two Collateral Agreements, as business confidential
`information pursuant to 35 U.S.C. § 317(b). 1412 IPR, Papers 18 & 19;
`1525 IPR, Papers 16 & 18. These Requests are granted, and the Settlement
`Agreement (Ex. 1012) as well as the two Collateral Agreements (Exs. 2008
`& 2009) will be treated as business confidential information under 35 U.S.C.
`§ 317(b) and 37 C.F.R. § 42.74(c).
`
`Joint Motions to Terminate the Proceedings
`IV.
`The parties have filed Joint Motions to Terminate each proceeding
`pursuant to 35 U.S.C. § 317(a), on the basis of a settlement reached by the
`parties. 1412 IPR, Paper 17; 1525 IPR, Paper 17. The parties indicate they
`have settled their underlying disputes and have executed the Settlement
`Agreement (Ex. 1012) to terminate these two proceedings, as well as the
`District Court litigation involving the ’685 patent and the ’979 patent:
`Civil Action No. 2:18-cv-02495, in the District of Kansas. 1412 IPR,
`Paper 17, 3; 1525 IPR, Paper 17, 3. The parties further indicate they have
`filed or shortly will file dismissal papers in that litigation, and they have
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`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
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`agreed to settle and dismiss all other litigation between them. 1412 IPR,
`Paper 17, 3; 1525 IPR, Paper 17, 3.
`Generally, the Board expects that a proceeding will terminate after the
`filing of a settlement agreement. See 35 U.S.C. § 317(a) (“An inter partes
`review instituted under this chapter shall be terminated with respect to any
`petitioner upon the joint request of the petitioner and the patent owner,
`unless the Office has decided the merits of the proceeding before the request
`for termination is filed.”); 37 C.F.R. § 42.72 (“The Board may terminate a
`trial without rendering a final written decision, where appropriate,
`including . . . pursuant to a joint request under 35 U.S.C. 317(a)”); see also
`Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,768 (Aug. 14,
`2012) (“The Board expects that a proceeding will terminate after the filing
`of a settlement agreement, unless the Board has already decided the merits
`of the proceeding.”). Here, the proceeding is at a relatively early stage and a
`final written decision has not been reached or entered. Accordingly, we are
`persuaded that, under these circumstances, termination of this proceeding is
`appropriate, and we grant the Joint Motions to Terminate the proceedings.
`This Decision does not constitute a final written decision pursuant to
`35 U.S.C. § 318(a).
`
`Order
`V.
`In consideration of the foregoing, it is hereby:
`ORDERED that the Joint Motions to Expunge the two Collateral
`Agreements (1412 IPR, Paper 20; 1525 IPR, Paper 19) are each denied;
`FURTHER ORDERED that the Joint Requests (1412 IPR, Papers 18
`& 19; 1525 IPR, Papers 16 & 18) to treat the Settlement Agreement
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`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
`
`(Exhibit 1012) and the two Collateral Agreements (Exs. 2008 & 2009) as
`business confidential information are each granted, and those agreements
`shall be kept separate from the files of U.S. Patent No. 7,991,685 B2 and
`U.S. Patent No. 7,742,979 B2, and made available only to Federal
`Government agencies on written request, or to any person on a showing of
`good cause, under 35 U.S.C. § 317(b) and 37 C.F.R. § 42.74(c); and
`FURTHER ORDERED that the Joint Motions to Terminate these
`proceedings (1412 IPR, Paper 17; 1525 IPR, Paper 17) are each granted, and
`the proceedings are hereby terminated under 35 U.S.C. § 317(a) and
`37 C.F.R. § 42.72.
`
`
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`IPR2018-01412 (Patent 7,991,685 B2)
`IPR2018-01525 (Patent 7,742,979 B2)
`
`PETITIONER:
`
`David Cabello
`James Hall
`Stephen Zinda
`BLANK ROME LLP
`DCabello@BlankRome.com
`JHall@BlankRome.com
`SZinda@BlankRome.com
`
`
`PATENT OWNER:
`
`Joshua P. Larsen
`Yoojin Jung
`Todd G. Vare
`Deborah Pollack-Milgate
`BARNES & THORNBURG LLP
`Joshua.Larsen@btlaw.com
`Kate.Jung@btlaw.com
`Todd.Vare@btlaw.com
`Deborah.PollackMilgate@btlaw.com
`
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