UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`UNIFIED PATENTS INC.,
`Petitioner
`
`v.
`
`DYNAMIC DATA TECHNOLOGIES, LLC,
`Patent Owner
`
`
`Case IPR2019-01085
`Patent 8,135,073
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`PETITIONER’S REPLY TO PATENT OWNER’S
`PRELIMINARY RESPONSE
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`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`UNIFIED PATENTS INC.,
`Petitioner
`
`v.
`
`DYNAMIC DATA TECHNOLOGIES, LLC,
`Patent Owner
`
`
`Case IPR2019-01085
`Patent 8,135,073
`
`
`
`
`
`
`
`PETITIONER’S REPLY TO PATENT OWNER’S
`PRELIMINARY RESPONSE
`
`
`
`
`
`
`
`
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`
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`TABLE OF CONTENTS
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`Introduction ................................................................................................... 1
`I.
`1. Patent Owner Cannot Demonstrate an Express Obligation of
`Assignment ........................................................................................................ 2
`2. Patent Owner Cannot Demonstrate an Implied Obligation of
`Assignment ........................................................................................................ 5
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`
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`
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`
`
`i
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`
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`TABLE OF AUTHORITIES
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`Cases
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`Cahill v. Regan, 5 N.Y.2d 292 (1959) .................................................................... 5
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`Dalzell v. Dueber Watch-Case Mfg. Co., 149 U.S. 315, 13 S. Ct. 886 ................... 5
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`Talbot v. Harrison, 150 Misc. 798, 270 N.Y.S. 171 ............................................... 5
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`United States v. Dubilier Condenser Corporation, 289 U.S. 178 (1933) ................ 6
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`
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`
`ii
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`I.
`
`Introduction
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`Petitioner’s asserted Yang reference is prior art; it was not co-owned by the
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`owner of the ’073 patent (i.e., Mr. Shen) at the time of invention. Under 35 U.S.C.
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`§ 103(c), prior art is excluded from consideration as a ground for obviousness if it
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`was owned by the same person or was subject to an obligation of assignment to the
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`same person as the challenged patent. It is undisputed that Mr. Shen had not assigned
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`the ’073 Patent to the owner of the Yang reference (i.e., Koninklijke Philips
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`Electronics N.V. (“Philips”)) at the time of invention on December 20, 2002. Rather,
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`Mr. Shen did not assign his rights in the ’073 Patent to Philips until 2004. The record
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`does not show that Mr. Shen was under any obligation to assign his invention to
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`Philips on December 20, 2002. While Patent Owner suggests that Mr. Shen’s
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`employment agreement obligated him to assign his patent rights, Patent Owner has
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`not produced any agreement. Nor does Mr. Shen’s declaration suggest that a written
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`employment agreement exists, or that he ever signed one. Absent legal obligation to
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`assign, Mr. Shen’s “sense” that he had some obligation to assign is irrelevant. Even
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`if such self-interested testimony were credible, vague moral obligations cannot, as a
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`matter of law, demonstrate a legal obligation of assignment.
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`In the absence of normal facts demonstrating an obligation to assign, Patent
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`Owner reverts to a narrow line of implied assignment cases under New York state
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`law. Patent Owner supports this implied-in-law theory by proffering conclusory
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`1
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`
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`statements by Mr. Shen that merely parrot the legal standard without offering any
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`underlying facts that would support it. Mr. Shen’s declaration does not provide any
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`meaningful details regarding his employment in 2002. For example, Mr. Shen does
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`not even suggest that he had an employment agreement with Philips in 2002. He
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`does not indicate whether he was working on multiple projects, or what his full
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`employment responsibilities were at the time. Indeed, the record evidence does not
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`permit any accurate assessment of whether Mr. Shen was operating in a position of
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`“general employment” rather than as a person specifically “hired to invent” as Patent
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`Owner contends. The record evidence simply does not support such an analysis.
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`Patent Owner’s evidence has not demonstrated that Yang is not available as prior art.
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`At a minimum, institution of this proceeding is proper so as to permit appropriate
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`discovery post-institution to further develop the record with respect to Mr. Shen’s
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`status and actual legal obligations, if any. The Board should, accordingly, institute.
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`1. Patent Owner Cannot Demonstrate an Express Obligation of Assignment
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`Dynamic Data has not demonstrated—and seems to concede the lack of—any
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`express obligation for Mr. Shen to assign the ’073 patent to Philips. An express
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`obligation of assignment requires, as the term suggests, evidence of an actual,
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`express agreement between Mr. Shen and Philips. The record does not contain any
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`evidence to suggest there even was an employment agreement between Mr. Shen
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`and Philips. Dynamic Data has not produced evidence of any employment
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`2
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`
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`agreement, written or otherwise, obligating Mr. Shen to assign his invention to his
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`employer in 2002, or setting forth any other terms and conditions of his employment.
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`Mr. Shen does not assert that he ever signed an employment agreement during his
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`time at Philips or that he had a formal agreement. Instead, Mr. Shen asserts that he
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`assigned his rights to Philips in 2004 (i.e., fourteen months after the time of
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`invention) “to comply with what I understood to be my obligation to assign the rights
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`of the inventions disclosed in, and the application for, the ’073 Patent to my
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`employer[.]” Ex. 2004 at ¶13. He further explains that “I understood the terms of my
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`employment for Philips required me to do so. I always understood that I had an
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`obligation to assign the rights to inventions that I created within the scope of my
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`employment with Philips, on company time, or using company resources, to
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`Philips.” Id. at ¶14. He does not detail where that sense came from—certainly not
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`from a written agreement or an employment interview or employee manual—and
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`his testimony reflects only that Mr. Shen appears now to have felt an obligation to
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`his employer. But Patent Office guidelines are clear that a “moral or unenforceable
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`obligation would not evidence common ownership” as required to invoke the
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`common ownership exclusion under 103(c). MPEP 706.02(l)(2) (emphasis added).
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`Such as here. Even Mr. Shen’s uncorroborated, subjective belief does not indicate
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`that he believes even today that he was contractually (i.e., legally) obligated to
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`assign his invention to Philips in 2002; just his ex post facto feeling.
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`3
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`
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`In lieu of any employment agreement (there appears not to be one), Dynamic
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`Data provides instead several exhibits suggesting that other unrelated employees
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`signed express employment agreements obligating them to assign their patent rights
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`to Philips. For example, Patent Owner provides an “Employee Ethics and
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`Intellectual Property Agreement” signed by another Philips employee in April, 2002
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`that required the employee to “disclose promptly and agree to assign” their
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`inventions to Philips. Ex. 2011.
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`This hurts Dynamic Data’s case. That Philips did have such easily producible
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`agreements with others, but not with Mr. Shen, suggests that Mr. Shen was under no
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`obligation, or it would have been similarly written. What Patent Owner calls the
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`“unbroken employment practices” of requiring employees to sign such agreements
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`was broken here, where no agreement between Philips and Mr. Shen exists.
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`Patent Owner adds that Mr. Shen’s course of conduct in 2002 suggests he was
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`(or at least felt) obligated to assign his invention to Philips as of December 20, 2002.
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`This alleged course of conduct includes Mr. Shen’s assignment of other inventions
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`to Philips in the 2002 timeframe, and Mr. Shen’s later assignment of the ’073 patent
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`to Philip—again, fourteen months later—in 2004. POPR, Paper 6 at 35. This
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`suggests at best that Mr. Shen willing to and he felt he should assign his rights in
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`2004 (perhaps at Philips’ request). They do not, however, do not suggest that Mr.
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`Shen had a binding obligation requiring him to assign his rights to Philips as of the
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`
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`4
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`
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`date of the invention on December 20, 2002. On the current record, there is no
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`evidence that Mr. Shen had any employment agreement with Philips. Patent Owner’s
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`multiple attempts to show there must have been an employment agreement that
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`obligated Mr. Shen to assign his patent rights rings hollow.
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`2. Patent Owner Cannot Demonstrate an Implied Obligation of Assignment
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`Dynamic Data’s attempt to prove an implied obligation to assign the ’073
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`patent also fails. As a general rule under New York state law, absent an express
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`agreement otherwise, employees are entitled to inventions developed in the course
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`of their employment. Indeed, even where an employee uses company equipment,
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`time, resources, and materials to develop an invention within the contours of his
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`“general employment,” he remains “entitled to enjoy the fruits of any invention
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`which he conceives while so employed and is under no duty to turn the patent
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`obtained over to the employer in absence of an express agreement to that effect.”
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`See Cahill v. Regan, 5 N.Y.2d 292 (1959); see also Dalzell v. Dueber Watch-Case
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`Mfg. Co., 149 U.S. 315, 320, 13 S. Ct. 886, 888 (1893); Talbot v. Harrison, 150
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`Misc. 798, 799, 270 N.Y.S. 171, 172 (Sup. Ct. 1932). In Cahill, the court reasoned
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`that while it was “true that [inventor] was, among other things, hired generally to
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`design cans, [] that does not entitle[] the employer to the patent since there was no
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`agreement to assign it to him.” Cahill, 5 N.Y.2d at 299. This general rule highlights
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`the importance of express agreements in determining whether there is an obligation
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`5
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`
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`to assign. Where there is no express agreement, inventions developed in the course
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`of general employment belong to the employee, not the employer.
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`The only exception to the general rule is where an employee was specifically
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`“hired to invent.” The rationale underlying this exception is that where an employee
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`is specifically hired to invent a particular thing and does so invent, the employee
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`“has only produced that which he was employed to invent. His invention is the
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`precise subject of the contract of employment.” POPR, Paper 6 at 26 (quoting United
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`States v. Dubilier Condenser Corporation, 289 U.S. 178, 187 (1933). The “hired to
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`invent” exception to the general rule is a simple recognition of an implied-in-fact
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`contract that arises where an employer pays an employee to invent a specific thing
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`such that the specific invention becomes the consideration for his or her employment
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`compensation. That is not the situation in a “general employment” scenario because
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`the employee provides other value in consideration for his employment beyond
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`presenting an invention to the employer.
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`Mr. Shen indicates that he worked with Philips for many years as an engineer
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`working on many different projects as evidenced by his other patents that Patent
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`Owner references. Ex. 2007, 2008, 2021. Mr. Shen asserts, without detailing his
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`overall job duties, that he became a “technical lead on a project with the specific
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`goal of inventing new technologies that would reduce the processing required for
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`video enhancements” in roughly 2001 or 2002. However, video processing is a broad
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`6
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`field of endeavor that is generally focused on reducing the processing required for
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`video enhancements. Any researcher or technical staff member working in the field
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`could describe his/her “general employment” in this manner. Mr. Shen provides no
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`details to indicate or suggest that he was hired to invent a solution to a specific
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`problem such that the fruit of that work was the consideration that his employer
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`would expect as a quid pro quo for his employment. That Mr. Shen was working on
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`other projects in the same field belies the fact that he was employed specifically to
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`invent the subject matter of the ’073 patent. Rather, Mr. Shen appears to have been
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`performing “general employment” duties in his area of work. Under New York law,
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`the fruits of Mr. Shen’s efforts belonged to him until the point where he opted to
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`assign them away, which he was under no legal obligation to do. Patent Owner has
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`not demonstrated that Mr. Shen had any legal obligation to assign the ’073 patent to
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`Philips in December 2002. At a minimum, the record lacks sufficient specificity to
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`conduct the required analysis and should be more fully developed through post-
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`institution discovery into the precise terms, conditions, and obligations of Mr. Shen’s
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`employment with Philips. On the current record, Petitioner maintains a reasonable
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`likelihood of prevailing on the question of whether Mr. Shen was under an obligation
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`of assignment in 2002, and, as such the Board should institute the instant proceeding.
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`7
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`Respectfully submitted,
`ERISE IP, P.A.
`
`BY: /s/ Eric A. Buresh
`
`Eric A. Buresh, Reg. No. 50,394
`Jason R. Mudd, Reg. No. 57,700
`Chris R. Schmidt, Reg. No. 63,982
`Ashraf Fawzy, Reg. No. 67,914
`Roshan Mansinghani, Reg. No. 62,429
`
`ATTORNEYS FOR PETITIONER
`
`
`
`8
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`
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`CERTIFICATE OF SERVICE
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`I hereby certify that a true and correct copy of the foregoing PETITIONER’S
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`REPLY TO PATENT OWNER’S PRELIMINARY RESPONSE was served on
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`October 9, 2019, by email on the following counsel of record for Petitioner:
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`
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`Dated: October 9, 2019
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`
`
`Kenneth J. Weatherwax
`weatherwax@lowensteinweatherwax.com
`Nathan Lowenstein
`lowenstein@lowensteinweatherwax.com
`Patrick Maloney
`maloney@lowensteinweatherwax.com
`Jason C. Linger
`linger@lowensteinweatherwax.com
`Daniel P. Hipskind
`dph@lowensteinweatherwax.com
`DDT_IPRs@lowensteinweatherwax.com
`
`
`Respectfully submitted,
`
`BY: /s/ Eric A. Buresh
`
`
` Eric A. Buresh, Reg. No. 50,394
`
`ATTORNEY FOR PETITIONER
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`
`
`9
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`
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